SALE CHANNELS

The map is divided into 4 regions: North America (abbreviated NORAM), Latin and South America
(LATAM), Europe, the Middle East and Africa (Europe-MEA), and Asia and the Pacific (APAC). NORAM's
city is New York. LATAM's city is Rio de Janeiro. Europe/MEA's city is Amsterdam. APAC's city is
Bangalore.

Your sales channel to your customers will be through company-operated, bicycle shops and a web sales center.
Normally, higher-end bikes are sold through independent retail stores that carry a variety of manufacturer
brands and make all of the local marketing decisions. By having your own stores, you will have complete
control over brand selection, pricing, advertising, and sales. Control will eliminate surprises at the point of sale
from independent retail operators. And, you will have the freedom to adjust your marketing decisions as you
learn more about your customers, the competition, and the costs of doing business in a variety of geographic
markets.

You can also set up a web sales center to create and serve demand. A web sales center is a physical place with
computers, internet connections, phones, and sales and support staff. It will have its own set of product
information pages where potential customers can review the technical features of the available bikes, check out
the prices, and place an order. Customers can also call the web sales center to ask sales people for information
and advice on a potential purchase.

However, before you begin to make tactical decisions, it is important to have an overall sales channel strategy
to guide these tactical decisions. Review the available information regarding the market opportunity and the
sales channel options and then formulate your sales channel strategy.

In the next quarter, you will test market your business strategy. However, it takes a full quarter to open a bike
store or an international web sales center. Therefore, you must schedule the opening of your first sales channel
in the current quarter.

It is recommended that you open a brick-and-mortar bike shop and/or a web sales center for test marketing.

To help you make your sales channel decision, review the size of each market in your target markets.

As you contemplate your sales channel options, consider the following factors:

Traditional brick-and-mortar:
 The big advantage of a brick-and-mortar sales outlet is that customers can physically touch and feel
the carbon fiber bike and take it for a short ride. These bikes are impressive and it is easy to fall in
love with one.
  Potential buyers will also have lots of questions about a bike’s performance capabilities, many of them
specific to a particular segment’s needs and wants. With a brick-and-mortar outlet, you can have
dedicated sales people for individual segments. One might be trained to serve the Speed segment
while another might specialize in mountain biking. This training will enable them to personally help a
customer to choose the brand or model that is right for that customer. And, the sales person will have
the skill to properly fit a bike to the customer’s physical and performance requirements.
 The big disadvantage is that brick-and-mortar, sales outlets are expensive to open and run. And, there
are a lot of details to manage.
Web Sales Channel:
 The chief advantage of a web sales center is that you can set up a single site to serve all of the
geographic markets you choose to enter.
 Another advantage is that it will allow you to market to an entire metropolitan area, an area much
broader than a single store can cover.
 You will hire employees that are fluent in multiple languages. When potential customers call in, they
will speak with someone that answers in their own language. Even though the web sales center is
located far away, they might think it is located in their community.
 The biggest disadvantage is that the customer cannot touch and feel the bike. All they have to work
with is a picture and the product description. By the same token, it is harder to have a conversation
with the sales rep on the phone than when the rep is standing next to you and the bike.
 Another drawback to e-commerce is that you must wait for the customer to find you (your website).
Your advertising and search engine marketing will help to put your name and brands in front of
potential customers. If they like what they see, they will visit your sales site, and hopefully place an
order. You can improve the odds of a purchase by investing in various productivity tactics. You can
also hire a sales and service staff to help close the sale, but remember they must wait for the phone to
ring.
DECISION TIP
 It is easy to get excited about having both a web sales center and traditional bike stores for selling
your products. However, it will be expensive to initiate both distribution channels. You may wish to
start with one and then expand to the other.
 Be aware that the web sales channel will cannibalize sales from bike stores, and vice versa. Some
customers that may have bought from the brick-and-mortar outlet will switch over to your web sales
site because that is their preference. And, the opposite is true. This will lower the productivity of both
sales channels. On the other hand, the use of two channels of distribution may create more total
demand, even if each one loses business to the other.
 Some of your customers will prefer to purchase through a brick-and-mortar, sales outlet while others
will prefer to shop on the web. Some of these differences are correlated with segmentation. You
should note which segments prefer to shop on the web and which ones prefer a brick-and-mortar
outlet as you select your target segments and engage them with your marketing.
SALE STORES

In the next quarter, you will test market your marketing strategy. To do that, you must choose where to open
your first store. Your decision will depend upon the biking opportunities and market potential in each
geographic location.

YOUR TASK
It takes a full quarter to open a bike store. Thus, you must schedule the opening of your first store in the
current quarter.
DECISION TIP
It is recommended that you open one store for test marketing. You can open additional stores in the future after
you gain market experience. To help you make your decision, review the size of each market in your target
markets.
Once you choose a city, a real estate agent will help you to find a suitable location within the city. A middle-
class area of town would be best for an upscale bike store like yours. And to speed entry into the market, the
agent will look for an existing store with approximately 3,200 square feet or 300 square meters of floor space
near a major road.

The space in the sales outlet will be divided up into a display area (about 50%), a fitting area (about 20%), and
a service area (about 15%). The rest (15%) will be used for a sales counter, office space, and a backroom for
storage, among other things.

The display area and fitting area will be the keys to your success. In the display area, you will be able to
showcase all of your bicycles. You will want to have several bikes on display along with a few Point-of-
Purchase displays to feature your most important brands.

The fitting area will be for measuring the buyer so that you can fabricate a new bike customized to the
customer’s shape, weight and biking preferences. In that area, you will have a few model bikes that you can
work with to find the right measurements for each customer.

The display and fitting areas need room for more than just bikes and models. You can expect to employ several
sales and service people to work with potential customers in that area.

As you can imagine, your store can quickly get crowded with bikes, point-of-purchase displays, staff, and
customers. Having more than 15 bikes or 15 sales people will likely cause a reduction in a store’s productivity.

Keep all of these things in mind as you move forward with your marketing plans.

The Territory Development section of the Help file provides some valuable information on what to think about
when you enter a market.
Selections are indicated using an "X".
Sales Offices
Quarterly Lease
City Open Close Current Status Setup/Close Cost
Cost
New York City Blank Blank closed 200.000 62.000
Rio de Janeiro Blank Blank closed 90.000 17.000
Amsterdam Blank closed 136.000 44.000
Bangalore Blank Blank closed 84.000 13.000