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Lotus Development Corporation
Lotus Development Corporation
The director of sales operation of Lotus Development Corporation John Shagoury was in a
dilemma on whether:
1. To bypass the dealers and directly sell to large corporates.
2. Sell the products through the existing network of distributors and dealers.
Market Size:
Sales by channels:
Considering that the firm opts for direct selling, they will have to recruit 90 more salespeople to cover
the Fortune 2000 as 90 salespersons can cover 1000 companies.
So, looking at the market size and the profit margins we can conclude that it is indeed an extremely
important decision to make because it will affect the growth of the company and as well as strengthen
the market position among our competition.
Consumer Behaviour
Traditional storefronts dealt with low-end and price-sensitive clients. High-end dealers dealt
with external salespeople who handled business accounts on the behalf of their organisations.
They focused on customer support and system integration.
Lastly the pure discounters handled large volume and mail orders along with storefront
operations.
It was estimated that the market growth for next 5-10 years would be mostly accelerated by
small, medium and individual buyers that would contribute around 5 to 7 million. They were
mostly dependent on dealers as they did not have in-house activity.
Recommendation:
John Shagoury should not bypass the dealers (primary sales channel). With dealers,
additional yearly profit of 6.3 million is earned. Thus, Lotus Development Corporation
should sell the products through an existing network of distributors and dealers.