What should Alice’s have done?Based on your personal research, what distribution approach(es) would you use if you Alice’s was your company? Why?How do your ideas relate to your target market(s), does your research change the approach to the channel(s)? Why/why not? gross margin of only 23 cents perbottle (13 percent), even at the higher retail price of$3.99 perbottle.Alice finally decided to upgrade the bottle and label to a unique, tall, triangular, Italianglass bottle and cork, with gold and black labels and recipe hang-tags by alocal designstudio. Shesold the dressings directly to upscale s pecialty and grocerystores.Distributors would notbeused.Specialtybrokers were hired to aid in selling directly,at a 10 percentcommission on netsales. The premium pricingwas also retained in thisnon-elas tic, low-price- sensitivity marketsegment, with the new bottles retailing at$4.99 each. Final netfactory s ales perbottle were $2.69 afterdeducting 10 percentbrokerage commis sions,with netfactory profits of $1.10/botile. Specialty food storestook a 40 percentgross margin, butpaid fors hipping.Packaging and pricing decisions are intimately related to dis trībutionand sales forcedecisions: Alice's res taurant could have made severaldifferent dis tubution decis ions,with different packaging and pricing results:Sell the salad dressings only from the restaurant in 32-ounce jars withhandmade black and white labels at$5.00 each. This distribution and salesdecision requires the leastamountofextraresources, s pending, and ris k. Thisalso provides the smallestpotentialsales retum.Sell the dressings directly to all consumers through mail order or othermarketing channels with family members handling both marketing and s ales.This distribution and sales decisionis a variation onselling only from therestaurant and may require additional resources to manage and grow, butitdelivers better returns thanselling only to local restaurant cus tomers.Sell through DSD (Direct Store Delivery) distributors. This distribution andsales decision requires financial res ources, management time, personnel, highermargins, and spending support, butmaybe the fas tes tway to grow thebusiness.Hirebrokers for store and/or distributor sales. This sales decision dependsuponscope of operations and geographic and dis tribu tionchannelexpansionplans.Combine severaldistribution channels simultaneo usly. This distribution ands ales decision calls for the largestamuntof resources, time and pers onnel,with the objective of growing the business as fastas possible.License the formulas and restaurant name to another manufacturer andreceive a 4 percent to 5 percent royalty on nets ales. This dis trībutionand salesdecis ion is also low-risk, with low-resource requirements. The long-tempotential returm is much higher than selling outofa single res taurant.Sell a different size bottle or jar directly to stores only, as Alice finallydecided to do. This dis tribution and sales decis ionpreserves higher grossmargins and eliminates discounts to dis tributors and possiblys alescommissions to brokers, butrequires more financing, management persomeland time. Case Study: Alice's DressingsDistributions ys tems may evolve over time as abusiness grows and changes. Considera small one-store family res taurant named Alice's, with delicious, unique, homemadesalad dressings (e.g., Pomegranate Vinaigrette, Rum-Rais in-Orange Ranch, BhueCheese Catalina). Initially, the dressings were only availab le to customers eating atAlice's. Then cus tomers begin requestingbottles to buy. Initial sales and distributionofAlice's Salad Dressings were from the res taurant to walk-in cus tomes. The productwas packaged in a 32-ounce canning jarwith a handmade label.New distribution channeks cause packaging and pricing changes. Then Alice'sDressings were sold to a local grocerystore at a discounted wholes ale price, 28percent less per ounce than the retail res taurant price, packaged in asmaller, 26-ouncebottle. As local demand grew, Alice decided to have the dressings made in anindependent packing facility and sold to other s tores in the area, which initially rais edthe costof making the dressings. Alice's lusband, brothers, and asister-in-law dividedup initial sales res ponsibilities to callonlocal and regionalstores in their s pare time.The popularity of Alice's Dressings caused Alice to consider the possibility of sellinglarge pallet quantities to dis tributors in other s tates. The dis tubutors needed another 25percent dis count fromwholesale price, alongwith free s hipping. Sales brokers werealso recommended, at 5 percent commis sionon netdistributors ales, since the familycould no longer call oneveryone. A separate companywould have to be setup tomarket the s alad dressings; an enterprise requiring full-time management.Distribution channeks are ley to pricing and packaging decisions. In this case, aseparate business, new dis tribution chamels and sales representation grew outofAlice's initial one-store restaurart. Alice's restaurantwas initially able to sell the saladdressings at $5.00 per 32-ounce jar (15.6cents perounce) directly to customers.However, once adecisionwas made to sell Alice's Dressings as ashelf-s table item ingrocery s tores, the bottles changed to astandard 26-ounce size to compete with otherdressings sold in this size.Alice was concemed that grocery consumes, unfamiliarwith the restaurant, would notpay over $3.99 retail per 26-ouncebottle when competing brands ranged from $1.29 b$2.69 for the same 26-ource size. Wholes ale prices were 28 percert less than retail, at$2.89 perbottle. However, the costof ingredients was substantially more thancompeting brands, at$1.00 perbottle, and packaging and processing costs addedanother $0.50 perbottle. Profits were reduced from restaurants ales perbottle, butstillacceptab le (i.e., from $3.50 abottle, or 11 cents per ounce, to $1.39 perbottle, or fivecents perounce), since the total amountofsales and profits were expected to besubstantially greater through grocery s ales.Further researchwith marketing experts in the industy and sales brokers indicated afurther 40 percent reduction in delivered distrībutor price (inchudingbrokeagecommissions and shipping costs). Alicewould net $1.73 perbottle at delivereddistrībutor price withbrokerage commissions of 5 percent, leaving anunacceptable

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