- Statement of Main Problem- Level of Analysis
This scenario is a Level 3-Disciplinary issue: specific problem or issue that requires a solution (Patti, 2010).
Should Pioneer make considerable investments in tangible and intangible forms in order to revive their position and build profitable relationships with their dealers and consumers?
Marketing success will require building relationships with other company departments, suppliers, marketing intermediaries, customers, competitors, and various publics, which combine to make up the company’s value delivery network (Kotler & Armstrong, 2010, p.90).
- Analysis of Alternatives
3.1 Distribution Shift
One of the strategies was to shift retail distribution away from specialty stores to department stores and catalog showrooms. It is evident from the case that in 1977, 75% of U.S. Pioneer’s sales were accounted for by hi-fi specialty stores, compared to 5% by department stores and 7% by catalog stores. There was a need to increase the sales through department and catalog stores as they managed to have great consumer “pull” advertising, extensive customer credit and offered lower prices. The consumer pull advertising creates the required buzz and hype and leads to “word of mouth” marketing which is a powerful tool. Also, it is Industry gurus predicted that there would be a n increase in market shares of department stores and catalog showrooms.
3.2 Multiple Branding
In order to keep up with the trend of mass oriented retail outlets and to keep the specialty stores satisfied, they came up with a strategic option of multiple branding. The sales representatives suggested that they produce products of varying quality and price points. The high quality and high priced products could be sold in the specialty stores as it constituted for 75% of the sales for Pioneer and the low priced and low end products could be concentrated in the retail stores and cater to the retail store target audience and help Pioneer to be in sync with the current trend in the market.
3.3 Company owned stores
Expansion by increasing penetration of their current product-markets by operating their own retail stores was one of their long-run strategic alternatives. Some local players like Radio Shack and Sears, had been selling house brands in their retail stores and were penetrating the hi-fi market at a fast pace. There was a threat that Pioneer would be out- squeezed from the specialty stores due to this trend. Therefore, one way to overcome this potential risk was to open Pioneer retail stores by, either acquiring family owned stores or converting non-audio stores to Pioneer retail stores.
3.4 Dealer Communication Program:
After the Pioneer field investigations were carried out, one major inference of the study was that the dealers were not satisfied with Pioneer. Sales reps suggested coming up with a communication program in order to build long lasting liaison with their dealers and demonstrative that effective selling of Pioneer products can increase profits. From the table (Appendix 1) it is evident that the buying behavior 27% of the respondents was influenced by sales representatives/ dealers. Bib Gundwick president of the company sales office in
Florida, displayed a presentation package he had used successfully. The package suggested ways the dealers could (a) cope with their competitors, (b) determine their product mixes, (c) creatively sell Pioneer products in combination with other brands, and (d) improve their businesses in general. Other suggestions included (1) direct-mail brochures to all dealers; (2) more salespeople to increase the frequency of dealer visits; (3) cash rebates or other incentive programs (such as a contest for dealers); and (4) organizing a “national dealers’ conference” at a resort.
4.0 Recommendation
The table (Appendix 1) shows that dealers and salespeople greatly influenced buyers purchasing decision. The main problem that is outlined in the case is that the U.S. Pioneer has tarnished their image with their dealers due to their gross margins offered by Pioneer on their products when compared to their competitors, which did not result in high profits for the dealers. Therefore, U.S Pioneer should clearly rebuild its relationships with its dealers. U.S. Pioneer can take an initiative to provide sales support and training similar to that developed by Bob Gundwick. U.S. Pioneer has to continue to work with dealers to develop the add-on/upgrade market for Pioneer products. Pioneer should adopt ways to have dealer satisfaction as high as customer satisfaction. Continue heavy advertising and marketing towards college students as they highest buying population for component buying ( In 1974, population between 18-24 constituted for 42.5% of sales and in 1975 47.3% of sales). Also, considerable investments need to be made in order to penetrate into the retail stores and catalog showrooms, as unit sales increased from 2.2% in 1975 to 9.4% in 1977.
Multiple branding may tarnish Pioneer’s reputation for selling only top-of the-line products. Penetration by wholly owned Pioneer retail stores is not a good investment. As it requires high investments in terms of space, inventory and services to monitor the quality of customer service.
5.0 References
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Kotler, P. and Armstrong, G. (2010), Principles of Marketing, 13th Ed. New Jersey: Prentice Hall.
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Patti,C,H.(2010). Learning and Growing with Cases. Brisbane:QUT.
Appendix 1
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