The Success of the KiddieLand Company - Case Study Example

Case Study: KiddieLand Name & ID Course Name & Code Instructor’s Name Summary KiddieLand is a retail store that deals with toys, and it is located in Midwest. The headquarters of KiddieLand is located at Chicago, which is also a distribution centre, while the second distribution centre is located in Columbus. Generally, KiddieLand has 70 stores located in six regions. The company sales a range of toys emphasising on brand name toys and KiddieLand brand. The company has numerous competitors, but the success of the company is attributed to aggressive pricing, comprehensive product line and self-service. The company is intending to introduce Super Gym Outdoor Children’s Exercise Centre valued at $715, packed in three boxes with a weight of $450 pounds; this will be heavier and expensive toy that they will sale. Moreover, the company was profitable that year and the employees will have additional bonuses, this also shows that the market share of the company is improving. Thus, the new toy was a major concern to the organisation and management team came together to strategise on the appropriate approach to sell and deliver the product. Since, the toy is heavy, the managers looked for alternatives to fulfil delivery requirements. One of the options was for Super Gym to deliver the toy to the customer address but was not possible because of requiring ten units by the manufacturer to deliver they toy. KiddieLand had already committed to 400 Super Gym toys but the major problem was delivery. The management formulated five alternatives, which are purchasing a two-wheeler, utilise service of local trucking company, stocking the product at the two distribution centres and using the track to delivery, charge the consumer or negotiate with Super Gym manufacturer. They analysed these options. The cost of a two-wheeler trailer was $2100 ($1800+$250+$50) but bumpers of most of new autos do not support trailers and this option is associated with numerous losses. The second option was using the trucking company that charges $38.21 per set within 25 miles with additional $1.50 per mile for distance of more than 25 miles. However, this option of charging the customer a flat rate of $40 was also analysed. In addition, this option was not viable because the truck used for delivery is large for the forth option. The fifth option backfired because the manufacturer said that it was not possible to deliver the toy to the customer address directly since they require consignments of ten units. Answers to Questions 1. Advantages and disadvantages of purchasing two wheeled trailer for each store Advantages The company can ship the toys anytime they want or a customer wants. Additional income can be earned from delivery charges The trailer can be used to deliver other toys to the customer and also transport toys between the stores Disadvantages The two-wheeler trailer is expensive since the product has not been tried e.g. the customers have not bought them or are not aware of the product. The company should place into consideration local authority regulations and provisions of two wheeler trailer 2. Advantages and disadvantage of having local trucking companies to deliver Super Gym Advantages Using trucking company is cheaper It does not require extensive capital since when a consumer purchase a product it is directly transported by the company Many Super Gym toys can be transported in a single delivery Disadvantages The delivery can be possible only twice a week Trucking companies use large trucks thus it may cause discomfort to homeowners or neighbourhoods Some customer may require the toys urgently but the tracking company may not be available Some customers may argue why pay for transport cost, and the product will be delivered after some days. 3. Advantages and disadvantages of stocking Super Gym at the distribution centres and using the track that delivers Super Gym to these stores deliver to the customer Advantages Customer demand per region is not known, thus, stocking the product at the distribution centre ensures that the product can easily be delivered to a consumer in any region. The cost of transporting from the manufacturer to the store will decrease Using the delivery truck ensures that the product is delivered to the customer instantly Additional profits may be made because the customer will be paying for transport cost The company can easily control operation of the truck since it owns it Disadvantages Transporting a single toy to a customer will not be beneficial to the company since the company may likely spent more. It will be beneficial if more than one set of toy is transported Sometimes, the location of distribution centre may be far relative to other retail stores and thus may cause inconveniences There may be a conflict of interest in using the truck because the original aim of the truck is to deliver the toys to the retail stores but not to transport the product to the customer 4. Advantages and disadvantages of charging consumers for home delivery Advantages The company will not incur any costs The company may benefit from the charges and thus increase the company revenue The company will be able to decide the type of means of delivery e.g. either by using the trucking company or using company’s truck Disadvantages The customer will see this is additional expense doubled up with the expensive toy The number of sales will likely be small since the customer will decide to purchase another type of toy The customer may see the $40 delivery cost to be high, and may be the consumer leaves near the retail stores 5. Best alternative The best option that the company may employ is charging the consumer for delivery. The $40 per set is fair and may increase the revenue of the organisation. Even though, the customer may see it as an additional cost, but the end justifies the mission. Nevertheless, this approach will ensure that the product reaches the customer promptly. Improving on this option is purchasing a small van that can deliver the Super Gym to the consumer. This small van will be cheaper to maintain and at the same time cannot cause extensive damages to the subdivision or homeowners. Read More