The President of Maxwell Corporation was considering whether the Company should set up its own distribution system or to outsource the entire distribution and logistics functions to a third party service provider. The Company had set up a manufacturing plant in Vizag where a wide range of orthopedic equipments like the crutches, wheel chairs, heating pads, elastic bandages etc. were manufactured. Presently, the finished goods warehouse was located at Vizag itself and the products were sent to all major towns in India as a point to point dispatch.
The Company was supplying these equipments direscly to retail stores at all locations. Marketing activity was headed by a general manager – marketing, based at Vishakhapatnam who was supported by a sales team comprising of sales officers. The company was not resorting to advertisement and publicity though the products of the company were fairly well known. It was felt that all the customers wanted quick responses to their orders as the products catered to emergency patients. But, these retail outlets carried only limited inventories.
This was due to the fact that most of the products came in a variety of styles, shapes and sizes and the requirement was more customer driven. Keeping even a moderate inventory of all types was not economically viable and lead to dead stocks in the long run. The company was looking at various options which included the following: 1. Setting up of hub and spoke type of distribution network wherein it was proposed to set up a stock point or mother warehouse in each zone, east, west, south and north respective retail outlets were to be fed from the mother warehouse located in that zone. . 2. Setting up a central warehouse anywhere in Central India and feeding retail outlets from this location. 3. Changing the distribution channel from the present numerous retail outlet systems to a more efficient system. 4. Outsourcing the entire distribution and logistics to a third party wherein the entire activity of transportation and distribution till the ultimate retail outlet would be taken care by the service provider and the company could focus more on the activities of marketing and Sales.
Questions: Q1. Which of the options do you think should the Company consider and why? Q2. What should be the distribution channel for Maxwell and outline the advantages and disadvantages for having such a type of set up. Q3. What type of marketing and sales set up would you recommend for Maxwell Corporation and why? 2. )CASE STUDY: SOUTHWEST AIRLINES: Marks: 15 Division A : roll no. 31 to 61 Division B : roll no. 36 to 71 Southwest Airlines occupies a solid position in the minds of U. S air travelers as a reliable, convenient, fun and no frills Airline.
Translated, this position means high value- a position reinforced by all the elements of Southwest’s service marketing mix, it had maintained this position consistently for over 30 years while making money every year, no other U. S airline comes close to this record. As further evidence of the airline’s financial stability, southwest was the only airline to remain profitable in the months immediately following the September 11, 2001, tragedies in the United States that sent many airlines to near bankruptcy. Success, has come for a number of reasons.
One is the Low cost structure and the other is the channels of distributing their Services. It flies only one type of plane, Boeing 737s which lowers the cost because of the fuel efficiency of the aircraft itself is combined with the ability to standardize the maintenance and operational procedures. The airline also keeps its cost low by not serving meals, having no pre assigned seats, and keeping employee turnover low. Southwest airline’s is famous for his belief that the employees come first and not the customers..
The Dallas carrier has managed to be the low cost provider and a preferred employer while enjoying high levels of customer satisfaction and customer loyalty. Southwest airlines has the best customer service record in the airline industry and has won the Industry’s record in the airline industry’s “triple crown” for its best baggage handling, best on time performance, and best complaint statistics many years in row. Observing this, it is clear that all of its marketing mix and direct marketing approach with no intermediaries had contributed to the successful market position.
Southwest airlines use its people and the customers very effectively to communicate its position. Employees are unionized yet they are trained to have fun allowed to define what “fun” means and given authority to do what it takes to make flights lighthearted and enjoyable. People are hired for their attitudes, technical skills and are trained. The service delivery process reinforces its position. There are no assigned seats on the aircraft (by the agents, thereby avoiding the intermediate channel) so passengers line up and are herded for their seats.
The airline does not transfer baggage and food is not served. In all, the process is standardized, low cost allowing for low fares. Southwest airline’s easy to use website is yet another form of consistent, tangible evidence that supports the airline’s strong positioning. The consistent positioning using the services marketing mix reinforces the unique image in the customer’s mind, giving Southwest airlines its high value position, which has resulted in a huge and committed following of satisfied customers and increasing profits.
Southwest airlines have come under intense competition in its U. S routes. This had led to a decline in the revenue. The loss can be attained by competitor’s shuttle by United trying to replicate the Southwest business model. Questions: Q1. What is Southwest airline’s competitive strategy? How does it make money? Q2. Can Shuttle by United imitate the business model of Southwest airline and can it persist with time? Justify. Q3. A no frills airline – Southwest airlines, had this lead to the decline of the Sales? Comment.