Business Finance
Colorado State University Market Exposure Policies Discussion

Colorado State University

Question Description

I’m studying for my Marketing class and need an explanation.

This exercise will give you some practice in determining the ideal degree of market exposure for a company. Six cases are presented below-with the first serving as an example. Read each case carefully and then indicate:

a) the product class which is involved,
b) the degree of market exposure (intensive, selective, or exclusive) which you think would be ideal, and

c) explain why you think the indicated degree of market exposure would be ideal. State any assumptions that you have made.

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In-Class Activity 10-1: Determining market exposure policies Introduction Once a producer decides to use intermediaries (wholesalers and retailers) to help distribute its products, it must decide what degree of market exposure will be best: exclusive distribution, selective distribution, or intensive distribution. Contrary to popular opinion, maximum exposure is not always desirable. The ideal market exposure should meet-but not exceed-the needs of target customers. As one moves from exclusive distribution to intensive distribution, the total marketing cost may increase-and the quality of service provided by intermediaries may actually decline. When deciding about the desired market exposure, a marketing manager should consider the functions which intermediaries will be asked to perform and the product class for his product. The product classes summarize some of what is known about the product-including what the target customers think of it, their willingness to shop for it, and the amount of personal attention and service they want. The product class often determines the ideal market exposure. Of course, there sometimes is a difference between a product's ideal market exposure and the exposure which it can achieve. Intermediaries are not always willing to carry a new product, especially when several similar products are already on the market. Similarly, intermediaries who are interested in carrying a product may not have the opportunity, unless the producer wants them as a channel partner. Assignment This exercise will give you some practice in determining the ideal degree of market exposure for a company. Six cases are presented below-with the first serving as an example. Read each case carefully and then indicate: a) the product class which is involved, b) the degree of market exposure (intensive, selective, or exclusive) which you think would be ideal, and c) explain why you think the indicated degree of market exposure would be ideal. State any assumptions that you have made. Note: Ideal here means the degree of market exposure which will satisfy the target customers' needs (but not exceed them) and also will be achievable by the producer. For example, a new producer of homogeneous cookies might desire intensive distribution, but agree to sell to only a few food chains because it knows it will not be able to obtain intensive distribution with its undifferentiated cookies. So its ideal is selective distribution, and it will adjust the rest of its marketing mix accordingly. 1. Hart Dinettes, Inc. manufactures a wide line of kitchen dinette sets for sale throughout the United States. The products are distributed through retail outlets. Retailers are supposed to stock a large assortment of dinette sets, along with a large inventory of replacement parts. The tables and chairs are usually shipped to the retailers unassembled. According to a recent cost study, 30 percent of Hart's retailers account for about 80 percent of the company's sales. 2. James River Paper (JRP) recently introduced Absorb, a new double-thick paper towel aimed at families with children. Primarily an industrial products manufacturer, JRP had produced paper towels for a few large grocery chains to sell as their own dealer brand. But Absorb was its first attempt at marketing a consumer product under its own brand. So far, results are not encouraging. Only a few wholesalers have taken on the line. Most are very reluctant to handle Absorb, claiming that retail shelves are already overcrowded with paper towels. 3. Ciao Footwear designs and manufactures a high-quality line of fashionable shoes that are popular among young professional women. The line is quite expensive-and it is sold through specialty shops that handle only this type of fashion shoe (including competing brands). Ciao will only work with retailers who agree to stock a large variety of sizes and colors of Ciao shoes. They also must agree to promote the Ciao line very aggressively. In return, Ciao agrees not to distribute its line to other retailers within the specialty shop's immediate trading area. Since continuing promotion seems to be necessary in this highly competitive market, advertisements for Ciao shoes appear regularly in fashion magazines targeted at professional women and on select cable TV broadcasts, including broadcasts of women's tennis tournaments. 4. EconoStore, Inc. makes and sells a low-priced line of file cabinets for use in offices. One style of cabinets is designed to store standard size business papers, and another style is designed for computer output. The files are sold directly to universities and other institutions-and indirectly through wholesalers to office equipment dealers. EconoStore's files sell to final customers (not the intermediaries) at prices ranging from about $90 to $300. Most dealers handle several competing brands of file cabinets, including some high-quality brands that sell for as much as $1,000. 5. International Tractor, Inc. (ITI) manufactures a full line of farm machinery-including tractors, graders, and materials-handling equipment. ITI farm products are distributed through over 500 independent dealers scattered throughout the United States. Typically, there is only one ITI dealer near any rural community, although there may be several other dealers who sell competing equipment. Many of ITI's dealerships are quite small, and the company lacks adequate dealers in several key market areas. To further complicate matters, price wars between dealerships are becoming common as industry sales continue to decline. In fact, some ITI dealers often find themselves competing directly with other ITI dealers-since many farmers travel 100 miles or more to purchase new equipment. 6. Domicile Designs, Ltd. manufactures decorative items for the home. It recently added beaded bamboo curtains to its product line. Designed for use in open doorways or as room dividers, the curtains are available in several colors and can be mounted easily on curtain rods. They are priced at $20 per set and measure six feet long by three feet wide. Like most of the company's products, the curtains are sold in gift shops, hobby shops, and specialty shops such as Pier-toPier franchise outlets. Initial sales for the curtains have been quite promising. The product seems to have good eye appeal, according to one shop owner. Apparently, the early customers hadn't planned to buy anything like bamboo curtains, but once they saw them displayed in the store, they couldn't resist buying them. Bonus Question How do you think each firm should try to achieve the ideal degree of market exposure you discussed above? Are there any legal constraints they should consider? Appendix 1 – Consumer Product Classes from Chapter 8 Product class definitions • Convenience products - products a consumer needs but isn't willing to spend much time or effort shopping for. o Staples - products that are bought often, routinely, and without much thought. o Impulse products - products that are bought quickly-as unplanned purchases-because of a strongly felt need. o Emergency products - products that are purchased immediately when the need is great. • Shopping products - products that a customer feels are worth the time and effort to compare with competing products. o Homogeneous shopping products – shopping products the customer sees as basically the same-and wants at the lowest price. o Heterogeneous shopping products – shopping products the customer sees as differentand wants to inspect for quality and suitability. • Specialty products - consumer products that the customer really wants-and makes a special effort to find. • Unsought products - products that potential customers don't yet want or know they can buy. o New unsought products - products offering really new ideas those potential customers don't know about yet. o Regularly unsought products - products that stay unsought but not unbought forever. Appendix 2 – Business Product Classes from Chapter 8 Business product class definitions: • Installation: important capital items such as buildings, land rights, and major equipment. • Accessories: short-lived capital items-tools and equipment used in production or office activities. • Raw materials: unprocessed expense items-such as logs, iron ore, and wheat-that are moved to the next production process with little handling. • Farm products: products grown by farmers-such as oranges, sugar cane, and cattle. • Natural products: products that occur in nature-such as timber, iron ore, oil, and coal. • Components: processed expense items that become part of a finished product. • Supplies: expense items that do not become part of a finished product. • Professional services: specialized services that support a firm's operations. ...
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Final Answer

Hello,I have attached the responses in the document below.Read through them and let me know if you have any questions.Thank you!😇

In-Class Activity 10-1: Determining market exposure policies
a) The product class which is involved
b) The degree of market exposure (intensive, selective, or exclusive) which you think
would be ideal
c) Explain why you think the indicated degree of market exposure would be ideal. State
any assumptions you have made

1) Hart Dinettes, Inc.
a. Shopping Product: Heterogeneous Shopping Product
b. Selective
c. A selective distribution would be ideal for Hart Dinettes because of...

Duke University

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