Free Essay: Benefits and Challenges of Having One Channel Partner in the Example of Martin Guitar

Martin Guitar, otherwise known as, C. F. Martin & Co., Inc, is a manufacturer of guitar and guitar spring. The company is known all over the world and is situated in Nazareth, Pennsylvania, a small town in the Lehigh Valley of Eastern Pennsylvania. This paper will be using the example of Martin Guitar to outline the benefits and challenges associated with having one channel partner having a dominating market share. It will also explain the steps that companies with such partnerships can start and maintain good relationship with other retailers both on store and online.

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Background Information

Martin Guitar started more than 180 years ago as a one man shop has but thrived over the years to employ some craftsmen. The company had a breakthrough when it made mandolins and ukuleles but the major breakthrough was seen when it came up with a totally new guitar style called the dreadnaught. The company continued with the tremendous growth until 1920s when there was the great depression. It meant that the president had to come up with new ways of making the company to survive.

C.F Martin III, the president of the company, came up with a robust campaign in order to come through this period. They therefore created the violin and wooden jewels. It also led to the development of 14 fret neck which was well received among several guitar users. There was high influx of orders that Martin could not keep with. Instruments were being back ordered. He was then forced to expand in 1972 and was able to produce well over 23,000 guitars without sacrificing the quality.

However, behind the facade of this success, lay a widened gap between the leadership and the factory workers culminating into a strike in the year 1977, the challenges continued leading to a significant level of drop in production that only saw 3,000 guitars produced in the year 1981. Frank resigned as the president but was slater appointed as the board chair in 1982.

In 1980s through to 2016, there was a tremendous growth and regeneration of Martin Guitar. This was due to the changes in the internal factors that were affecting the company. One of the changes was to create the Martin Guitar culture. The first element of this culture was that Martin Guitar had developed a wide market base over time. The second aspect of the culture is the relationship built among different stake holders from dealers, to consumers and the community. The beliefs and culture placed on an organization has a profound effect on the performance of that particular organization.

Frank leant his lessons well in the fall of 1980s. He however leant from what his father had done came began building the company based on the values and the beliefs that the father had left behind. There was and is a serious competition from other guitar specialist organizations within the country. To wade off this competition, Martin guitar produce durable guitars. He dealt with the external market by wrestling the production process.

In 1990s, Chris made a number of changes in his leadership styles that helped improve the productivity of Martin Guitar. One of the notable changes that were seen in him during this period was the change of attitude towards the community. He shifted his attention the members beyond the plant He also began trusting his close associates and could delegate some duties to his vice president. He also built relationships with the employees by organizing of rout door capacity building activities. He also created a network with other leaders in the industry and those beyond the industry to share experiences on corporate governance and management issues.

By 2000, Martin Guitar was in a strong position. The combined effect of sustained popularity of acoustic music and the need for high quality production process made Martin Guitar to be even more relevant in the market place. The market grew and soon was the need to have more of the Martin Guitar especially by the song writers and producers of the popular genre of music, Americana. Martin had challenges to get woods to be used for guitar construction.

This called for either if two responses. The first was to source for rare yet protected woods around the world. This process became increasingly expensive and a difficult exercise. The second response was to look for alternative types of wood that would be used to produce the guitars.

During this period, there were other changes that were seen too. The first change was the growth of Taylor Guitar into a successful brand. Taylor became a strong competitor because they produced high quality guitars like the Martins but at a relatively cheaper price. The second change was the rapid growth of Guitar Center. By 2014, Guitar center had grown to have more than 200 outlets. Guitar Center was a major purchaser of Martin Guitar products with their purchases forming up to 30% of Martin Guitars sales by 2009. By 2017, the growth of Guitar Centre had resulted to the decrease in sales of Martin Guitar by 20% - 25%.

Potential Benefits of Having One Channeled Partner

There are number of benefits that come with one channel partner with a dominating market share. To begin with, there will be increased productivity. Martin Guitar had Guitar center as their channeled partner and this led to the increase in sales of Martin Guitar for up to 30% of the total sales were coming from the Guitar center. This means that there has to be increased productivity because as the channeled partner continues to grow, their demand for your services is also growing. There is greater profitability also obtained by having a channeled partner in the market.

Challenges of Having One Channeled Partner

On the contrary, having one channeled partner in the market can be detrimental to the growth of the larger company. The growth of Guitar Center led to a decrease in the sales of Martin Guitar by a big percentage. They were already making up to whopping 30% sales from martin Guitar in 2009. There was decrease in this sales by about 10% to 15% further by the growth of Guitar Centre.

The net effect of the growth of a channeled partner is that the will be taking some of the customers away from you. As Guitar Center continued to grow, they were also capable of producing high quality guitar and at a relatively lower cost. This means that they had to eat into the market share of Martin Guitar.

Having a channeled partner is a good business strategy but the management but always is alert to look for alternative sources of market when the partner has out grown the relationship. A failure to address this in time will leave the parent company greening over losses by the gap created by the partner company.

How Can Martin Create A Good Relationship other Retailers

Chris should promote the interest of Martin Guitar through external engagements and sales. He could use his position as the chair of NAMM, the trade organization for the manufacturers of musical instruments to create rapport and make contracts with other firms within the industry that would be beneficial to Martin Guitar. He maintained the open relationship that he had with other people. He remained to be an ambassador of the company and promoted it in the best way possible to the rest of the market place. The appointment of Keith Lombardi was one of the decisions he made that was worth the risk. He was sure to get the economic value and the return on investment on his appointment. Lombardi was one of the key people who had engineered the way Martin came back from the depression time

Getting involved in corporate social responsibility to the community is another way He did this through the formation of Martin Guitar Charitable Foundation in 1996. Martin Guitar Company made contributions directly from the profits made to the foundation in order to facilitate some of the activities that were geared towards benefitting the community. The foundation was involved in music education and direct human service in the Nazareth area.

Conclusion

Channel partners are important in the growth of a company. The relationship should however be such that both of the two companies benefit from each other. The company's involved should always be prepared so that in the event of expansion of one, they are not left to make losses because they are unable to make up for the market gap that has been left. Heads of institutions needs to build a network of good working relationship with both of those who are working, other players in the market place and the community at large.