Milestone 7_ Distribution Channel

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Feb 20, 2024

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Milestone Seven Assignment Amy Richard Southern New Hampshire University MKT 500: Marketing Strategies Professor Tina Brown November 2, 2023

When designing and selling a new product, it is vital that companies carefully choose an appropriate distribution channel. Choosing a strong distribution channel is important because it allows for a smooth delivery process which will generate customer satisfaction. If customers are satisfied, companies will gain their loyalty and there will be a positive word-of-mouth about the product and the service the company provides. Consumers are the ultimate success or failure of any company and that is why it is imperative that they are top priority. The distribution channel I will be using to get the Model F into the market is a direct distribution channel. “A direct distribution channel is organized and managed by the manufacturer itself. Direct channels tend to be more expensive to set up at the beginning and can sometimes require significant capital investment” (Ross, 2022). I have selected this distribution channel for the Model F because it will allow Tesla to have total control over the product and the process of delivery. A direct distribution channel is often faster than other distribution channels and it often builds stronger customer relationships. The only disadvantage to utilizing a direct distribution channel is that it is often more costly for companies, and it adds more stress on the company and their employees. Many automotive companies use an indirect distribution channel because it is less costly. However, an indirect distribution channel often increases delivery time, and involves third parties like warehouses, shipping centers, and retailers that creates a sort of distance from company to customers (Ross, 2022). This distance often makes it hard for companies to develop customer loyalty. A plan to use push and pull promotional strategies to help promote my product to Model F’s ultimate consumer. Push and pull promotional strategies are main ways to attract customers. “A push promotional strategy works to create customer demand for your product or service through promotion: for example, through discounts to retailers and trade promotions” (Magloff,

2019). “A pull promotional strategy uses advertising to build up customer demand for a product or service” (Magloff, 2019). I plan to publish informative articles online that will educate consumers about the Model F and its benefits for the environment and the economy. This is a pull promotional strategy. I also plan to have fliers handed out and emails sent out to those who express initial interest in the Model F. These fliers and emails will contain a small discount to persuade consumers to invest in a Model F. This is a push promotional strategy. I plan to manufacture Model Fs in several of the Tesla’s company-owned plants in the United States. Tesla’s plants can be seen around the world. However, most of Tesla’s plants are in the United States and their largest can be found in Fremont, California (Redding, 2023). Model Fs will be manufactured in the same assembly lines as Tesla’s current models. Model Fs will only be made by order. Once a customer’s Model F is ready, it will be immediately shipped out to them. With this being said, warehouses will not be required until there is an increase in demand. Once there is an increase in demand for Model Fs, then they will be stored in Tesla’s warehouses. Model F’s will be delivered by boat or plane to the customer’s nearest Tesla dealership where they can schedule a pickup date and time. Channel members should expect a similar process to Tesla’s. The marketing, manufacturing, warehousing, and delivery process will be almost identical to Tesla’s. Where Tesla has already achieved so much, I predict that the process will be smooth and undisruptive. My organization will be structured in an organized, efficient manner where everything will be completed one step at a time. This structurization will allow me and my channel members to accomplish what needs to be accomplished in order to deliver customers their orders on time, if not sooner.

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I do plan on having a sales force as a sales team is essential for any business who plans to not only grow but succeed. Salespeople will be carefully selected. It is preferred that candidates have some experience. However, if the candidate has no prior experience, but is the right fit, then they will be required to do some form of training. Training will require one to shadow a fellow coworker for a couple months and take a short online class. This training will be offered and available to all. As for compensation, those who successfully make a sale will receive 20% of the vehicle’s final cost on top of getting paid $20 per hour. All of those on the sales team will receive full benefits. These benefits will include health, life, dental, and vision insurance, two weeks paid vacation, ten paid sick days, yearly bonuses, and a retirement savings plan. Since a direct distribution channel will be utilized, it is vital that the sales team is highly taken care of, so that they feel valued and appreciated. Employees who feel this way will be more likely to be productive, show up to work with a smile, and stay with the company for many years. According to Salesforce.com, “Companies using direct channels of distribution must heavily invest in sales teams and consumer marketing infrastructure, rather than relying on partners. It’s also much more difficult to achieve a wide reach geographically or across various market segments without the help of intermediaries” (What is a Distribution Channel?, n.d.). I believe that my chosen distribution channel will not only allow products to be delivered properly to customers but will increase the overall efficiency of the distribution process, which will then result in a positive impact on customer satisfaction. “Customer satisfaction is important because it illustrates whether your customer base likes what you’re doing. Research shows that high satisfaction leads to greater customer retention, higher lifetime value, and a stronger brand reputation” (Franklin, 2023).

References Franklin, A. (2023, October 27). What is customer satisfaction? Definition + importance. Zendesk. https://www.zendesk.com/blog/3-steps-achieving-customer-satisfaction-loyalty/ Magloff, L. (2019, March 8). Push & Pull Promotional Strategy. Chron. https://smallbusiness.chron.com/push-pull-promotional-strategy-10972.html Redding, C. (2023, August 25). Where Are Tesla Cars Made?. CarShtuff. https://www.carshtuff.com/post/where-are-tesla-cars-made#:~:text=Tesla%20cars%20are %20manufactured%20at%20company-owned%20plants%20located,abandoned%20the%20all- in-one%20production%20facility%20model%20decades%20ago. Ross, S. (2022, October 30). Direct vs. Indirect Distribution Channel: What's the Difference?. Investopedia. https://www.investopedia.com/ask/answers/052115/what-difference- between-direct-and-indirect-distribution-channel.asp#:~:text=A%20direct%20distribution %20channel%20is%20organized%20and%20managed,delivery%20staff%20will%20need%20to %20be%20set%20up . What is a Distribution Channel? (n.d.). Salesforce. https://www.salesforce.com/eu/learning-centre/sales/distribution-channels/

Milestone 7_ Distribution Channel

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