Cardon Mill Case

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Qualitative factors in Modification decisions between two distribution strategies: using wholesalers and setting up own distribution centers: 1. Coverage efficiency: To keep the coverage efficiency, Carbon Carpet Mills needs to have their presence at 07 metropolitan areas: Atlanta, Chicago, Dallas – Fort Worth, Denver, Los Angeles, New York City, and Philadelphia. Cardon Carpet Mills could actually provide better transportation costs if they open a warehouse in the 2 areas where their wholesalers do not have facilities. 2. Satisfaction of buyer’s need: The retailers may give a better price to consumers because retailers are getting a reduction on input price from the company. The original input price from wholesalers were added 20% margin on sales billed at the price to retailers. 3. Changes in Marketing functions: Marketing will be focused towards the retailer if Cardon Carpet Mills cuts out the wholesaler and sells directly to retailers. The company has to spend extra effort managing the sales force in each distribution center: 10 sales representatives at each distribution center and 01 field sales manager to manage every eight sales representatives. 4. Effects on channel participants: For Carbon Carpet Mills: have a full sales team devoted for selling Carbon Carpet Mill products full-time, lower their stock by keeping the number of their inventory turnovers at four, instead of at five as per request of wholesalers. The buying groups could break up if the retailer each can get a cheap price directly from the manufacture and they may not receive the extended credit from the wholesalers. The wholesalers may close down. 5. Contribution to the long-term organization objective: Increase net income, corporate image, and control over retailers’ information. 6. Resources needed to operate new distribution system: They have to set up distribution centers in 07 metropolitan areas as well as setting up their own sale team, requiring lots of...
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