The Concepts of Distribution and Retailing - Assignment Example

DISTRIBUTION AND RETAILING Contents Contents 2 Introduction 3 Question 3 Explanation of the situation of Jackson Engineering 3 Recommendations on their options in managing their relationship with GEH 5 Question 2 7 Explanation of how an independent clothing retailer might gain competitive advantage 7 Conclusion 8 References 10 Introduction In the marketing concept distribution is one of the most vital elements of the marketing mix. Distribution can be defined as a process through which a service or product can be made available to the consumer or any business end user ether through direct means or by taking help of some intermediaries. Channels are the means through which products and services are distributed. Channels are basically sets of intermediaries or independent organizations through which products or services are distributed for consumption by the end user. Some forms of intermediaries are the merchants who firstly buy the product then resells it. Broker and agents also are other forms of intermediaries that operate on behalf of the manufacturer. In order to motivate the channels it is essential for the firm to encourage positive actions such as setting higher margins and premiums for its intermediaries or else there can be channel conflict that would prevent the firm from achieving its objectives. Retail is one more aspect of the marketing concept in which the goods and services from business or individuals are sold to the end consumer. Retail forms a very important part of the supply chain. A retailer usually purchases in large quantities from the manufacturer and then sells the products in smaller quantities to the customer so as to gain profit margins. A new concept of retailing has evolved in the recent decade which comprises of retailing through online websites, payments using electronic platforms etc. There are various types of retail outlets such as departmental store, discount store, malls, hypermarket, supermarket, demographic, warehouse store, variety store, specialty store, mom and pop store, general store, boutique, convenience store, e-tailer, category killer or specialist store, ad vending machine. Question 1 Explanation of the situation of Jackson Engineering Jackson Engineering manufactures spare parts of trucks. Its products have gained significance in the market over the years and it distributed its products through 8 wholesalers. The wholesalers were satisfied with the operations of the company but in the recent years GEH distributors who is the one of the most important customer of Jackson Engineering has noticed some problems with the firm in terms of ordering and delivery. GEH buys almost 30% of the total production of the Jackson Engineering. This makes it one of the most important distributors of the firm. Jackson Engineering does not have any integrated information system in its supply chain operations which has resulted into delay in ordering and delivering process. The company follows the traditional model of the logistic systems and is not in favour of implementation of any kind of new technology in its business system. The company is very firm in its decision and so is the GEH distributor which wants to have the required details of the stock of the manufacturer and also desires to order through the new technology of EDI (electronic data interchange). The firm even does not find a similar interest for integrated systems in other distributors, and there are only two companies including GEH which has demanded for the new technological approach in the system. GEH distributors are constantly pressurizing the company for the new system which has resulted into a dispute and it needs to be sorted out so that the company does not lose the largest customer of its operations. The main reason behind the dispute is the lack of knowledge of the management of the Jackson Engineering towards the new technologies that are prevalent in the market place. The importance of the information system in the supply chain operations is not known to the management (Rushton, 2010, pp. 143-145). The information system helps in integrating all the tasks and reduces the manual work and saves the time and cost and even enhances the quality of the operations. The lack of information system in Jackson Engineering has resulted into various kinds of issues such as there is lots of time spends in ordering the products by the distributors, proper order tracking system is not incorporated which results into delay in the order placed. The delivery delay results into low satisfaction level in the customers and even initiates channel conflict. The lack of technology in the operations also does not give an opportunity to the distributors to maintain stock records so that they do not have to keep excess inventory and can order as soon as the stock level at Jackson’s Engineering is high so that they do not have to wait to pick up the order placed. The integrated system has been suggested by GEH because it is only through implementation of the new technology much of the issues regarding the delays in delivery and ordering can be resolved. However the issue with the management of the company is that it feels that a lump sum amount of initial investment is required to integrate the technology in the system. The investment required would be high but it would even help to reduce the errors, manual work, time, and cost associated with the operational delays. If the customer of the company is not satisfied then the main objective of the company would be lost that is to gain high profit margins. The condition of the dispute is so worse that it can lead to major losses for the company because if GEH’s idea is not implemented then it would not continue performing business with the company. The company feels that the way its operating is bringing in desired revenues so it does not has the need to invest in order to improve the system (Kuipers and Niederreiter, 2012, pp. 107-108). The management’s thought is also supported by six of its other wholesalers who feel that the business operations are as per high performance standards and there is no such need to improve the system. The majority of the concerned people in the supply chain of the company are in favour of Jackson Engineering which has resulted into a fiercer dispute between GEH and the company. The dispute has also weakened the relationship between the two parties that would ultimately affect the quality of operations and finally can even result into GEH shifting to any other manufacturer of truck’s spare parts. The company is in a condition where it would be facing loss from both the ends if it incorporates the new system it needs to undergo an initial investment and if it does not then it may lose on one of the most important customer of its operations. Recommendations on their options in managing their relationship with GEH The most important factor of concern for the company is managing their relationship with GEH. The distributor and manufacturer’s relationship is very sensitive where both the parties needs to give due respect to each other’s interests. Jackson Engineering needs to come out of the conservative thought process so that they can understand the problem that GEH is encountering on performing business operations with them. An integrated information system would not only be beneficial for GEH distributor but also for the company. The reason behind this is that it can help the company reduce the cost of manual labour as all the tracking of stock level and order placing and picking can be maintained through the information system. This would facilitate the company to save time on its operations and that time that was spent on resolving issue with the distributors regarding delays can be utilized in formulating strategies by the company for its business operations. The dispute can be resolved by conducting a friendly discussion with GEH. This would enable the company to analyze the major issues that is faced by GEH. The company has some options through which they can manage their terms with GEH. Firstly would be a friendly discussion where they would guarantee GEH that further there would not be any delay in delivering the orders placed by GEH. Being the largest customer they would be given the first preference for delivery when the orders are placed simultaneously by many other distributors. This would resolve one of the issues of GEH that was concerning the delay in delivery. Secondly, for quick order placing the company needs to incorporate a system in its operations known as EDI through which the distributors can easily place the orders and be assured that the electronic platform would enhance the performance level. The distributors can place the order on the integrated system after having a look at the stock level at Jackson Engineering that would even be shared through the system. This form of an electronic platform would build up a very transparent system and even facilitate the trust level between the manufacturer and distributor. EDI approach would help to track the inventory level so that the company does not have to bear any additional carrying cost for the inventory. This would keep GEH is highly satisfied with the company and would resolve the entire dispute. Third option available with the company would be an approach to convey to GEH that they do not possess the required financial resources to support an integrated information system in its business operations (Fields, 2002, pp. 96-97). If the company convey their issues of not being able to support the new idea this would have an impact on GEH as they are associated with the company from a very long time. The other option is that the company can appreciate GEH on its innovative thinking to enhance the performance level of the business operations and can ask for some time frame in order to implement the approach into the system but before that the dispute should not affect their operations. This would make GEH distributors at least feel satisfied that their efforts are being recognized. The fifth option would be to set up a specific team for handling the issues with the distributors and to have a check on whether the orders that are placed are being delivered on time or not. This team would be held responsible if the distributors are not satisfied with the company and would communicate with the distributors constantly so that whenever there is shortage of the products they can pick up the order without giving much burden on the distributor to place the order. These are some of the efforts that can be undertaken by the company so that they can build a strong relationship with all its distributors and most importantly the largest customers such as GEH distributor. The relationship between the company and GEH distributor is affected simply because there is a lack of communication between both the parties. The relationship can be strengthened only by giving importance to the individual interests and to be sure that the common objective of the business operations is not lost in midst of all the disputes. Question 2 Explanation of how an independent clothing retailer might gain competitive advantage Retail business has gained more importance in the recent years where the consumer demand is very high and very much significant in the clothing sector. The demand is more towards different brands of clothes under one roof. The retail business gained importance because it came forward with such an approach. An independent clothing retailer can gain competitive advantage through various ways. The positioning of the retail chain would be delivering the best quality and branded clothes that would cover the various market segments as kid wear, men and women wear. The different segments covered by the retail chain would help it to attract all the kinds of customers. The retail chain can incorporate all the most famous brands within the same store. It can even incorporate some of the designer clothes so as to attract the premium customers. In order to gain competitive advantage it is very much essential for any kind of organization to position its products and set up its business strategy in such a way that it cannot be easily copied by its competitors. Often in the retail business it is observed that separate target markets are there according to the purchasing power of the customers. It is very rarely observed that a retail chain for clothing has branded as well as unbranded products (Cox, 2006, pp. 117-118). This independent clothing retailer can obtain through adopting this innovative approach and using this it can target both the market segments of middle and higher income level. The target market for the retailer would be comprise of two major parts one would be a section for the premium customers who demand for designer and branded products and the other section of clothing would be for those customers who prefer buying good quality clothes but are price sensitive. The expanded target market would enable the retailer to gain more of market share as it would have different kinds of clothing for specific market segments. It is not always possible for customers to visit individual brand outlets so the retail chain provides the benefit to the customers by which they can not only try out various brands but also analyze the price and quality level of clothes of different brands. The retail chain can also position itself as one that identifies the demand of consumer and bring exactly what they need. The different pricing level strategy would enable the retail chain to maximize its returns and even balance the sales between the branded and unbranded clothes. However which ever set of clothes the consumer buy from this retail the quality would not be compromised which would be the major competitive advantage of the retail chain. There is another option through which the independent clothing retailer can gain its competitive advantage that would be through retaining its customer base. This could be achieved through loyalty programs in which the regular customers would be offered loyalty cards through which n their next purchases there would be some percentage of discounts given to them. These cards would be a medium to retain its customer base and even acquire new sets of customers through the existing customer base (Findlay & Sparks, 2002, pp. 102-103). The independent clothing retailer needs to even offer the best of services to its customers not only in the form of quality clothes but also making them enjoy a friendly and warm atmosphere at the retail outlet. Higher sales can be an advantage for short term but for longer run it is the service level that forms the major advantage of the retailer. It should even focus on collecting the customer feedback and even ask for suggestions that can be implemented into the system. These would build up a bond between the customers and the retailer. If at the retail outlet each of the customers are given equal importance in the form of advising them on what would suit them best or by giving them what they are demanding for would make the customers feel very much comfortable while shopping at the retail outlet (Madaan, 2009, pp. 105-106). The job of the retailer is not only bounded to the sales of the products but even after the sales is executed in terms of solving the queries, and giving better customer service, as the customers are the major competitive advantage that can be possessed by an organization. The different clothes section for different categories and the collection of the clothes for the different market segments would form the major competitive advantage of the independent clothing retailer. Conclusion Distribution management is a very essential part of the business operations. If there is no proper communication flow between the firm and the distributors it would eventually end up in a channel conflict. In such a scenario as in the case of Jackson Engineering it becomes very much important to address the issues of the distributors and if the company does not shift from its position then it would lead to a major loss in the form of distributors. The integration of technology is very essential in the supply chain operations as it would enhance the performance level and even enable a transparent system where the information can be shared between the two parties. The integrated technological system enables a company to increase the efficiency in terms of order placing by the distributors, tracking the stock level, and delivery of the ordered products without any delay. One more aspect of marketing is that of retailing which is a booming sector in today’s scenario. To obtain competitive advantage in the retail industry it is very important that the retailer has a wide range of products to offer the customers and it creates a perfect ambience for the customers to shop from the retail outlets comfortably. The main focus of the retailers should be towards the customers, to offer the best quality products at a reasonable price and even incorporate after sale service so as to maintain a loyal customer base. References Cox, R. 2006. Retailing: An Introduction. New Delhi: Pearson Education India. Fields, G. S. 2002. Distribution and Development: A New Look at the Developing World. USA: MIT Press Findlay, A. M., & Sparks, L. 2002. Retailing: The evolution and development of retailing. Great Britain: Taylor & Francis Kuipers, L., and Niederreiter, H. 2012. Uniform Distribution of Sequences. UK : Courier Dover Publications. Madaan, K. V. S. 2009. Fundamentals of Retailing. New Delhi: Tata McGraw-Hill Education. Rushton, A. 2010. The Handbook of Logistics and Distribution Management. New Delhi : Kogan Page Publishers. Read More