Michelin is a prominent French company. The company is well-known for being a global tire manufacture. Apparently, Michelin’s global presence and reputation are attributed to the fact that it is ranked in the top three tire manufactures, right behind Bridgestone and Goodyear. Michelin was founded in 1889 as a family business by the Michelin Brothers. Immediately after its establishment, Michelin Company shot fast into fame in the year 1891. By then, the organization was already calculative in its approach, and this was apparent in that, by the 1920s, it already had a rubber plantation in Vietnam. Based on the uniqueness of its approach and the quality of products, Michelin was already gaining its reputation. For instance, in ensuring that the organization stayed put and very competitive, it invested heavily in research and development. This helped the organization increase its innovation, which was evident in its ability to come up with technologically advanced kinds of tires. Over the years, this has continued being Michelin’s basic strategies, which entails pushing all the barriers of technology to provide consumers with the highest quality of products that matches their taste and preferences.
The Target Market, Positioning, and Branding Of the Product(s)
Typical of any company, Michelin has had its eye on customers enchanted to high-quality products. In particular, Michelin’s target customers are individuals that seek innovative products, are quality conscious, and price sensitive. Since its establishment, Michelin has managed to focus on these individuals and it prides itself on the establishment of customer intimacy that helps them with increased retention. For Michelin to achieve unshaken customer loyalty, the company has always made sure that it produces innovative products (Malhotra & Berger, 2016). In return, this gives it the opportunity to build brand equity, and this involves the introduction of a segment characterized by segmentation of customers demanding high-quality products. The aspect of Michelin’s target market being quality conscious is influenced by the desire to buy premium tire products that are reliable, durable, and easy to handle.
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The company’s positioning is quite clear based on its product distribution strategies. A critical analysis of Michelin’s position distribution shows that the organization has always made sure that it focused on supplying its product to parent nations. However, with time, this has changed since the company has been forced to extend its operations beyond the horizon of supplying from the parent nation. As a result, this was followed by the organization seeking to position itself in a way that it went ahead to establish branches all over the world (Malhotra & Berger, 2016). Currently, Michelin supplies its products to almost every part of the world. Additionally, the organization makes sure that all distribution channels have a showroom to showcase its tire supplies and also help with stocking up the products.
Similar to the case of its positioning strategy, Michelin is reputable for the tactful branding of its products. First, the organization makes sure that its products are restricted to tire supplies. Therefore, its only focus is to make sure that it provides consumers with all sorts of tires. Based on this approach, the differentiation strategy is that every tire is unique and created to serve its particular purpose (Malhotra & Berger, 2016). Despite starting small, Michelin has managed to make sure that it diversifies its branding process, which is why its tires are categorized based on the cars that suit them best. In this context, some of its notable product brandings include tires being labeled as SUV type, off-road category, and other customized types. In the recent past, the company has expanded its horizon to include truck tires. A similar expansion has also been witnessed in the bike tire segments.
The Types and Sources of Potential Gaps in the Channel Design
Considering that Michelin Company has been operating for over a century, it might be successful but still has gaps in its channel design. On close examination, Michelin’s fails in its channel design since it does not have wide distribution networks. In fact, the distribution channel that Michelin applies with other businesses is categorically simple and this has its limitations. On the same note, the channels between this business and its customers are not that effective and would need some improvements (Malhotra & Berger, 2016). Unlike in yesteryears, the company can now focus on having channel design that meets the standards of contemporary society. For example, Michelin ought to focus on having internet channels that allow it to venture into online sales as well as have a more direct connection with its consumers and other partnering businesses. The organization also falls short in having agents to help it enter new markets. In such an occurrence, Michelin fails to have developed retailer distribution networks.
The Channel Flows of Michelin
Through advertisements, organizations focus on making sure they stimulate market demands for their goods among target consumers. In Michelin’s case, it is a reputable global manufacturer of tires, and it ought to make sure that it has the best market presence. Thus, Michelin is obliged to invest heavily in advertisement budgets since they will help promote its products to the final consumers. Particularly, the company’s primary approach to this issue, since time immemorial, is to make sure that it develops a positive attitude as well as build brand awareness among car owners (Darmon, 2007). The manner of channel flow in Michelin Company shows that the company is keen to implement the push and pull strategy. According to literature, this strategy is unparalleled, considering that it is complementary and it is used by businesses to build a balanced marketing program. Therefore, Michelin has a role to play in ensuring that it creates a unique image of itself, such that the consumers can continue perceiving its products as being more reliable and secure.
Possible Channel Conflict Resolutions
Channel conflict refers to the integral parts of a company’s channel strategy. In Michelin’s case, the identification of the conflicts requires that there is a critical examination of the company’s position before envisioning any management strategy. A closer look at Michelin’s channel strategy shows that the problem therein is masked around the larger channel issues. Therefore, in the execution of a solution to address the issue of having a narrow distribution network, there is the need to focus on this company’s end-user segmentation, pricing, policies, and channel supporting programs (Eshghi, 2019). With this realization, there is the need to create a conflict solution that focuses on the implementation of components particular to channel strategies. That is, managing Michelin’s destructive channel conflict calls for a management process that focuses on structural and economic controls. The economic controls include dual compensation, shared costs, discounts, and market share competition. The economic controls are, therefore, significant in that they help motivate Michelin’s channels and also avoid conflicts. An almost similar approach is replicated with structural controls since they are grounded on tactics and effective communication.
The Channel Power of Michelin
By definition, channel power describes a company’s ability to influence other members in the distribution channel by getting them to modify or alter their behavior because of their strong position. With Michelin as top-ranked tire manufacture, the organization enjoys the power of dominating and influencing other channel partners by getting them to act according to its requirements. The channel power inherent to Michelin, based on its global prevalence, is referent power (Le, Cheng, & Tran, 2018). Based on this, Michelin manages to develop an image that the intermediaries are proud to be associated with. That is, local distributors will struggle to be Michelin’s outlets in a given nation, and this is understandably because of its influential image on global levels. In relation to this, Michelin plays the role of ensuring that it provides these parties with quality goods and services, which they can channel to the final consumers.
Distribution Channel Design and Implementation Issues
Overall, Michelin ought to make sure that its most crucial decisions are about developing a distribution plan that matches its global presence. Therefore, this should include making decisions that are applicable to the overall distribution process. The first choice should be to address the issue of how the company plans to make sure that its products are available to its target customers (Malhotra & Berger, 2016). On this note, Michelin will have to address the issue of the most significant channels and the way they serve the distribution partners. Next is the issue of the direct involvement of middlemen. So far, the complications arise due to indirect distribution tactics, but this can be addressed accordingly.
Recommendation
After an overall analysis of Michelin’s channel flow, it is evident that the company is doing relatively fine. However, if it is to continue being successful and even surpass its major competitors Bridgestone and Goodyear, there is the need to reevaluate its marketing channel flows. First, the company’s global presence is commendable, but it needs to change some channel flow models, such as those in Europe to match those in the UK and France. These strategies include having direct contacts with the customers, building partnership relationships, and exercise control over product and service provision. Secondly, Michelin can mitigate the issue of hefty cost in channel distribution by ensuring that it involves third parties, but it is involved in monitoring the quality of service they offer. Thirdly, Michelin needs to address the issue of produce investment by making sure that it focuses on reducing customers’ perception of risk, through increased variability of its products and services.
References
Darmon, R. (2007). Leading the Sales Force: A Dynamic Management Process (1st ed.). Cambridge: Cambridge University Press.
Eshghi, K. (2019). Managing channel conflict: Insights from the current literature. Handbook of Research on Distribution Channels , 130-160. doi:10.4337/9780857938602.00014
Le, A. N. H., Cheng, J. M. S., & Tran, M. D. (2018). The Exercise of Power Sources in Distribution Channels: A Synthesis Study. Journal of Empirical Generalisations in Marketing Science , 18 (1).
Malhotra, T., & Berger, P. (2016). Marketing Strategy and Innovation at Michelin. British Journal of Marketing Studies , 4 (5), 63-73.
