Rockwell Case Study

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A-B can use channel-design decisions above (Kotler et al, 2016) to decide what the future shape of its distribution would be. The first step, A-B needs to analyse its customer needs. Refer to the case, there are 2 types of customers including 1. service customers who appreciate service and are willing to pay for it, and 2. price customers who do not need the support, but require lower prices (Kotler et al, 2016). A-B then establish channel objectives and constraints for the next step. Providing desired levels of service is focused for the first type of customer whilst for the second type, minimising costs are needed. Regarding the third step, by focusing on the service customers, A-B should maintain its relationship with local distributors. This is because local distributors extensively trained by A-B are capable of supporting customers’ field needs and distributor service quality was the key of A-B’s success in the market. However, unlike national distributors, local distributors had a weakness in terms of supplier consolidation, especially for large multinational companies. The company should develop technologies that can link all local distributors into one centralised department, allowing better cost savings and more convenience. In terms of price customer market, some of MRO products might been distributed by national distributors as it focused on price competition rather than high quality services. National distributors allow economies of scale, better pricing, cost savings and strong IT capabilities. Moreover, a MRO sale increase in this new channel might benefit sale of capital purchases accounted for two-thirds of the total revenues of the distributor sales.

With respect to integrated MRO solution, A-B should provide an integrated MRO solution for its customers, especially large customers because there was an accelerated trend in this market showing a 20 percent annual growth in 2001 according to the case, and it can strengthen the relationship with large companies. Nevertheless, this solution allows distributors to take control of a customer’s MRO ordering and inventory management activities, leading to a conflict of interest that A-B might favor its products over competitors’ products. To tackle this problem, A-B might cooperate with other suppliers setting up the solution for their customers. This would help the company to increase trustiness from customers and also reduce the investment cost required for this project.

Furthermore, A-B should continue offering superior service as it is a key success of A-B, particularly on service customers. However, higher cost service might undercut A-B’s competitiveness for cost-conscious customers. Thus, to meet expectations of both types of customers, A-B should offer a lower price for price customers or charge for service separately from the product purchases.

As mentioned earlier, Technology is still needed to offer a one-stop shop for minimising costs and competing with national distributions. But, this time A-B should apply multichannel marketing (Kotler, 2016) allowing customers to do business not only e-commerce but also phone, fax and email. Moreover, the platform should be created by a partnership between A-B and other manufacturers to minimise costs of supporting IT infrastructure occurred for each membership.