Description of the Business and its Supply Chain
Seattle Sutton Healthy Eating (SSHE) Company produces healthy weekly meals to its customers who are mainly diabetic or obese. The organization targets these consumers because they are required to consume healthy diets, which are time consuming to prepare. The organization ensures that it products are unique by changing the diet every week while ensuring that the calories in each meal remain are in accordance with the physician’s requirements.
The organization has a geographical distribution channel which means that every physical location has its own distributors (Gopal and Olsen 5). The organization prefers this kind of distribution channel to avoid competition among distributors and to ensure that its products reach all the locations where target customers reside. The organization has distributors even in locations where it does not have a kitchen; for example, the old kitchen in Ottawa, which was the first to be built, serves distributors in both Ottawa and Illinois. The new kitchen in Ottawa, on the other hand, serves distributors of Indiana, Michigan and Lowa (Gopal and Olsen 6). The geographical location of distributors enables the organization to avoid duplication of effort and it helps in increasing sales because each distributor markets the firm’s meals to a different set of consumers from other distributors.
Alternative Channels of Distribution
The organization is considering adopting new channels of distribution so that it may expand in terms of geographical coverage. This form of expansion increases the margins of an organization, and it also enables the company to reach new consumers (Verbeke 452). The organization is also looking to expand its channels of distribution because previous efforts to expand through franchising turned out to be unfruitful. This was mainly because it was unaffordable for the franchisees to set up new kitchens; the equipment and space required investment of at least a million dollars.
The firm is hoping to distribute its products through grocery stores especially in areas that the organization has not yet covered. The organization should not adopt the new distribution channel whereby it sells meals through grocery stores. This is because the new channel has more threats than benefits. One of the limitations of the grocery distribution channels is that they stock numerous products from various manufacturers. The stores, therefore, do not have time to market any single brand that they sell extensively because of the numerous products that they sell (Pride and Ferrell 340).
The fact that SSHE deals in specialized diet means that the company needs sellers who are able to convince customers about the benefits of the products. The sellers also have to advice the consumers on how to consume the meal portions. The grocery stores may not afford or they may not even be willing to employ sales persons who handle only SSHE’s products. This is a limitation because it indicates that even if consumers were willing to purchase products in the groceries, the lack of insights on the benefits of the meals and how they should be consumed and preserved may cause the consumers to lack dedication to the company’s products.
Thirdly, the grocery stores may turn out to be the competitors of SSHE within a short time after they start selling the firm’s products. This is because the products have double digit margins meaning that the probability of penetrating this market and succeeding are high. Therefore, SSHE should stick to its specialized geographical distribution channels where a distributor sells only the organization’s products to consumers within a specific physical location. This will prevent the firm from experience the above mentioned threats.
Gopal Gurram and Kathy Olsen. Healthy Eating Meets the Grocery Chain: The Grocery Supply Chain. Slideshare. Print.
Pride, William M, and O C. Ferrell. Marketing. , 2016. Print.
Verbeke, Alain. International Business Strategy: Rethinking the Foundations of Global Corporate Success. Cambridge: Cambridge University Press, 2013. Print.