Channel Management, Wholesaling, and Physical Distribution

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Channel Management, Wholesaling, and Physical Distribution

Introduction

This report discusses the Channel Management, Wholesaling, and Physical Distribution process for distributing wakeboards. The report looks at a medium-size wakeboard manufacturer (MKMC Inc.) looking to expand into the US market. The report will analyze and give recommendations on the best distribution system for the product. Our product is in the growth stage of the product life cycle. (appendix 20)

Target Market – Boarders

Demographics: (appendix 1 and 2) VALS – Experiencer (appendix 2 and 3)

• Age: 19-30 - Young, enthusiastic, and impulsive consumers • Gender: Male - Seek variety and excitement, savouring the new, the offbeat, and the risky • Family Structure: single, couples and young families - Energy finds an outlet in exercise, sports, outdoor recreation, and social activities • Income: wealthy enough to own a boat, - Purchases reflect the emphasis they place on looking good and having "cool" stuff • Household income approximately $85,000

• Ethnicity: multi-cultural
• Geography: Anywhere

Objectives in choosing a Distribution Strategy

• Distribution through key retailers in each geographical area • Cost effective and efficient expansion into the US wakeboarding market (US market being the number 1 market for wakeboarding)

Evaluate the Internal and External Environment

Factors to consider:
• US GDP as of July – 10,686,000,000 trillion dollars (appendix 14)- Imports totalling – 1,545,000,000 trillion / 19% being from Canada (appendix 18) • State of US economy – Moderate recovery- Consumer confidence – good • Annual GDP growth to date – 1.4%(appendix 15)- Major Competitors: Hyperlite Wakeboards, O’Brien Wakeboards and Ho Sports • US dollar is worth – 1.39 (Canadian)(appendix 16)- It is a consumer market • Unemployment rate – 6.4% (appendix 17) - Retail sales totalling over 300,000 million (appendix 19)

Distribution Channels Compared (See appendix 4)

Manufacturer – Customer: Two Channels, direct distribution

Pros Cons
• No intermediaries (appendix 5 and 6) - Number of transactions would be too high (See appendix 7) • No additional cost to the customer (appendix 12)- 1000 boards to 1000 consumers very expensive • You can sell right to the customer through the internet - compared to 1000 to a wholesaler/retailer not so expensive • Direct contact with the customer (personal interaction is at the highest) - Facilitating functions become limited • Increased market coverage via the Internet (the world) - Cross border transactions are extremely difficult. (Duty, lost deliveries) • Quicker responses to changes in the marketing mix. - Warehousing in host country is a large additional cost. - Difficult to manage inventory - Consumer loses ability to compare products (see and hold product in their hand) - Direct interaction of customer w/ sales staff is lost. (Explaining technology and service benefits of product are lost)

Manufacturer – Retailer – Customer: Three Channel, indirect distribution

ProsCons
• No additional cost to the manufacturer (less overhead) (appendix 12)- Less profit margin to the manufacturer on the sale • Direct interactions of customer and sales staff.- Cross border transactions are extremely difficult • The customer can now: - Number of transactions would be too high (See appendix 7) o Ask questions - Warehousing is an additional cost in host country o Get more information about additional services - Difficult...
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