ETHICS IN CHANNEL MANAGEMENT – A CASE STUDY

Bill Robinson was in the market for an electronic typewriter and so he decided to pay a visit
to a well known full service business machine store called Bundy Typewriter in downtown
Philadelphia. Bill visited the store and was immediately greeted by a salesperson. The
salesperson asked Bill what he was looking for and Bill explained that he was considering
the purchase of a portable electronic typewriter to supplement his personal computer. The
typewriter would be used only for small jobs such as brief letters, very short reports, and to
address envelopes in his home office. Bill added that he had spoken to friends who still
found the old fashioned typewriter useful for these kinds of small jobs. The salesperson
nodded in agreement and remarked that many of Bundy’s recent typewriter customers had
told similar stories.

The salesman then showed Bill a variety of models from the store’s wide selection of
typewriters. Various features were pointed out and demonstrated and the pros and cons of
each were discussed. Bill made it a point to try out each machine for its touch and feel and
asked a number of questions about the different models to which the salesperson, who was
quite knowledgeable and helpful was able to provide complete answers. One of the models,
for example, used a cartridge-type ribbon that Bill thought might be difficult to insert into
the machine,. The salesman showed Bill that this was not the case because a touch on a
lever made the cartridge easy to insert. Bill also wanted to know about the availability of
the ribbons and the salesperson told him that the store carried a full range of supplies for all
of the machines it sold. Bill also asked about the repair service and here again the salesman
told him that the store had a complete service department to handle repairs of products
purchased from them. Bill continued to try several other machines and asked a variety of
further questions on features and capabilities.

The whole process of trying out machines and talking to the salesperson had taken about 35
minutes. Finally, Bill zeroed in on what he, with the salesperson’s concurrence, thought was
the best typewriter for Bill’s purposes – a Smith Corona Memory Correct Model I. Bill asked
the salesperson for the

store’s price, which turned out to be the same as the price on the manufacturer’s tag,
$399.95. Bill hemmed and hawed and then told the salesperson that he would have to go
home to “ think about it” before making a purchase. He asked the salesman for his card,
thanked him for his time and information, and remarked something about being “back in a
day or so”.

Later, on, at home, Bill picked up a catalog from Best Products Company, a catalog
showroom retailer of jewelry and general merchandise. On page 191 he found the Smith
Corona Memory Correct Model I that he had tried out at Bundy, with a small picture of the
machine and a brief description of its capabilities. It was listed at $299.95 - $100 less than
the price quoted by Bundy.

The catalog showroom was only about 20 minutes from Bill’s home. He decided to take a
drive there to see if it was indeed the same machine. He found a display of four different
models of typewriters behind a counter at about eye level. The typewriters were anchored
down in such a way that they would be difficult to try out. After a few minutes Bill found a
salesperson, who knew nothing about the typewriter he wanted and even appeared to be
surprised that the store sold typewriter. But the Smith Corona was there, and the Best
Products price was $299.95.

Bill still did not want to make a decision that day and so he went home to “sleep on it.”:

By the next afternoon Bill had made up his mind. He simply could not justify to himself the
idea of paying $100 more in order to buy the typewriter from the full service retailer,
Bundy, he knew what he wanted, and it was available from the catalog showroom for 25
percent less than Bundy’s price. His mind made up, Bill picked up the telephone, called the
800 toll-free number listed for Best Products catalog sales department, and ordered the
typewriter using his VISA card. The machine would be delivered to his home via UPS in
about a week, he was told.

Bill was rather satisfied with how clever he had been in the purchase of this products. He
got to see it, feel it, try it out, compare it other products, and ask all sorts of questions
about it, and still save a “bundle” of money in the process He felt a little guilty about taking
up so much of the salesperson’s time and then not giving him the sale. “But “, he reminded
himself”, people just don’t find $100 in the street. Why should not I have taken advantage
of this situation.”?

QUESTIONS
1. Do you find anything objectionable in Bill Robinson’s approach to buying the typewriter?
Why or why not? Explain your reasoning and the values on which it is based.

2. Do you think that it would have been proper for Bundy typewriter Co. to tell its sales
people to avoid customers like Bill Robinson by more carefully “sizing them up” before
spending so much time and effort on them?

3. What is your opinion of the manufacturer’s role in this? Specially, is it fair to sell the
same machine to such different types of retailers at the same wholesale price and let
the retailers simply fend for themselves?

(The above case has been taken from the book “Marketing Channels ( A Management View)
- Bert Rosenbloom, The Drydon Press)