Foxy Originals Sales Channel Case Study

Foxy Originals Introduction:

As the popularity of Foxy Originals products grows the company takes the chance of over saturating their current Canadian market in which they hold a dominant position. To avoid this looming problem, the company has decided to enter the U.S. market by January, 2005 so they can expand beyond Canada. For Foxy Originals to achieve their goal they need to make decision on what is the most profitable sales channel to bring their product to the US market. Should the company attend trade shows or hire sales representatives?

1. Pros & Cons of Each Sales Channel:

Write up about one paragraph………………….

Trade Show Pros & Cons:

Pros:

• Foxy Originals will be able to interact face-face with their target US customers.

• This allows them to build relationships with customers
• Keep control of branding as far as how your customers see you company
• Trade shows will also allow you to notice trends quicker

Cons:

• Requires a lot of time for Preparation

• Up to 30 days attending shows
• Up to 50 days of prep work

• Orders may be geographically spread out so that will require you to think of new ways to get your product to the customer

Sales Representatives Pros and Cons:

        Pros

• Does not require a lot of commitment from owners.
• Commission-based compensation allows you to lower the risk of fixed cost
• Sales reps can sell multiple retailers in spreading across the US, resulting in better brand recognition.
• Sales reps can use the many contacts that they have accumulated over time

Cons

• Sales reps carry multiple brands
• Foxy will not fully control how their brand is portrayed to their US customers
• Possibility of high turnover due to sales rep leaving the company and this could cause their sales training expense to rise.

Contribution margin for each channel:

The trade show contribution margin is much higher than the sales representatives. This is mainly because there is more variable cost per sale due to the commissions for sales representative. The sales representatives have less fixed cost but over time the variable cost will add up over time. In terms of contribution margin the Trade show is the stand out.

Trade Show

Contribution Margin Chart

Sales Representatives

Contribution Margin Chart

1. Compute break-even point (in terms of number of orders and dollars) for Each Distribution channel:

The Trade show has more fixed cost which is the reason why it takes more unit sales to breakeven. Sales representatives only need 118 units sold to reach their breakeven point. In terms of Breakeven the Sales representative are the stand out.