Colorado State University Market Exposure Policies Discussion This exercise will give you some practice in determining the ideal degree of market exposure

Colorado State University Market Exposure Policies Discussion 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, andc) explain why you think the indicated degree of market exposure would be ideal. State any assumptions that you have made. 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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