In this case, shampoo is clearly a luxury item, as the majority of the population can not afford the price of $250 and will likely sacrifice the quality to find the cost-efficiency ratio they are satisfied with. As the target audience of the product is the elitist audience, the product needs to not only satisfy the demand for high quality but also comply with other standards of the prestigious merchandise.
Thus, the most obvious distribution approach is the direct one. It has several advantages crucial to the setting. First, the direct approach allows for the more individual and personal interaction. According to Richardson and Gosnay, “you will get to know your customers, start forming a relationship with them, receive timely feedback and, perhaps even more important, you will retain control over how your product reaches the customer.” (81) This latter point may prove especially useful as the shampoo is a completely new product, and timely feedback may be required as overlooked issues surface.
Taking into account the limited clientele and the value of each customer, such issues must be addressed in the shortest time possible. If an indirect approach is used, the feedback will take much longer to reach the manufacturer and will encounter more obstacles at each new level, such as a retailer or a wholesaler (Richardson and Gosnay 83). However, the direct distribution approach has two serious shortcomings: the high cost and the dependence on background knowledge.
If the expensive shampoo is a product made by a large company that seeks to expand its market to the new audience, it will likely be able to provide the means of transportation and secure the channels of distribution. If, on the other hand, the company is a small business that begins its operation with the introduction of a luxurious shampoo, building up the material basis and seeking the place where their product can be sold will most likely be a financial challenge. In this case finding an intermediary that is experienced in dealing with prestigious merchandise would probably be a good decision, at least in the beginning phase.
A similar strategy is recommended in selecting market coverage. The selective approach is an obvious choice in this particular situation. First, the high quality of the product will inevitably result in the limited supply of the shampoo, which already excludes the possibility to use the selective approach. The limited clientele further eliminates the necessity for availability. More importantly, however, is the image of the product.
While the high quality of the product is important for its success on the market, it is not likely to be bought by a movie star if it is not perceived as prestigious. In the case of exclusive distribution, “the product is purposefully limited in its availability to emphasize its exclusive appeal.” (Richardson and Gosnay 85) Thus, the limited availability is a preferred strategy even in the long run, when the established production line will exclude the possibility of shortages.
In the case of the extremely inexpensive laptops, an opposite approach should be used. First, market distribution should likely be selective. The exclusive selection is not an option for two reasons: first, it contradicts the goal of reaching as wide a market as possible, and second, it will likely make no economic sense. A laptop is a complex piece of hardware and even at the price of $150 it is unlikely that any sufficient profit is derived.
Thus, the business must emphasize on a large number of sales to generate revenue. At this point, it may seem like the intensive distribution is the best approach. However, the intensive model is suitable when “customers often need these products on a daily basis.” (Richardson and Gosnay 85) A laptop is clearly not something that the people need regularly. Additionally, many potential customers already possess a regular laptop, which most likely is of superior quality and capability, so they are unlikely to buy another one except for some specific purpose.
Finally, the customers who do consider buying a laptop will not automatically select a cheap and “not fancy” variant, so the careful selection of the market is key. The selective approach thus offers a middle ground by providing “good coverage for your product but not to the extent of the intensive approach or limited availability of the as with the exclusive approach.” (Richardson and Gosnay 85)
The same goes for the distribution model. The direct distribution, as was already noted, is costly at the initial phase, and will likely be unacceptable for the business that offers goods with small gross profit. Besides, the carefully selected intermediary will probably know the market well, so the retail process will be optimized, and unnecessary efforts for finding the right target audience will be eliminated. Finally, the audience for the inexpensive laptop capable of Internet connectivity will likely include the market of the developing countries, which require massive transportation capabilities. Thus, the only scenario where the direct distribution model of such goods is acceptable is when the seller is a large company with sufficient transportation and logistics base.
The business of selling customizable clothes is somewhat similar to the case of expensive shampoo. First of all, the level of customization is an important factor.
If the company offers a fairly limited selection of fabrics and sizes, it essentially boils down to printing a pattern chosen by the customer on one of the pre-crafted templates. This would not be significantly more expensive than the mass-produced item. Thus, the product will appeal to a range of audience not satisfied with the limitations of the ready-made clothes but not willing to pay for a personal tailor.
Thus, the selective distribution will be optimal as it targets a specific but wide audience. On the other hand, if the process is fully customizable, i.e. the customers are able to choose every aspect from many variants and introduce their own details that are impossible to predict, the price of such item will equal the custom-tailored clothing as the process is tremendously more costly than mass production. In such a case, the exclusive distribution must be chosen, with all its properties such as using the limited supply to emphasize the exclusive quality of goods. Finally, as the design process involves visiting the web page at the earliest stage, it is logical to assume that the purchase and transactions will also be made there.
This fact means that at least the wholesalers and retailers are excluded from the channel succession. However, the direct approach is still not the best variant as “you still need to develop and maintain an effective delivery system to customers to achieve complete satisfaction.” (Richardson and Gosnay 84) The use of the Web to reach the customer suggests the need for at least nationwide distribution, so the indirect approach is required to secure transportation.
Works Cited
Richardson, Neil, and Ruth Gosnay. Develop Your Marketing Skills, Philadelphia: Kogan Page Publishers, 2010. Print.