Shiseido in China: a Case Study Analysis
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Shiseido in China:
A case study analysis
1. What are the functions performed by the distribution channels in cosmetic products? How are some of these functions performed in Shiseido’s operation in China?
There are a variety of distribution channels used in the marketing of cosmetic products which include examples such as product counters set up in department stores and product distribution through shelf display in supermarkets. These intermediaries make selling more efficient by minimizing the number of contacts a company has to make by handling all the individual contacts with customers and providing a range of goods to customers at one location. All of the distribution channels perform a core set of functions that are required in order for the cosmetic products to be available to the customer. These functions can be grouped by their nature under transactional, logistical or facilitating functions.
Distribution channels can perform the transactional function of buying by purchasing the product for resale in the case of wholesalers or by acting as an agent for the supply of a product as in the case of goods sold on a consignment basis. Wholesalers, unlike agents, take title of the goods before reselling and thus also perform the function of risk taking by assuming any business risk in the ownership arising from the cosmetic products becoming obsolete and out of fashion or from the products deteriorating over time. This is an important aspect of cosmetic product purchasing as cosmetic products have an average shelf life of about one year and are more prone to spoilage if they are made of natural ingredients. Agents serve the function of selling by serving as a contact to customers and by promoting the products while wholesalers serve as a contact to retailers who in turn are in contact with the customers.
Logistical functions performed by distribution channels involve the
Shiseido in China:
A case study analysis
1. What are the functions performed by the distribution channels in cosmetic products? How are some of these functions performed in Shiseido’s operation in China?
There are a variety of distribution channels used in the marketing of cosmetic products which include examples such as product counters set up in department stores and product distribution through shelf display in supermarkets. These intermediaries make selling more efficient by minimizing the number of contacts a company has to make by handling all the individual contacts with customers and providing a range of goods to customers at one location. All of the distribution channels perform a core set of functions that are required in order for the cosmetic products to be available to the customer. These functions can be grouped by their nature under transactional, logistical or facilitating functions.
Distribution channels can perform the transactional function of buying by purchasing the product for resale in the case of wholesalers or by acting as an agent for the supply of a product as in the case of goods sold on a consignment basis. Wholesalers, unlike agents, take title of the goods before reselling and thus also perform the function of risk taking by assuming any business risk in the ownership arising from the cosmetic products becoming obsolete and out of fashion or from the products deteriorating over time. This is an important aspect of cosmetic product purchasing as cosmetic products have an average shelf life of about one year and are more prone to spoilage if they are made of natural ingredients. Agents serve the function of selling by serving as a contact to customers and by promoting the products while wholesalers serve as a contact to retailers who in turn are in contact with the customers.
Logistical functions performed by distribution channels involve the
References: Kerin, A. R., Hartley W. S., Berkowitz N. E., Rudelius W. (2006). Marketing. New York: McGraw-Hill Taipei Times. (2002). Shiseido not seen as so exotic in its home in Japan. Retrieved March 31, 2009, from http://www.taipeitimes.com/News/bizfocus/archives/2002/04/27/133644.