Electronic Store Chains, Independent Electronics Stores, And Select Department Store Chains

Electronic Store Chains, Independent Electronics Stores, And Select Department Store Chains

3D Tech is a manufacturer of 3D printers in the USA.  The company sells its printers through Electronic Store Chains, Independent Electronics Stores, and select department store chains.  The company has been allocating its marketing funds for cooperative advertising, in-store displays, and retail store support based on dollar sales by channel of distribution.  [Take a minute to really think about this, please.]

You have been asked to help the company review its sales and profits in the three channels so that they can determine whether they should continue to allocate their marketing funds based on channel dollar sales or change to base allocation of marketing funds on profit. (So, currently, they look at the percent sold in a channel, and give that channel the same percent of marketing dollars.)

As you respond to the questions, keep in mind the purpose.  You are going to help them determine whether they should (a) continue to allocate their marketing dollars to the channels based on the dollar sales in the channel, OR (b) if it would be better to allocate their marketing dollars based on the profit made in the channels.

The current data shows the following:

.85pt”>Channel .85pt”>Channel Sales (% of Total) .9pt”>Channel Profit (% of Total)
.85pt”>Electronic Store Chains .85pt”>62.5% .9pt”>48%
.85pt”>Independent Electronics Stores .85pt”>22.7% .9pt”>45%
.85pt”>Select department store chains .85pt”>14.8% .9pt”>7%

 

Annual Percentage Change in Sales by Channel

.85pt”>Channel .85pt”>3 years ago .9pt”>2 years ago .9pt”>Last year
.85pt”>Electronic Store Chains .85pt”>+1.6% .9pt”>+2.1% .9pt”>+2.4%
.85pt”>Independent Electronics Stores .85pt”>+.83% .9pt”>+1.1% .9pt”>+1.25%
.85pt”>Select department store chains .85pt”>+.5% .9pt”>+.3% .9pt”>-.5%

 

Question 1. Based on the data analysis, what do you recommendation about how the company should allocate marketing funds in the future?  Should they continue to allocate marketing funds based on channel sales or should they change to allocate marketing funds based on channel profits and why do you recommend this?

Question 2. Bill is a distributor for various jewelry manufacturers.  He currently has an exclusive deal with Silver’s to market their jewelry line.  However, Silver’s has been approached by Amazon, who would like to begin offering the line on their site.  Given what you know about the value offered by a middleman such as Bill, what persuasive points might you suggest he use with the manufacturer to convince them to keep him as the exclusive rep?

Question 3. As you respond to the questions, keep in mind the purpose.  You are going to help them determine whether they should (a) continue to allocate their marketing dollars to the channels based on the dollar sales in the channel, OR (b) if it would be better to allocate their marketing dollars based on the profit made in the channels.

 
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