Company S's Distribution Process - Essay Sample

Introduction

Delivery of goods to the end-consumers is always affected by logistical and administrative challenges. Companies thus choose to use channel intermediaries to help in the distribution process. The role of channel intermediaries includes having goods, collecting payment, and providing after-sales services (Chernev, 2018). In this case, Company S is in the business of selling scooters and wants to partner with dealers who will help distribute their products. This paper will, therefore, discuss in depth the motivation strategies, the pros, and cons of the strategies, and finally, elaborate the significance of the distribution programming as a measure to secure entrance in the business of scooters.

Is your time best spent reading someone else’s essay? Get a 100% original essay FROM A CERTIFIED WRITER!

Order now

Motivation Strategies

Special Deals

Special deals involve the extended terms provided for stocking inventory, and they are intended to encourage the intermediaries to partner with Company S. Some of the benefits of special deals include discounts such as add-on features and volume (Chernev, 2018).

Higher Margins

Higher margins incentivize the dealers to promote the new line of scooters by allowing the intermediaries a chance to increase their profits by increasing the margins at which they can sell the scooters (Chernev, 2018).

Premiums

Premiums motivate the intermediaries by providing better incentives such as gifts, monetary rewards, and special partner-perks in circumstances where the sales quotas are achieved.

Display Allowances

The display allowances enhance bonus payments in cases where intermediaries display products in high traffic areas.

Cooperative Advertising

Cooperative advertising promotes the shared responsibility of both the manufacturer and the intermediaries to advertise their products by cost sharing, which increases consumer awareness and market base (Chernev, 2018).

Pros and Cons of the Strategies

Pros of Special Deals

Some of the advantages of exclusive deals include the volume discounts offered by manufacturers to intermediaries in cases where goods are bought in bulk. The discounts enable the intermediaries to gain higher profits while they keep the prices of the scooters competitive (Iturrioz et al., 2015). The special deals also provide for region exclusivity where intermediaries can sell their products without the fear of competitor intermediaries.

Cons of Special Deals

Company S will suffer from the increased costs of production needed to cover for the high-volume discounts. Company S will also be disadvantaged because of the limited number of intermediaries serving the distribution channels who may not be able to purchase goods in bulk to allow room for an advantageous discount.

Pros of Higher Margins

The higher margins will enhance Company S to yield higher profits through the sales of scooters. Higher margins also help promote brand reputation through intermediaries who offer better scooters in their product lines.

Cons of Higher Margins

Company S and the intermediaries may suffer from slower sales experienced in price-sensitive markets (Iturrioz et al., 2015). The cost of adding the improved scooters to the product line may prove to be expensive to allow Company S to yield better profits.

Pros of Premiums

The intermediaries benefit from cash incentives, special packages, and partnership perks received from meeting specific sales quotas.

Cons of Premiums

Company S may lose a lot of cash from paying off premiums or partnership deals in cases where the sales quotas are easily achievable. The intermediaries may not get the cash incentives in circumstances where the sales quotas are not achievable.

Pros of Display Allowances

The use of professional displays attracts larger audiences, thus increasing sales. The display allowances also enable flexibility for the intermediaries to set up and locate their displays (Iturrioz et al., 2015).

Cons of Display Allowance

The intermediaries need Company S consent to use the displays, and the size or complexity of the displays may discourage the intermediaries from displaying.

Pros of Cooperative Advertising

Intermediaries benefit from the available resources of Company S by sharing advertising costs. Both Company S and intermediaries also benefit from excellent consumer awareness achieved through advertising channels.

Cons of Cooperative Advertising

The effectiveness of the advertising may be reduced because of the logistic cooperation between Company S and intermediaries. Lack of resources to support the advertising may also cause challenges.

The Effectiveness of the Strategies

The effectiveness of the strategies can be determined by securing a partnership deal with the intermediaries, assessing the increased profits, and the ability of the intermediaries to accomplish repeat orders (Chernev, 2018). For instance, higher margins will be evaluated through attainable profits. Exclusive deals will depend on the interest achieved through channel partnership and completion of satisfaction surveys. Premiums will be evaluated through the achieved sale quotas, and Company S may be required to revise quota requirements if they are not achievable (Chernev, 2018). Display allowances, on the other hand, will be adequate when intermediaries require more displays, and it can be shown that the displays are located accordingly. Finally, cooperative advertising will be effective when there is an increase in product sales and through intermediaries' efforts to maximize the available advertising strategies within the confines of the cooperation.

Distribution Programming

Distribution programming seeks to create a marketing system that meets the needs of both the manufacturer and the intermediaries (Chernev, 2018). In this case, Company S has identified at least five motivation strategies that will help them sell and promote their scooters through their channel partners. The strategies will heavily rely on the needs of both the manufacturers and intermediaries, the market base, partnership, distribution channels, profits, and satisfaction of the consumers.

Conclusion

The motor transportation business is heavily crowded and thus proves to be a challenge for new entrants such as Company S to enter the markets and acquire loyal consumers. Several factors face the sustainability of the motor business in the market. However, Company S can penetrate the market by incorporating a good vertical marketing strategy. The marketing strategy can be achieved through engaging long-term partnerships with the intermediaries.

References

Chernev, A. (2018). Strategic marketing management. Chicago: Cerebellum Press.

Iturrioz, C., Aragon, C., & Narvaiza, L. (2015). How to foster shared innovation within SMEs' networks: Social capital and the role of intermediaries. European Management Journal, 33(2), 104-115. DOI:10.1016/j.emj.2014.09.003