Page 594 - Business Principles and Management

C HAPTER 21 A SSESSMENT

CASE 21-2: A Direct-Marketing Dilemma
The Elegant Affair is a specialty retail shop. It sells assorted gift boxes of
various meats, cheeses, nuts, jams, and jellies. The business is located in
a midwestern city and is facing declining sales due to the city’s economic
difficulties. One major manufacturing plant has closed, and layoffs from
other businesses have caused many people to move from the area in search
of new jobs.
The president of the company has been studying a number of alterna-
tive distribution methods. She has considered moving her retail business
to another city. This would require a large investment and hiring and re-
training a new set of employees. She has also considered closing the retail
shop and finding other stores to carry her products. This would lower
her profit per box but could increase the total number of boxes sold. She
has also considered direct marketing as a way to increase sales without
having to move the store or build a new store in an area with a more
attractive economic climate.
Direct-marketing alternatives she has considered include using the
Internet and telemarketing. She believes that by using salespeople and
a computerized telemarketing system, the company can sell gift boxes to
people throughout the United States. She also believes that the cost of
those sales will actually be lower than the cost of selling the products
to people who come into the store. However, she is concerned about the
increasing use of no-call lists. The Internet could open sales across the
country, but will require an investment in technology and new personnel.

THINK CRITICALLY
1. List each of the alternative distribution systems that The Elegant
Affair is considering. List the advantages and disadvantages of each
of these alternatives.
2. What types of activities would The Elegant Affair have to do to
start a telemarketing system?
3. How can the company identify prospective customers for its tele-
marketing salespeople to call?
4. What types of activities would The Elegant Affair have to do to
start an Internet-based marketing system?
5. Identify two distribution methods that The Elegant Affair might use
for the products it sells through telemarketing or the Internet. What
are the advantages and disadvantages of each?
6. Develop a brief script for the telemarketing salespeople to use to in-
troduce the company and its products to prospective customers.
7. How could the increasing use of no-call lists impact the telemarketing
strategy? What types of customers are likely to be on a no-call list?
8. Do you believe an online system for customer ordering might be a
better method for the company than telemarketing? Why or why not?

581