Problem:
Your recently submitted a report to the Vice President of Marketing recommending that the 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 are not happy about the company's plans. They argue that disintermediation will deprive them of customers, and they 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. Here are your topics of discussion.
1) What answer can you offer to your retail partners?
2) Should the company adopt a direct-marketing model like the one used by Dell Computers or adopt a system similar to the one used by Hewlett-Packard in which in which web orders are forwarded to local retailers who complete the orders, ship the products and get a sales commissions?