Channel Conflict Analysis of Schwinn Essay

With Schwinns recent elaboration into many large-scale retail stores (i. e. Wal-Mart, Toys-R-Us, Target, etc. ), they began to shift into a dual pass marketing strategy. a lot times, if non handled properly, this type of approach can result in significant problems for close to or every last(predicate) of the statistical distribution channel partners. Fortunately for Schwinn however, they were able to make many critical decisions which ensured that each of the partners distinct interests was narrowly aligned with their own.This proactive plan not only motivated many of their smaller independent cycle dealers to continue carrying their increases but it also allowed Schwinn to effectively reach a much larger fraction of their bespeak market. By closely analyzing this case, we can learn many valuable lessons regarding the overall importance of strong channel management. Product dissimilariation was one of the primary ways that Schwinn managed to avoid channel conflict. Schwin n segmented the market and delivered to the different segments of the market through different channels.The product line delivered through the mass market channel consisted of wholly different bicycles than those found at the independent bicycle dealers. This segmentation reduced the likelihood of conflict between the two channels, since the two product lines were targeted at segments with little to no crossover. Additionally, Schwinn introduced products like the Sting Ray which had desirous appeal and stretched beyond the traditional customer base of the independent bicycle dealers.These types of bicycles provided them with a unique product and furthermore a healthy margin to bolster profits. By maintaining distinct product lines for their two channels, Schwinn was able to minimize multi-channel conflict. The key to motivating channel members is to provide value and benefits to each partner in entrap to align interests and thus achieve the ultimate goal satisfy the customers nee ds. Schwinn used twain push and pull strategies effectively.By offering a relatively higher margin level than separate high-end manufacturers catering to independent bicycle dealers, they were able to restore the confidence and interest of their long term retailers in spite of going for a dual channel strategy. Moreover, as mentioned in the article, unlike most companies in the industry, there was no complicated loyalty formula required to get the best prices from Schwinn. In addition, Schwinn did not require specific pre-order sales in order to carry their products.Instead, suppliers were granted flexible purchasing options so they did not have to unnecessarily stock inventories during their off-seasons (i. e. winter months in cold climates). This push strategy not only reduced the administrative cost of the retailers, but also improved the inventory turnover and in the long run the retailers bottom line. Conversely, Schwinn was also able to simultaneously create a pull strategy after they utilize the extensive media exposure of products, such as the Sting Ray, to increase the brand recognition among customers thus drawing them to the independent bicycle dealers.In addition to this, the specialty storeowners found significant profits lying in the repairing of these rhythms and selling of parts/accessories. This proved to be a great factor for specialty bike owners to stay on in business while selling Schwinn. They had a clear edge over other tough retailers like Wal-Mart who did not provide any after sales service to its customers. Because they were making money by servicing the bikes sold at the mass market stores, the independent bicycle dealers were more tolerant of losing some sales on the edge of their segment to Wal-Mart, Target, Toys-R-Us, etc.Schwinn has done a good job of chief off any channel conflict by keeping the incentives aligned for its two main distribution channels. By expanding its product line into major retailers, the company has been able to target a new segment of casual bike riders. With Schwinns new line of entry-level bikes, big-box stores can satisfy the needs of casual bike riders by offering a large selection of affordable bikes at convenient locations.Meanwhile, Schwinn exempt provides a number of incentives to local bike shops, which form the companys other main distribution channel. These shops still profit from service and repair, which large retailers do not offer. Additionally, some of Schwinns higher-end models are exclusively getable in bike shops. Finally, Schwinn is flexible with its inventory requirements and offers good margins. By offering different incentives to each of its distribution channels, Schwinn has been able to target more customers while also keeping its retailers happy.