Clos Du Bois Company’s Distribution System Report (Assessment)

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Updated: Feb 10th, 2024

Who makes up the Value Delivery Network for Ddb? What roles do they play?

Clos du Bois winery has been rated as one of the best producers of wine. This is attributed to the fact that they take pride in their products and also ensure that the consumers get the best offer on the table. The company has established a reliable supply chain to make its products available to consumers. It has further maintained a competitive edge through its solidified relationship with the key suppliers and retailers.

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The value delivery network entails a correlation in the downstream supply chain to realize the goal of the distribution (Kotler and Armstrong, 2010). The network process in Clos du Bois winery streams from the company itself to the distributors and finally down to the retailers, who in turn avail the finished wine products to the consumers. This kind of network operates under a three-tiered system, which involves the producer, the distributor, and the retailer.

The marketing channel adapted by the company plays a very important role in its distribution. The key players involved in the delivery network of the finished products add value to the process in their own unique ways. The main key role played by these intermediaries is to deliver to the consumers the finished goods in small quantities. This is evident in the fact that the company produces millions of bottles of wines.

They then ship the finished products to a central warehouse in bulk. The distributors take their orders from the warehouse and distribute them at a wholesale price to the retailers. The players in the marketing channel therefore play a very big role to bridge the gap in the distribution process. This role is achieved by ensuring that quality wine is delivered to the consumers at the right place and time.

How does the new Maryland state wine law impact CdB’s distribution?

The distribution channel used by Clos du Bois simplifies the distribution process of delivering the finished products to the consumers. This is because it refrains from dealing directly with the consumers. It should also be noted that the laws governing alcoholic beverages uphold the policy in an attempt to separate the producer from the consumer. Therefore, the company relies on its distributors to ship their wines throughout the states in America.

But what happens when a state implements a law that breaks the distribution channel? The new Maryland State Wine Law that came into effect in July 2011 only allows the direct shipment of wine to the consumers. However, the law denies the retailers possess the shipping rights, with only the wineries themselves being granted the shipping permits. This means that Clos du Bois winery will have to ship their finished products to the consumers in Maryland, hence breaking the delivery network. The company needs to pay an annual fee of $ 200 to be granted a permit (Atticks, 2011).

The law is bound to have a significant impact on the company’s distribution system. The process, also known as the direct marketing channel, does not involve any middlemen and the company deals directly with its consumers. A significant impact in this process is the ability of the company to cut down its distribution costs. The wine distribution process adopted by Clos du Bois causes the consumers to dig deeper into their pockets to enjoy that bottle of wine.

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This is due to the fact that the freight costs borne by the wholesalers and retailers are charged to the consumer. For example, it is cheaper to ship wine direct as a wine club member from the company’s website, rather than purchasing it in a restaurant or a chain store. However, the new Maryland law requires the company to have control over the distribution process. Though the policy decreases the length of the channel, the company bores the burden encountered at the intermediaries’ levels such as identifying the consumers and marketing the products directly to them.

Does the new law create channel conflict in CdB’s distribution system?

The new law is bound to affect the Clos du Bois’ distribution system. The company has come into a consolidation within its marketing channel in that they all depend on each other to complete the distribution process.

Therefore, a minor disagreement can trigger a channel conflict that eventually hinders a smooth transition of the process. The new law is likely to cause a channel conflict in Clos du Bois’ distribution system through the integration of multiple distribution channels. The move by the company to take over the role of the middlemen in one state may not auger well with the intermediaries. A conflict over the roles will therefore surface between the company and the intermediaries.

The conflict may be in form of vertical or horizontal conflict. Horizontal conflict involves a disagreement that occurs at the same channel level while vertical conflict entails a disagreement in the channels at different levels. In this case, the horizontal conflict prevails due to the disagreements with Clos du Bois and the other channel members at the same level. This kind of conflict boils down to the issue of economics.

The direct distribution behavior to reach the wine consumers in Maryland as required by the new law is likely to push the retailer profits at a lower level. This is because the company will result in other mechanisms to reach their clientele in Maryland. This can be achieved through its membership options available on the company’s website that allow the consumers to order wine online (Clos Du Bois, 2009).

The website does not exclude consumers from other states and they are likely to result in this option due to its affordability. This will create a conflict at the channel level due to the direct involvement of the producer. The conflict may be a result of the cannibalized sales that leads to diluted margins, hence the price reductions. Though the conflict is inevitable in this case, the company will need to come up with strategic mechanisms in order to contain the conflict between the channel levels.

Reference List

Atticks, K. (2011). Marylands’s New Wine Law. Maryland Life Magazine. Web.

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Clos Du Bois. (2009). Web.

Kotler, P. and Armstrong, G. (2010). Principles of Marketing (14th Ed.). USA: Pearson.

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