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Clique Pens

a) How are the objectives of MDF different from trade discount?

Market Development funds (MDF) are directed towards creating consumer awareness via channel partners or advertising channels whereas the trade discounts are incentives given to the channel partners in order to motivate to push the company’s product.

MDFs main objective is to create pull in demand via consumer oriented promotions on the other hand Trade discounts whole objective is to create demand via push strategy. MDF is designed to achieve long- term brand building by directly conveying value to the customer via different channels. Trade discount is used to reduce the companys inventory and increase sale in the limited period of time via channel stuffing.

MDF can be viewed as a part of marketing concept if implemented well and Trade discount can be viewed as the selling concept.

MDF calculation is derived by the size or penetration of the promotion whereas the trade discount is the percentage of amount of sales that a channel partner makes.

b) Should clique be more concerned with retailer need or consumer need?

Clique should be concerned about both retailer needs & consumer needs depending on the sales & distribution channel (SDC).

If you consider big multi-brand retail channel like Walmart, their bargaining power is higher. They also account for huge bulk orders which are necessary for the company and to cover the fixed costs. (Retailer Needs)

Whereas small indirect retail channels have relatively lower bargaining power & consumer needs are of vital importance over here. Since the consumer walking in is brand aware and also has a preference mindset before purchase. This consumer segment ensures the profitability of the company. (Consumer needs)

c) How should Ferguson manage push/pull conflict between Marketing and sales department?

Ferguson should Formulate the concept of MDF but the allocation of MDF should be entrusted to Sales or Marketing depending on the distribution channel.

Case clearly mentions that Big Retailers like Walmart & Walgreens would not be interested in dealing with Clique if they arent incentivized well so they should be handled by Sales department’s approach of Push.

It is mentioned in the case 85% of people walk in to stores with preferred set of brands that they would like to buy but are influenced by the retailer, but still Small retailers and office retail stores should be handled via Pull approach. Since this is essential to ensure the long-term brand building or sustainability along with profitability.

IIM Indore PGP at Mumbai

Group 9

Mehta Akshay/ Natasha Gautam/ Jonny Paul