CHAPTER 4: DEMAND MANAGEMENT, ORDER MANAGEMENT AND CUSTOMER SERVICE
CHAPTER 4: DEMAND MANAGEMENT, ORDER MANAGEMENT AND CUSTOMER SERVICE
内容提要：中国经济管理大学 www.mhjy.net www.eauc.hk
講義:小保羅·R·墨菲《MBA物流學》(4)
PART II
ANSWERS TO END-OF-CHAPTER QUESTIONS
CHAPTER 4: DEMAND MANAGEMENT, ORDER MANAGEMENT AND CUSTOMER SERVICE
1. What is the relationship between demand management, order management, and customer service?
There is a key link between order management and demand forecasting, in that a firm does not simply wait for orders to arrive in order to learn what is happening. Forecasts are made of sales and of the inventories that must be stocked so that the firm can fill orders in a satisfactory manner. There is also a key link between order management and customer service because many organizations analyze customer service standards in terms of the four stages of the order cycle.
2. Discuss the three basic demand forecasting models.
Judgmental forecasting involves using judgment or intuition and is preferred in situations where there is limited or no historical data, such as with a new product introduction. Judgmental forecasting techniques include surveys and the analog technique. An underlying assumption of time-series forecasting is that future demand is solely dependent on past demand. Time-series forecasting techniques include simple moving averages and weighted moving averages. Cause and effect forecasting assumes that one or more factors are related to demand and that the relationship between cause and effect can be used to estimate future demand. Simple regression and multiple regression are examples of cause and effect forecasting.
3. List and discuss several demand forecasting issues.
Demand forecasting issues include the situation at hand, forecasting costs in terms of time and money, and the accuracy of various forecasting techniques. With respect to the situation at hand, judgmental forecasting is appropriate when there is little or no historical data. As for time and money, survey research, for example, can cost a great deal of money and/or also take a great deal of time depending on the media. Forecasting accuracy refers to the relationship between actual and forecasted demand, and accurate forecasts have allowed some companies to reduce transportation costs because fewer shipments need to be expedited.
4. Is computer software the panacea for demand forecasting? Why or why not?
The text suggests that there have been tremendous advancement in the breadth and computational power of computer software. Nonetheless, software-based forecasting continues to be plagued by inappropriate applications, cost issues and forecast error. Relatively simple software, such as Microsoft Excel, tends to generate relatively unsophisticated forecasts characterized by a great deal of error. Alternatively, highly evolved forecasting software may be too difficult to learn how to use.
5. Define and describe the order cycle. Why is it considered an important aspect of customer service?
The order cycle is the elapsed time from when a customer places an order until the customer receives the order. It is an important aspect of customer service in part because the order cycle is frequently used to determine the parameters of customer service goals and objectives. The order cycle is also being used by some firms as a competitive weapon (generally the shorter the better), and technological advances now make it extremely easy (and fast) for customers to determine the exact status of their order(s).
6. What are some causes of order cycle variability? What are the consequences of order cycle variability?
Order cycle variability can occur in each stage of the order cycle. For example, order transmittal by mail sometimes results in the mailed item never reaching its intended destination; variability, in the form of unreliable transit times, can occur during order delivery. One consequence of order cycle variability might be an increase in inventory levels to guard against stockouts. If inventory levels are not increased, then stockouts could occur because of order cycle variability, or a company might be forced to use expedited transportation to make sure orders arrive on time.
7. Define the perfect order concept. What is its relevance to the order cycle?
The text defines a perfect order as simultaneously achieving relevant customer metrics. The order cycle offers plentiful opportunities for errors to occur—and thus failure to achieve a perfect order.
8. List the various methods of order transmittal and discuss relevant characteristics of each one.
In person => greatly reduces the potential for order errors, but it is not always convenient or practical in situations where the supplier is geographically distant.
Mail => more convenient than ordering in person, but mail is relatively slow and there are occasions when the order never reaches the intended destination.
Telephone => fast and convenient, but order errors may not be detected until the order is delivered.
Fax => fast, convenient and provides hard copy documentation of an order, but there is the potential for junk (unwanted) faxes and the quality of transmission may be problematic.
Electronic => fast, convenient, and potentially very accurate; major concern is the security of the data being transmitted.
9. Define order triage and explain how it can impact order processing.
Order triage refers to classifying orders according to pre-established guidelines so that a company can prioritize how orders should be filled. Companies that choose to do order triage must decide the attribute(s) used to prioritize (e.g., first in, first served; customer longevity). Although there is no one right attribute to use for order prioritization, the chosen attributes are likely to delight one set of customers and disappoint other customers.
10. What is pick-to-light technology, and how can it improve order picking?
In pick-to-light technology, orders to be picked are identified by lights placed on shelves or racks. An advantage to pick-to-light is that the worker simply follows the light from pick to pick, as opposed to the worker having to figure out an optimal picking path. Pick-to-light often results in higher pick rates and fewer picking errors, along with reduced training time and reduced levels of employee turnover.
11. Discuss the order delivery stage of the order cycle.
Order delivery refers to the time from when a transportation carrier picks up a shipment until it is received by the carrier. Customers now have increasing power in terms of delivery options and companies such as UPS and FedEx offer prospective shippers a diverse menu of transit time options. In addition, shippers are emphasizing both elapsed transit time as well as transit time variability and some companies are utilizing delivery windows, or the time span within which an order must arrive. Another key delivery change is that the overnight range for truck service has been pushed from 500 miles to between 600 and 700 miles.
12. How can customer service act as a competitive weapon?
Customer service is more difficult for competitors to imitate than other marketing mix variables such as price and promotion. The text cites an example of Nordstrom’s, a high-end retailer that has a long-standing reputation for excellent customer service. Their devotion to excellent customer service leads Nordstrom’s to do things that competitors cannot or will not match.
13. Distinguish between customer service and customer satisfaction.
Customer service strives to keep customers happy and creates in the customer’s mind the perception of an organization that is easy to do business with. Customer satisfaction compares a customer’s actual experience with the expected experience, and if the actual experience equals or exceeds the expected experience then the customer would be satisfied. Customer service can influence both the expected and actual experience and hence influence customer satisfaction.
14. Why are organizations and customers demanding a higher level of customer service?
Macroenvironmental changes, such as globalization and advances in technology, are causing organizations and individuals to demand higher levels of customer service. Moreover, customer (and organizational) expectations continue to increase over time, and if the associated performance (service) levels fail to keep up, then customer dissatisfaction is a likely outcome. And, in an increasingly automated and computerized world, the relationships between customers and vendors can become dehumanized. A company that can offer a high level of customer service, especially on a personal basis, finds that it has a powerful sales advantage in the marketplace.
15. List and discuss the three elements of the dependability dimension of customer service.
The three elements are consistent order cycles, safe delivery, and complete delivery. As pointed out earlier, inconsistent order cycles necessitate higher inventory requirements. Safe delivery brings loss and damage considerations into play; lost or damaged product can cause a variety of negative ramifications for a customer, such as an out of stock situation. One way of measuring the completeness of delivery involves the order fill rate or the percentage of orders that can be completely and immediately filled from existing stock; incomplete deliveries generally translate into unhappy customers.
16. What are some advantages and disadvantages to technological advances designed to facilitate buyer-seller communications?
Cell phones, personal digital assistants, and the Internet have certainly helped buyer-seller communications. These technological advances allow for less costly and more frequent contact between the two parties. Having said this, technology such as text messaging and the Internet can depersonalize the communication process, which is why periodic telephone interaction and even face-to-face contact between seller and customer are recommended.
17. Distinguish between customer service goals and objectives.
Goals tend to be broad, generalized statements regarding the overall results that the firm is attempting to achieve. Objectives, the means by which goads are to be achieved, have certain minimum requirements and are more specific than goals. Objectives should be specific, measurable, achievable, and cost effective.
18. How do characteristics such as substitutability and product life cycle stage influence the development of customer service goals and objectives?
If a firm has a near monopoly on an important product (i.e., few substitutes are available), a high level of customer service is not required because a customer that needs the product will buy it under any reasonable customer service standard. As for stage in the PLC, a product just being introduced needs a different kind of service support than one that is in a mature or declining market stage. When introducing a new product, companies want to make sure that there is sufficient supply of it to meet potential customer demand, and so companies might use expedited transportation to protect against out of stock situations.
19. Should organizations use a limited, or extensive, number of customer service measures? Support you position.
The text suggests that while customer service must be measured if it is to be managed, organizations should resist the tendency to “measure everything that moves.” Rather, organizations should utilize a limited number of meaningful and relevant metrics. Excessive measurement can strain an organization because it requires the collection of tremendous amounts of data, and once collected the data must be analyzed. This can result in analysis paralysis, or the idea that so much time is required for analysis that there is little, if any, time left to make decisions based on the data.
20. What is meant by service recovery? How is it relevant to logistics?
Service recovery refers to a process for returning a customer to a state of satisfaction after a service or product has failed to live up to expectations. Service recovery is particularly relevant to the order cycle; for example, late or erratic deliveries can play havoc with customer supply chains. One service recovery guideline, fair treatment for customers, is operationalized by some transportation companies in the form of service guarantees. If a shipment misses various delivery parameters (e.g., on time delivery), then customers can receive a full refund (or are not billed for the transportation).
PART III
EXAMINATION QUESTIONS
CHAPTER 4: DEMAND MANAGEMENT, ORDER MANAGEMENT
AND CUSTOMER SERVICE
Multiple Choice Questions
1. The creation across the supply chain and its markets of a coordinated flow of demand is the definition of:
a. order cycle
b. order management
c. demand management
d. supply chain management
(c; p. 82)
2. Which of the following is not a basic type of demand forecasting model?
a. exponential smoothing
b. cause and effect
c. judgmental
d. time series
e. all are basis types of forecasting models
(a; p. 82)
3. Surveys and analog techniques are examples of ____ forecasting.
a. cause and effect
b. time series
c. exponential smoothing
d. judgmental
(d; p. 82)
4. An underlying assumption of ____ forecasting is that future demand is dependent on past demand.
a. trial and error
b. time series
c. judgmental
d. cause and effect
(b; p. 82)
5. Which forecasting techniques tends to be appropriate when there is little or no historical data?
a. exponential smoothing
b. judgmental
c. time series
d. cause and effect
(b; p. 83)
6. Successful implementations of collaborative planning, forecasting and replenishment have resulted in 20 to 30% improvements in forecasting accuracy as well as ____ to ____ % reduction in order cycle times.
a. 5; 10
b. 10; 15
c. 20; 30
d. 40; 50
(c; p. 84)
7. Which of the following is true?
a. computer software for demand forecasting dates back about 25 years
b. one challenge to collaborative planning, forecasting, and replenishment is getting supply chain partners to share data
c. the Excel software package tends to generate forecasts that generate very little error
d. SAP is the most widely used software package for demand forecasting
e. All are true
(b; p. 84)
8. ____ refers to the management of various activities associated with the order cycle.
a. Logistics
b. Order processing
c. Demand management
d. Order management
(d; p. 84)
9. The order cycle is:
a. the time that it takes for a check to clear
b. the time that it takes from when a customer places an order until the selling firm receives the order
c. also called the replenishment cycle
d. also called the vendor cycle
(c; p. 84)
10. The order cycle is composed of each of the following except:
a. order picking and assembly
b. order delivery
c. order retrieval
d. order transmittal
(c; p. 84)
11. Which of the following is false?
a. order cycle lengths continue to get shorter
b. the order cycle should be analyzed in terms of total cycle time and cycle time variability
c. order management has been profoundly impacted by advances in information systems
d. order management and the order cycle are vitally important to the perfect order concept
e. all are true
(e; p. 85)
12. Order transmittal is:
a. the same thing as an order cycle
b. the series of events that occur between the time a customer places an order and the time the seller receives the order
c. the series of events that occur between the time the customer perceives the need for something and the time the seller receives the order
d. the series of events between the time a customer places an order and the time the order cycle begins
(b; p. 85)
13. In general, there are ____ possible ways to transmit orders.
a. six
b. five
c. four
d. three
(b; p. 85)
14. Which of the following is not a possible method of order transmittal?
a. in-person
b. mail
c. fax
d. electronic
e. all are methods of order transmittal
15. Ordering by ____ can be fast and convenient, but order errors are generally not detected until the order is delivered.
a. telephone
b. mail
c. fax
d. electronic
(a; p. 85)
16. ____ refers to the time from when the seller receives an order until an appropriate location is authorized to fill the order.
a. Order processing
b. Order cycle
c. Order management
d. Order transmittal
(a; p. 88)
17. Order processing typically involves each of the following activities except:
a. credit check
b. entering the order into the system
c. determining inventory location
d. marketing department crediting the salesperson with the sale
e. all are activities
(e; p. 88)
18. Classifying orders according to pre-established guidelines so that a company can prioritize how orders are to be filled refers to ____.
a. order management
b. order processing
c. order triage
d. ABC analysis
(c; p. 90)
19. Order picking and assembly is:
a. the most important component of the order cycle
b. the way a customer decides what he needs to purchase
c. the component that follows order processing
d. the most computerized part of the order cycle
(c; p. 90)
20. The text suggests that ____ often represents the best opportunity to improve the effectiveness and efficiency of an order cycle.
a. order transmittal
b. order delivery
c. order processing
d. order picking and assembly
(d; p. 90)
21. Travel time accounts for ____ to ____ % of total time when picking an order.
a. 10; 20
b. 20; 30
c. 40; 55
d. 60; 80
(d; p. 90)
22. Which of the following is not a characteristic of advances in order pick technology?
a. higher pick rates
b. reduced employee turnover
c. fewer employee accidents
d. fewer picking errors
e. all are characteristics
(c; p. 90)
23. The document that indicates what items were picked, along with who picked the order, is called a(n) ____________.
a. packing list
b. order pick list
c. order check list
d. consular document
(a; p. 91)
24. The final phase of the order cycle is called order ____________.
a. picking and assembly
b. delivery
c. receiving
d. replenishment
(b; p. 91)
25. The time span within which an order must arrive refers to ____.
a. transit time
b. delivery window
c. order delivery
d. transit time reliability
(b; p. 91)
26. A commonly used rule of thumb is that it costs approximately ____ times as much to get a new customer as it does to keep an existing customer.
a. three
b. four
c. five
d. six
(c; p. 91)
27. Why might customer service be more effective than pricing as a competitive tool?
a. price reductions can be done only once or twice before they become ineffective
b. holding large inventory stocks is cheaper than price reductions
c. superior customer service will be noticed more than a price reduction
d. superior customer service is more difficult to imitate
(d; p. 92)
28. ____ compares a customer’s actual experience with the expected experience.
a. customer satisfaction
b. customer service
c. customer loyalty
d. order management
(a; p. 92)
29. The ability of logistics management to satisfy users in terms of time, dependability, communication, and convenience is the definition of:
a. customer satisfaction
b. the order cycle
c. perfect order
d. customer service
(d; p. 93)
30. Which of the following is not a dimension of customer service?
a. time
b. convenience
c. dependability
d. communication
e. all of the above are dimensions
(e; p. 93)
31. The percentage of orders that can be completely and immediately filled from existing stock is the ____ rate.
a. order cycle
b. perfect order
c. order fill
d. optimal inventory
(c; p. 93)
32. What component of customer service focuses on the ease of doing business with a seller?
a. convenience
b. dependability
c. time
d. communication
(a; p. 94)
33. Which of the following statements is false?
a. goals tend to be broad, generalized statements regarding the overall results that the firm is trying to achieve
b. objectives are more specific than goals
c. a central element to the establishment of customer service goals and objectives is determining the customer’s viewpoint
d. benchmarking generally involves comparing an organization to competitors in the same industry
e. all of the statements are true
(d; pp. 94-95)
34. ____ is the process of taking corrective action when measurements indicate that the goals and objectives of customer service are not being achieved.
a. Control
b. Managing
c. Leadership
d. Benchmarking
(a; p. 96)
35. Which of the following statements is false?
a. service recovery refers to a process for returning a customer to a state of satisfaction after a service or product has failed to live up to expectations
b. one service recovery guideline involves fair treatment for customers
c. approximately 40% of customers who experience a problem with purchases of less than $5 will not do business with that company again
d. good or excellent service recovery can actually result in increased customer loyalty
e. all of the statements are true
(c; pp. 98-99)
True-False Questions
1. In make-to-order situations, finished goods are produced after receiving a customer order. (True; p. 82)
2. Simple moving averages and weighted moving averages are examples of judgmental forecasting. (False; p. 82)
3. Judgmental forecasting is appropriate when there is little or no historical data. (True; p. 83)
4. SAP is currently the most widely used software for business forecasting. (False; p. 84)
5. No software package—regardless of its sophistication and cost—is capable of totally eliminating forecast errors. (True; p. 84)
6. In general terms, order management refers to how a firm handles incoming orders. (True; p. 84)
7. The order cycle is usually the time from when a customer places an order to when the customer receives the order. (True; p. 84)
8. As a general rule, order cycle times have been increasing in recent years. (False; p. 84)
9. The shorter and more consistent the order cycle, the less inventory that is needed by one’s customers. (True; p. 85)
10. Order processing refers to the time from when the customer places an order until the seller receives the order. (False; p. 85)
11. There are four possible ways to transmit orders. (False; p. 85)
12. One method of order transmittal relies on bar codes and scanners. (True; p.88)
13. Order information is checked for completeness and accuracy in the order processing component of the order cycle. (True; p. 88)
14. The “order triage” function refers to correcting mistakes that may occur with order picking. (False; p. 90)
15. A commonsense approach is to fill an order from the facility location that is closest to the customer, with the idea that this should generate lower transportation costs as well as a shorter order cycle time. (True; p. 90)
16. Order picking and assembly follows the order processing component of the order cycle. (True; p. 90)
17. Order processing often represents the best opportunity to improve the effectiveness and efficiency of the order cycle. (False; p. 90)
18. Travel time accounts for a majority of an order picker’s total pick time. (True; p. 90)
19. Pick-to-light technology is an order picking technique that has grown in popularity in recent years. (True; p. 90)
20. A pick list indicates what items were picked as well as the person responsible for preparing the order for shipment. (False; p. 91)
21. Order retrieval is the final phase of the order cycle. (False; p. 91)
22. As a general rule, the narrowest delivery window, or time span within which an order must arrive, that carriers must meet is 30 minutes. (False; p. 91)
23. The current maximum range for overnight delivery by trucks is approximately 500 miles. (False; p. 91)
24. It costs approximately five times as much to get a new customer as it does to keep an existing customer. (True; p. 91)
25. Customer service and customer satisfaction are synonymous concepts. (False; p. 92)
26. Consumers are demanding about the same levels of service today as in years past. (False; p. 92)
27. One reason that customers are demanding higher levels of customer service is that reliable service allows a firm to maintain a lower level of inventory. (True; p. 92)
28. Customer service compares a customer’s actual experience with the expected experience. (False; p. 93)
29. Dependability consists of consistent order cycles, safe delivery, and consistent delivery. (True; p. 93)
30. Order fill rate is the percentage of orders that can be completely and immediately filled from existing stock. (True; p. 93)
31. Text messaging and the Internet have lessened the need for telephone interaction and face-to-face contact between seller and customer. (False; p. 94)
32. The convenience component of customer service focuses on the ease of doing business with a seller. (True; p. 94)
33. Goals are the means by which objectives are achieved. (False; p. 95)
34. Objectives should be as specific as possible, so it can be determined if the objectives have been met. (True; p. 95)
35. Benchmarking should only involve numerical comparisons of relevant metrics (e.g., fill rates). (False; p. 95)
36. The nature of the product can affect the level of customer service that should be offered. (True; p. 95)
37. Leadership is the process of taking corrective action when measurements indicate that the goals and objectives of customer service are not being achieved. (False; p. 96)
38. Organizations should utilize a limited number of meaningful and relevant metrics and should resist the tendency to “measure everything that moves.” (True; p. 98)
39. About 25% of customers who experience a problem with purchases of less than $5 will not do business with that company again. (False; p. 98)
40. Satisfactory service recovery tends to increase a customer’s willingness to recommend the offending organization; unsatisfactory service recovery magnifies the initial failure. (True; p. 99)
PART IV
CASE SOLUTIONS
CASE 4-1 CHEEZY WHEEZY
Question 1: Assume that Cheezy Wheezy goes into the catalog order business. What policy should it adopt for handling stockouts—that is, what should the company do when it receives mail orders that it cannot completely fill because one or more of the desired items are out of stock?
They could have any one of a range of policies. They probably should find out what their competitors are doing. One suggestion would be to ask for customer phone numbers (or e-mail addresses) on the order form and then contact customers in case of a stockout and determine how customers want to handle the situation.
Question 2: Some mail customers will complain that the items Cheezy Wheezy shipped never arrived. What policy should Cheezy Wheezy adopt to deal with this?
Again, the firm has a variety of options. Firms might ship a duplicate order upon receipt of a complaint, and maintain a file of customer complaints to insure that certain customers do not abuse Cheezy Wheezy’s “no questions asked” policy. An alternative is to use parcel shipping that requires a signature upon receipt of a package.
Question 3: Should the order form, which will be stapled into the center of the catalog and will be addressed to Cheezy Wheezy, be of the postage-paid type, which means that Cheezy Wheezy will pay the first-class postage rate plus a few cents on each envelope delivered to it, or should the customer be expected to add a first-class stamp to the order before he or she mails it? Discuss.
The increasing cost of postage, combined with the customer having to put a stamp on an envelope, could be a sufficient enough hassle to convince some customers to shop elsewhere. Moreover, there could be delays if some potential customers need to obtain stamps. Postage-paid envelopes increase the convenience factor for the consumer, and allow the order to be mailed more quickly.
Question 4: Cheezy Wheezy’s headquarters are in New Glarus, but the company also operates in southern Wisconsin and northern Illinois. Is New Glarus the best address to use for receiving mail orders for cheese? Might there be advantages, perhaps, in having the mail addressed to a more major city—say, Madison, Milwaukee, or Chicago? Discuss.
An advantage of the larger city post offices is that the mail might be delivered earlier. The advantage of New Glarus is that the name is one that would be associated with the cheese industry.
Question 5: From the facts that have been presented in the case, how would you handle the matter of charging for the packaging costs of each shipment? Why?
Again, there can be a variety of answers. A quite common response among past students was to include packaging costs in the costs of the cheese, rather than developing complex tables that would cover all possible situations.
Question 6: How would you handle the matter of charging for the transportation costs of each shipment? Why?
Past students have suggested including a simple table, with the weight of the shipment along one axis, and the distance from New Glarus along the other, as the basis for calculating transportation charges.
Question 7: Taking into consideration your answers to questions 5 and 6, write out in either text or tabular form the explanation of shipping charges that your catalog customers will read. (Note: As used here, shipping includes both packaging and transportation.)
A complete answer could say something like, “Calculate shipping charges from the accompanying table; the figures include packaging, insurance, and delivery to your door.” The table would have groups of two-digit zip codes (i.e., the first two digits of one’s five digit zip code) across the top of the chart with the shipment’s weight along the side. Within the table would be numbers, expressed as dollars and cents, which are the shipping costs.
Question 8: On a single 8 ½ by 11-inch sheet of paper, design a catalog order form for use by Cheezy Wheezy.
If this assignment is done outside of class the student will probably borrow heavily from “real-world” catalog order forms (especially during the latter part of the calendar year, when holiday catalogs abound).
Question 9: Contemplate a simple website for Cheezy Wheezy to sell its products within the
The order form on the website would be designed so that customers would have to submit an accurate order, i.e., zip codes could be required and addition of charges would have to be correctly done. It would probably be easiest to have the same sales and shipping policies for both catalog and Web presentation. The website could recognize repeat customers in case it was believed that they deserve some sort of bonus or incentive.
CASE 4-2 HANDY ANDY, INC.
Question 1: Is this a customer service problem? Why or why not?
Customer service is sometimes defined as keeping existing customers happy and we have little evidence that there is a customer service problem. We do not know of customers who are inconvenienced by this system, nor do we know of lost sales. However, some customers are probably confused by the system.
Question 2: Marketing channels are the arrangement of intermediaries (wholesalers, retailers, and the like) that the firm uses to achieve its marketing objectives. Is the problem discussed in Handy Andy’s marketing channels? Why or why not?
This is a marketing channels problem because the arrangements between the home office, the factory distributors, the regular dealers and customers are not what was planned. The existing systems may be working better, but that is not the question.
Question 3: Logistics channels handle the physical flow of goods or service. Is the problem discussed in Handy Andy’s logistics channel? Why or why not?
There is probably not much of a problem in the physical flow of goods because the factory distributors were expected to be the main source of compactors, delivered and installed.
Question 4: It appears that the factory distributors are exploiting the smaller dealers. Yet from what we can tell, Handy Andy in St. Louis has heard no complaints from the smaller dealers. Why would they not complain?
They may be afraid or they may be receiving “kick-backs” from the factory distributor. Chances are that if the smaller dealers were losing money then they would likely complain to Handy Andy.
Question 5: What should Handy Andy’s marketing Vice President do? Why?
Probably study the situation further because there is little or no information so far that the existing arrangements, confusing as they may seem, are cutting into Handy Andy’s sales. The problem may be more complicated than the text indicates because the dealers and factory distributors also probably market other lines of appliances produced by other manufacturers. So the focus may be on the marketing arrangements for all types of appliances, not just Handy Andy compactors.
Question 6: Redesign the warranty postcard, staying within the same dimensions, and include questions or statements that will make it easier for Handy Andy headquarters to detect whether installation practices of the type discussed in this case occur.
In the past, some students have designed cards similar to the one presented in the book, with a question or two added asking whether the model installed was the one originally ordered. To understand exactly what was happening, a number of specific questions had to be crafted. Other students believed, however, that such questions would undermine customer confidence in Handy Andy and its distributors.
Question 7: In the case is the statement, “The factory distributors in these few cities indicated that they, not Handy Andy, Inc., stood behind the 1-year warranty.” Is this a problem for Handy Andy? Why or why not?
This is a difficult question to answer because we are not certain whether the buyer perceives that both the factory distributor and Handy Andy are standing behind the product (i.e., doubling their protection) or that the factory distributor is filling a void created by Handy Andy’s unwillingness or inability.
Question 8: Assume that the situation described in question 7 is a problem. How should the firm deal with it?
One suggestion is to change the wording in the warranty, giving more emphasis to Handy Andy’s role. A statement could also be added to the return post card.
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