Slendertone Analysis

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1. Describe the root causes of Slendertone¡¦s French sales revenue losses?
All sales of slendertone were through distributors except of home-market. Since the investments being made in research and production, the company¡¦s marketing resources were very limited, they thought it could develop new market for Slendertone more cost-effectively and quickly. However, there were some poorly resourced and inexperienced distributors.
In France, the company was concerned about the growing dependence on one distributor.
There are 5main basis causes of Slendertone¡¦s French sales revenue losses listed below:

Ć Increasing competition continued to put pressure on price: from 1993 to the beginning of 1996: drop the retail price to compete
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„« A transaction category for providing customized services and procedures for merchants which offer merchandise or services via catalogs, telephone calls, mailings, and/or advertisements.

„« The variety of approaches a marketer uses to promote a product directly to the buyer and elicit and immediate response. Includes direct mail, catalogs, telephone sales, TV, radio, or newspaper ads that usually invite consumers to call a toll-free number or fill out a coupon

Direct marketing¡¦s disadvantage and problems: Legal restrictions- for example, DR television was not allow in Germany

Cultural factors: for instance, Germany and Switzerland are more conservative than French, Spanish, and South Americans. For the reason, they may not to be interested in a product like Slendertone.

Save cost effectively and quickly: compare with Direct shop(charged high margin), they can save more cost. Slendertone wanted to attract new customers in a cost-effective manner using the retail stores as a new route to market.

High return rates: the return rates of product from customers as hing as 35 percent, very often the outer packaging hadn¡¦t even been opened by the purchasers.

Lower than expected sales, low margins : Direct shop operated on high margins which meant that BMR would get less than 25 percent of the 120 retail price for the products,

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