PROBLEM SCENARIO: Your recently submitted a report to the Vice President of Marketing recommending that the computer manufacturer company establish a direct-marketing channel for its products. As a result of that report, the VP has decided to promote you and place you in charge of establishing a direct-marketing system where customers can purchase products directly from the company web site.
Several major retailers in your existing distribution network aren't happy about the company's plans. They argue that disintermediation will deprive them of customers and have even threatened to drop your company's product lines. These retailers account for about 60% of sales.
You have called a meeting of your associates to discuss this problem.
1. What answer can you offer to your retail partners?
2a. Should the company adopt a direct-marketing model like the one used by DellTM Computer
or
2.b. adopt a system similar to the one used by Hewlett-PackardTM in which web orders are forwarded to local retailers who complete the orders, ship the products and get the 8% sales commissions?