What advantages does the specialty retail store distribution strategy offer Timbuk2? What risks does this strategy entail?
A) Mark rethought the strategy to benefit the company for the long term keeping in mind the uniqueness of his product. The alternative he decided to use was, to market his product through specialty retail stores. “These stores are somewhat similar to big retail stores, however, they attract brand conscious customers who are willing to pay a higher price for a (given) product” (When less is more). Specialty stores seemed the best fit for Timbuk2 because they offer deeper selection of merchandize, knowledgeable sales people, innovative store environment and higher profit margins. The attributes offered by these stores offered the best solution to carry Mark’s unique product. It gave Timbuk2 an opportunity to create a differentiated image for its product, over the clutter of other similar products. It offered higher profit margins and lesser production pressures as this was not a volume based business strategy any more. Through these stores Mark targeted an all new segment of customers and moved from price conscious buyers to premium price buyers.
Nonetheless, there were some risks embedded in the use of this channel. This includes the risk of satisfying the higher end of market. Customers willing to pay a higher price for a given product, are generally tougher to please. This segment of buyers tends to be more quality and brand conscious than other buyers. Therefore, the decision to choose this retail channel in itself was a risk assumed by Mark. If he had failed to meet the expectations of this set of customers; the business would have suffered. In addition, Mark also needed to create a preferential and unique brand image for Timbuk2 products because of the nature of his target market. If Timbuk2 was to remain in business then its product line and product designs had to be customer focused and follow the urban trends. Failure to gauge these trends would have resulted in huge losses to the company. Therefore, Mark assumed all of the above risks and was able to cater them effectively.
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