Kaufman Shoes For Mos Case Study
Executive Summery
Jim Wells’ must determine how to promote and distribute a new product, which is a shoe made for cattle suffering from hoof disease. The target market is predominantly dairy cattle however, beef, show, research and breeding cattle were all potential users of moo shoes. Together Wells’ and his brother-in-law have $25000 they can invest into this business venture without risking their personal property. Wells’ has chosen Kaufman Footwear to work with in producing the shoes, as they are a company with an excellent reputation for quality. Kaufman has determined a production price of $19.00 per shoe. There are a few alternatives and promotional options that are considered. The three distribution alternatives considered are direct mail, local dealers, and using a mix of the both options. With the direct mail alternative, the Foundation for the Mentally Handicapped has offered to take care of all of the shipping for an additional fee of $0.67 for packaging on top of $2.00 postage fee. Shoes for Moos will not have to carry any inventory under this method because Kaufman has agreed to carry a minimum of 100 units. This method provides a one-to-one relationship with customers. The second alternative is to …show more content…
Considering the 40 per cent mark up dealer charge, and the approximate 100K salary of a sales person required to obtain shelf presence, fixed costs are much higher using the local dealers. Other costs that may be incurred using dealers are inventory costs, and shipping costs. If Wells was not to hire a sales person, and work with dealers on his own, time would be taken away from his retail store eventually adding costs. With the added costs of obtaining shelf space and the 40 per cent mark up, this method is not economical (exhibit-3)
Jim Wells’ must determine how to promote and distribute a new product, which is a shoe made for cattle suffering from hoof disease. The target market is predominantly dairy cattle however, beef, show, research and breeding cattle were all potential users of moo shoes. Together Wells’ and his brother-in-law have $25000 they can invest into this business venture without risking their personal property. Wells’ has chosen Kaufman Footwear to work with in producing the shoes, as they are a company with an excellent reputation for quality. Kaufman has determined a production price of $19.00 per shoe. There are a few alternatives and promotional options that are considered. The three distribution alternatives considered are direct mail, local dealers, and using a mix of the both options. With the direct mail alternative, the Foundation for the Mentally Handicapped has offered to take care of all of the shipping for an additional fee of $0.67 for packaging on top of $2.00 postage fee. Shoes for Moos will not have to carry any inventory under this method because Kaufman has agreed to carry a minimum of 100 units. This method provides a one-to-one relationship with customers. The second alternative is to …show more content…
Considering the 40 per cent mark up dealer charge, and the approximate 100K salary of a sales person required to obtain shelf presence, fixed costs are much higher using the local dealers. Other costs that may be incurred using dealers are inventory costs, and shipping costs. If Wells was not to hire a sales person, and work with dealers on his own, time would be taken away from his retail store eventually adding costs. With the added costs of obtaining shelf space and the 40 per cent mark up, this method is not economical (exhibit-3)