Canterbury spice man (CSM) is a distributor of spicy sources in the United Kingdom its principle owner Mr. Rizal Ahmad secured the exclusive right to distribute a range of spicy sauces in the UK. (CSM) believes that the major markets for these products are in London, Birmingham, Manchester and Bradford. The company is planning to import 25,000 cases a year from suppliers in Thailand, Malaysia and Indonesia. It intends to keep the original brand names on half the product range and stick the ‘Spice Man’ labels on the other half. The company plans to distribute the following sauces- rending sauce from Indonesia, fried rice sauce from Indonesia, curry noodle sauce from Thailand, curry sauces from Malaysia and sweet and sour sauces from Thailand. The average cost to CSM of a case (12 jars) of any of these sauces “CIF” at Southampton is estimated to be about £6.
As Canterbury Spice Man’s management have limited marketing experience, myself and my designated group of marketing consultants were appointed to act as consultants for Canterbury spice man to assess and analyze the difficulties and provide a marketing plan which includes the recommendations on the channels of distribution that should be used, the market offerings proposed for intermediaries/ channel members and recommendations of the specific strategies that Canterbury spice man should use to develop and maintain effective business relations which are believed to be needed.
This report shows research material and appropriate assessments carried out by my self and my marketing team, which involves developing a well structured marketing plan; my individual recommendations and assessments; the required distribution channels recommended which include wholesalers, restaurants, supermarkets, etc; our proposed market offerings to channel members and the marketing strategies which could be used by Canterbury spice man in distributing its brand of spicy sauces.
Marketing is the art of communicating a products presence and abilities to its target market in an attractive and buyable format. Canterbury spice man like millions of companies has the onus of selling a new fangled brand to a chosen target market in the United Kingdom. His product range includes five types of spicy sauces which are to be distributed to four cities; London, Birmingham, Manchester and Bradford, in the United Kingdom. His sales capacity is 25,000 cases; of 12 bottles, per annum. The objective of this report is therefore to present warranted recommendation on distribution channels, the market offerings for such channels and to offer a comprehensive strategic marketing plan for Canterbury spice man to develop and maintain effective business relations
This market plan will show Canterbury Spice Man (CSM) the distribution channels available to him in his target areas as well as a recommend to him channel of distribution to use. Distribution is an important part of the 4 aspects of marketing. A distributor is the middle man between the manufacturer and retailer. After a product is manufactured it is typically shipped and usually sold to a distributor. The distributor then sells the product to the retailers or customers. The distribution channel chosen for CSM is based on the market for his product, the availability of these channels of distribution; their advantages and disadvantages; and a low cost budget. These channels include both direct and indirect sales mediums, they are; Trade fairs, wholesalers, and retailers.
Haven recommended a channel of distribution I have itemized market offerings that CSM can use to attract these distributors and secure a relationship with them. They are discount services, free deliveries, JIT delivery, credit facilities and advertising. These market offerings recommended are further analyzed based on their cost and benefits to Canterbury spice man. They are uniquely put together to accommodate the specified target areas as well to ensure CSM makes a profit from sales.
Finally, the market offering are valued based on their critical and financial value to members of the chosen distribution channel. This value when presented to the chosen wholesalers, retailers and restaurants will help develop a business relationship. However it is paramount that such relationships be properly maintained. Positive maintenance lies in the areas of flexibility, dependability and kaizen. This analysis would form the basis a market plan that CSM would follow to achieve a success in this financial year
When choosing a distribution strategy CSM must determine what value a channel member adds to its products. Customers assess a products value by looking at many factors including those that surround the product (augmented product). Several surrounding features can be directly influenced by channel members, such as customer service, delivery, and availability. Consequently, for CSM selecting a channel partner involves a value analysis in the same way customers make purchase decisions. That is, CSM must assess the benefits received from utilizing a channel partner versus the cost incurred for using the services.
Mr. Rizal Ahmad has decided to import 25,000 cases of spicy sauces per annum and to remove the brand name on 12,500 of these cases and replace them with the CSM logo.
In order to move this stock of varied sauces; which include, rending sauce from Indonesia, fried rice sauce from Indonesia, curry noodle sauce from Thailand, curry sauces from Malaysia and sweet and sour sauces from Thailand, he needs to effectively distribute approximately 2090 cases per month between four chosen locations. These locations are London, Birmingham, Bradford and Manchester. There are various types of distribution channels that CSM can employ and due to the dual nature of his products the chosen channels of distribution are categorized into two; direct and indirect sales. Direct selling channels include Bids and tenders, online shops, Sales Team for face-to-face selling, Sales Team for telephone selling and Trade shows and exhibitions. On the other hand indirect selling channels include wholesalers, retailers, resellers, and sales agents. The relevant aspects of direct selling which are inline with the product type that CSM offers are: an online store, sales team for face-to-face selling and trade fairs and exhibitions. Indirect selling on the other hand offers more value to CSM. Its relevant types are; wholesalers and retailers.
The 12,500 cases of spices which are not branded by the CSM logo will be directly sold to the restaurants located in two of the geographic areas chosen. They are London and Birmingham. This is because they are both highly populated with people of ethnic origin and restaurants characterized by spicy foods. In order to effectively move this stock this means 520 cases need to be delivered to each of these locations per month (1040 cases in total).
The Criteria for Direct Sales
The criteria for direct sales to any end user are as follows; the customers are large and well defined; the customers insist on direct sales; sales involve extensive negotiations with upper management and control of the selling job is necessary to ensure proper implementation of the total product package and guarantee a quick response to market conditions.
The market for restaurants in London and Birmingham is a large and well defined market.
London’s ethnic importance for CSM
London has an exciting cultural diversity; with over 300 languages in regular use and with 200 communities represented in the population. London represents the ‘World in one city’ (London 2012, 2007).
The London region is by some distance, the most ethnically diverse in Britain. People from ethnic minority groups made up 40% of its population at the time of the 2001 census. Within Greater London, more than 50 ethnic groups are represented in numbers of 10,000 or more. Out of every 1,000 people, on average: 597 are White British, 120 are Asian, 114 are White non-British, 109 are Black, 32 are of mixed race and 11 are Chinese
(Commission for racial equity, 2007)
London’s sophisticated tastes and rich ethnic mix create a huge receptive market of innovation and distribution for CSM. In London chefs are the new celebrities and new food experiences are part of everyday life. London offers a consumer market of goodies with consumer spending on eating out reaching $8 billion, 30% more than the UK average. London’s strong restaurant culture, with the full range of restaurants (over 6,000) from ethnic fast food to top chefs, serve dishes for over 70 different countries worldwide. In addition London is also home to around 5,700 retail food and drink outlets, in the UK (think London, 2005).
Birmingham’s ethnic importance for CSM
Birmingham, home to almost a million people, is the second most diverse city in Britain. According to the 2001 census, people from ethnic minority groups accounts for more than a third of its population. It has the largest concentrations of many groups outside of London, particularly Asians and Black Caribbean’s. In two districts; Washwood Heath and Bordsley Green, both to the east of the city centre, Pakistanis form the majority ethnic group – that is, more Pakistanis live there than all other ethnic groups combined (including whites). The ethnic Pakistani population in Birmingham predominantly originates from the Mirpur district of Azad Kashmir.
The city exhibits very extreme concentrations of particular ethnic groups, with the Pakistani predomination in the east and a large Indian population in the north-west of the city centre. One in five people in the entire city are Asian; a total of 191,000 people. Put another way, nearly half of all south Asians in the West Midlands live in Birmingham. Of those, more than half (104,000) are Pakistani, 56,000 are Indian and 21,000 Bangladeshi. (Commission for racial equity, 2007).
Do customers insist on direct Sales?
Although they do not necessarily demand direct sales, the volume of demand in individual restaurants places a need for the Just -In -Time production of food. A direct sale to these restaurants will help them fulfill these needs.
On- going Negotiations of Sale
As the volume of CSM products demanded by restaurants increase these restaurants would demand better service and better prices. In order, to be ahead of the competition, these relationships need to be managed. Therefore direct sales will ensure that upper management is happy and sales levels are managed properly
Control of the Selling Job.
This is especially necessary for restaurants in order to educate them on how these spices can be used and to guarantee just in time delivery, since this is the nature of their business.
Types of Direct Selling
Direct sales tactics such as face-to-face selling, an online store and trade fairs and exhibitions can be used to create awareness to restaurants about the product ranges and delivery services that CSM offers.
Face- to – face Selling:
This involves employing a sales team to sell products on a one-on-one basis to potential customers. It is important to use this method of direct sales when for example, your product is high-value and you only need a few sales to achieve your business objectives; the product is a luxury item that demands high level of involvement from the sales person; the features and benefits of the product need to be explained in detail; the sales cycle (ie from initial interest to making a purchase) is very long; and the decision to buy rests with more than one person.
Advantages and Disadvantages
The face- to-face sales method will create exact awareness to target customers and is especially good for building the brand name in the restaurant market. It will ensure that CSM knows the exact need of individual restaurants and enable him to deliver accordingly. However, a large disadvantage for this method of sales is that it involves a lot of time, energy and high labour costs. It would be very expensive for Canterbury spice man to get sales men to sell door to door, to every restaurant in London, Manchester, Birmingham, and Bradford.
An online Shop
This involves the sales of goods and services on a website. This sort of selling can work if products are well defined; there are fixed prices for all types of potential customers; products can be delivered within a predictable lead time; there is high volume of sales and low to mid-value products. In order to set up an online store you need to set up shopping cart facilities on your web page, a payment system, a back-end order processing system to prepare package and post the goods and to manage any returns, and a system to keep track of the payments.
Advantages and Disadvantages
This can be beneficial to Canterbury Spice Man for the following reasons. They include increased sales for CSM spices, decreased cost of sales in terms of managing sales and distribution depots, and greater publicity; since the worldwide web is available to everyone. Conversely however the disadvantages of selling online is firstly high competition levels on the web, the fact that consumers might need spices immediately and do not have time to wait for the lead time involved in delivery, high delivery cost in form of singular postage and package and non-specific sales. If the sales made are not specific, Canterbury Spice man will not know where to expect repeat demand from and who to build relationships with. Furthermore, the biggest challenge Canterbury Spice man will face in online store is that of a non-established brand. Consumers are likely to go for the brand names they are familiar with online than try new things with no recommendation. If it was in a store it would be that store recommending the CSM sauce to them however a CSM owned website will not be sufficient to recommend itself.
Trade Fairs and Exhibitions
A trade fair or trade show is an exhibition organized so that companies in a specific industry can showcase and demonstrate their new products and services. Some trade fairs are opend to the public, while others can only be attended by company representatives (members of the trade) and members of the press, therefore tradeshows are classified as either “public” or “trade only”. Trade fairs often involve a considerable marketing investment by participating companies. Costs include space rental, display design and construction, telecommunications and networking, travel, accommodations, promotional literature, and “give away” items. In addition costs are incurred at the show for services such as electrical, booth cleaning, internet services, floral decoration within the booth and drayage. Cities often promote trade shows as a means of economic development.
There are a number of trade fairs are held in UK, however there are 14 trade fairs to be held in the Catering food processing and wine sector in the next 2 years. Nine of these exhibitions are held in Birmingham and Eight in London (Trade Fairs and Exhibitions, 2007). Canterbury Spice Man can take advantage of these trade fairs to make his brand known to other retailers in the food industry and from these gain monthly orders.
Advantages and disadvantages
It is very advantageous for Canterbury spice man to participate in trade fairs as it would give him contact with all sorts of consumers (restaurants, wholesalers, etc) in the food industry. The contacts he gets here would create a ripple effect in the right market. Trade fairs are an effective platform to introduce and market new products since the reason why people attend trade fairs is to see what is new. Canterbury spice man will also get immediate feedback on his product range from all customers. Furthermore he can recruit dealers and set up distribution channels at these trade fairs. It is also a good opportunity for CSM to check out the competition in order to establish a strategic market plan. Trade fairs also offer media exposure to all attending exhibitors which will create more awareness of CSM’s product range and services press releases and magazines do reports on these trade fairs and exhibitions. The adverse side to participation in trade fairs is strong an active presence of competitors as well as the cost of setting up a stand..
Members of the distribution channel are specialists in what they do and can often perform tasks better and at lower cost than companies who do not have distribution experience. Marketers attempting to handle too many aspects of distribution may end up exhausting company resources as they learn how to distribute, resulting in the company being “a jack of all trades but master of none”. Indirect distribution uses at least one type of intermediary, if not more .CSM should focus on two specific areas for its indirect sales as mentioned earlier; these are wholesalers and retailers.
Types of Indirect Selling
The wholesalers are the first point of contact in the distributive channel that Canterbury spice man must undertake. The benefits wholesalers offer to members of the channel can be significant. Distribution decisions, through specific benefits vary by type of wholesaler. Yet there are two particular benefits CSM could gain. One for suppliers and one for retailers that are common to most wholesale operations.
Firstly, wholesalers can help CSM by providing various customers access to its products- wholesalers are in business to provide products and services to buyers (e.g. retailers) who either cannot purchase directly from CSM because their purchase quantities are too low to meet CSMs minimum order requirements or, if they purchase directly from suppliers will pay higher prices compared to bigger retailers who obtain better pricing by purchasing in greater quantities. Secondly, since wholesalers sell to large number of buyers their order quantities may match those of large retailers thus allowing them to obtain lower prices from suppliers. Wholesalers can then pass these lower prices along to their buyers, which can enable smaller retailers to remain competitive with larger rivals. In this way transacting through wholesalers is often the only way certain retailers can stay in business.
Thirdly, by employing the service of a wholesaler CSM is providing smaller retailers access to products they cannot acquire without wholesaler help offers a benefit for suppliers as well since it opens additional market opportunities for suppliers. Namely, suppliers can have their products purchased and made available for sale across a wide number of retail outlets. More importantly, for a company offering a new product, convincing a few wholesalers to stock a new product may make it easier to gain traction in the market as the wholesaler can yield power with the smaller retailers convincing them to stock the new product. Considering a wholesaler can serve hundreds of small retail customers, the market efforts persuading the wholesaler to adopt a new product may be far more efficient compared to efforts needed to convince individual store owners to stock the new product. (knowthis.com, 2007).
Wholesalers will have a key interest in CSM having the required quantities of the different sauces at required times and for CSM to provide a JIT service. These sauces must meet UK food and packaging standards and adhere to the strict guidelines. The wholesalers are interested in the shelf life of the products due to the length of the distribution channel. Finally CSM might also face a challenge in convincing wholesaler to stock these new-fangled products.
In today’s dynamic retail environment, CSM must recognize the importance of reaching consumers wherever they shop. ‘Retailing includes all the activities involved in selling goods and services directly to final consumers for there personal non business use.’ (Kotler, 1988 pg 554) A retailer or a retail store is therefore any business enterprise whose sales volume primarily comes from retailing. There are various types of retail organizations however we will focus on store retailers. The major types of store retailers include specialty stores, department stores, supermarkets, convenient stores, superstores, discount store, warehouse stores and catalogue showroom. It is recommended that Canterbury spice man distributes to large store retailers such as specialty stores, department stores, supermarkets and discount stores; since small stores will get CSM stock from wholesalers.
Retailers offer many benefits to suppliers and customers. For suppliers the most important benefits relate to offering opportunities to reach their target market, build product demand through retail promotions, and provide consumer feedback to the product marketer.
Retailers would like to know how CSMs products need storing, the quality of the products, how quickly the sauces can be delivered. Retailers are more than likely to demand exclusivity rights to products they stock. CSM could experience a loss of autonomy and flexibility, and gain a dependence on the buyer (e.g large retailers) this will also lead to CSM having a weaker negotiating position and would begin to share its confidential cost and other information with these large retailers.
Based on all the information gathered it is recommended that Canterbury spice man follows a distribution channel that involves both direct and indirect sales. I recommend that he sells directly to restaurants in London and Birmingham through the agency of trade fairs and exhibitions. There about 16 expected to be held between the two cities. Trade fairs will augment his product in the exact way he wants, it since he is in charge of its sales to restaurants. However its costs are the disadvantages mentioned above. I also recommend that he further distributes his sauces via wholesalers in all four cites. These wholesalers while help ensure that CSM products are available to small retailers and convenience stores. He can also make these products available to large retailers such as: super markets, specialty stores, discount stores and department stores.
Logistics and numbers
Logistics refers to designing and managing all activities necessary to make materials available for production or to offer finished products to customers when, where and in the condition they are needed. 520 cases per month need to be distributed to each of the locations in order to effectively move stock by the end of CSM’s financial year. The wholesalers can stock more goods and for longer periods of time, retailers will take lower quantities at a more frequent rate and restaurants will simply order when they need stock. It is therefore recommend that CSM operates a JIT delivery system to all members of the distribution channel.
Canterbury spice man can secure orders from restaurants and retail specialist stores at trade fairs; however he would have to strategically approach other members of the distribution channel in order to secure orders.
Canterbury Spice Man is a new product in the food and spices industry. It will therefore face a challenge in gaining the trust of members of the distribution channel as well as end-consumers. The members of the distributive channel play a big role in convincing consumers to buy this new product range. There is therefore an onus on Canterbury Spice Man to offer incentives to members of the distribution channel in exchange for shelving his products. The market offerings proposed for intermediaries/channel members are; Discount services, Free deliveries, Just-in-time (JIT), Credit Facilities and Advertising.
CSM will have to provide discount services for all members of the distribution channel in order to arrive at the prescribed retail price of £1.75 per bottle. The cost of buying each packet of 12 spices is £6 therefore the price of each bottle is 50p. in order to make a
100% markup each case should be sold at £12 (£1 per bottle). In providing a discount service to wholesalers and large retailers CSM can sell each case between £11 and £12 depending on the quantity of purchase. For example every purchase bellow 500 cases will cost £12 per case and every purchase of 500 cases and above will cost £11 each. Deliveries to restaurants which are in smaller quantities will cost a standard £13 per case however after 6 consecutive orders it becomes £12.50 per case. The following six consecutive orders will drive down the price to £11.50 each. These discounts enable members of the distribution channel to make a sizable profit by selling each individual bottle of spice at £1.75.
Costs and Benefits for CSM
The recommended retail price for each bottle of spice is a £1.75, it would therefore mean that a case of 12 would cost £21 (£1.75 * 12). It will therefore cost Canterbury spice man a potential £9 worth of profit when he provides wholesalers with cases at the cost of £12; and a potential £8 worth of profit when he provides restaurants with cases at the cost of £13. It is therefore costing CSM between £10 and £7 to provide discount services to members of its distributing channel. On the other hand what Canterbury Spice man will lose in potential profit, he will gain in exponential in terms of sales volume. For example, if CSM sold all the stock of spice by himself at the rate of £1.75, he would not attract many consumers; however by employing specialist in the distribution channel he is more likely to exhaust the stock of spices by the end of the year. He would be distributing to so many locations at once.
There is a standard delivery charge of £10 per order however for deliveries to wholesalers in quantities of 200 cases and above are free. Deliveries to retailers and restaurants are free after the fifth order. However we recommend that Canterbury spice man has a depot in all four cities in order to minimize delivery costs.
Costs and Benefits for CSM
The cost involved in delivering CSM products to various members of the distribution channel include Warehouse costs, delivery vans, , depreciation of vehicle, fuel costs and labour cost. The warehouse costs arise from the storage space rented or bought for the purpose of storing goods in the four target localities. The cost of purchasing a delivery van, the cost of fueling it and the depreciation that arises from usage are all part of delivery costs. Further more the wages paid to the drivers who pickup and deliver the
CSM goods are factored into the cost of each delivery. It will therefore cost Canterbury spice man a lot to deliver goods free. The benefits of free delivery service however out weigh the said costs free delivery will also act as a loss leader and thus build customer loyalty. Secondly free delivery will result in increased sales volume which will result in increased profit levels and reduction of overhead costs. It should however be noted that others below 200 cases will cost a £10 delivery charge, and all restaurant orders are note free until the sixth order.
Just- in-time (JIT)
“The objective of a JIT system is to eliminate waste of all kinds from the production process – required the delivery of the specified products at the precise time and at the exact quantity needed.” (Hutt, Speh, 2001) CSM will meet just in time requirements of all members in the distribution chain. This will help members of the chain reduce the risk involved in over stocking. This will involve synchronizing with these members production/delivery schedule.
Costs and Benefits for CSM
Suppliers who are able to meet the required orders of customers JIT requirements will find their share of business growing with the JIT-oriented customer. Meeting JIT requirements often represents a marketing edge, and may mean survival for CSM. Secondly CSM will get immediate feedback on consumer response and behaviour to his products. The costs of JIT include sophisticated computing software which networks production plans and inventory needs of members of the distribution channel with CSM. It will also cost some man hours to insure quick and efficient response to the demands of these members. The major limitation that CSM may face is not having enough stock to satisfy the JIT demands of all members of the distribution chain.
Canterbury spice man will provide wholesalers and retailers with one month credit facility this means goods will be delivered at the beginning of the month and the companies will be invoiced and expected to pay at the end of the month. This service will allow these customers the opportunity to stock in direct relation to monthly demands and to increase (or at least maintain) cash flow.
Cost and Benefits
The cost of this service will be the required startup capital and corresponding interest rate to meet CSMs monthly expenses prior to payment by wholesalers and retailers. Such monthly expenses would include petty costs such costs as fueling delivery vans purchase of invoicing booklets and other day to day running costs. The benefits of this service are that CSM will secure more orders and will get monthly feed back on consumer behaviour towards his products. Based on this information he can put together informed forecast and resultantly predict the volume of goods to be purchased for the following year.
Advertising costs form a large part of the total costs faced by most companies. For large retailers like Tescos and Morrison, they take advertising campaigns seriously and they take up every space they can get. In order to attract such retailers and similar natured wholesalers, CSM will offer an advertising service to those that shelves its products. CSM will advertise on TV, radio and magazines in each local area and will mention the members of its distribution channel on all its local advertisements. For example a TV AD in Manchester will make consumers aware of the new ‘Spice Man’ brand and the stores in Manchester that shelf these products.
Costs and Benefits for CSM
CSM will incur advertising costs when placing adverts on TV radio and magazines and news papers in all four localities. However the awareness created by these adverts will increase consumer demand which will increase the sales volume of spices. Further more the adverts which will mention members of the distributive chain in various localities will give incentives for consumer loyalty.
Recommendations on market offerings that CSM provides
CSM needs to be careful to provide attractive services to the members of his distribution channel as well as to cover all the expenses involved and finally to make a profit. That is to say after providing free delivery advertisement, just in time delivery and discounts, all expenses which were mentioned above must be covered through the price and desired sales volume. Furthermore Canterbury spice man must walk away with a sizable profit.
Strategies to Develop and Maintain Business Relationships
“Relationship marketing centers on all activities directed toward establishing, developing and maintaining successful exchanges with customers and other constituents. The nurturing and management of customer relationships has emerged as an important strategic priority in most firms. Loyal customer relationships are far more profitable to keep than those customers who are price sensitive and perceived little differences among alternative offerings. Second, a firm that is successful in developing strong relationships with customers secures important and durable advantages that are hard for competitors to understand, copy, or to displace.” (Hutt, Speh, 2001)
These are the reasons why Canterbury Spice Man needs to develop and maintain good relationships with members of his distribution channel. On the other hand prescriptive service methods which will attract CSM to be in strong relations with these channel members are elements such as delivery, flexibility, lead time and technical support. These elements are essential to the smooth flow of products through the product lifecycle. Furthermore, due to the fact that CSM is a new brand name the extent of his market offerings are not yet of obvious importance.
He would need to put the financial and critical importance of his market offerings across to these members.
Wholesalers and Retailers
CSM is giving wholesalers the opportunity to make btw £0.45 and £0.60 worth of profit on each bottle of sauce. Since he sells it to them between £0.90p £1.00 per bottle (depending on quantity and repeat order frequency) and the recommended retail price is £1.75. Large retailers can even make profit levels of between £0.75p and £0.85p on each bottle. Furthermore, free delivery, free advertisement and JIT methods ensure that these profit levels are made with minimal cost and risk along side large sales volumes. Therefore for a sales volume of 200cases (which brings free delivery) wholesalers will be making a minimum of £840 (200cases*12 bottles in a pack* £0.35 profit per bottle) in profit. Retailers will be making a maximum of £2040 (200cases * 12 bottles in a pack * £0.85 profit per bottle) on this same quantity of cases.
The biggest problem faced by most firms is that of cash flow and inventory. The JIT service provided by CSM will help wholesalers and retailers, remain at their desired cash flow levels by purchasing what they need not stock buffers. Furthermore, CSM would provide wholesalers and retailers with credit facilities such that they can pay for the goods at the end of the each month. This will help them adjust their order to monthly demand levels.
Since restaurants need CSM’s products for commercial purpose, they would require larger quantities than end consumers. The financial and critical value of the market offerings provide to restaurants thus be viewed as a two-sided coin. CSM is therefore saving them time, research, travel costs and cash flow.
Time, Research and travel Costs:
It will take restaurants time to find the right brand to supply all their spicy sauces. It will equally take them time to travel to the stores that stock. The travel cost is not only the cost in fuel and depreciation of asset, but also the cost of man hours, which will either increase labour costs or decrease efficiency of food production. Canterbury Spice man will thus help restaurants save these costs, in conjunction with providing with sauces from their regions of origin at below retail prices. The initial £60.00 charge for the first six orders will be made back over long-relationship period.
All the costs mentioned above that restaurants will save through dealing with CSM will increase their cash flow levels.
The market offerings provided by Canterbury Spice Man will help him develop valuable relationships with the firms he does business with. However, such relationships have to be maintained in order to ensure relationship longevity and resultant revenue.
Maintaining the Business to Business Relationships
In order to maintain effective business to business relationships CSM must be flexible in his service delivery approach. He must also be dependable; be reliable and able to reduce lead times to the barest minimum. Finally he must create account specific product offerings based on feed back and fore sight of consumer needs are inline with the Japanese continuous improvement methods (Kaizen). For wholesalers and retailers such account specific product offerings would be to maintain and/or increase discount levels as sales volume increases this will enable both party to operate at low cost levels. Retailers and wholesalers can be encouraged to function in sync with Canterbury Spice Man in areas of scheduled stock replenishment this encouragement will come in form of prompt delivery and a free offloading service. It is recommended that CSM operates a kaizen method through regular feed back from all members of his distribution chain. The goods cost a fixed price but the services are delivered free or at minimal cost.
Furthermore, in order to maintain a long lasting and valuable relationship with restaurants CSM needs to implement strong actor bonds. He must have a representative team that works closely with the restaurant management in the selected restaurants in London and Birmingham. This team will be responsible for follow ups from trade fair orders to restaurants food specifications and requirements. This will ensure that Canterbury spice man will provide the right type of sauces to the specified restaurants at the right time. Thus being flexible, dependable and continually improving.
Conclusion and Recommendation
In conclusion the product range Canterbury spice man has chosen to deliver comes with a required service level to efficiently and effectively market it. The provision of these services comes with associated market cost and benefits. His chosen distribution channel helps CSM specialize in distribution of authentic sauces. This distribution channel includes wholesalers, retailers and a special group of end consumers; restaurants. To attract members of this channel CSM provides services such as discounts, free deliveries, credit facilities, free advertisement and just in time delivery systems. Furthermore for this first year CSM is allowing members of the distribution chain make more profit on sales of his product than he is. For every 200 cases of sauce delivered he will make an average of minimum of a £1200 while retailer will make a maximum of £2040. Based on that pricing at the end of the financial year CSM will make a minimum of £150 000. This of course is dependent on CSM ability to effectively maintain relationships with all his distributees.
Maintaining relationships with businesses is a complex and specific mater which Canterbury spice man has to incorporate into the day to day running of his business. The three main areas that will help keep these business relationships long and valuable are; flexibility, low service costs and kaizen methods.
In order to ensure effective marketing, I have recommended the following to CSM
• Employ wholesalers and retailers as members of his distributive channel
• Employ direct sales methods to market to restaurants in the London and Birmingham area. This is due to high population density and ethnic diversity in these two areas.
• Provide free and low cost services for members of the distribution channel. Services such as discounts, free deliveries, credit facilities, free advertisement and just in time delivery systems.
• Finally based on the individual nature of CSMs customers they most provide account specific market offerings in order to maintain valuable and long lasting relationships. Feedback and improvement are adhesives that will hold CSM and members of his distribution chain firmly together.
Hutt, M.D., Speh, T.W., (2004), “Business marketing management” 8th Edition, Thomson
Hutt, M.D., Speh, T.W., (2001), “Business marketing management” 7th Edition, Thomson
Kotler, P., (1988), “Marketing Management” 6th Edition, prentice-hall International, inc.
London 2012, Ethnicity [online] (2007) https://www.london2012.org/en/gettinginvolved/ethnicity
Trade fairs and Exhibitions, [online] (2007) www.exhibitions.co.uk
Commission for racial equity, ethnicity profiles: London [online] (2007)
Knowthis.com, [online] (2007) www.knowthis.com
Think London, [online] (2005) www.thinklondon.com