Shiseido in China
1. What are the functions performed by the marketing and distribution channels for cosmetics products? Which of these functions are most important? Why?
Distribution Channels in the cosmetics industry consist of individuals and firms, involved in the process of making cosmetic products or services available to consumers. Marketing channels make possible the flow of goods from a producer, through intermediaries, to a buyer. Intermediaries perform 3 basic functions - Transaction, Logistical, Facilitating. All 3 function must be performed in a marketing channel, even though each channel member may not participate in all three. To reduce wastage of resources due to repetition, channel members often negotiate which specific functions they will perform and for what price.
Distribution channels perform a transaction function that involves buying, selling and risk taking. Performing a transactional function by the distribution channels in cosmetics products would involve buying from the manufacturer of the cosmetics and reselling to other intermediaries, or intermediaries who resells to consumers. Wholesalers performs the function of sharing risk with the producer when it stocks the cosmetics products in anticipation of sales. However, if the stock is unsold for reasons such as out of fashion or deteriorating over time, the intermediary--not the producer-- suffers the loss. This is an important aspect of cosmetic product purchasing as cosmetic products become obsolete quickly as they only have an average shelf life of about one to two years and are more prone to deterioration.
Logistical functions performed by distribution channels involve preparing and getting the cosmetics products to buyers. Another logistical role is to transport cosmetics products to either the next level of distribution channel or directly to the customers. Some of the distribution channels purchase different cosmetics products from several sources and create product assortments to meet the
Distribution Channels in the cosmetics industry consist of individuals and firms, involved in the process of making cosmetic products or services available to consumers. Marketing channels make possible the flow of goods from a producer, through intermediaries, to a buyer. Intermediaries perform 3 basic functions - Transaction, Logistical, Facilitating. All 3 function must be performed in a marketing channel, even though each channel member may not participate in all three. To reduce wastage of resources due to repetition, channel members often negotiate which specific functions they will perform and for what price.
Distribution channels perform a transaction function that involves buying, selling and risk taking. Performing a transactional function by the distribution channels in cosmetics products would involve buying from the manufacturer of the cosmetics and reselling to other intermediaries, or intermediaries who resells to consumers. Wholesalers performs the function of sharing risk with the producer when it stocks the cosmetics products in anticipation of sales. However, if the stock is unsold for reasons such as out of fashion or deteriorating over time, the intermediary--not the producer-- suffers the loss. This is an important aspect of cosmetic product purchasing as cosmetic products become obsolete quickly as they only have an average shelf life of about one to two years and are more prone to deterioration.
Logistical functions performed by distribution channels involve preparing and getting the cosmetics products to buyers. Another logistical role is to transport cosmetics products to either the next level of distribution channel or directly to the customers. Some of the distribution channels purchase different cosmetics products from several sources and create product assortments to meet the
References: Jian, S. (2011, July 28). Shiseido Expands into Mass Cosmetics with Diverse Product Strategy. Retrieved from EuroMonitor International: http://blog.euromonitor.com/2011/07/shiseido-expands-into-mass-cosmetics-with-diverse-product-strategy.html Nakamoto, M. (2011, Jan 21). New Shiseido chief is in no rush. Retrieved from Financial Times: http://www.ft.com/cms/s/2b528944-258f-11e0-8258-00144feab49a.html Theng, L. G. (2013). Marketing in Asia, Second Edition. McGraw-Hill Education (Asia).