View
126
Download
0
Category
Preview:
Citation preview
Case Study LeClerc Enora RAVALEC
Laura VEILAND
OVERVIEW
LeClerc Machines de Cuisine: Paris Manufacturer of food processors, blenders, grinders, etc.
Decide exporting its products through an US distributor: Creative Cuisines.
Contract: Exclusive distribution agreement
Creative Cuisines assumes marketing, sales promotion costs and markets product aggressively.
Problem in July 1994: Another firm offered the LeClerc LMC Professional and the LeClerc LMC Standard food processors
LeClerc PARIS Manufacturer
Decides to export : USA EXCLUSIVE DISTRIBUTION
AGREEMENT
Creative Cuisines : ONLY distributor in the USA
LECLERC PRODUCT
EXISTING SITUATION
Creative Cuisines
LeClerc PARIS Manufacturer
Decides to export : USA EXCLUSIVE DISTRIBUTION
AGREEMENT
LECLERC PRODUCT
THE PROBLEM
LECLERC PRODUCTLOWER PRICE
Reliable Restaurant & Home Kitchen Sup
Creative Cuisines
VIOLATION OF THE AGREEMENT
MAIN CARACTERS
Mr. François Jost LeClerc's overseas sales manager
Mr. Bill LewisPresident, Creative Cuisines
Ms. Marie DominicAttorney representing, Creative Cuisines
Jane WatsonSales Manager, Creative Cuisines
Sandra JordanAccount Executive at Feingold Advertising Creative Cuisine's Advertising Agency
Albert RosePresident, Reliable Restaurant and Home Kitchen Supplies
Creative Cuisines
LeClerc
Feingold Advertising
Reliable Restaurant & Home
MAIN F IRMS
DIALOGUE Between Mr. Bill Lewis & Ms. Marie Dominic
Dominic: It depends on how Reliable is getting the LeClerc products.Lewis: What do you mean?Dominic: If Reliable is getting its products direct from LeClerc in vio lation of your exclusive distribution agreement, it’s illegal. Or, it's illegal if the LeClerc products it's selling are counterfeits, not genuine LeClerc products.
I M P O RTA N T :
It’s Illegal if :
Leclerc provides the products and Reliable distributes Violation of the exclusive distribution agreement
Reliable does not sell genuine product Counterfeiting
DIALOGUE Between Mr. Bill Lewis & Ms. Marie Dominic
Dominic:First, I’ll write a letter to Reliable implying possible legalities. Meanwhile, you see what you can find out about Reliable's source of supply. Get LeClerc to issue a warning to its foreign distributors. Most likely one of its own distributors, maybe in Canada or in Europe, is supplying Reliable with products. That happens quite often. In many cases the distributor doesn't even know he's violating an agreement. The truth is, though, these measures may be ineffective. I suggest you immediately adopt some marketing tactics to counter this offensive—the same way you would with any other competitive threat.
I M P O RTA N T:
To solve the problem : Inform Reliable about the violation Get leClerc warn its foreign distributors Adopt some marketing tactics to counter this offensive
EXHIBIT 2 : Letter from Dominic to Albert Rose
My client, Creative Cuisines, Inc., has recently brought to my attention that you have either knowingly or unknowingly violated the exclusive distribution agreement between LeClerc Machines de Cuisine, and Creative Cuisines, Inc. This agreement, which went into effect in January of this year, explicitly gives sole distribution rights to Creative Cuisines and also names them as the only authorized service agent of LeClerc in the US.
I M P O RTA N T:
Inform Reliable about the violation agreement between Leclerc and Creative. Warn them that we can undertake a procedure against them.
EXHIBIT 3 : Memo from Jane Watson to Bill Lewis
It is without a doubt a genuine LeClerc LMC Standard. The warranty, although identical to the one issued by LeClerc, France, names Reliable on the return. I enclose it for your examination.
I M P O RTA N T:
It’s genuine product It’s not counterfeitingIt’s exactly the same warranty but with the name Reliable on it
But we don’t know who gave the product to Reliable Restaurant and Home Kitchen Supplies.
EXHIBIT 5 : Reliable's Ad in a Number of Consumer Food Magazines and Professional Journals
EXHIBIT 4 : Memo to Creative Cuisines Sales Department from Jane Watson
I M P O RTA N T:
Cuts prices down for 2 months to face the competitionChange of all ads
Reaction of Creative Cuisine against Reliable prices
This is a temporary two-month price cut to head off illegal competition from Reliable. Please contact dealers immediately to inform them of the savings. Ads, to be run in the September issues of all magazines in which we are advertisers, will reflect this change.
EXHIBIT 6 : Letter from Bill Lewis to Sandra Jordan
Concept: Aggressively take on Reliable. Ad should inform customers of Reliable's "pirate" actions. Emphasis will be placed on possibility that warranty will not be honored. Low price will also be advertised, but not focus. Standard graphics will be used.
I M P O RTA N T:
Respond to Reliable affront Aware consumer about its actions and the consequences Aggressively advertise
Strengths and Weaknesses
Topic Strenghts Weaknesses
CommunicationGood Communication between LeClerc and Creative Cuisines fast reaction to face the problem
Lack of communication :
Leclerc / Distributors
Ethics Illegal business : One of the distributors didn’t respect its contract by selling the LeClerc’s products to another distributor
STATEMENT OF THE PROBLEM
Leclerc company is facing one problem
How to avoid illegal business ?
Solution N°1 : STATUS QUO
Increase LeClerc’ notoriety
Target more consumers :Reliable + Creative Cuisines
Blind Eye to illegal business on the market
Reliable will remain unpunished
Violation of the exclusive distribution agreement
Negative impact on LeClerc’s brand image Warranty not honored
Creative Cuisines may not want to deal with us anymore
Solution N°2: Solve the problem out of court
Not exposing the problem publicly
No impact on LeClerc’s brand image
Save Time & Money
Difficulty to find the culprit
The culprit may not agree with the arrangement
Settle an arrangement between LeClerc and the culprit :If the culprit does not stop, LeClerc will stop its collaboration with him.
Solution N°3: LeClerc decides to sue the culprit
Examination of the product can make LeClerc win the case
Eliminate Illegal Business
If we win the culprit will be punished and will pay indemnification
Not sure to win
Time & Cost consumingTrail long and expensive
Affects negatively the brand image of LeClerc
Solution N°4 : Increase the control on the distribution : Hire someone
Time & Cost consuming to hire someone
A way to struggle against the illegal business
Keeping an eye on all the distributors and checking if everything is respected.
Keeping the contract with Creative Cuisines : Exclusive agreement
Solution N°5 : LeClerc assumes the distribution in the United States
No more contact in the United statesLoss of Creative Cuisine agreement
Hire a representative in the USA toassume marketing, sales promotion costs and market product
No knowledge of the market, language barriers, loss of creative cuisines clients.
Total control on the distribution
Elimination of illegal business
Recommended