Question

A small paper goods manufacturer uses the services of Mr. Nick Hansen to find buyers for its household paper products. A typical example of a buyer that Mr. Hansen finds is Edgewood Supplies. Edgewood Supplies stores paper goods in warehouses and sells them to small grocery and convenience stores. (a) Describe the channel of distribution of this manufacturer’s products. Identify each marketing intermediary and state clearly what type of marketing intermediary they are. (b) Describe how the manufacturer would use promotion to push its products through this channel of distribution. Then describe how the manufacturer would use promotion to pull its products through this channel of distribution. For each of your descriptions, give an example of a particular promotional method that would be used and make clear how that promotional method would help get the products through their channel of distribution. (c) In the course, it was noted that cutting out a marketing intermediary does not necessarily lower the distribution costs. In the channel of distribution you described in Part (a), pick a marketing intermediary to possibly cut out. Then, describe a situation in which cutting out that marketing intermediary would lower distribution costs. After that, describe a situation in which cutting out that marketing intermediary would raise distribution costs.

Answer 1

a)

1. Small paper goods manufacturer- Manufacturer
2. Mr. Nick Hansen- Agents who acts as an extension of the manufacturing company.
3. Edgewood Supplies- Wholesaler and takes title to the goods.
4. Small grocery and convenience stores- Retailers who directly sell to the end user.

b)

A.Push Marketting Strategy- The manufacturer in order to push it's products in the channel of distribution by creating a personal interest for the intermediaries by way of attractive incentive bonus for attaining sales targets.

Also he could insit the grocery and convenience store onwers for a spectacular space in their outlet for display of his products.   

B.Pull Market Strategy- In order to attract the customers towards the product the manufacturer may have to spend on promoting the product and building loyalty among the customers.

He could conduct festive bumper draws for hiis customers and advertise the same about the gift hampers to the winners of the draw.

He could offer festive discounts to the customers.

He should maintain contact with his customers and update them with any innovations and get feedback about the product.

c)

In the distribution channel it is suggestable to remove Mr. Nick Hansen which would now decrease the commission paid to him, however, now the manufacturer has to search for his buyers and maintain a logistics facility for moving the goods to the wholesalers. Thus, there is a rise in the distribution cost.