InterviewSolution
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Beauty Solutions Ltd., a reputed firm producing cosmetics chose the simplest channel of distribution. It opened its own retail shops throughout the country to sell a wide range of cosmetics and beauty products. This channel of distribution has become very popular toddy as producers experience several benefits. With reference to the above:(a) State the type of distribution channel used by Beauty Solutions Ltd. and explain why this channel has become increasingly popular? (b) Discuss any three methods that can be used as channels of distribution other than retail outlets.(c) Mention five factors that Beauty Solutions Ltd. must consider while deciding its channel of distribution. |
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Answer» (a) The type of distribution channel used by Beauty Solutions Ltd. is Direct Selling i.e., short-channel. Direct selling means the producer directly sells goods to ultimate consumers and there is no middleman or intermediary. Short channel of distribution has become increasingly popular because this provides an ease base to the manufacturers to promote their goods to a large bunch of customers. This channel helps them to get direct contact with their customers through their address and telephones and through this they get a proper and an appropriate feedback. The maximization of profit also becomes possible because no other handling or transportation costs are included. Therefore, short channel distribution is good for the market-competition as well and helps the customers to find their perfect choice. (b) The other three methods that can be used as channels of distribution other than retail outlets are: 1. Door-to-Door Salespersons: The producer employs sales force who approach customers at their residences/offices, book orders and deliver the goods. Sales call is the original and the oldest form of direct marketing. Many companies such as Avon, Amway are also using this method. 2. Tele marketing: The product is heavily advertised on T.V. The custo-mers who watch the advertisements and feel interested can place their orders by telephone, mail or fax. It has become a major direct marketing tool. 3. Catalogue Selling: In this method, the seller mails one or more product catalogues to selected persons who are likely to place an order. Direct mail is a popular medium because it permits high degree of selectivity. (c) The five factors are: 1. Perishability: The cosmetics are of perishable nature, that is they get destroyed soon and cannot handle repeated handling. So for this, the Beauty Solution Ltd. should choose short channels i.e., selling channel of distribution. 2. Bulk and Weight: Beauty Solution Ltd. will choose short channel for distribution, because cosmetic goods are bulky and weighted because they are manufactured on large stock basis. This also minimized handling costs. 3. Promotion: Beauty Solutions Ltd. can promote its products well among the customers. With the short channel of distribution, promotion of cosmetics becomes easier. Maximizing the Profit: Short channel of distribution i.e., direct selling helps to maximize the profit by not including any expenses. 4. Financial Resources: A large and reputed firm like Beauty solution Ltd. with sufficient funds can established its own retail shops to sell directly to consumers. But a small or weak enterprise which cannot invest money in distribution has to depend on middlemen for marketing its product. |
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