Reference no: EM132440293

Creston Vineyards, California (Video case)

Creston Vineyards customers include individuals, retail stores, restaurants, and hotels. The variety of consumers requires a sophisticated system of distribution channels. By combining different types of intermediaries, they are able to meet the requirements of many customers in many locations.

One of the most common channels of distribution involves a wholesaler (distributor) buying wine directly from the vineyard and reselling it to retail stores and restaurants within a geographic area. (In the US wine can be purchased from many types of stores not just liquor stores.)

Some wholesalers (distributors) may not need quantities large enough to warrant purchasing directly from the vineyard. They may pick up several brands from numerous vineyards at a consolidating warehouse (like Groskopf's) located in an easy-to-access central location in the wine growing region.

A broker may facilitate sales by calling on the wholesalers (distributors). Wineline (John Drady and Barbara Gold) is one of twelve brokers that are used by Creston Vineyards. The brokers pass on the key information about Creston's wines in a specific geographic region, and they may even help train and assist the wholesaler's salesforce. The brokers are not employees of Creston, but earn a commission when they facilitate sales of Creston's wines. They may also represent up to 30 other vineyards.

The wholesalers sell smaller quantities to the retail stores, restaurants, and hotels in their area.

Other channels are also used by Creston. In some markets, Creston can sell directly to large retailers. They even create private brands for a large grocery/liquor store chain.

Another channel of distribution is through wine clubs that provide members with information about wines and send them about six different wines per year. At one point this accounted for approximately 15% of Creston's sales.

Creston also experimented with selling directly to the ultimate consumer using a third-party Internet website. (Adapted from Berkowitz et al-Marketing, 5th Canadian Edition.)

Questions:

1) A. Draw, label, and discuss the functions performed by each channel member in Creston's first and longest channel. B. Then analyze and evaluate the effectiveness of Creston's ‘longest marketing channel,' and their ‘Internet marketing channel'.

2) Discuss the advantages and disadvantages of Creston hiring their own salesforce versus the advantages and disadvantages of using brokers.

3) A pipeline is the least expensive way to move a liquid. Why is most of the wine transported by truck? Why don't they use other modes of transportation: air, rail, ship, & pipeline? Discuss the pros and cons of all five options.