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Developing a Marketing Strategy and Mix: Direct Marketing Channel

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You recently submitted a report to the Vic President of Marketing recommending that the company establish a direct-marketing channel for its products. As a result of that report, the VP has decided to promote you and place you in charge of establishing a direct-marketing system where customers can purchase products directly from the company web site.

Several major retailers in your existing distribution network are not happy about the company's plans. They argue that disintermediation will deprive them of customers, and they have even threatened to drop your company's product lines. These retailers account for about 65% of sales.

You have called a meeting of your associates to discuss this problem. Share your thoughts with them on these issues:
What answer can you offer to your retail partners? Should the company adopt a direct-marketing model like the one used by Dell Computers or adopt a system similar to the one used by Hewlett-Packard in which web orders are forwarded to local retailers who complete the orders, ship the products and get a sales commissions?

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Solution Summary

The solution addresses direct-marketing channels in 565 words without references.

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The company must adopt a system similar to Hewlett-Packard. Why?

With Dell Computers, the consumer can not see the product or try the product prior to purchase. With Hewlett-Packard, their products are in all the Walmart stores, all the Office Max stores, all the Circuit City stores just to name a few. The consumer can look at the product, touch the product, see the product's dimensions and try the product prior to purchase. When a product looks good on television or in a print ad that is one factor but for the consumer to actually get the chance to see if the product fits his or her needs prior to purchase is priceless.

Yes, many consumers purchase items online but most of the items are the purchase of an item one has seen or used in the past. Would the consumer purchase a car over the internet ...

Solution provided by:
Jo Ann Prevetti, MBA, PhD (IP)
Education
  • Master of Business Administration, University of Phoenix
  • Bachelor of Science in Paralegal Studies, Kaplan College
  • Business Diploma, Katharine Gibbs Business College for Women
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