Page 3 - MCS August Day 2 Suggested Solutions

SUGGESTED SOLUTIONS

TASK 2 DISTRIBUTION CHANNEL ANALYSIS

To: Senior financial manager

From: Financial manager
Date: Today
Subject: Distribution channel analysis

Montel’s distribution channels

Montel branded shops (100 shops selling Professional and Premium DSLR cameras)

As these are owned and operated by Montel, we are responsible for the running costs of the
shops, including rent (or depreciation for owned premises), rates, fitting out costs, etc., which we
are not responsible for with third party retailers.

We also need to ensure that staff are fully trained with regard to our products. It wouldn’t be
unreasonable for customers to expect the highest possible quality of knowledge from the staff
they interact with in these particular shops.

Specialist third‐party camera shops (150 shops selling Professional and Premium DSLR cameras)

We shouldn’t incur any overheads in relation to the running of these shops but will have to supply
point of sale materials, including things like display stands.

A high level of training will need to be provided for the staff of these shops as they are expected
to have the same level of knowledge as the staff in the Montel branded shops.

Overhead will also be incurred in relation to the selection of which shops we will allow to sell the
professional DSLR range and for the continuous monitoring of the shops to ensure that they don’t
fall below our ‘rigorous selection criteria’ levels.

As these shops also sell other brands, we may also need to incur costs of ‘mystery shopping’ to
ensure that the shops are giving appropriate advice about our products and not being biased
towards competitor products. It should also enable us to check on the level of discounts being
offered. Third party retailer sales are ahead of target while Montel‐branded shop sales are below
– perhaps this is because of discounts being offered. We should be careful that our brand or
reputation is not being eroded due to an excessive discount level being offered.

Specialist third‐party camera shops (1800 shops selling Premium DSLR cameras but not
Professional DSLR ones)

Training will need to be provided for the sales staff in these shops, although not to as high a
standard as those that sell the Professional range. This may have to be provided on a more
regular basis than for the ones that sell the Professional range due to the number of shops and
therefore staff involved and the likelihood of higher overall staff turnover.

Point of sale material and displays may be provided.

KAPLAN PUBLISHING 87