Description
Memaksa Steel, an Indonesian steel products manufacturer, has recently developed a new finishing process that reduces the wear time on steel by 60% for products that are subjected to intense abrasion during use. The marketing department believes this innovation should be applied to steel saw blades for use in Indonesia’s lumber mills. Saw blades manufactured using this new finishing process would sell for 35% more than the older blades, but would drastically increase the cutting time before needing replacement. Santi der Majoido, the CEO, must examine the channel structure and decide whether or not to launch the new product.
This case is an introduction to distribution channels as it highlights the necessity in bridging the gap between production and use in an industrial setting. It is also applicable for classes on new product introductions and industrial or business-to-business marketing.
This case introduces the concept of the intermediary, such as distributors and outfitters, and the functions they perform: promotion, ownership, inventory, etc., as well as the financial model for various actors in the channel.
The case can be used for undergraduate, masters, and executive level classrooms.
Inspection copies and teaching notes are available for university faculty. To receive an inspection copy and teaching note, please email cmpshop@smu.edu.sg with your registered faculty email ID and a link to your contact information on the faculty directory at your university as verification. An inspection copy and teaching note will then be sent to your faculty email account.