Case Study #3: Distribution Agreement
Shed some light
Raynonplus is a small, family-owned eyewear business located in Ottawa, Ontario, Canada. Started by Pierre Dupuis in 1952 under the name of Visionplus, the company has been exclusively owned and operated by the Dupuis family for over 50 years. Currently, the business—a sole proprietorship—is owned and managed by Gerald Dupuis, grandson of the original entrepreneur. The Dupuis’ changed the business name in 1957 to capitalize on a trend in polarized sunglasses that swept the neighbouring French speaking province of Quebec.
Traditionally, Raynonplus sold a wide range of generic and brand name eyewear including prescription lenses, contact lenses, frames and sunglasses; but
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What are some of the benefits that would have compelled Raynonplus to choose a distributorship agreement over an international sales agent agreement?
.. Sales agents tend to be used for more highly specialized goods that require implementation, installation or aftermarket services.
.. A distributorship agreement, or the terms governing the business relationship between the principal and the foreign distributor, often ensure an extensive portion of the financial costs are absorbed by the distributor, whereas there is no such risk to a sales agent. For example, distributors often purchase the merchandise outright and are compensated through price mark-ups and predetermined credit and payment policies as opposed to sales agents who do not purchase the merchandise and work on commission based compensation.
2. List another possible form of international business endeavor Raynonplus could have considered as a market strategy in France. Given the details of this particular business case, why would this option not have been right for Gerald?
.. Additional possibilities for international business include:
.. FDI
.. Joint venture
.. Partnership
.. For the most part these options require a sharing of both financial and operational responsibilities.
For example, in many countries, national FDI legislation requires 51 percent national ownership.
These are therefore not viable options for Gerald who wishes to
Warby Parker target customers are people with a concern for style and a high quality eyewear that is at the same time affordable. Similarly, by adding a social component, the company appeals to customers that are motivated to help others and the environment. Warby Parker is well aware that some customers, especially nowadays, prefer to shop online from the comfort of their home. That is why Warby Parker implemented its convenient home try-on program designed especially for this kind of customers. Meanwhile, Warby Parker keeps gaining access to customers uncomfortable with purchasing eyewear online by taking advantage of the power of physical storefronts to promote brand awareness.
4) What is the key difference between merchant wholesalers and agents/brokers? What are the risks and benefits of each approach for producers?
The Luxottica Group is an Italian eyewear company founded in 1961 by Leonardo Del Vecchio. Luxottica is the leading designer, manufacturer, and distributor of luxurious and designer eyewear controlling over 80% of the world 's designer eyewear brands. Luxottica has become a leader in the prescription eyewear business in North America with retailers that include LensCrafters and Pearle Vision brands, Asia-Pacific with OPSM and Laubman & Pank brands, and in South America with the GMO brand. Luxottica also operates points of sale for its retail licensed brands in North America under the Sears Optical and Target Optical brands.
people afflicted with site problems. Not only do they believe in making the necessary eyewear more
By not going through the regular intermediaries that the competitors use will cause problems for the distribution factor. By going through their intermediaries it will be provided by a trusted network where the salespeople that Richard hires might cause a channel conflict and it will fail.
Potential channels included: Heavy supply houses and heavy equipment distributors - provided access to a wide market but also absorbed additional profit margins. More importantly, they were unlikely to hold the enthusiasm needed to actively promote CMI’s pads and educate the market. Manufacturer’s reps – were commission-based transaction-driven salespeople. Reps held strong industry connections and offered access to a wide market without increasing labor costs. On the other hand they held low brand loyalty and could be discouraged by complex time consuming transactions requiring market education. CMI was also considering In-house direct sales force – they would have offered strong brand loyalty, product knowledge and professionalism but also take longer to gain market coverage and demand large expenditure on labor and training. CMI eventually decided to sign manufacturing reps who sold their pads to various distributors and supply houses.
In order to meet this condition, the identified benefit must be sufficiently separable from the recipient’s purchase of the vendor’s products such that the vendor could have entered into an exchange transaction with a party other than a purchaser of its products or services in order to receive that benefit.
1. Should ServiSoft cave in to the distributors, or go around them and go direct using independent reps?
The company sells its products through two separate channels of distribution. Each is treated as a
Oliver Peoples was founded in 1987 by Larry Leight in the central of West Hollywood, California (Oliver Peoples Home, 2015). Oliver Peoples is a luxury eyewear American brand (Sandison, 2015) in high end of the market (Luxottica Annual Report, 2010). In 1989, the company succeeded to the first top of optical retailers in this industry (Oliver Peoples Home, 2015). Currently, the company’s main retail stores are located in The United States and Japan. The Oliver people eyewear designs were inspired by the estate collection of vintage. Additionally, it provides handmade details that are distinctive and unique to customers (Oliver Peoples Home, 2015). All eyewear of Oliver Peoples is handcrafted from the finest quality materials, whether frames, colors and so forth (Luxottica Annual Report, 2010). The eyewear can be found in a variety of notable fashion boutiques, department stores and online stores throughout the world (Oliver Peoples Home, 2015). However, Oliver Peoples has plenty competitors in the eyewear business. It includes Lenscrafters, Pearle Vision, Sears Optical, Target Optical, Sunglass Hut, Ray-Ban, Oakley, Vogue, Persol, Arnette and REVO (Luxottica Annual Report, 2010). As it mentioned above, these rival companies illustrate that they provide the same type of products or services to the same target group. In addition, the product might be sold in the same place, such as in eyewear department stores and online shops (Luxottica Annual Report, 2010). Nevertheless, to
The current sales structure divides independent sales representatives into different product lines and territories. This means that an Atomic Company retailer carrying four or five different Atomic product lines would have four or five different sales representatives. Not only that, independent sales representatives typically have a fairly high turnover rate in the industry,
The global eyewear market is anticipated to continue to grow in the next six years due to an increased number of people experiencing visual deficiencies and also as the general population continues to age (Grand View Research, 2014). Eyewear consumers
of the key issues result from John’s inability to comprehend the difference between sales representative and a sales manager. He was overly enthusiastic about his position and disregarded Phil Jackson’s tips on how to be successful as a sales manager. Sales managers must be multi-taskers who plan, organize and lead the functions of all customer contact and ensures that these methods of contact maximize the profit and sales goals of the company which hires them. A salesperson is responsible only for his/her own territory – a sales manager is responsible for the entire sales force and their productivity and revenue that
This alternative does not need traders to intervene in sales representatives’ jobs but the company has to make sure that both departments are able to identify prospective customers and make existing customers still trust in the company’s performance.
Company was founded in 1982 and now sells their products in 55 countries, including many countries in Europe, North- and South America, China and Asia.