Impact on Positioning

This activity outlines two situations in regards to thepotential impact on the firm’s positioning due to theirdistribution channel selection. Your task in this activity is toanswer the assessment questions at the end regarding eachsituation.

ACTIVITY/TASK

Increasing Sales of Jeans

The manufacturer of a well-known brand of jeans has determinedthat its selective distribution strategy is limiting their salespotential. Their product range mainly consists of higher quality,strongly branded jeans that are sold through more up-marketspecialist clothing and jeans stores. To help increase sales, theydecided to expand their distribution mix and adopt a more intensiveapproach. As a result, they started to sell their jeans to discountstores.

The change in strategy proved successful in generatingadditional sales, but at a much lower margin. As a result, therewas no real change in overall profitability. They were alsoconcerned with the impact that their new distribution mix washaving on their brand integrity. After a period of just 12 months,they decided that expanding their channels was probably not a goodidea, and reverted back to using their traditional channelsonly.

Questions

1.1. What were the main reasons that the firm reversed theirdecision and returned totheir initial channel mix?

1.2. Do you agree with their decision?

New Time – Same Channel

For many years, a number of Swiss watch manufacturers dominatedthe watch markets throughout the world. Their standard marketingmix was a range of good quality, well-designed watches that wereprimarily sold through jewelry stores at premium prices.

However, the emergence of cheap digital technology severely cutinto their marketing success. Today, a key part of the watch marketbelongs to low-priced ($10 or less), unbranded digital watches(which can even be bought at convenience stores).

As a competitive response, a number of these Swiss watchmanufacturers decided to introduce their own range of cheap digitalwatches. To protect their brand name, they produced these newproducts under a new brand name. And to be able to distributecheaply, they decided that they would utilize their traditionaljewelry store distribution channel.

QUESTION

2.1 -  do you agree with their choiceof channel for their new watches? Why?

2.2 - Do you think that most of their existing jewelry storeswill be willing to stick and sell these new watches?

2.3 What other channels (retailers) should they alsoconsider?