Distribution and Retail - Essay Example

DISTRIBUTION AND RETAIL al Affiliation) Question One Distribution Channel for a Clothing Range Channel design enhancesthe supply of goods from the manufacturer to the end user. The distribution channel therefore acts as the link between the customer and the manufacturer. The main purpose of creating a distribution is to facilitate the flow of commodities from a manufacturer to and the consumer who is an end user at a timely basis on the right place. The distribution channel acts as the marketer’s bridge to the consumer market. Channel design is a critical fact when it comes to marketing and distribution since it creates a competitive advantage that distinguishes market player between winners and losers. It is evident that an efficient and effective distribution channel design and its implementation can create opportunities that will lead to a competitive advantage of a marketer in the long run. For a design channel to be effective it needs to achieve all the tasks which are necessary to provide a positive impact to the sale of goods to an end user. Antony will have to do a marketing research of United Kingdom which is the market that he intends to distribute the small range of garments. Since the garments are all white they would serve as uniforms to be used by the government and the private sector. The garments would also find meaning in the general public. It would be extremely hard for Antony as the sole distributor of the garments to distribute them in a single channel. It is advisable for him to come up with a distribution channel design with many segments that will facilitate the flow of goods to various end users in different organizations and sectors. Since the garments are entering the United Kingdom market for the first time, it will be challenging for it to deal with the customers in the government sectors. It would be hard for the government to rely on the distributer’s word so it will force Antony to come up with effective means of convincing the government. Since the supply of these garments to the government sectors will involve many units, the distributors will be have to approach the government with a good proposals that explains clearly the features of the product together with its advantages. The most efficient way to distribute these garments to the government would be through the designing of an indirect distribution channel. In this case the distributors only act as intermediaries. The distribution of the garments to the private sector is more flexible than in the government sector. The distributor will definitely supply many units of the garments in this sector too. The distributor should design a channel of distribution that will ensure timely supply of the garments to this sector. The design should incorporate other marketing techniques such as the giving of discounts to ensure the efficiency of the distribution channel. The distributor will have to negotiate extensively with the upper level of management to facilitate their distribution to this sector. The direct distribution channel would therefore work well in the private sector. The distribution of the garments to the customers in the general public will not constitute the sale of small units per customer. It would be hard for the distributor to supply the garments personally to these individual customers. It is advisable that the distributor supply these products to the general public through wholesalers and distributors. The distribution of the garments in the United Kingdom market will occur through different channels as discussed above. It would be of high importance to differentiate these design channels to be in a position to apply them depending on the different target groups. The first design channel is the direct selling. This is the selling and distribution of commodities directly to consumers without the use of a fixed retail location. The direct selling distribution channels include internet or online sales, personal contract sales, one on one demonstration and the sales carried out through party plans. The direct personal demonstration, presentation and sale of goods and services to customers usually take place in their homes. Consumers greatly benefit from direct selling. They get explanation and demonstration on the use of these products and after sales services such as home delivery. Manufacturers and major distributors benefit from this system too due to the low costs associated with initiating it. Another design channel of distribution of products is the selling through intermediaries. This is an indirect channel of distribution. The most common indirect design channel is from the manufacture or producer to agent to wholesaler to retailer and finally to the end consumer. This channel of distribution is effective in a market in which there is presence of many small retailers and small producers. The agent facilitates the coordination of a large supply of the production of the garments. A more integrated channel of distribution is the dual distribution. This design consists of a wide variety of marketing arrangements which the producers and the distributors incorporate more than one design of distribution in their distribution channels. There are various factors that need consideration when determining the distribution channel. The nature of the product determines a distribution channel. Agents and distributors sell complex or technical products only. Customised products are best sold through direct selling. The market in which products are distributed determines the distribution channel. The distributor will have to determine the geographical spread in the region and the nature and extent of competition in the market. Another factor that the distributor will have to consider in determining a distribution channel is the size the business they are into. They will have to consider the size and scope of the business, its objectives and the prevalence of an established distribution channel in the new market. Lastly the distributor will have to consider legal issues in the new market when determining distribution channels. This includes the possibility of having a limitation of sale of the product and the implications if any of an intermediary selling the commodities to an unauthorized consumer (Giles, 1990). There are many types of retailers but the common ones that are applicable to many businesses are only seven. These types of retailers are defined by the size and scope of their business and the nature in which they sell their goods. The First type of retailer is a department store. This is the most complex type of retailers. It refers to the system which a company manages many small retail store with a wide range of products. This type of retailer is very convenient to a retailer since it enables them to purchase a variety of products from one retailer. The second type of retailer is the supermarket. The supermarket were initially retailers that were concentrated with the supply of food and beverages but in modern times they now supply many other products such as home applicants, electrical items and fashion accessories. They are characterized with having a high buying power which makes the retail at lower prices (Hart, 1994). The Warehouse retailers are the next type of retailers. They are those that are located near in Business Park where the premises rents are generally low. Due to this fact, these retailers are able to stock and display large quantities of different products which they retail at competitive prices. The Specialty retailers are the other type of retailers. These are retailers that are connected to specific industries and they offer expertise and high level service to their customers. The next type of retailer is the E-tailer. This is a modern form of retailing in which customers get to order for products via the internet and the goods are delivered to them. Since these retailers have lower rents and overheads, they retail at fairly low prices. A convenience retailer is also a common type of retailer. They offer plenty of convenience since they are located near the customers. The last type of retailer is the discount retailer which offers discounts to a variety of its products. The distributor will have to choose which type of retailer is convenient for its new market (Cherunilam, 2008). It is very essential that distributors conduct their business in an ethical manner. Ethical concerns by the distributor will ensure that the business is run in a socially responsible way. Apart from concentrating with making of profits and maximizing, the distributor should also try to contribute to the economic growth of the market by building its employees through adding value to their skill and improving the living standards of the society it operates in. Corporate social responsibility ensures that the distributor observes ethical issues. It is highly recommended that distributors should come up with ethical policies that ensure high ethical standards that will enable them to make appropriate decision in circumstances of ethical dilemmas (Dennis, 2007). It is advisable that Anthony as the distributor of the garments in United Kingdom to consider all the issues put into this discussion when coming up with a distribution channel. He should put more emphasis on the type of distribution channel to choose for the specific consumers he targets, the type of retailers to use as intermediaries in its distribution channels and the ethical issues arising. Question Two Advantages of Supplying Large Scale Retailers such as Waitrose There are many benefits associated with a small scale producer such as Dora’s supplying products to a large scale producer such as Waitrose. Distributing products through large scale retailers adds value of ones products and services to its customers. The retailer facilitates the flow of goods from the producer to the end user. It is always easier to convince and entice customers using large scale producers than individually supplying the goods and services. With Globalization, retailers are able to supply products and services to customers worldwide (Cateora, 1983). The large scale retailer will offer services to the small scale producer. These offers include the assistance and advice on record keeping, insurance, administrative expenses and finances which the small scale produce will use to strengthen its services. The discussion of these services that has plenty of benefits to the producer is explained further in this essay. The retailers provide some of these services without a fee and others at a fee. Different retailers provide different services that can benefit the producer in many ways (Kotler, 2000). To begin with, a retailer such as Waitrose will promote the producer’s goods. The retailers often promote the products that they supply to increase their sales, this will enhance the popularity of the producer’s goods. Since Waitrose advertises it’s the products it distributes through the internet it will conduct the promotion of these services more efficiently at no cost. The retailer has effective forms through which it will enhance the promotion of products. It combines customer orders which enable it to charge more affordable price than the one direct distribution by the producer would charge individual customers. A large retailer will assist a small producer with sock control. Dora will be storing her finished products at Waitrose deposits. This will help the producer to save inventory holding costs. It will also ensure that the retailer has constant supply of the products to avoid stock outs which can lower sales revenue. Keeping of stock in the large retailers’ deposits help the small scale producer to refrain from having its cash tied up in inventory. The retailer will assist in the point of supply promotion aids. Most large retailers are major sources of display of products and they facilitate the sale of many products though impulse buying from their domestic and international customers. The retailers will therefore update the producers on how the use of aids can take place effectively. In some special cases the retailer would send a worker to go work for a producer during special promotion. The retailer can go to the extent of providing a show room where displaying of producer’s goods takes place. Advertising in cooperative way such as the producer-retailer partnership is a more convenient way of reaching out to different target groups. This means of advertising is very economical and the same time enhances customer loyalty (Blythe, 2006). The retailer helps the producer by giving it market information. The provision of market information will enable the producers to attract and reach many customers. This will happen due to the fact that the information will enable the producers to satisfy the customers’ wants. The large retailer will collect information on the prices, consumer demand, and new changes in the trade and supply conditions. The retailer will then hand this information to the producers. The retailers will get this information from sales persons, customer feedbacks and own analysis of the market. The retailer position of being between the producers and the consumers makes it be at a better place to identify changes in the consumer demand. Its interaction with both local and international consumers and suppliers will enable recognize events that would affect the level of local consumption. The retailer knows which products attract consumers more and the ones that do not due to their frequent interaction with them. The retailer will therefore inform the producer when to change its production levels and inventory levels. The producer will also get up to date and reliable information about the price to charge their products from retailers. Large retailers would collect competitive information about prices from their interaction with a variety of customers. This information would enable the producer to charge a competitive price. The provision of information about market supply conditions by the retailer to the producer is also very important. Retailers keep producers informed on the market conditions that will change trend of supply of a given product. Information involving the super abundance and scarcity of related or competitor products are of much importance to the producer since they will determine the level of production and the pricing of their products. It is essential if this information reaches to the producer on a timely basis. One of the best ways to keep at par with the latest methods, products and ideas by the producers is to keep in touch with large scale retailers. These retailers can provide information about all these due to their interactions with a variety of suppliers and products (Lewis and Trevitt, 1996). Retailers provide financial aid to producers despite these forms of finance being taken for granted. Small producers supply large retailers their products in smaller quantities than they would require supplying in direct distribution channels. This reduces the cash needed by the producers to carry their normal operations. The large scale retailer pays the producers money for their supplies in a lump sum. This enables the producer to budget appropriately for the purchase of its inputs as well as the payments of its overheads. The retailer occasionally extends its financial aid through giving the producers pre payments for their supplies (Solomon, 2003). Large scale retailers can provide accounting assistance to small producers if need be. The retailers can offer accounting services such as compiling manuals and forms if the producers are experiencing difficulties. In other circumstances large scale retailers negotiate with private accounting firms to compile the accounting work for their producers. This is in a bid to ensure that there producers are abiding to local rules and regulations since failure to follow them may interfere with their operations and as a result cut the supplies. Disadvantages of supplying large scale retailers Many small scale producers such as Dora distribute their products and services through large scale retailers with a major objective of making huge profits. These producers stand a chance of recording high sales by dealing with the large scale producers but they need to keep in mind that there are some disadvantages associated with doing business with the retailers such as Waitrose. Large retailers sell large quantities of a variety of products on a daily basis. If a producer’s product is unknown or uncommon in the market, the producer will get a lot of difficulty trying to supply it to the big retailers. For one to be able to have their products stocked at a large retailer’s shelves one has to have track of good performance in their records. Large retailers only concentrate on items whose demand is high and therefore move faster. If customers do not frequently buy some specific products, these products are side lined. These large scale retailers make large sales figures than small retailers. These enormous figures make them to sell their products and services at a lower cost. The disadvantage is that they charge lower prices at the expense of the producer who supplies the products to them. They producer have to supply their products at a low cost since the large scale retailer will dictate the prices. These retailers will often set a lower than average prices for the producers making them to have lower profits (Ryan and Jones, 2009). Dealing with large scale retailers is very similar to doing business with large international financial institutions. The communication will always be impersonal as compared to dealing with small scale retailers who one can communicate personally with. Due to the impersonal communication, the large scale retailers can stop producers from supplying them with a brief phone call or a short written notice without giving proper explanation. The retailer deals with many producers and therefore will not take measures to ensure that an individual producer is well taken care of. The retailer would care less if a small scale producer makes losses. The big retailers stock their shelves with many products from many producers. A big retailer will buy similar products from competing producers, exposing their products to intense competition. If a producer’s product does not have a strong brand name and the ability to attract many buyers, it is common for the retailers to focus on competitor products at the expense of the producers products. Dora should distribute its biscuits through Waitrose retail stores. The advantages of dealing with large retailers such as Waitrose are very desirable in Dora’s business. Dora’s biscuits will be at a better position to increase their market share. The producer’s products will dominate over competitor products due its strong branding. Dora should also do further analyses to determine the impacts of investing in the new system before dealing with Waitrose. References Blythe, J. 2006. Marketing. London: SAGE Publications. Cateora, P. 1983. International marketing. Homewood, Ill.: R.D. Irwin. Cherunilam, F. 2008. Marketing of industrial goods. Mumbai [India]: Himalaya Pub. House Pvt. Ltd. Dennis, C. 2007. International journal of retail & distribution management. Bradford: Emerald Group Press. Giles, G. 1990. Marketing. Pitman. Hart, N. 1994. Effective industrial marketing. London: Kogan Page. Kotler, P. 2000. Marketing management. Upper Saddle River, N.J.: Prentice Hall. Lewis, R. and Trevitt, R. 1996. Intermediate retail & distribution. London: Hodder & Stoughton. Ryan, D. and Jones, C. 2009. Understanding digital marketing. London: Kogan Page. Solomon, M. 2003. Conquering consumerspace. New York: AMACOM. Read More