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Course

MKT – 6333 - Channels and Retailing

Professor Brian Ratchford

Professor

Brian Ratchford

Term

 

Fall 2009

 

Meetings

W

7:00 PM -9:45 PM

Professor’s Contact Information

Office Phone

972-883-5975

Other Phone

972-473-9384

Office Location

SOM 3.707

Email Address

Office Hours

W 5:00-6:00 and after class or by appointment

General Course Information

Pre-requisites,

Core marketing management (e.g., MKT 6301) and statistics courses, or permission of instructor

Co-requisites, &

other restrictions

Course

This course will study the design and implementation of channels of distribution, with particular emphasis on retailing, including electronic retailing. Topics covered will include channel coverage strategies, pricing and promotion in channels, retail services, location decisions, franchising and legal issues in channels. Prerequisites: core marketing management and statistics courses.

Description

Learning

Inform students about important decisions involved in managing channels of distribution, and provide approaches to making these decisions effectively. Specifically students should learn the consumer behavior and firm resource considerations required for designing an effective distribution channel, understand retail pricing techniques and other retail decisions, and understand institutional and legal considerations in designing a channel of distribution.

Outcomes

 

Text: Anne T. Coughlan, Erin Anderson, Louis W. Stern and Adel I. El-Ansary, Marketing Channels, Upper Saddle River, NJ: Pearson Education Inc., 2006.

Required Texts

& Materials

Packet of Harvard Cases.

Outside readings on the syllabus can be downloaded from the library.

Assignments & Academic Calendar [Topics, Reading Assignments, Due Dates, Exam Dates]

August 25

Introduction Text: Ch. 1

September 2

Demand for Channels: Consumer Behavior Text: Ch. 2

September 9

Supply of Channels Text: Ch. 3

Reading: Stephen Vargo and Robert Lusch, “Evolving to a New Dominant Logic for Marketing,”Journal of Marketing, , Vol. 68, No. 1 (Jan. 2004), pp. 1-17.**

.

September 16

Supply Side Analysis Text: Ch. 5-6 Case – Arrow Electronics (in case pack)

September 23

Power and Conflict Text: Ch. 6-7 Reading: Mark Bergen; Shantanu Dutta; Orville C. Walker, Jr., “Agency Relationships in Marketing: A Review of the Implications and Applications of Agency and Related Theories,” Journal of Marketing, Vol. 56, No. 3 (Jul. 1992), pp. 1-24.* Case: Cisco Systems (in case pack).

September 30

Strategic Alliances and Vertical Integration Text: Ch. 8-9 Reading: Aric Rindfleisch and Jan B. Heide, “Transaction Cost Analysis: Past, Present, and Future Applications,” Journal of Marketing, Vol. 61, No. 4 (Oct., 1997), pp. 30-54.* Case: Reynolds Metals Company: Consumer Products Division (in case pack).

October 7

Legal Issues Text: Ch. 10 Reading: Shantanu Dutta; Jan B. Heide; Mark Bergen, “Vertical Territorial Restrictions and Public Policy: Theories and Industry Evidence,” Journal of Marketing, Vol. 63, No. 4. (Oct. 1999), pp. 121-134.* Case: Peripheral Products Company (in case pack).

October 14

Mid-term Exam

October 21

Retailing: Positioning Text: Ch. 11. Case: Neiman Marcus (A) (in case pack).

October 28

Retailing: Location Web presentation: www.claritas.com/MyBestSegments/Default.jsp – discussion of Prizm NE. The web site may be reached efficiently by the Google search: claritas – My Best Segments. Site Selection Assignment (to be handed out).

November 4

Retailing: Promotions and Sales Reading: Notes on Promotion – to be handed out CVS Case Example – Video. Case: HEB Own Brands (in case pack).

November 11

Retailing: Electronic Commerce Reading: Florian Zettelmeyer, Fiona Scott Morton and Jorge Silva Risso, “How the Internet Lowers Prices: Evidence from Matched Survey and Automobile Transaction Data,” Journal of Marketing Research, Vol. 43 (May 2006), 168-181.** Case: Autobytel.com (in case pack).

November 18

Franchising Text: Ch. 13 Reading: Paul H. Rubin, “The Theory of the Firm and the Structure of the Franchise Contract,” Journal of Law and Economics, Vol. 21, No. 1. (Apr. 1978), pp. 223-233.* Case – Pizza Hut (in case pack).

November 25

Review and Discussion of Projects

December 2

Presentations of Student Projects

Finals week

Final Exam

* Article may be downloaded from JSTOR accessible through McDermott Library web site. ** Article may be downloaded by accessing journal at McDermott Library web site.

Course Policies

Grading (credit)

Groups of 3-4 students will be formed in the first class. Each group will prepare approximately two cases for class presentation, and complete a term project. The project will involve a channel audit for a company of the group’s choice; more details on the project are provided below. Students will also be required to complete one individual-level assignment; the assignment is explained below. There will be a mid- term exam and a final exam. Grades will be based on: group projects (about 30%), mid-term exam (about 20%), final exam (about 20%), group presentations of cases (about 20%), class presentation and individual projects (about 10%).

Criteria

Make-up Exams

 

None

Extra Credit

 

None

Late Work

Handled on ad hoc basis – I do not want to give incompletes.

Special

To be explained

Assignments

Class Attendance

 

Mandatory

Classroom

 

Citizenship

Students are expected to be prepared and to participate.

Field Trip

N/A

Policies

 

The University of Texas System and The University of Texas at Dallas have rules and regulations for the orderly and efficient conduct of their business. It is the responsibility of each student and each student organization to be knowledgeable about the rules and regulations which govern student conduct and activities. General information on student conduct and discipline is contained in the UTD publication, A to Z Guide, which is provided to all registered students each academic year.

The University of Texas at Dallas administers student discipline within the procedures

of

recognized and established due process. Procedures are defined and described in

Student Conduct

the Rules and Regulations, Board of Regents, The University of Texas System, Part 1, Chapter VI, Section 3, and in Title V, Rules on Student Services and Activities of the university’s Handbook of Operating Procedures. Copies of these rules and regulations are available to students in the Office of the Dean of Students, where staff members are available to assist students in interpreting the rules and regulations (SU 1.602, 972/883-6391).

and Discipline

A

student at the university neither loses the rights nor escapes the responsibilities of

citizenship. He or she is expected to obey federal, state, and local laws as well as the Regents’ Rules, university regulations, and administrative rules. Students are subject

to

discipline for violating the standards of conduct whether such conduct takes place

on or off campus, or whether civil or criminal penalties are also imposed for such conduct.

 

The faculty expects from its students a high level of responsibility and academic honesty. Because the value of an academic degree depends upon the absolute integrity

of

the work done by the student for that degree, it is imperative that a student

demonstrate a high standard of individual honor in his or her scholastic work.

Academic

Integrity

Scholastic dishonesty includes, but is not limited to, statements, acts or omissions

related to applications for enrollment or the award of a degree, and/or the submission

as

one’s own work or material that is not one’s own. As a general rule, scholastic

dishonesty involves one of the following acts: cheating, plagiarism, collusion and/or falsifying academic records. Students suspected of academic dishonesty are subject to disciplinary proceedings.

 

Plagiarism, especially from the web, from portions of papers for other classes, and from any other source is unacceptable and will be dealt with under the university’s policy on plagiarism (see general catalog for details). This course will use the resources of turnitin.com, which searches the web for possible plagiarism and is over 90% effective.

Email Use

The University of Texas at Dallas recognizes the value and efficiency of communication between faculty/staff and students through electronic mail. At the same time, email raises some issues concerning security and the identity of each individual in an email exchange. The university encourages all official student email correspondence be sent only to a student’s U.T. Dallas email address and that faculty and staff consider email from students official only if it originates from a UTD student account. This allows the university to maintain a high degree of confidence in the identity of all individual corresponding and the security of the transmitted information. UTD furnishes each student with a free email account that is to be used in all communication with university personnel. The Department of Information Resources at U.T. Dallas provides a method for students to have their U.T. Dallas mail forwarded to other accounts.

Withdrawal from

The administration of this institution has set deadlines for withdrawal of any college- level courses. These dates and times are published in that semester's course catalog. Administration procedures must be followed. It is the student's responsibility to handle withdrawal requirements from any class. In other words, I cannot drop or withdraw any student. You must do the proper paperwork to ensure that you will not receive a final grade of "F" in a course if you choose not to attend the class once you are enrolled.

Class

 

Procedures for student grievances are found in Title V, Rules on Student Services and Activities, of the university’s Handbook of Operating Procedures.

In attempting to resolve any student grievance regarding grades, evaluations, or other fulfillments of academic responsibility, it is the obligation of the student first to make

serious effort to resolve the matter with the instructor, supervisor, administrator, or committee with whom the grievance originates (hereafter called “the respondent”). Individual faculty members retain primary responsibility for assigning grades and evaluations. If the matter cannot be resolved at that level, the grievance must be submitted in writing to the respondent with a copy of the respondent’s School Dean.

a

Student

Grievance

Procedures

If

the matter is not resolved by the written response provided by the respondent, the

student may submit a written appeal to the School Dean. If the grievance is not resolved by the School Dean’s decision, the student may make a written appeal to the Dean of Graduate or Undergraduate Education, and the deal will appoint and convene an Academic Appeals Panel. The decision of the Academic Appeals Panel is final. The results of the academic appeals process will be distributed to all involved parties.

Copies of these rules and regulations are available to students in the Office of the Dean of Students, where staff members are available to assist students in interpreting the rules and regulations.

Incomplete

As per university policy, incomplete grades will be granted only for work unavoidably missed at the semester’s end and only if 70% of the course work has been completed. An incomplete grade must be resolved within eight (8) weeks from the first day of the subsequent long semester. If the required work to complete the course and to remove the incomplete grade is not submitted by the specified deadline, the incomplete grade is changed automatically to a grade of F.

Grades

 

The goal of Disability Services is to provide students with disabilities educational opportunities equal to those of their non-disabled peers. Disability Services is located in room 1.610 in the Student Union. Office hours are Monday and Thursday, 8:30 a.m. to 6:30 p.m.; Tuesday and Wednesday, 8:30 a.m. to 7:30 p.m.; and Friday, 8:30 a.m. to 5:30 p.m.

The contact information for the Office of Disability Services is:

The University of Texas at Dallas, SU 22 PO Box 830688 Richardson, Texas 75083-0688 (972) 883-2098 (voice or TTY)

Disability

Essentially, the law requires that colleges and universities make those reasonable adjustments necessary to eliminate discrimination on the basis of disability. For example, it may be necessary to remove classroom prohibitions against tape recorders or animals (in the case of dog guides) for students who are blind. Occasionally an assignment requirement may be substituted (for example, a research paper versus an oral presentation for a student who is hearing impaired). Classes enrolled students with mobility impairments may have to be rescheduled in accessible facilities. The college or university may need to provide special services such as registration, note- taking, or mobility assistance.

It is the student’s responsibility to notify his or her professors of the need for such an accommodation. Disability Services provides students with letters to present to faculty members to verify that the student has a disability and needs accommodations. Individuals requiring special accommodation should contact the professor after class or during office hours.

Services

 

The University of Texas at Dallas will excuse a student from class or other required activities for the travel to and observance of a religious holy day for a religion whose places of worship are exempt from property tax under Section 11.20, Tax Code, Texas Code Annotated.

Religious Holy

The student is encouraged to notify the instructor or activity sponsor as soon as possible regarding the absence, preferably in advance of the assignment. The student, so excused, will be allowed to take the exam or complete the assignment within a reasonable time after the absence: a period equal to the length of the absence, up to a maximum of one week. A student who notifies the instructor and completes any

Days

missed exam or assignment may not be penalized for the absence. A student who fails to complete the exam or assignment within the prescribed period may receive a failing grade for that exam or assignment.

If a student or an instructor disagrees about the nature of the absence [i.e., for the purpose of observing a religious holy day] or if there is similar disagreement about whether the student has been given a reasonable time to complete any missed assignments or examinations, either the student or the instructor may request a ruling from the chief executive officer of the institution, or his or her designee. The chief executive officer or designee must take into account the legislative intent of TEC 51.911(b), and the student and instructor will abide by the decision of the chief executive officer or designee.

These descriptions and timelines are subject to change at the discretion of the Professor.

Case Analyses Groups will each be assigned to provide a class presentation of approximately two cases. These should be power-point presentations that are supplied before class so they can be loaded onto my computer that I will bring to class in a timely manner. I will print out and grade these presentations as well as performance in class discussions. Presentations should roughly follow the format set out in the “Notes on the Analysis of Cases” listed below. Briefly this format is: problem statement, discussion of alternatives, critical issues, conclusions. The presentations should be scheduled for about 30 minutes, and should facilitate a more general discussion after the presentation. Students not assigned to present a case are expected to be prepared to discuss it, and are encouraged to express their views. They will be graded on their participation. The Notes on the Analysis of Cases” provide guidance on how to participate effectively. To help in approaching the cases, a list of questions that are posed in each of the assigned cases is presented below. These lists are meant to provide guidance in solving the case, and the presentation need not follow the list of questions exactly. However the questions should be addressed in some way in preparing the solution to the case.

Questions to Accompany Cases – Meant to provide guidance in solving the case

 

1. How do the Arrow/Schweber (Arrow) salespeople build their relationship with their customers? Specifically how do they leverage Arrow’s product line B&S versus VA products to add value to their customers?

2. What is Arrow’s business model? What value does it add for suppliers?

Arrow

Electronics

3. How does Express affect Arrow’s business model and its selling effort?

4. What is your action plan? Should Arrow accept or reject the Express proposal?

5. What is the impact of the Internet on the Arrow salesperson?

6. Do you think the Internet is a friend or foe to Arrow?

 

1. How have Cisco’s channels evolved in the last 10-15 years? Why have they evolved that way? What does the future look like?

2. What grade would you give Cisco for managing the evolution? Good or bad? Why?

Cisco Systems

3. Against the background of your answer to questions 1 and 2, how should Cisco distribute VoIP products? Through voice VARs? Data VARs? Both?

4. What are your reactions to the “Pyramid” model advanced in Figure C of the case? What is the core concept of the model? Is there an alternative evolutionary model that Cisco should adopt?

 

1. Compare and contrast MDF with off-invoice deals. How are the objectives of the two different?

Reynolds Metals

2. Does MDF offer a more effective trade promotion alternative to off-invoice? Why or why not?

Company

3. If Reynolds were to fully implement MDF, how should Rosser go about obtaining retailer support? Is retailer support even necessary?

4. How should Rosser manage the transition of trade deal responsibility from the marketing department to the sales department?

 

1. What is the problem in this case? Whose problem is it?

Peripheral

2. What are the important characteristics of the disk-drive industry that affect the gray market situation? How would you characterize PPCo’s strategy within the industry?

Products

3. What is your evaluation of the alternatives being considered for dealing with the gray market?

4. What should Ousley do? How should any proposed changes in pricing, distribution or sales-management practices be implemented?

 

1.

What is the Neiman Marcus Difference?

2.

Are the Galleries of Neiman Marcus a good idea for Neiman Marcus?

Neiman Marcus

3.

What other growth alternatives does Neiman Marcus have?

4.

What location should Neiman Marcus consider for the Galleries or for any other concept?

 

1.

What is your recommendation on Glacia?

2.

How should Own Brands respond to competitive price promotions? When should they follow? What about national promotions?

HEB Own

3.

What is the role of H-E-B and Hill Country Fare as own brand labels? How should they be positioned with respect to other brands in the category?

Brands

4.

What is the role of Own Brands in H-E-B’s overall corporate strategy? Should it be scaled up? Or dialed down? If so, in what products or in what product categories?

 

1.

What is Autobytel’s value proposition for consumers? For dealers? Are there any downsides to the Autobytel model from the consumer perspective? From the dealer perspective?

Autobytel.com

2.

What course of action should Autobytel take to accelerate revenue growth?

3.

How should Autobytel differentiate itself from competition?

 

4.

Come up with a new positioning for Autobytel. What kind of marketing mix should accompany the new positioning statement? How enduring is this new positioning?

 

1.

Should Pizza Hut enter the home delivery market?

2.

Why would a consumer choose home delivery, eat-in or carryout?

Pizza Hut

3.

Is competition from Domino a threat?

4.

Would entry into home delivery cannibalize Pizza Hut’s other business?

5.

Who knows more about the market, Pizza Hut or its franchisees?

6.

What should Pizza Hut do at the upcoming winter meeting?

NOTES ON THE ANALYSIS OF MARKETING CASES* (Plus ten secret tips on class presentation at the end)

INTRODUCTION

The purpose of these notes is to provide the student with a framework for the analysis of a marketing case. All too often students perceive the purpose of case analysis to be only the provision of an answer without specific rationale or support. While having a complete answer is important, in case analysis we are more interested in how clearly and effectively the student argues his or her point of view. What is required is two-fold. Set forth options and show, through deductions from case facts, the direction that should be taken. The presentation of a detailed answer without supporting rationale demonstrates weak case development regardless of the possible correctness of the answer.

The analytical framework set forth provides a blueprint to be applied to the analysis of a case and a means for testing whether logic is consistent and complete. By use of this framework, students may gain more confidence in their analyses and recommendations.

THE FRAMEWORK

The framework is composed of four major components: a statement of the problem faced by the company, a description of the best alternatives available to solve this problem, the identification (and discussion) of the critical issues bearing upon the choice of alternative, and a conclusion that selects the best alternative.

The Problem Statement

The problem may be regarded as a barrier facing an organization, which blocks, or threatens to block, the achievement of important goals. The key words here are goals and barrier. "Goals" refers to a set of objectives (perhaps only implicitly present in the case) that the management wishes to accomplish. Objectives may include market share, consumer attitude shifts, extension of distribution channel position, sales growth, image, or product position. The barrier refers to conditions that threaten or hinder management from achieving these objectives.

The problem definition sets guidelines for the case analysis. Data that do not contribute to the solution of the identified problem become irrelevant. Alternatives that do not address the problem, issues that are unnecessary for the argument, and conclusions that stray from an appropriate solution cause the analysis to fail its purpose.

An example of a case regarding men's toiletries follows:

The company has enjoyed a substantial growth in men's toiletry sales over the last fifteen years (in a market that has grown six-fold over this period). Sales for the last year have just kept pace with inflation and for the current year have been flat--indicating a fall in real sales adjusted for inflation. The company would like to develop a marketing strategy that would restore sales growth and fend off major challenge from Shulton's Blue Stratos product introduction. If left unchecked, the company's stagnant sales threaten to weaken their market position and lead to erosion of their substantial distribution channel penetration.

In this statement, the student indicates that the company's sales growth in men's toiletries was being threatened by competitor product introductions. This is quite adequate. If the student had defined the problem to the introduction of a new product or to maximize profits, such statements shed little insight into the difficulties being faced.

If several distinct problems are identified, the student should focus (especially in written work) upon the most important where data are sufficient data to permit analysis. Alternatively, the student may look for some means to synthesize many of the problems into one, large gestalt. When one raises several problems, the task of analysis often becomes too complex. Problems that

call for critical facts and considerations not available in the case should be avoided and attention given to those that can be resolved with the information and deductions in the case .

The Best Alternatives List

Alternatives comprise a set of strategies that offer competing approaches to resolve the organization's problem. Competing approaches means that each of the strategies selected by the student for consideration reflects a significantly different means of problem attack. In responding to a competitor's incursion into the company's market, one might offer several pricing alternatives that differ only marginally in the price level chosen. A better response would include options that differ more broadly, such as a lower price, a new product introduction, and strengthening distributor motivation. If alternatives are available that differ in major strategic dimensions, the resulting discussion is often more fruitful.

An alternative should include the following elements:

1)

Strategic goals and aims, e.g., to motivate dealers to display product

2)

Methodologies to be applied, e.g., provide special monetary incentives for

3)

those who reach targeted sales goals Resources required, e.g., $5,000,000 per year.

For any alternative to be adequately evaluated, it must show what effects are expected and how various elements of the marketing mix are employed. In most instances, this requires that market targets be specified and use of marketing mix components be made explicit. Enough information must be provided to indicate that the student has thought through all aspects of each alternative and how each might resolve the company's problem.

Strategies may usefully be given titles to provide a quick orientation or gestalt to the character of an alternative. These could characterize the alternative as a frontal attack to grab market share, retrenchment, or repositioning.

In selecting alternatives, students should never use more than four for analysis and two or three is preferable. It is impossible to treat numerous alternatives properly and one task of class discussion is winnow out the lesser options.

An alternative for the toiletry's company case reads as follows:

TAKE THE HIGH ROAD

The company's goal [under this alternative] would be to introduce their new Cambridge brand at the high end of the "medium priced" range with a target of 3 million dollars in sales in 1981.

The company would have to apply [substantial resources to this new product introduction] about 1 million dollars in advertising and an additional $350,000 in other promotional costs. The new product would be positioned at the $10 price, [putting it at the highest extreme of the "medium price" market segment] and would be distributed through the company's existing retail channels-- primarily drugstores and general/mass merchandise chains. The product would be targeted at the 19-34 year old age group and would be primarily positioned for purchase by females as gifts for males. Advertising and packaging would be designed to differentiate the product from the mainline English Leather brand and the associated fragrances in the existing line.

This alternative contains a good description of a marketing strategy appropriate for a "high price line" product distinct from the company's existing products. Putting the market segment objective at the start and eliminating unnecessary words as indicated by the brackets could have improved the statement.

Since the purpose of case analysis is to develop decision-making skills, it is seldom productive for the student to recommend an alternative calling for more research. Such a choice is characteristic of one yet to come to grips with the case. If a student believes more research is the correct approach, then he or she should specify the data to be acquired, the time, cost and method of acquisition, and why the information is critical. In other words, the resource and strategic implications of a more-research option must be treated like any other alternative.

Critical Issues

This section evaluates the causal forces affecting alternative success. Critical issues are a series of questions, each of which illuminates a crucial factor for analysis. The analysis of each issue provides the insight for understanding the issue's impact upon the company's situation.

Examples of key issues follow:

1. What elements of buyer satisfaction have been the least well resolved by current distribution channels?

2. To what extent can advertising affect the purchasing behavior of buyers for this product? Will resellers provide this advertising?

3. What action might competitors take to the introduction of a new, lower priced channel?

4. How capable and motivated are the resellers in selling the new product?

Note that issues are all framed as questions. This forces an analytic mode. If one were simply to identify consumer behavior as an issue, no insight is being signaled as to the key dimensions of user response. Perceptive questions can often reveal much about the sharpness of the analyst's arguments and focus the response. More fundamentally, the answer to an issue question must provide help to the student in establishing the proposed solution. If not, then the issue is either inappropriate or the answer requires reworking.

In some instances, data on key aspects may be absent. The student may deal with this in a number of ways. Where the missing information lies with consumer behavior, generalizations derived from behavioral or economic theory may be applied as a guide. Often bits and pieces of the case can be sewn together with such logic to develop an insightful response.

Alternatively, the student may set forth different possible states of nature. Probabilities of occurrence could be subjectively estimated and decision theory employed to evaluate consequences for each alternative. The estimates may be wrong, but the student has tried to come to grips with the problem. Problems seldom have all the data one would like in the real world as well.

An example of an issue statement and analysis in the toiletry case is:

Would dealers be receptive to an extension of the product line?

The company has already encountered difficulty in gaining shelf space for its Racquet Club brand. Since retailers were not willing to provide additional shelf space for that product, sales came at the expense of other items in the line. However, the Racquet Club introduction involved an extension of the company's already broad line of identically packaged English Leather fragrances. The Cambridge brand would be a new product altogether, yielding substantially more profit at the 40% margin. By offering aggressive trade promotions (which the company appears to be very good at) the company could actually increase their shelf space by pursuing the "High Road" strategy (and bringing out the Cambridge brand). The "Circle the Wagons" alternative would also look promising from this aspect, as the retailer would be pleased to see the company remove their slower-selling brands and concentrate on English Leather (which offers more profit anyway).

This analyst responds well here to the issue question. Retailer interests are discussed from their point of view. Different market segment and price point potentials, however, could have been effectively raised in the response.

Contrast the above issue with the following:

The fourth issue that the company faces is whether food stores are an appropriate place for the distribution of any of their products. Would consumers perceive this as a depreciation of the value of their entire line? Would the additional trade deals and promotional expenditures required by food stores severely limit or completely eliminate the profitability of this option? How much interest will food stores have in promoting the company's products once they have them on their shelves?

Here the student raises a good question in the second sentence (which causes the first sentence to be redundant). Unfortunately, the student did not assemble any case facts to answer the question. Instead, new questions are raised and the contribution is limited.

The Conclusion

The conclusion integrates the answers to the issues, building upon each to show how one alternative is superior to the others. This may be done through a series of deductions moving from one issue to another. Alternatively, where financial data are available, pro-forma profit and loss statements should be constructed for each alternative. Here one must insure issue responses have developed sufficient information to support pro-forma results.

Both of these approaches force the analyst to consider the contribution of each issue to the choice of an alternative. This avoids the situation where choice is made without supporting rationale. It also helps identify issues that can be weeded out and where others may be missing.

To exemplify the importance of this, please read the following case conclusion:

Alternative A, the "Go for Broke" strategy, offers the best opportunity for the company to expand market share and revenues in the long-pull.

Selling English Leather in food stores will exploit the product's relatively low price, encourage routine purchase, and capture shelf space in what promises to be a high velocity marketing channel.

Dropping the least competitive brands from the line will save production costs and allow the Cambridge brand to gain access to retailer shelf space.

Introducing the Cambridge line will allow the company to expand into the higher-priced segment of the men's fragrance market. By having a product in this segment, the company will be able to capitalize on both the expensive gift givers with Cambridge and the more price sensitive purchaser with English Leather.

A good conclusion reviews each of the alternatives presented, weighs each against the others, and identifies the key reasons for preference. A form of decision analysis is a useful means for checking upon the logic. Consider the following table with five issues rated on basis of one to ten, with ten the best, as to how they affect the prospects of the three alternatives.

This table shows Alternative High Road to be the best, although Circle is close. This table forces the case analyst to determine that all issues are germane to the solution and the preferred alternative is consistent with all issue argument. Here, each issue is assigned importance in making the selection. Issue weights may be assigned if appropriate.

Alternatives

Issue #1

Issue #1

Issue #1

Issue #1

Issue #1

Issue Total

Go for

5

3

1

2

4

15

Broke

High Road

8

9

5

0

3

25

Circle the

2

5

3

5

7

22

Wagons

Such a table is useful in alternative development and serves as a key test of logic.

TEN SECRETS FOR SUCCEEDING IN CLASS DISCUSSION

1. At the start of class, the first few speakers earn high recognition if they present a brief, but complete analysis of the entire case.

2. Identifying end-user needs (and frequently those of the intermediaries) with respect to channel services is invaluable as a means for arguing issues in channel design.

3. Discussion of the forces that motivate the various players in the channel similarly provides useful insight.

4. When presenting an alternative, provide enough detail to show that you have thoroughly thought through its viability. Shooting from the “hip” is obvious to all and detracts rather than adds to your ideas.

5. Do not propose alternatives for which there are little data available in the case. This typically leads to wild guessing.

6. Where data are missing, use deductive thinking with respect to the needs of the end-user or reasons for channel member behaviors.

7. Numerical analysis as a means to buttress your arguments invariably impresses. Case numerical data are typically (though sometimes they may be a red-herring) made available for this purpose.

8. All class contributions are valuable if they help us see a new facet of the case or correct misinformation already provided. The more ideas on the table, the better off we are.

9. If not prepared to discuss the case, let the instructor know so that you are not unnecessarily embarrassed if called upon.

10. If a student recommends further research as the appropriate means for resolving a case, the reasons why the available data are insufficient must be set forth. Otherwise, this often appears as a convenient excuse for the absence of adequate analysis.

* Obtained from Louis P. Bucklin, Professor Emeritus, University of California, Berkeley.

Group Projects

Groups are to perform a channel audit of a firm of your choice. This could be any type of company: manufacturing, services, retailing, etc. It might be most interesting if this is a company one of the group members works for (if necessary appropriate non-disclosure agreements can be implemented). It could also be a new business that someone is trying to develop. The basic objective is to evaluate existing channels of distribution for the chosen company for the purpose of uncovering current or potential problem areas, and of making recommendations to solve these problems. Questions to be addressed will vary somewhat with the type of firm, but should include the following:

1. What are the main current and potential end-user customer groups and what channel services do they require. Are there segments that require different services? What is their relative size? How much are the segments willing to pay? Relevant services are convenience of location (including the Internet), product assortment, sales assistance, advertising or other information, credit, delivery/waiting time, customer service, and possibly others that you identify.

2. What are the channels that best meet the needs of these customer groups? For retail or service businesses (doctors, insurance agents) these would involve location (including Internet) and other services that are to be provided to customers by the business itself. For manufacturers or other upstream businesses these would involve finding appropriate retail channels.

3. For the latter, another relevant question is what are the main current and potential channels that sell to end-user customers, and what channel services do they require? Relevant services are delivery time and availability, sales assistance, credit, assistance at selling products to customers, and possibly others that you identify.

4. How well does your chosen firm perform at matching the needs of its customer groups? Should some groups be concentrated on? Should some be ignored?

5. Should your chosen firm integrate forward into wholesaling or retailing, or into having its own sales force? Or if it is a retailing or service firm should it integrate backward into wholesaling or manufacturing? Or is it better if the firm is decentralized? Should the firm become more integrated or decentralized?

6. Based on your analysis of the above, what appear to be the major problems faced by the firm in distributing its products/services to consumers?

7. Develop a plan to solve these problems. Support your recommendations.

Your actual analysis might deviate from the above as the circumstances of your chosen company dictate. But it should include a thorough analysis of end users and how their needs are best met. A timeline for the project is as follows:

September 16 – Identity of company to be studied.

October 21, 28 – Ten minute informal progress report on project: nothing written required.

December 2 – Final presentation – length will depend on number of projects. Should use Power-point.

December 2 – Hand in final report – somewhere around 25 pages double spaced.

Individual projects

Students may either complete the site location project that will handed out or participate in one class presentation of a reading, or in the presentation of the Claritas web site.

Two students may be assigned to each reading. One will present a summary of the article lasting about 10-15 minutes, the other will present a discussion of the article lasting about 10-15 minutes. The summary should outline the main points in the article. The discussion should outline any areas of disagreement, and present actual examples relating to the article.

The Claritas web site discussion should emphasize site location services and the Prizm NE geo-demographic profile of each ZIP in the U.S.

I will assign students to these presentations at the beginning of the second class.

The site location project will involve analyzing the feasibility of a proposed location for a retail outlet. Regression analysis using EXCEL will likely be involved. The project will be handed out as soon as I can put it together.