Wholesale Marketing Channel - Case Study Example

Wholesale Marketing Channel The US market is expansive and requires a marketing channel that will make it possible for the product to reach the target market. With the increasing levels of competition in the US market, many companies are opting to use independent retailers in order to distribute their products in the market. However, some retailers have collided with the competitors in order to suppress the companies in the market (Palmatier, Stern, & Ansary, 2015). This is through creating an artificial shortage. This aspect forces the customers to shift their attention towards the existing substitutes in the market. Furthermore, these retailers create delays in order to frustrate the customers and tarnish the reputation of the company in the market. As a result, the most appropriate marketing channel for FOXXY is the use of the wholesalers. Unlike in Canada whereby the company was able to use internal sales representatives to distribute products in different parts of the country, the US market requires a different approach. The reason is that the target market requires different segmentation strategies in order to position the products strategically in the market. Therefore, the use of wholesalers will offer the company with an opportunity to focus on the production system. Therefore, the company will produce high quality products which meet the tastes and preferences of the target market (Keillor, 2013). The reason is that majority of the target customers are young people who have a disposable income that they are willing to spend on high quality products. However, this group has access to information especially from the social media. As a result, they can easily shift their loyalty to new entrants in the market. Local wholesalers understand the market dynamics in the United States. With the increasing levels of globalization, it has become critical for the company to focus its attention towards customers’ satisfaction. However, due to the fact that FOXXY is an external company, many of its subordinates do not understand the US market. Each market has its unique culture which must be taken into consideration while marketing and distributing the products. Therefore, in order for FOXXY to achieve this objective, the company should have to employ local subordinates who understand the local consumption culture. This would delay the expansion program and affect the future plans of the company. Moreover, the US market prefers to be associated with products that have been produced locally (Reidenbach & Goeke, 2006). As a result, the move to use wholesalers will bring the local market closer to the company because the wholesalers will take over the distribution work from the company. Market research is an important aspect towards the success of any company in the market. Many multinationals are spending a very huge amount of money in order to learn about the consumption behavior of the target market and different factors that affects the purchasing behavior of the customers. Contracting different wholesalers that understand the local market will provide FOXXY with an ideal opportunity to collect crucial information regarding the market. The reason is that the Wholesalers will be in direct contact with retailers who interact with the customers. As a result, they will obtain any information regarding any changes in the consumption behavior. This will enable the company to make the necessary changes in order to prevent the customers from shifting towards the competitors products (Reddy & Pellegrini, 2012). Furthermore, the company will have an opportunity to produce products that are customized to meet the varying interests of the customers. The Wholesale channel can offer the company with a franchising option. Many of the wholesalers have invested heavily in logistics and storage of the products. Some of them can brand the products in order to attract more customers and own the product. With the expansive market, the company can use this option in order to reach a large customer base. However, this option should have an agreement in order for the company to retain its position as the right owner of the design. The agreement should stipulate the franchisor’s name, store designs and outfitting (Rosenbloom, 2004). These must be customized according to the proposals made by the company. Furthermore, with the increasing costs of advertising the products, franchising will help the company to reduce its advertising budgets. The reason is that some of the wholesalers have their sales agents who will play a significant role in marketing the products. They also have a well drafted network that enables them to interact with the customers. For instance, many of them are using social media and the internet in order to reach the target market. This makes it possible for them to retain the loyalty of the customers towards their products (Varey & Lewis, 2002). Therefore, FOXXY can use this network to expand its reach in the market. This will play a significant role in cementing the relationship that will have developed through the trade shows. Wholesalers will be responsible for training their employees. With the changing market dynamics, it has become critical for the company to keep on equipping the employees with the new skills. This is important in enabling the company to retain its competitive advantage in the market. However, it is a very expensive intervention which reduces the profits of the firm. Therefore, delegating this responsibility to the wholesalers will save a lot of money for the company (Perreault, Cannon, & McCarthy, 2009). As a result, the amount will be used to create a barrier of entry to other interested investors. Furthermore, the money will be used to expand the operations of the company in other markets across the world. Pricing is significant when dealing with the young people. Although trade shows will bring the customers closer to the customers, any increase in the prices of the products will have a major impact on the overall sales. Therefore, the use of wholesale channel will be significant in saving some costs. For instance, the company will cut the service costs and sales force costs (Rosenbloom, 2013). This will make it cheaper for the customers to purchase the products directly from wholesalers who break down the bulk packages in order to sell the products to the consumers. FOXXY can avoid channel conflicts with wholesalers by getting into a contract which will specify the specific areas whereby the company will hold trade shows and distribute the products directly. The reason is that customers who will purchase their products directly from the company will enjoy cheaper prices (Keillor, 2007). This might lower the morale of the wholesalers who might feel that the company is enjoying the benefit accrued from their promotional activities. Therefore, the company should segment the market into sections depending on its ability to reach the customers with ease. During the selection process, the company should take into consideration the benefits of distributing the products directly to these clients and whether it has enough workforces to cover these markets. The company can avoid channel conflict by being in control of the distribution activities by the wholesalers. The two parties should work together as a single unit in order to achieve the larger objective of improving the performance of the company in the market. This could be achieved by ensuring that wholesalers follow the strategies that will be set by the companies. The reason is that giving the wholesalers an opportunity to work independently will bring differences in policies and work ethics (Grandi & Fornari, 2012). Furthermore, the wholesalers might advance their individual interests which might hurt the reputation of the company in the market. Therefore, the marketing department should be in control of all distribution activities being conducted by the company. This means that the wholesalers should be answerable to the management of the company and any decision that might bring conflicts should be addressed by both parties. References Grandi, S., & Fornari, E. (2012). Marketing channel trends. Milano: EGEA. Keillor, B. D. (2007). Marketing in the 21st century. Westport, CT: Praeger. Keillor, B. D. (2013). Marketing in the 21st century and beyond: Timeless strategies for success. Santa Barbara, CA: Praeger. Palmatier, R. W., Stern, L. W., & Ansary, A. I. (2015). Marketing channel strategy. Boston [u.a.: Pearson. Perreault, W. D., Cannon, J. P., & McCarthy, E. J. (2009). Basic marketing: A marketing strategy planning approach. Boston: McGraw-Hill Irwin. Reddy, S. K., & Pellegrini, L. (2012). Retail and Marketing Channels (RLE Retailing and Distribution). Routledge. Reidenbach, R. E., & Goeke, R. W. (2006). Value-driven channel strategy: Extending the lean approach. Milwaukee, Wis: ASQ Quality Press. Rosenbloom, B. (2004). Marketing channels: A management view. Mason, OH: Thomson/South-Western. Rosenbloom, B. (2013). Marketing channels: A management view. Australia: South-Western Cengage Learning. Varey, R. J., & Lewis, B. R. (2002). Internal marketing: Directions for management. London: Routledge. Read More