Shiseido in China

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Case- Shiseido: Channeling Cosmetics in China

1.Marketing and distribution channels for cosmetics products performed mainly transactional and logistical function. Distribution channels such as the voluntary specialty chain stores perform transactional function when they buy these cosmetic products from the manufacturer and sell them in their individual stores. They share risk with the producer (Shiseido) as they stock merchandises in anticipation for sales. On the other hand, counters at departmental stores and door-to-door selling perform logistical function, whereby they gather, sort and disperse these cosmetic products at these specific counters. For example, some departmental stores may place all the cosmetics counters together on a single level/ specified area in order to serve its customers better. They can also store these products together at a single venue. Door-to-door selling brings the products directly to the consumers. Facilitating function can sometimes be performed in departmental stores as well, where they highlight the bestselling cosmetic brands/products through their own advertisements.

Transactional function is generally more important than logistical function, as the former involves the exchange of value (transaction) of products and money, as well as the potential risk the intermediaries are taking up when they chose to sell these products. If the stock the intermediaries purchased is unsold, they suffer the loss and not the producer. Hence, this function involves tangible gains and losses of the intermediaries, which usually tend to value these aspects more.

2.Channel Length

Channel Intensity
Creation of the Aupres brand which was sold in 350 departmental stores in 2004 shows the approach of intensive distribution Shiseido undertook, Shiseido in China continued on this approach as it attempted to open specialty model stores for its own brands of cosmetic products (some imported from Japan- Shiseido UV White, and some...
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