Apple Inc. and Mary Kay Cosmetics

P29 Q1 1. The marketing channel for Mary Kay cosmetics is called a direct selling channel. The company user a sales force of over 1000000 Independent Beauty Consultants around the world. These consultants are not employees of Mary Kay Corporation; they 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. a. To what extent does an Independent Beauty Consultant participate in the eight universal marketing flows? b. How might these flows be shifted, either among the members now in the channel or to different agencies or institutions not presently included? What do you think would be the implications of such shifts? (think about how cosmetics are sold through department stores or through drugstore chains, for example. ) c. Within each of these distribution systems, specify the consumer’s role from a flow-absorption perspective. Contrast this with the consumer’s role when buying cosmetics from a department store or a drugstore chain. P64 Q1,2,3 2. For each of the three scenarios below, categorize the demand for bulk-breaking spatial convenience, waiting/ delivery time, and assortment/ variety as high, medium, or low. In each case, explain your answers. a. A woman in an emerging-market country of Southeast Asia wishes to buy some cosmetics for herself. She has never done so before and is not entirely sure of the occasions on which she will wear the cosmetics. She does not live near a big city. She is too poor to own a car but has a bit of extra money for a small luxury. b. A manufacturer uses a particular industrial chemical in one of its large-scale production processes and needs to buy more of the chemical. The rest of the raw materials for its plant operations are delivered in a just-in-time fashion. c. Before you visit certain parts of the world, you are required to get a yellow fever vaccine. Many travelers let this slip until the last minute, forgetting that it is advisable (or avoiding an unpleasant shot as long as possible). But they definitely realize they need the shot, and they do not want to have to cancel their trip at the last minute because they did not get it. They often find themselves making a long trip to a reginal medical center because trhey did not plan ahead. 3. For the three scenarios in Question 1, describe a marketing channel that would meet the target end-user’s demands for service outputs. 4. Describe three different buying situations with which you are familiar and the SODs of the buyers in each one. Do you think the SODs being supplied are close to those being demanded? Why or why not? P. 103 Q4 5. Explain how the shopping characteristics for the following consumer and industrial goods affect the channels for them: CONSUMER GOODS INDUSTRIAL GOODS Bread Laser printer toner cartridges Breakfast cereal Uranium for nuclear power plants Women’s hosiery Cement Refrigerators Medical machinery(e. g. , ultrasound machines) P. 150 Q5 6. Apple, as a computer company, has struggles over the years with the assortment problem. Company-owned Apple stores offered only Apple computers. Although management liked having control of the assortment, customers wanted side-by-side comparisons with other brands, eventually driving Apple to close many of its own stores. Apple also has had difficulty influencing how independent computer outlets stock and display its products. Apple is now using the success of its music downloading systems (iPod and variations) to compose larger assortments-and is reopening company-owned stores. Is this a good idea? What, if anything, would you recommend to Apple as an alternative strategy to improve its products’ coverage and sales? P192(4) 7. A manufacturer is in the habit of offering liberal payment terms to distributors: They can pay anytime within 45days of receipt of the merchandise. The manufacturer currently has a band line of credit to cover accounts receivable and pays an interest rate (prime+1%) on the balance on loan from the bank. One of the manufacturer’s key distributors offers to pay for shipments by immediate bank funds transfer upon receipt of merchandise if the manufacturer will reduce the price by 1%. Does this offer close a gap? If so, what sort (demand side, supply side, what flow)? P238 Q6 8. You are the owner/manager of an auto dealership in Germany selling the Audi line. Your dealership is exclusive to Audi; you have invested heavily to build the dealership; and your contract is such that, if you decide to sell your dealership, Audi has the right to approve or disapprove any buyer you might find. What is the balance of power in your relationship? What sort of working relationship are you likely to have with your supplier? What could your supplier do to ensure you do not become alienated?