Marketing Management

CASE STUDY (20 Marks)

 

Eureka Forbes successfully introduced and sold for many years a few models of vacuum cleaners through door–to–door marketing. During the initial few years, Eureka Forbes vacuum cleaners were not available at any dealer channel. These were sold only by direct marketing. Some experts attribute the success of Eureka Forbes to two factors: one, the implementation of an effective sales management system & two, the elimination of channel conflict by adopting only door-to-door selling even at a stage when durables were sold only through dealers. Scene 1 It has been a common experience that well-advertised & well-organized trade fairs generate huge sales. Experts believe that people visit such trade fairs with a frame of mind that is favorably predisposed to making purchase decisions. Deriving a cue from the trade fairs, way back in 1980, a small & upstart computer manufacturer arranged “Road Shows” in metros & mini metros. It was a period when foreign computer vendors were asked to leave India indigenous makes of computers were few; perception of people about computers were – highly expensive, complex to use, needed trained manpower to operate that was scarce & performance of the hardware was unreliable. Those were the early days of computer marketing when there were no dealers & manufacturers had to sell through their own sales teams. Scene 2 In the year 1999 Compaq Corp declared that its objective for the year is to become the Internet leader in the InfoTech industry. But for some strange reasons, the rival company Dell took the lead in the sale of PCs over the Internet. They take just over three days to deliver a built-to-specs PC ordered via the net in the USA. Compaq, in the meanwhile, has behaved all muddled up in its Internet plan. The company made a tentative start but recently announced that it has stopped selling its computers to internet-only retailers worldwide. Such a move had a drastic effect on major players such as Siberian Outpost & Shopping.com, which derive much of their revenue from the sale of Compaq PCs through their websites. On the other hand, Compaq plans to purchase Shopping.com and merge it with the Alta Vista search engine on the net. Compaq also declared that its move to stop retailing on the net is not permanent & it will reexamine this policy after three months. So what exactly prompted Compaq to move away from what is the direction in which all others are headed? Industry watchers say that Compaq’s regular stores were being hurt by online sales. Many online retailers sell items at just above the procurement cost since they maintain low inventories and have hardly any overheads to take care of. This was turning out to be the competition to Compaq’s brick-and-mortar retailers, who cannot simply match those prices because of slow operations and high overheads. As against this Dell, who sold only through direct marketing, could derive immense advantage from Internet retailing. This was supplemented by a highly-rated online customer support service.

 

Answer the following question.

 

Q1. Explain channel conflicts. What lesson do you learn about a selection of channels from the above scenes?

 

Q2. Compare the merits & demerits of selling by the company’s own sales team, Dealer Channel & Direct Marketing.

 

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