A company needs to analyze its internal and external environment to capitalize on its strength and do away with its weaknesses (Miller 112). This article will feature Anbessa Shoe Company, analyzing the types of goods offered by the company and how competition is established. It will also look at the factors that are considered when setting the price of the goods in the company. How the company does its promotional activities through public relations and also how the company chooses its channel members. Finally, the article will also look at how the company handles a conflict created between the company and its channel members.
Types of goods and services offered by Anbessa Shoe Company
Anbessa Shoe Company was established over seventy years ago. It is concerned with the manufacturing and distribution of leather lining shoes, leather upper, and boots for children, men, and women. It also produces military shoes which have stuck on the sole. The company produces about two thousand five hundred pairs of shoes daily and this is because of the experienced workforce. It also has a good management team that spearheads its success. The company has employed approximately seven hundred employees who help in various activities of the company, which include shoe manufacturing up to the production of ready shoes. These employees also help in selling and distribution activities to ensure the shoes get to individual retail. Most of these personnel are employed permanently, which makes it possible for the company to retain highly experienced employees thus avoiding the problem of employee turnover.
For Anbessa Company to operate competitively in the market, it ensures that it produces different types of leather shoes which will meet the customer’s expectations both locally and internationally. The company also aims at developing unique designs for the shoes to be competitive in the local and international markets. The company also uses alternative materials to replace the imported low materials which result in a reduction of the production cost and thus gaining a competitive edge in the market. Technology is also a competitive advantage which the company uses. It renovates the old machinery used and gets other new machines and this goes hand in hand with training the employees for them to accept the new technology and feel comfortable using the new technology. This has resulted in the company doubling its production level and reducing the cost of production due to efficiency. This has also made the company have a competitive advantage in the market. The company enjoys a competitive advantage from the fact that it is located in a country that has a high source of leather. The country also has a high population of people who make a ready market for the shoes manufactured. Other competitive advantages that the company enjoys include its good distribution network which is strategically located thus making it easy for the customer to get the shoes. The company has a good image which also makes the customers loyal.
Anbessa Company has a well-established distribution network which includes a warehouse, wholesale and retail shops, which are located in major capitals and major towns. The company targets its shoes to the upper, middle, and lower-income earners, and most of the production is targeted to the local customers. The company also sells forty-seven percent of its shoes to a public institution that purchases uniform shoes for the workers. Fifty-three percent is sold to the companies own retail shops which are all over the country.
Factors considered in determining the price of goods and services
When determining the prices of goods and services, a company has to consider some factors to arrive at a price that is profitable to the company, competitive, and one that the customer will feel is fair after relating to the value gained after buying the goods or services.
Cost of production
A company should consider the cost incurred in the production of certain goods or services (Miller, p. 112). This will help the company to fix a price that is above the cost of production since the company’s aim of production is to make profits. Labor cost is one of the operating costs that Anbessa Shoe Company considers. This involves the cost of the workforce who help in the production and sale of the shoes. Labor cost includes salaries and wages given to the employees and also the cost of fringe benefits received by the employees. The other cost that the company considers is a material cost which includes the raw materials used by the company to make shoes like sock lining, shoe upper, and last raw materials among others. Overhead cost is also an operating cost that should be considered and it includes depreciation, lighting and heating, and other indirect expenses. The final cost is the cost of delivering the product till it gets to the hands of the consumer. The company thus considers all these costs and sets the price of the shoes at a price above the total cost to earn some profits.
A company should set the prices of its goods and services at a competitive price to compete fairly in the market. Competitor’s price influence the pricing strategy of the Anbessa shoe company where the company researches to know the prices of the shoes from the competing companies (Miller, p. 112). The company sets its prices at a price above the competitors because it has already acquired a good reputation and thus the customers are loyal to the company and are ready to pay premium prices. The high-quality shoes manufactured by the company also make it possible for the company to sell the shoes at a high price because the customers get value from purchasing those shoes. The strategic distribution channels which the company has established make it easier for the customers to access the goods and thus they don’t feel the pinch of paying a higher price compared to that of the competitors.
General market environment
The general environment of the market affects how Anbessa shoe company prices the shoes produced. These environmental factors in the market include the market forces of demand and supply, the market cycle where if it is the early cycle the company can charge high prices, and also the economy’s status affect pricing depending on whether the is experiencing inflation or deflation.
Different companies use different pricing strategies and thus the company in determining the prices of the shoes has to use the laid down strategies and standards of the company (Miller, p. 112).
Company public relation activities
Public relations is used to promote the company. It focuses on enhancing the reputation of the whole organization by making people aware of the company’s products, brands, and activities and also by creating the company’s image such as innovative or dependability image (Bernays 256). Anbessa uses public relations as one of its promotional strategies. This helps the company initiate a favorable relationship with its products. These products are made to satisfy the users, who are the general public and build a strong customer base through a proper communication strategy. The company has employed a public relations officer whose work includes monitoring closely the numerous media channels for public comment about the company and its products. This is important because in case a bad comment is made about the company then the public relations officer can rectify the comment and give good news about the company.
The company’s public relations department helps in building awareness of the company and favorable image and products. They use media to say their success story, both electronic and print (Bernays, p. 256). The public relations officer explains about the company and the products it produces, insisting on their quality and how it is the best shoe producer compared to the other producers. This creates a good image of the company and also helps in attracting customers to buy the company’s products.
Public relation helps in building goodwill among the Anbessa shoe company target market through community, philanthropic and special programs, and events. By the company involving itself in the social responsibility activities like visiting the needy in the society, arranging special events like sports for the community around and employing people from the community has made the company have a good image and reputation which results to the attraction of more customers thus increasing the revenue and at the same time getting a competitive edge in the market. Through public relations, a company can overcome managing crises that threaten the company or the product image. The public relations officer ensures that any management problem arising in the company is solved immediately without exposing it to the public to maintain the company’s good reputation.
Public relation supports marketing by building product and company image which is also known as publicity. It helps companies to build serious and credible products that customers can relate to. In many cases, however, “audience view most media outlets as unbiased in their coverage, which means the decision to include the name of the company and the views expressed about the company is not based on payment but the media outlet judgments” (Bernays, p. 256).
The company uses a well-structured public relations campaign to provide the target market with more detailed information. The use of media to market the company products is normally successful because they have more space and time to explain to the customers what is available in terms of value and at what costs, hence customer loyalty is built even as it grows. Public relation in this company ensures that a story about the company is picked by a large number of media and this is achieved by inviting many media outlets to attend an event organized by the company.
Public relation media
Anbessa Company uses different types of media in its public relations activity which include:
Marketers in the company capture names and addresses of customers and potential customers and then use newsletters to make regular contacts with them. The newsletters provide content of interest to customers and information on products and promotions.
The company holds special events like sports and visits the needy in society to reach a specific narrow target audience. It captures the attention of the “audience in the immediate area and also the attention of mass media like the television news and major newspapers which provide broad reach” (Bernays, p. 256).
The company has a culture of communicating regularly with employees to keep them informed about the corporate programs, sales incentives and also keeping them updated. Employee communication also helps in solving any problem.
The company also uses media relations to publicize itself and its products to the members of the press. These media include television, radio, newspapers, magazine, and the internet.
Choosing channel members
To make a distribution channel work the company selects its channel partners carefully (Dent, p. 234). Several factors are considered by Anbessa Shoe Company and they include:
Strength of the channel member
This is one of the factors used in selecting the prospective channel member. The company finds the financial resource at the disposal of the partner being selected and this information can be found from the intermediaries’ financial statements and analysis. The company does this to have an idea of the resources the potential partner can spare for the manufacturer. This also helps the company to know whether the intermediary will be in a position to meet the payment deadlines.
The reputation of the intermediary
The second factor that the company considers when choosing channel members is the reputation of the intermediary. Since in today’s economy the customer behavior is motivated by the need to maintain a status symbol, the reputation of the intermediary in the market does a lot of difference in terms of input required to sell the product in the market (Dent, p. 234). The company, therefore, chooses a channel partner who has a good reputation for the customer and one who does not have the bad habit of returning orders and the habit of late payments and asking for discounts.
The company chooses a channel member with wide market coverage and who is also quantified in terms of several outlets per market area, industry coverage, and intensity coverage. This is important because the aim of the company in sharing market control is to bridge the gap between itself and the larger number of customers.
Manufacturers look for an intermediary to increase their strength in the market. Therefore Anbessa Shoe Company analyses the management style to get the channel member with an efficient management style that is compatible with that of the company. The company measures the channel efficiency by considering factors such as employee relations, organization decision-making structure, employee training, and strategic direction of the company.
Equipment and facility
Anbessa Shoe Company analyses the kind of transportation facilities, delivery methods, safety precautions during storage and transportation, and record-keeping facilities of the prospective channel member. This is important because it helps the company to get the best intermediary with the best facilities to ensure that the shoes get to the final customer and where the customer wants them.
Ordering and payment procedures
The efficiency with which the intermediary places orders with the company and settles his bills influence the selection process. This is because there is no use of a fast inventory conversation period to the company if the average collection period is long.
Sales performance/ good track record
Sales strength means the qualitative strength of the sales force whose competence is enhanced by the intermediary (Dent, p. 234). The company analyses the performance of the existing related product lines in the portfolio of the channel partner. The efficiency is also measured by the capacity of the intermediary to reach target individuals, provide after-sale service and organize advertising and sales promotion programs.
Anbessa shoe company analyses the skills, competencies as well as the number of the sales force employed by the intermediary to get the channel member with the best sales force. Competency is measured in terms of communication skills and technical know-how possessed by the employees of the channel partner.
The company considers the product line carried by the prospective intermediary. An in-depth analysis is made into the type, strategies, and resources committed by the intermediary to the product line to know whether the channel member is dealing with the competitor’s shoes. This analysis is done because in the modern economy it is impossible to find an intermediary who is solely dedicated to one product line.
Handling conflict between the company and the channel members
The company must clearly define all the policies and incorporate them. These policies include the scope of support to the distributors, their margins, roles, and responsibilities among others. The conflict which arises between the company and the channel members may be as a result of the undue price cut by a channel partner, lack of clear demarcation of territories, and lack of uniform credit policy by different channel partners (Dent, p. 234). For the company to be in a position to solve such conflicts dealers’ meetings are organized and are encouraged to air their problems for discussion till they agree.
The dealers are also given a brief insight into the company’s internal functioning so that they can understand the company in a better way. When they understand the company properly conflicts are reduced and thus the meetings are made Occasionally though frequent mails are used to seek the dealer’s opinions and suggestions on important issues relating to them (Dent, p. 234). The company’s executives also frequently visit the channel members to reduce the chances of lack of communication. When the company notices a dispute, the managers make sure they change the regular trouble creators to avoid the same problem in the future.
Anbessa Shoe Company does its best to remain competitive in the market by producing quality shoes that meet the customer’s expectations and at the same time earn the company profits. This article has given a brief profile of the company featuring its products, its workforce, the channels of distribution used, and also the competitive advantages that the company has. The article has also looked at the different factors that determine the price set by the company and also the public relation activities of the company. Factors considered by the company in choosing the channel members and how to solve channel conflict are also explained in this article.
- Bernays, Edward. Public Relations. New York: Kessinger Publishing, 2004.
- Dent, Julian. Distribution Channels: Understanding and Managing Channels to Market. Chicago: Kogan Page Publishers, 2008.
- Miller, Kenneth. Fundamentals of marketing. New York: McGraw-Hill, 1999.