 |
 |
 |
 |
|
 |
 |
to 0.5 million Euro for chilled warehousing. Chilled warehousing would allow the company
to revert to a mixture of road and rail delivery. This would bring transport costs into line
with those of western Germany. With the low cost of land, the company could also
consider the development of an additional production facility in the eastern Lander. This
was likely to cost around 8 million Euro for the required capacity to service the eastern
Lander.
Promotion
The company had relied on high quality products to achieve repeat purchase after
becoming established in an outlet. In the old west of Germany, this policy had worked well.
The company had a reputation throughout the trade for its quality and price competitive
products. In the east, Chrombach was relatively unknown. It had considered a number of
alternative promotional policies but, at present, was concentrating on supplying large
quantities of leaflets to distributors. Other possible avenues included promotion in trade
magazines, or direct mail or telephone. Three trade magazines were starting to be
circulated in the eastern Lander. They were the main three catering magazines on sale in
the west. In total, they had a circulation of 200,000 of which 15,000 was currently in the
east. Costs of advertising in all three would total 20,000 Euro per month for a full page
advertisement. The company could also invest in the creation of a direct mail database,
which would cost around 30,000 Euro to establish and then around 1.5 Euro per mail
shot. Finally, the company could use telesales to maintain contact with the new market.
Chrombach could either subcontract this service at a cost of around 10,000 Euro per
month or establish an in-house operation.
Action
Should marketing management support the development of business in eastern Germany?
Should the company chose production and/or warehousing?
What type of warehousing policy should be followed?
As the company moves into the new market, what other implications will there be for
promotion policy and organisational development?
 |