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Question 3 What factors does a cosmetics company need to co

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Pầu Khùm Khùm

on 2 June 2014

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Transcript of Question 3 What factors does a cosmetics company need to co

Consumer Needs

Channel Objectives

Identifying Major Alternatives

Evaluating the Major Alternatives

Each alternative should be evaluated against:
Economic criteria
Adaptive criteria

Consumers expect to find a low-priced line in a mass merchandiser or drug outlet. Selling online is a possibility, although consumers might not be willing to pay shipping charges on a low-priced good.

With a low-priced line, a consumer does not expect the high level of service found at the cosmetics counters of department stores. In addition, because the product is low priced, the marketer could probably not reach the margin expectations of a high-end department store while keeping the product at a low price to the end consumer.

the company will seek intensive distribution of the product in as many outlets as possible.

Discuss the complexities international marketers face when designing channels in other countries.

corporate VMS
integrates successive stages of production and distribution under single ownership.

*For example, Sherwin Williams owns and operates its own manufacturing and retail outlets

Describe the major types of vertical marketing systems and provide an example of each.
contractual VMS
consists of independent firms at different levels of production and distribution who join together through contracts to obtain more economies or sales impact than each could achieve alone. The franchise organization is the most common type of contractual relationship .

In an
administered VMS
, leadership is assumed not through common ownership or contractual ties but through the size and power of one or a few dominant channel members.

*For example, General Electric, Procter & Gamble, and Kraft can command unusual cooperation from resellers. Large retailers such as Wal-Mart, Home Depot, and Barnes & Noble can exert strong influences on the manufacturers that supply the products they sell.

What factors does a cosmetics company need to consider when designing its marketing channel for a new low-priced line of cosmetics?

The company must balance consumer needs not only against the feasibility and costs of meeting these needs but also against customer price preferences.

Targeted levels of customer service
What segments to serve
Best channels to use
Minimizing the cost of meeting customer service requirements

Types of intermediaries
Number of intermediaries
Responsibilities of each channel member

Each country has its own unique distribution system that has evolved over time and changes very slowly.
In some markets, the distribution system is complex and hard to penetrate, consisting of many layers and large numbers of intermediaries
At the other extreme, distribution systems in developing countries may be scattered, inefficient, or altogether lacking.

List and briefly describe the major logistics functions. Provide an example of a decision a logistics manager would make for each major function.
- The major logistics functions include :

(storing their tangible goods while they wait to be sold)

inventory management
(maintaining the delicate balance between carrying too little inventory and carrying too much)

(choice of transportation carriers)

logistics information management.

Marketing Channels
Delivering Customer Value

Thank you for listening
♥ For example :

A manager might decide on how many and what types of warehouses are needed and where they will be located, how much inventory to carry, and which of the five main transportation modes to employ (truck, rail, water, pipeline, and air), along with an alternative mode for digital products (the Internet, or how to share information).

Discuss the various types of conflict that may arise in the channel of distribution.
Horizontal conflict
: occurs among firms at the same level of the channel
Vertical conflict
: conflicts between different levels of the same channel, is even more common
Explain how channel members add value for manufacturers and consumers
Producers use intermediaries because they create greater efficiency in making goods available to target markets through contact, experience, specialization and scale of operation.

narrow assortment
of products in
large quantities



broad assortment
product in
small quantities

Marketing Channel members
Buy large quantities from many producers.
Break them down into the smaller quantities and broader assortments wanted by consumers.
Add value by bridging the major time, place, and possession gaps.

Marketing Channel members
Perform many key functions:

: Gathering and distributing marketing research and intelligence information.

: Developing and spreading persuasive communications about an offer.

: Finding and communicating with prospective buyers

: Shaping and fitting the offer to the buyer’s needs, including activities.

: Reaching an agreement on price and other terms of the offer.

Physical distribution
: Transporting and storing goods.

: Acquiring and using funds to cover the cost of the channel work.

Risk taking
: Assuming the risks of carrying out the channel work.
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