The Extent to Which an Independent Beauty Consultant Participate in the Eight Universal Marketing Flows - Case Study Example

Mary Kay: The Extent to Which an Independent Beauty Consultant Participate in the Eight Universal Marketing Flows Client Inserts His/her Name Client Inserts Grade Course Client Inserts Tutor’s Name 11/10/2011 World Federation of Direct Selling Association (WFDSA) has defined direct selling as “on non-fixed retailing places and through the use of face to face way, the product and service are sold directly to the consumers.” Robert, Peterson & Wotruba (1996) also describe direct selling as a face to face selling without fixed retailing sites. This can also be described as a distribution method for consumptive product or service through personnel contact (sales personnel to the consumer) and at different commercial locations. The natures of consumptive and distribution way are emphasized from direct selling (Rosenbloom 1993). Direct selling can be either single level direct selling or multi-level direct selling. In this case we are interested in single level direct selling that Mary Kay uses. Here direct sellers are also the consumers and they also sell the company product or service to the company consumer. The income of direct sellers comes directly from the retailing he or she sells the product to the final consumer (Robert et al 1996). Mary Kay was founded in 1960 with its direct seller called Cosmetology Consultant. Direct seller is the only sale channel of Mary Kay, thus when consumers want to order Mary Kay’s products, the consumer has to find a cosmetology consultant he or she knows who buy cosmetics from the company at a wholesale price and sell to end-users at a retail price. They maintain personal relationships with their end-user consumers and deliver product to them after it is ordered; it is a high-service purchasing relationship from the consumer’s Point of view. Consultants thus act as both distributors and retailers (Coughlan, Anderson, Stern & El-Ansary 2006). Marketing flows shows the movement of products and services from the producer to the consumer. There are various intermediaries that make up a marketing channel in which eight universal flows can be identified. In the marketing flow, physical possession, ownership and promotion are typically forward flows from producer to consumer. Each of these moves is down the channel. Negotiation, financing and risking flows move to both directions, whereas ordering and payment are backward flows (Coughlan et al 2006). These Independent beauty consultants participate in the eight universal marketing flows of Mary Kay products and they are very instrumental for its success. Figure 1: Marketing flows in the charnel Physical possession is one of the eight universal marketing flows. In Mary Kay Company, products are physically possessed by the independent beauty consultants. The various beauty products are purchased by the consultants who subsequently sell them to their customers thus making the physical possession a forward flow. When a wholesaler takes ownership and physical possession of a portion of the output of a manufacturer, the wholesaler is essentially financing the manufacturer. In this case the independent beauty consultants own the products that they have already bought. They store the products in their stalls to sell to their customers. The products when in the hands of the consultant remain their responsibility (Rosenbloom 1999). According to the universal marketing channel, promotion moves in a forward direction. The independent consultants are given discounts by Mary Kay given that they by products in wholesale. The same consultants will translate this to their customers by giving them some discounts based on their agreement. Mary Kay runs various product promotions especially during the introduction of new product lines. They do this by giving out free samples to the consultants who subsequently give them out to the consumers. Negotiation refers to a dialogue between two or more people intending to reach an agreement, understanding, resolve their indifference, or gain some advantage out of it. It is evident in the universal marketing channel. Every member of the channel will always negotiate to his or her favour and sometimes in order to benefit every member of the channel. This as can be seen has both the forward and backward flow (Lamb, Hair & McDaniel 2011). The customer will give feedback to the consultant about the products he/she has used and the consultant in turn will pass this to the producer (Mary Kay). This will help the producer improve the product quality. Mary Kay will sometimes give surveys to the consultants who complete them personally or give out to their clients. Financing is the most important of these flows, when stocks are being held by one member of the channel, financing is in operation. This notion is apparent if the costs of stocks are considered. Stocks that are held in store as dormant stock is considered dead money, but if these is freed via the independent beauty consultants, the said dead money is thus available for reinvestment. This backward flow of financing is not only associated with stockholding, but can also be prepayment for merchandise. Forward flow of financing is more common. All terms of sale, with the exception of cash on delivery and prepayment are viewed as elements of the forward flow in financing (Govindarajan 2007). Business transactions involve taking risks. Risking in this case according to the universal marketing channel has both the forward and backward flows. The producer (Mary Kay) will come up with a given new product line that needs to be channelled to the market. They are not sure if the product will be accepted by the market or not. They are taking risks. Sometimes they give out products to the beauty consultants who pay the latter on. They are not certain that the beauty consultants will pay for the products but they risk is worth being taken. The beauty consultants on the other hand are taking the risk of purchasing the products in wholesale not certain that these products will be purchased by the consumers. They are just risking it because the risk is worth taking. The consumer is also risking using the product not sure of its effects. The channel members depend on the trust built within the market channel. Ordering on the other hand is the other way round in the universal marketing channel it embraces the backward flow. The Mary Kay products are ordered by the customers through the various independent beauty consultants. The consultant will approach Mary Kay to order the products which are sold to her in public. Payments in the universal marketing channel are made in backward flows. This is because ordering is also in backward flow as ordering goes hand to hand with payment. The consumer will pay the beauty consultant when ordering for the product that has been suggested by the consultant. Subsequently the beauty consultant will pay Mary Kay for the ordered products to be delivered to her. Marketing segmentations that are appropriate for the purposes of product design but inappropriate for the purposes of marketing channel design Market segmentation refers to subdividing a market along some commonality, similarity, or kinship. That is, the members of the market segment share something in common. The purpose of segmentation is the concentration of marketing energy and force on the subdivision (or the market segment) to gain a competitive advantage within the segment. Product design on the other hand can be described as the process of creating a new product to be sold by a given producer to the consumer. These products are designed in a way to satisfy the consumer’s needs. Marketing channel design is the process creating a flow or distribution of products from the producer to the consumer (Lamb et al 2011). There are some marketing segmentations that are appropriate for the purposes of product design but inappropriate for the purposes of marketing channel design. Demographic segmentation is a good example of such a case. Gender, age, income, housing type, and education level are just a few of the common demographic variables. A product can be designed that target only a certain gender e.g. women (Chin-Feng 2002). One step in product design is identifying the targeted end consumer. This is mainly done through market segmentation whereby a specific product is designed to target that market segment. In this case demographic segmentation does not in any way affect the decisions that are made when designing a market channel. A marketing channel is rather designed by determining the needs of the consumers. A certain demographic segment will always prefer a certain product and thus when designing that product the focus is emphasized on the preference of that market segment (Rosenbloom 1999). However, when designing a marketing channel, it would be inappropriate to target that group but rather emphasis is placed on how these products are going to reach these groups (market segments) efficiently. An end-user's decision about where to purchase a product (or service) depends not just on what the end-user is buying but also how the end-users want to buy it. The element of how the product or service is bought is called services outputs Service outputs are the productive outputs of the marketing channel. Over which end-users have demand and preference (Coughlan et al 2006). In a fashion line for example, the designed will design a given wear according to the targeted group which has been already segmented demographically. The materials used also vary with preference in different market segments. A fashion line targeting women for example will make only women wear and use clothing materials that are more colourful and light as most women tend to prefer this. Those targeting men will design men wear according to the preference of me. However, when it comes to designing marketing channels, the market is treated as a whole but not segment to target either men or women. Marketing channels will be designed according to the needs of the market so that the products are accessible to the end user. A good marketing channel will focus on the following elements: bulk breaking, spatial convenience, waiting time (or quick delivery), variety and assortment, customer service, and information provision (Dahmen 2004). Example where the product-design segmentation is also useful for marketing channel design purposes There are segmentations that are useful both in product design and marketing channel design. One of these segmentations is time segmentation. This type of segmentation is less common but can be highly effective (Neves, Castro & Consoli 2010). Some stores for example stay open later that others, or stay open on weekends. Some products are also sold only at certain times of the year (e.g. Christmas cards, fireworks etc). The time dimension can be an interesting basis for segmentation. Some products e.g. Christmas cards are only designed or rather produced during the Christmas period. These cards are designed specifically for the Christmas occasion. On the other hand it is only during this period that a marketing channel is designed to satisfy the high demand and large market capacity for these Christmas cards (Massingam & Lancaster 2010). Segmenting the market by service output demands is useful tool for channel design because the resulting groups of end-users are similar (within each group) in terms of the channel that best serves their needs (Coughlan et al 2006). List of References Chin-Feng L., 2002. Segmenting customer brand preference: demographic or psychographic. Journal of Product & Brand Management, 11 (4), p.249 – 268. Coughlan, A. T., Anderson, E., Stern, L.W., and El-Ansary, A, 2006. Marketing Channels. 7th ed. London: Pearson. Dahmen P., 2004. Multi-Channel Strategies for Retail Financial Services: A Management- Framework for Designing and Implementing Multi-Channel-Strategies. California: DUV. Govindarajan, 2007. Marketing Management: Conceptstrue Challenges and Trends. 2nd ed. New Delhi: PHI Learning Pvt. Ltd. Lamb, C. W., Hair, J. F., and McDaniel, C., 2011. Essentials of Marketing. 7th ed. Stamford: Cengage Learning. Massingam, L., and Lancaster, G., 2010. Essentials of Marketing Management. Oxford: Taylor & Francis. Neves, M. E., Castro, L. T. E., and Consoli, M. A., 2010. Marketing Methods to Improve Company Strategy. Oxford: Taylor & Francis. Peterson, Robert, A. and Wotruba, T. R., 1996. What is Direct Selling? Definition, Perspective, and Research Agenda. Journal of Personal Selling and Sales Management, 16 (4), P. 1-16. Rosenbloom, B., 1993. Direct Selling Channels. London: Routledge. Rosenbloom, B., 1999. Marketing channels: a management view. 6th ed. Chicago: Dryden Press. Read More