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Case Study On Marketing Channels A Management

The challenge

One of the largest cement manufacturers in Southeast Asia sought to develop and strengthen its distribution network to all customer segments in Indonesia.

The objectives of the study were to:

Understand the structure of channels in the cement market, from distributors to wholesalers and retailers

Map typical distribution flow for each type of channel as well as understand the channel margin structure

The process
Spire conducted groundwork study to formulate a hypothesis about the distribution network. These included interviews with industry experts (including associations, staff of company), as well as field observation and mystery shopping made by contractor companies (including visits to cement dealers, wholesalers and retailers).

In-depth face-to-face interviews were also held with key manufacturer’s staff; targeting staff that had full understanding of the products, pricing, channel and distribution, as well as staff specializing in distribution or supply chain management. Spire also conducted in-depth interviews in the Greater Jakarta, West Java and East Java areas with fabricators, distributors, dealer/wholesalers and retailers.

The results
Our report provided critical conclusions relating to Indonesian channel characteristics and trends, enabling our client to expand its presence in the Indonesian market.

Project deliverables included:

Deep-dive profiling of the four largest cement manufacturers in Indonesia, including sales trend and cost and pricing structure

Analysis of channel types and characteristics

Sales transaction and business background for each retail shop category

Mapping of Distribution Flow and Channel Margin Structure for cement channels

Recommendations for channel entry strategy

Recommendations for improving and strengthening the client’s existing distribution channel management system to better address market opportunities

The Dynamic Effects of Bundling as a Product Strategy

by Timothy Derdenger & Vineet Kumar

This paper investigates the practice of bundling as a product strategy, and identifies how consumers make choices between products and bundles in a dynamic environment. Authors Timothy Derdenger and Vineet Kumar look at the handheld video game market to study bundling in a platform setting with the goal of investigating several key questions of interest to practitioners who make product decisions: First, do consumers value bundles over and beyond their component products, indicating a synergy, which some researchers have hypothesized? Second, have there been differing opinions on whether mixed bundling, that is offering both the bundle and individual products for sale, is more effective than offering only pure bundles or even compared to offering only the products for sale? Given the prevalence of bundling in technology markets, it is critical to understand whether bundling is more effective in environments with strong network effects or with weak network effects. Key concepts include: Consumers have a negative synergy effect, that is they are willing to pay less for the bundle than for the individual console and game, leading to the question of whether introducing such bundles can increase revenue. Because bundles act similar to damaged goods, they work well in dynamically segmenting consumers and allow for purchases to occur earlier in time—the presence of bundles induces consumers to purchase earlier rather than wait. The time shifting of hardware purchases has a strong effect on software sales, since more consumers who own consoles will purchase video games over a longer time frame. Mixed bundling is especially effective compared to pure bundling, and the authors find that moving to pure bundling would reduce sales by over 20 percent. Strong network effects do not enhance the value of bundling, suggesting that bundling may instead prove more useful in settings with weak network effects. Bundling is thus a strategy that could serve as a substitute to creating stronger network effects. Closed for comment; 0 Comment(s) posted.

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