Although a 15,000 sq. ft. store at site Y yields an expected annual net operating profit of $23,393, a 20,000 sq. ft. store at the site would maximize the market share at 45.9 percent. With the larger store the market share of the competition is severely eroded (see head-to-head comparison). Store A with a 10% loss in market share (33% to 23%) will probably not survive. Furthermore, with store B and Athol located in close proximity the effect of clustering will draw even more customers to shop both stores simultaneously.
The locations of boarding areas at an airport are given below:
Step-1: Calculate the cross-media by adding the expected capacity and dividing it by 2, as shown below:
Step-2: Identify the order of the four locations stores: If one has to move from east to west, west to east, north to south, and south to north.
East to west: d-c-b-a
West to east: a-b-c-d
North to south: b-a-c-d
South to north: d-c-a-b
Step-3: For each direction, add the demand values up until have reached or exceeded the cross-median value. In our problem, this value is 52 (see step 1).
Step-4: Identify the business in which cross-median demand is reached or exceeded for each direction:
• West to East = C
• East to west = C
• South to North = C
• North to South = C
Since, all the options are showing the location-C, location-C is as an optimal solution.
The optimal coordinates are (8, 3).
Business distribution channels pave path to deliver its products or services. The distribution channels used to deliver products differ from the distribution channels used to deliver services. This is because, services are intangible and cannot be preserved.
Due to the fact that services cannot be felt or stored physically, the service providers make use of intermediaries to carry the service from source to destination i.e. service provider to consumer.
The benefit of using intermediaries in the service distribution channel is as discussed below:
As services are intangible, their movement to reach the destination is restricted to some geographical areas. To eliminate this issue, service providers use marketing intermediaries as organizational entities to create unlimited geographical service area.
For example, companies provide on-site work by arranging common equipment to examine the issues faced by the customers. A separate department namely, customer care executives are hired to solve these issues which has eliminated the issue with geographical service area.
Some other benefits using intermediaries in the service distribution channel are as discussed below:
• Virtual delivery can be one among the intermediaries in the service distribution channel that could be expand the business by interacting with clients, or customers using phone calls, teleconferences, videoconferences, etc.
• Using third party consultancy as one among the intermediaries in the service distribution channel, the service provider prevents issues that raise while working remotely. PR consultancy can hire an employee which works for YX company. He or she would render services to YX but, get instructions from PR consultancy. Therefore, the functions of company YX would be continue its operations remotely.
Thus, intermediaries of service distribution channel would help companies to overcome from issues those raise in delivering services and promote growth to the companies.