The threat of complacency
A certain degree of intrabrand competition in a market area is beneficial to the manufacturer. It brings forth each channel member's best efforts without going so far as to put the channel member in a losing situation. Best Buy, a giant electronics retailer, acquired Future Shop, a competitor in Canada. Rather than shutting down Future Shop stores or converting them to the Best Buy name, the parent company actually left both names and both stores in place-even when they had stores literally across the street from each other. The two chains serve to block a third entrant-and to stimulate each chain to perform better.17 Companies often use the strategy of com peting head-to-head with themselves at the brand/product level on the theory that it is better to be cannibalized by another division than to be bankrupted by another com pany. Best Buy elevates this logic to the channel level none of the greatest drawbacks of selective distribution is the danger that selec- tivity fosters lackluster representation. ning enough coverage to create the opti mal degree of intrabrand competition, however, can clash with other objectives. The rest of this chapter will cover how to balance the risk of complacency that inevitably accompanies selective distribution by creating other methods of motivating channel members to give their best efforts when coverage has been limited. Sidebar 4.3 details how boat builder Bénéteau, skillfully avoided this risk after acquiring a rival Jeanneau.
The threat of complacencyA certain degree of intrabrand competition in a market area is beneficial to the manufacturer. It brings forth each channel member's best efforts without going so far as to put the channel member in a losing situation. Best Buy, a giant electronics retailer, acquired Future Shop, a competitor in Canada. Rather than shutting down Future Shop stores or converting them to the Best Buy name, the parent company actually left both names and both stores in place-even when they had stores literally across the street from each other. The two chains serve to block a third entrant-and to stimulate each chain to perform better.17 Companies often use the strategy of com peting head-to-head with themselves at the brand/product level on the theory that it is better to be cannibalized by another division than to be bankrupted by another com pany. Best Buy elevates this logic to the channel level none of the greatest drawbacks of selective distribution is the danger that selec- tivity fosters lackluster representation. ning enough coverage to create the opti mal degree of intrabrand competition, however, can clash with other objectives. The rest of this chapter will cover how to balance the risk of complacency that inevitably accompanies selective distribution by creating other methods of motivating channel members to give their best efforts when coverage has been limited. Sidebar 4.3 details how boat builder Bénéteau, skillfully avoided this risk after acquiring a rival Jeanneau.
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