The Canterbury Spice Man is Mr. Ahmad’s local distribution company established in the United Kingdom. Securing the exclusive right to locally distribute the spicy sauce products manufactured by companies based in Southeast Asia such Rendang Sauce and Fried Rice Sauce in Indonesia; Curry sauces from Thailand and Malaysia; and seafood sauce from Thailand, he has the option to serve as foreign distributor, an export agent or both. A foreign distributor or an import merchant is a company that directly purchases imported products with the intention to resell these products in the domestic mainstream.Usually these products are resold under the company’s label or wholesaled as is; but nevertheless the risks relevant to its sale are carried over by the merchant. An export agent on the other hand serves as the manufacturer’s representative in marketing transactions at a foreign country.
Thus, the agent helps promote and market the product but does not assume the risk of loss relevant to sale. The original brand name or label of the imported product is not changed and that is why the risk of loss remains with the manufacturer.Based on the case, it appears that Canterbury Spice Man will serve as distributor and export agent since he intends to keep the brand names of half of the imported spicy sauces and stick labels to the rest of the products. Pricing wouldn’t be much of an issue, considering that the goods are exported on CIF basis and sold under competitive wholesale prices with a 100% markup. Potential Distribution Channels Considering the options of Mr. Ahmad, there are 3 distribution channels that he can utilize for the retail of spicy sauces and these are supermarkets, restaurants, and the independent retailers.
Supermarkets There are about 4 superstores in United Kingdom that Mr. Ahmad can supply with spicy sauces. Referred to as the “Big 4” these are Tesco, Asda, Sainsbury’s, and Morrisons. These supermarkets operate buying offices that attend to supplier applications and concerns. Note that these supermarkets are quite selective in the selection of suppliers as well as over the product lines that find its way into their shelves.
In most cases, the Big 4 prefer to distribute products that hold longer shelf life, with at least 1-month turnover and do not require special locations.They also put more premium over locally-manufactured products, unless the product(s) offered by the supplier is not available in the United Kingdom. This being the case of Southeast Asian spicy sauces, it would be best to conform to set supermarket guidelines that require imported products to bear the name, type of product, country of origin, importer’s name, manufacturer’s batch number, expiration date and the list of ingredients and nutritional information written in metric units. RestaurantsThere are United Kingdom restaurants that prefer the use of spicy sauces in food preparations to come up with a unique blend or mixture in their dishes. These restaurants usually buy products in bulks to avail of pertinent purchase discounts. It would also be good for Mr.
Ahmad to approach these restaurants and market the spicy sauces while providing a price list and recommending payment methods and modes of delivery. Restaurants may not be a big market but creating a long-term relationship with them helps build credibility in the long run.Independent RetailersIndependent retailers are those that sell local and imported products to serve a minimal and specific market. While these retailers normally do not require the volume of orders typical with a supermarket, they cater to a specific market group and that is why most small suppliers opt to sell their products via this channel.
With spicy sauces intended for Asian customers and a number of Britons, there has got to be independent specialty retailers operating in London, Birmingham, Manchester and Bradford that cater to Asian communities, and most likely Canterbury Spice Man can tap this distribution route.Nevertheless, many independent retailers are not financially stable and are not reliable as long-term distribution channels. But then again, these retailers can serve as alternative channels to reach out to potential clients not buying with supermarkets. Design of Marketing Channel Assuming that Canterbury Spice Man has conclusively defined its target market and their location, as well as the lines of distribution to tap, Mr. Amhad can now proceed to outline the design of his marketing channels for the spicy sauce products.It is recommended for Mr.
Amhad to adopt a single-level and selective channel for the distribution of its imported spicy sauce products. The components of its marketing channel involve the following intermediaries: As sales channel, Canterbury Spice Man can set up an online website that would serve a dual function such as (1) provide an electronic trading platform for retailers and (2) provide opportunities for direct sales through online-based transactions. Moreover, considering the target volume of the company, it would be more cost-effective for Mr.Amhad to employ the services of independent sales agencies to initially market its spicy sauce lines with delivery channels in the four identified United Kingdom locations rather than establish its own sales force at this point in time. The sales agency should however have a commendable clout over superstores and independent retailers in said areas while holding a good sales track record.With reference to the distribution channels previously defined, it is recommended that Mr.
Amhad extensively, but then again selectively, pursue superstores as delivery channels since a bulk of UK purchases for basic goods and commodities are conducted in these channels. Being selective does not imply exclusivity but rather setting guidelines as to which superstores can provide long-term profitability in the sale of spicy sauces. Criteria should include the profit and financial position of the superstore and its credibility to the buying public as a provider of quality and affordable merchandise.Another good criterion would be the location of said superstore.
The more it is closer to Asian communities, the more likely are sales for Asian spicy sauces in said channel. Nevertheless, in the intent of gaining solid ground in the United Kingdom market, Canterbury Spice Man should not miss out on restaurants and independent specialty retailers as an alternative delivery channel for spicy sauce products. Superstores are the likely initial route for imported products.But we can never anticipate the potential of alternative delivery channels. For all you know, this is frequented more by target clients than the big name superstores in the case of independent retailers. Restaurants serve a dual-edged purpose.
On one end is the income potential of regularly supplying spicy sauce products to a number of restaurants. On the other end is the promotions function whenever the sauces end up on the tables of restaurants.What is deemed necessary is for Mr. Ahmad to select a solid distribution channel that would provide sustained profitability in the long run, not only because it comes patronized by a good number of customers that defines the target market for spicy sauce products but more importantly said channel should be perceptive to long-term and collaborative forms of relational exchanges that would be mutually-beneficial to both parties.Recommended Business Relation StrategiesThe advent of the internet and other pertinent technologies in communications are putting people and organizations from around the world closer than the geographical confines that once limited interaction to costly long-distance calls and postal mails.
Today, global communication has been thoroughly redefined that people worldwide can interact despite the distance and in real time at the least possible cost. While this has altered the way companies do business, this development likewise affected pertinent marketing theories and concepts that once worked well for companies, at least towards the emergence of online technologies.Moreover, known strategies that once fueled successful business empires need to be reevaluated today to match and respond to the advances pertinent to this generation. It seems that the benefits of global interconnectivity put forth by the internet has ensued the need for interdependence, not only among people and organizations but also in terms of business process and more importantly between players in an industry’s economic value chain.In the past, going concerns often look at suppliers and retailers within their chain as independent entities that exist only to provide raw materials or support the lines of distribution to end-customers that is expended timely focus in the firm’s marketing efforts.
Now that organizations have become aptly aware of the stirrings of their target market, all these perceptions and commonalities have been reshaped. The modern age calls for organizations to work interdependently with players along their vertical and horizontal network, and not just with customers.Merging operational efficiencies with suppliers, distributors and retailers along the value chain while harnessing synergy benefits is a sure fire way of sustaining one’s competitive advantage in the 21st century. The Strategy In the case of Canterbury Spice Man, pertinent business to business approaches will surely work in its fervor. As a distributor, Canterbury Spice Man needs to interact with offshore manufacturers and attend to the responsibilities of close coordination among players within his value chain in the process of importing cases of spicy sauces and monitoring re-orders from retail outlets in the United Kingdom.
Therefore, Canterbury Spice Man should adopt a business process integration strategy that would efficiently respond to demand and supply developments within his network. Indeed, carrying exclusive distributorship in the United Kingdom for said spice labels may be considered as the company’s intrinsic competitive advantage but the absence of collaboration with the manufacturers and retailer would not merit the maximization of sales and profit potential in the long run.A business process integration strategy works like an improvised vertical integration strategy. With players in a vertical network collaborating for purchases, re-orders and inventory management, manufacturers will be able to save on production costs, the distributor on warehousing costs while retailers get an adequate volume of inventory to serve the regular rate of purchases by customers. How would the strategy work to achieve effective business relations?For a distribution outfit such as Canterbury Spice, the manufacturer and retailers are not mere entities but business partners.
And whether we like it or not, the need to coexist harmoniously with the players in the immediate network is deemed necessary with the fact that players operate under a shared network of resources and competencies. Thus, it is impossible for any business to stand alone, operate independently and increase its value as well.Canterbury Spice is doing business using the product resources of the manufacturer in the context of an exclusive arrangement and in return the manufacturer(s) takes advantage of Canterbury’s import facilities to distribute the spicy sauces in the United Kingdom. It would involve a tantamount of cost for the manufacturer to import these products without an intermediary. In a similar manner, Canterbury benefits from the established distribution networks of local retailers who in turn are assured of a steady volume of supply of spicy sauces that they regularly display on their shelves, sold for a certain markup.When everybody else in the network is contented over the synergy benefits of profitability and business acumen, then most likely effective business relations between the companies operating the network will ensue; otherwise, the multi-level partnership established through these lines is doomed to fail in case relational exchanges are hardly successful and prone to unresolved conflicts.
How should Canterbury Spice implement the strategy?The thought of business process integration is clearly reminiscent of the business to business (B2B) marketing concept, which is now taking strong ground among multinationals and the very entities that they do business with, excluding end-customers of course. Therefore, in the objectives of network interdependence as well as establishment of acceptable relational exchanges, Canterbury Spice should slowly integrate and adopt business to business marketing methods in the course of interaction with the players in its vertical network.Most likely, said approaches are generally applicable in the procurement and distribution functions of a going concern but would nevertheless require the following steps to implement. Information Exchange The very concept of B2B is rooted in the exchange of pertinent information between companies operating on a vertical network. As distributor, Canterbury Spice can initiate information transfer with manufacturers and retailers.In the case of manufacturers, providing online information about existing inventory levels as well as ordered quantities—and not just historical data of inventory and purchases is advisable to this end.
In the same manner, retailers can be regularly furnished with updated data on the available volume of spicy sauces and brands. This way, the guesswork put into re-ordering and inventory will somehow be eliminated with timely exchange of information.Technology Without automation and online connectivity, any attempts to serve business to business approaches will be futile. Nevertheless, the way companies are now interconnected to the internet while hosting websites to communicate with clients and associates, technology is not really an issue. Of its own initiative, Caterbury Spice Man could set up an online gateway that can be accessed by both manufacturers and retailers for this purpose.
This could very well be integrated into the company’s existing website to revolutionize the exchanges between players in its network. Nevertheless, Canterbury Spice Man can lobby with retailers to provide timely information on purchase volumes and on-shelf inventory levels, as well as a record on the frequency of purchases. But then again, to be able to work this arrangement requires strong linkages and reciprocal confidence with manufacturers and retailers that can be established in the long run.
