Retailing and Distribution - Assignment Example

Retailing and Distribution

Question 1

With regard to increasing role of the globalization process, retailing and distribution remains to be the most prominent as well as effective business tools, which are widely used by the majority of businesses. An appropriate choice of retail and distribution channels provides the organizations with an opportunity to effectively sell their products and gain a significant advantage over the rivals.

Before analyzing the alternative ways for distribution of One’s products and defining the most appropriate and effective retail and distribution strategy, there is a need to provide some definitions. According to Business Dictionary, “distribution channel is the path through which goods and services travel from the vendor to the consumer or payments for those products travel from the consumer to vendor” (NA, 2016). It needs to be pointed out, that the distribution channel can be short or can include “several interconnected intermediaries along the way such as wholesalers, distributors, agents and retailers” (NA, 2016). Therefore, retailing is considered to be a part of distribution strategy and can be defined as a “commercial transaction in which a buyer intends to consume the good or service through personal, family, or household use” (NA, 2016).

What are the alternatives for distributing ONE?

Inasmuch as Youthful is eager to expand their market and sales, the company has decided to develop the new range of the products, which will carry the name ‘ONE’. Therefore, due to the lower prices of the products and totally different target audience, it has to pay a notable attention to other ways of distribution.

It needs to be pointed out, that there are three major alternatives for distributing ‘ONE’. These options include intensive distribution, selective distribution as well as exclusive distribution. Talking about the first type, it needs to be pointed out, that the main objective of intensive distribution is to provide the saturation coverage of the market by means of using all available outlets. In the majority of the cases, such type of distribution is required in the situation when the customers have a lot of acceptable brands, which they can choose. To be more specific, it means that if 'ONE' brand is not available for the customers, they will simply choose the other one.

Talking with regard to the distribution channels of intensive distribution, it is worth to be mentioned that it involves all possible outlets and retail stores in order to effectively distribute the product. Mostly, such type of distribution is used for distribution of such products as soft drinks, chocolates, etc.

The second type of distribution, which can be used for distributing ‘ONE’ is a selective distribution. Within a framework of this particular approach to distribution, “it involves a producer using a limited number of outlets in a geographical area to sell the products” (Chand, 2015). In comparison with intensive distribution, the main advantage of the selective approach lies in the fact, that producer has an opportunity to choose the most appropriate or suitable outlets and in this turn to channel the efforts on them. In addition to all the above-mentioned, such type of distribution is immensely effective when the customers prefer particular brand or product and are ready to search for it in a number of different outlets. This method of distribution is considered to be the middle path approach. The explanation of this lies in the fact that within a framework of selective distribution the company focuses the efforts on a few outlets but at the same time contributes to establishing good relationships with all channel members.

In spite of a number of advantages of selective distribution approach, it also has some drawbacks. For instance, by means of using intensive distribution, the company will gain higher profit in comparison with the selective approach.

The last but no least approach to distribution is the exclusive distribution. According to Chand (2015), “exclusive distribution is an extreme form of selective distribution in which only one wholesaler, retailer or distributor is used in a specific geographical area” (Chand, 2015). Such a strategy is mostly preferred by the high prestigious brands with a strong image. The most typical examples of such brand are designer wear, domestic appliances, or automobiles.

Within a framework of the above-mentioned types of distribution, the company can use a variety of B2B as well as B2C channels. Apart from this, it can sell its ‘ONE’ products by means of a single distribution channel or through multiple channels, which include wholesaler and distributors, direct and Internet sales, catalog sales, consultant sales, dealer, retail.

Therefore, in order to choose the most appropriate channel of distribution, ‘Youthful’ should take into consideration conditions of the market, saturation, target audience, products, etc.

Which strategy do you recommend?

As it has been already mentioned in the previous paragraphs of this paper, in order to effectively distribute its products, there is a need for ‘ONE’ brand to properly choose a distribution strategy and the most appropriate distribution methods. Before choosing distribution channels, it is worth to be mentioned that the positioning of the products is based on excellence of the product in encouraging a clear skin and preventing lines and the signs of aging. In addition to this, the range of the products is to remain simple, a cleanser (in face wash form) for all types of skin, tonic, as well as a moisturizer for all types of skin. The pricing strategy of the brand is not so high as in comparison with the products of ‘Youtful’.

Therefore, on the basis of this information, it would be reasonable to recommend the company to use selective distribution, with some features of intensive distribution. The explanation of this lies in a number of advantages, which are connected with a selective distribution channel. The first and foremost, it provides the company with a better market coverage in comparison with exclusive distribution, where “only one wholesaler, retailer or distributor is used in a specific geographical area” (Chand, 2015). Secondly, selective distribution has more control and less cost than intensive distribution. The third advantage, which is worth to be mentioned lies in the fact, that selective distribution channels enable the company to concentrate its efforts on few productive outlets. The last but not least advantage of such distribution channels is the fact that selected firms capable of carrying full product line and provide the required service.

Apart from this, the above-mentioned distribution channel is more appropriate for ‘ONE’ due to the fact that it practically has no disadvantages. The only two disadvantages of selective distribution channel are may not cover the whole market adequately, and difficult to select dealers (retailers) that can match the requirements and goals.

Talking about the channels of distribution, it is worth to be mentioned that the company can choose a variety of them or mix a few channels into one. This means, in order to promote their new line of products, ‘ONE’ will be positioned around the same special powerful ingredient that is said to have an almost magic effect on preventing and in some cases improving wrinkles, improving skin texture and lessening blemishes. In addition to this, inasmuch as the new line is comparatively cheaper in comparison with ‘Youthful’ and has a different target audience, it will be reasonable to advertise the product by means of all possible ways. Also, the brand should encourage the inclusion of the product in product trials conducted by glossy magazines that are relevant to the target audience. In addition to all the above-mentioned, the company should enhance celebrity endorsement and make it less spontaneous.

As it has been already mentioned in the previous paragraphs of this paper, selective distribution approach implies that the products of the company/brand can be obtained only in particular stores. Therefore, these stores can be the same, which are mostly used by ‘Youthful’ brand. They are Harvey Nichols, Harrods, and Selfridges. Apart from this, the product line of ‘ONE’ can be also obtained in the local cosmetic stores and shops in order to gain new customers. Inasmuch as a target audience of ‘ONE’ is a middle-class people (conscious men and women aged 25-40), the products have to be available not only in the exclusive luxury stores.

In addition to the traditional ways of distribution, it will be reasonable for a brand to pay a notable attention to e-commerce through the website. Therefore, the company will significantly reduce the costs of distributing, retrieving as well as managing the paper-based information by means of its digitizing. Also, e-commerce will provide the brand with such advantages as improving the image, providing better customer services, simplifying the business processes and making them faster and more efficient, increasing the productivity of the organization.

Question 2

It is worth to be mentioned that retailing mix plays an immensely important role for the companies due to the fact, that it provides them with an opportunity to properly estimate its retail strategy and planning. In addition to this, the retailing mix also refers to the number of various features and is often called ‘the 6P’s’. It includes such Ps “as the retailing mix details, a retail business approach to its products, promotion efforts, personnel, presentation, place and price” (Koening, 2016). The main reason why it is important for the organizations to use retailing mix lies in the fact, that it helps the business to define its strategy and develop an appropriate plan of actions in order to achieve this. So, in order to develop an effective retailing mix for the company, there is a need to define the main reasons of its importance.

First of all, properly developed retailing mix helps the company to address customer needs (Helms, Haynes & Cappel, 1992). It needs to be pointed out, that the whole retail business deals with identifying as well as meeting the needs of end customers of products or services. Therefore, in order to be effective and gain some competitive advantage over the rivals, the business has to design its strategy on the needs of the target audience. So, when the company is developing the retailing mix, the main objective is to define the needs and requirements of the customers and find the ways how to meet them.

Secondly, an effective retailing mix contributes to formulating a strategy. To be more specific, the retailing mix provides the companies with an opportunity to properly estimate the factors, which have a notable impact on the way of conducting the business. These factors include products, personnel, promotion, presentation, place, as well as price. In addition to the above-mentioned features, an appropriate retailing mix provides a structure that managers can use during the planning business strategy for the organization. Therefore, the main benefit of using the retailing mix lies in the fact that it helps to consider how to use these factors in order to meet the requirements of the customers.

Thirdly, an effective retailing mix helps to coordinate the operations within organization. To be more specific, “by developing the retailing mix before carrying out business operations, business managers provide a plan for all employees to follow“ (Root, 2015). Therefore, this means that properly developed retailing mix coordinates the efforts of the employees in different departments at all levels of the business. In such a way, every single individual works toward the same goal of the company.

The last but not least reason why the retailing mix is immensely important for the effective company lies in the fact, that it helps to respond to the competition. According to Koening (2016), “when developing the retailing mix, a business may consider other companies working in the same industry and targeting the same market segment” (Koening, 2016). In order to become successful and meet the requirement of the customers, the company can analyze how their competitors address each factor of the retailing mix and in its turn compare own strategy to the rivals. Therefore, by means of such steps, the business will obtain a unique opportunity to develop its own retailing mix in response to the strategies of the main rivals.

As it has been already mentioned in the previous paragraphs of this paper, the retailing mix includes such elements as place, price, product, promotion, people (personnel), and process (presentation). Talking about out start-up retailer, there is a need to analyze each of the elements and properly estimate them. Therefore, the first key element of the retailing mix is the place, which includes such features as target market, channel structure, channel management, retailer image, retail logistic, and retail distribution. The target market of our start-up retailer is the clothing market with the main target audience men aged 40+ of the A and B social grades. Inasmuch as the clients are from the upper-middle and middle social classes, which include higher managerial, administrative and intermediate managerial positions, it would be reasonable to use selective distribution channel. Therefore, the products of retailer can be obtained in particular shops. Such type of distribution channel will provide the company with a better market coverage in comparison with exclusive distribution; more control and less cost than intensive distribution; will enable the company to concentrate its efforts on few productive outlets; required service. Apart from this, the image of brand is comparatively strong. The retailer deals with the men’s clothing targeted at A and B social classes, which means that the customers have an opportunity to buy their clothes in particular stores.

The second element of the retailer mix, which is needed to be analyzed, is the product. It includes such features as product development, product management, product features and benefits, branding, packaging, after-sales services. As it has been already mentioned, the startup will sell only exclusive products for the customer, who can allow themselves the clothes of a high quality. In order to successfully promote and sell the goods, the company has to deal with a famous brand or make these brands popular. Apart from it, inasmuch as the retailer will not make suits for individuals, it should find the other advantages, which are worth to be advertised. In order to obtain the loyalty of the customers, which is immensely important for the image of a brand, the retailer has to provide the clients with a number of after-sales services, which will contribute to gaining a significant competitive advantage. For instance, it can include a free delivery of the goods in demand of the customer.

The third element of an effective retailer mix is price, which includes “the costs, profitability, value for money, competitiveness, incentives, quality, as well as status” (Weitz, 1995). It needs to be pointed out that the price of the products is comparatively high due to the fact, that the main target audience of the retailer is the men aged 40+ of the A and B social grades. Therefore, this means that type of clients can afford themselves the clothes of the high quality at a reasonable price. Talking about the competitiveness of its pricing strategy, the brand can use the medium-price strategy and provide constant customers with the discounts. Apart from this, it will be reasonable to develop the discount system, Therefore, by means of such simple step, the retailer will prevent customers buying their clothes in other retailers or stores.

The next element of the retailing mix is promotion. It needs to be pointed out that the products are of the high quality and, therefore, this feature has to be advertised in the promotion campaign. In order to catch the attention of possible customers, it will be effective to use celebrity endorsement, which is considered to be one of the most effective promotion techniques for a luxury brands. It is not necessary to endorse the most popular celebrities due to the high costs of such promotion campaign. Therefore, it will be sufficient to endorse the popular people, which are well-known for the target audience. Apart from the above-mentioned, promotion also includes the sales promotion. Therefore, inasmuch as the retailer will use selective distribution channels, it will be sufficient to promote the sales directly in the places of distribution. In addition to this, the company can use a direct marketing and notify possible customers about new collections and special proposition via e-mail.

The next key element of an effective retailing mix is the people element (Zhang, Farris & etc, 2010). From my point of view, there will not be some problems with this due to the fact, that retailer will use selective stores, where the staff is already professional and capable of providing the clients with the services of a high quality.

The last but not least element, which has to be properly analyzed is the process. It includes order processing, database management, service delivery, as well as standardization (Smith, 2007). While the majority of its features will be the same as in the rivals, the retailer has to pay additional attention to an effective service delivery. Inasmuch as the prices of the products will be comparatively high due to the fact that the main target audience is A and B social classes, it will be reasonable to include into the prices of the clothes their free delivery (Flavian & Guinaliu, 2005). The customers will have a unique opportunity to take their clothes by themselves and to order the delivery into their home or place of work. Inasmuch as the main rivals, which are department stores and specialty stores including bespoke tailors in most of the cases do not provide their clients with such a service, the retailer will gain a competitive advantage. In addition to this, by means of such step the brand will demonstrate its respect for the customer and for their time. Apart from this, such insignificant feature can cause the loyalty of the customers and in its turn will lead to increasing the overall revenue of the retailer.

To sum it up, a properly developed retailing mix will help the company to define the needs and requirements of the customers and will help to meet them. Apart from this, taking into consideration all the above-mentioned important elements of retailing mix, the retailer will be able to gain a notable competitive advantage over the rivals, gain loyal customers and its turn to increase the overall revenue.