Retail Assignment

Newline
Mantas Malukas Thain1B 13/14/2010

Content:
1. Introduction; 2. Newline history; 3. Newlines distribution channels and distribution strategy; 4. How Newline products are presented in retail stores;

5. Benefits and drawbacks of opening Newline stores; 6. Chain form for Newline in establishing their own stores; 7. Direct and indirect distribution with its own web shop; 8. Conclusion.

1. Introduction
In this Retail Compulsory Assignment I am going to present Newline sportswear. I am going to introduce you with Newline history, explain Newlines current distribution strategy and channels, give some examples of it. After that I am going to describe the product and how it is presented in the retail store. Then I will try to imagine what would be advantages and disadvantages if the Newline will open a new store. On the last part we are going to find out what technology innovations Newline could use to improve their sales.

2. Newline History
Idea of Newline came in end of the 1970s. Helge Peterson was the one who found Newline. This man discovered that after jump from parachute his jumping suit got wet but the parachute remained dry, so he found that he could use parachute material for sportswear. After first running suit was made, Newline was established in co-operate with the swimmer Henrik Rasmussen. But after seven months Helge Peterson became a sole owner of the company which was focused on runners, racing cyclists and triathletes. Then company name was changed to Newline A/S.

3. (1.) Newlines current distribution channels and distribution strategy

Distribution channel is marketing the network of organizations, including manufacturers, wholesalers, and retailers, that distributes goods or services to consumers. Newline does not have their own shops that mean as a distribution channels they use retail stores such as Intersport, Sportmaster, Stadium, department and multibrand stores. Company also sells its products in specialists stores like Jensen Cykler, Loberen etc. Furthermore they have two sellers who present Newline products in Europe and other two who work in Western and Eastern parts of Denmark. For example Newline company does not have any shops it sells products for Sportmaster or Intersport and just there customer can found and buy Newline products.

Distribution strategy is management's plan for moving products to intermediaries and final customers. Newline use intermediated (indirect) distribution. With this indirect distribution strategy the marketer reaches costumer with the help of others. Under this strategy intermediaries may be expected to assume many responsibilities to help sell the product. Newline does not have many channel conflicts, because it is company with indirect distribution strategy and they do not collaborate with wholesalers. Because they have reliable suppliers in China it would be awkward to be in conflict with them. So it could be possible to get in conflict with retail stores.

Advantages of indirect distribution strategy: Can sell all over the world; Can be more popular ; Product is easy reachable for customers; Product can be easier found by target group; Clear target group.

Disadvantages of indirect distribution strategy: Competitors ; Big product assortment; Easy to compare with other companies products; Limited target group; Competitors.

Marketing parameters: Events/sponsorships Fairs Brochures Trade journals Friends Websites/Newline club. Most important marketing parameter for Newline is events and sponsorships like Vattern Rundt in Sweden where you can found approximately 40,000 athletes who are Newline target group. The company does not have any commercials on television or radio. That is one of the reasons why Newline products brand is not very popular comparing with brands like Nike, Adidas.

4. (2.) How Newline products are presented in retail stores

At first I had chosen to use interview to describe random customers opinion about how Newline products are presented in retail stores. I asked five people and three of them did not knew about Newline products at all. That means that Newline is not very popular, even in its home country Denmark. I thought that I should find out the reason why it is like that, so I have visited few shops. It was Sportmaster and Intersport stores in Herning city, Denmark. After I looked how the products of Newline are presented, it was clear that better known brands are seen easer and catch customer eye faster. First of all Newline products are presented in the end or corner of the retail store, so it is really hard to see it through shop windows from outside or even

inside. Furthermore customer has to go through other brand products to reach Newline clothes. Of course company products are divided into female and male. Products for male are on one side and for female in other. Second thing that I would like to mention is that Newline products are near other brands, so

costumer can easily compare quality and price differences. And it is really big disadvantage for Newline. The products of Newline are hanging next to brands like Nike, Adidas, Reebok, Protouch and Salomon. First three brands are very popular and have a really good reputation all over the world, so Newline is hardly comparable with them, even if price is not very different. Because they are so popular and reliable, retailers give more attention for these brands and place them in place where customer could easy see them. The last thing is that in those stores there were no advertisements of Newline, just Nike and Adidas posters was hanging on the walls.

5. (3. a.) Benefits and drawbacks of opening Newline stores

It is possible that Newline could set up their own stores in Denmark and then they could have a better control of distribution market. This could change some benefits. Because after they set up their stores they would be company with direct distribution strategy, thats mean that whole chain would be shorten, so there would not be any channel conflicts. Of course because of the same reason they would get a bigger profit . In Newline store customers could see all products or at least the biggest part of it, so assortment would be bigger. In their own store they could make advertisements, sales or other kind of promotions and the best thing is that they could always ask customer opinion about products. Moreover, according customers opinion they could make better products. The last but not less important thing is that Newline could keep everything in their own hands, they would be responsible for everything, and they always could change a strategy if something is going in wrong way. It is not really possible to evade some drawback. Newline store would be new in this area, so they do not have so much experience to be a really good and successful in the beginning. There are a lot of other competitors who have high reputation, so it would be difficult to grow and try to be more popular for Newline. Definitely care of the store would cost, that mean some extra expenses.

6. (3.b.) Chain form for Newline in establishing their own stores

Franchise could be relevant chain form for Newline, if they would try to establish their own store. The advantages of using this chain form would be few. Financing the business may be easier because banks are sometimes more likely to lend money to buy a franchise with a good reputation and Newline has good enough reputation in Denmark. Other advantage is in communication area. Relationship with suppliers could be established faster. One of the main disadvantage is expenses. Costs may be higher than you expect, as well as the initial costs of buying the franchise. Also all profits are shared with the franchisor.

7. (3.c.) Direct and indirect distribution with web shop

Nowadays buying on internet is very popular, fast, reliable and comfortable. Customer just need to find product he likes and pay for it by bank card, so he do not need to walk , or waste time by visiting stores and comparing prices. It might be a good idea to create for Newline their own web shop. A better idea is to use indirect distribution for making Newline products more popular and raise profit. Company could try to use global web shops like EBay, Amazon or others. They should be aware of competitors, because in both direct and indirect distributions it hard to evade their better promotions and you cannot control both of them so it would be a bit challenging.

8. Conclusion
To sum up I would like to say that Newline Company should stay where they are now. Reason of it is that this company is not really popular, so it is very difficult for them to set up their own store and keep it successful. Secondly, there is many competitor or companies with the familiar product which are in higher place than Newline. Probably every person would like to buy product from better know brand store. I believe that if they would combine direct and indirect distribution on the internet shopping websites like EBay their popularity would grow faster and sooner customer could recognize Newline product. Of course profit should grow up also. As I sad Newline should use indirect distribution until they will be recognized easily.