TABLE OF CONTENTS
2.1. Introduction and Background
2.2. Analysis
3.1. Environmental Factors that will affect the company’s business operations
3.2. Incentive programs to help achieve its day-to-day operations
4. Conclusion
5. References
This paper is an analysis of the complex system of distribution by King Industries. The usage of such system of distribution has not given the company any big problem, however, the presence of specific problems linking to the consistencies of prices and promotion of its products has been given importance in this paper. In addition, this paper has evaluated the adaptation by the company of the business-to-business procurement service, which has been a major factor that contributes to the rise of environmental factors that will affect its business operations. Incentives given by the company are also cited, with additional recommended programs of incentives is given by the author. A conclusion ends the discussion, summarizing the key points of the paper.
2.1. Introduction and Background
King Industries is a business in line with selling and distributing electrical safety products and services. The main distribution system of the subject is so complex hence creating some problems for the subject company. The complex distribution of the subject company is identified as complex because of the process itself. Based on the company profile, the subject company’s is distributed in three ways to three different consumers of their products. The first distribution channel has three stages from wholesaler through the branch network to the customers. There are also products distributed directly to the network from the suppliers. In addition, in instances that product in small quantity may be go straight to the end-users from the suppliers to the end-users. The pride of the company for adapting such kind of distribution made them more approachable and accommodating to their consumers.
2.2. Analysis
The company has been in the business for so long but there are still areas that create problems. One is the buying processes of the consumers, and the effect of different distribution system. The buying process of the consumers appears to be easy for them to do. However, the differences of those prices for direct consumers and wholesaler (branch network) makes it more difficult for the consumers to choose from they would buy products.
According to London Economics (n.d.), wholesale price pass through systems, which may have the appearance of reducing transaction costs in the short term, however, it actually increases the aforementioned costs over the long term. It further explained that such happens because retail entrants refuse to enter markets where they essentially must sell power at a loss relative to the wholesale price to entice customers to switch, and at the same time, incur additional costs for marketing, billing, and customer support.
Hence, it can be inferred that King Industries that the problem on the buying processes of the consumers. The clamor for retail prices or those items included in the distribution of its products to the end-users from the suppliers, to meet the wholesale prices offered to its networks branch may likely cause problems and some consumers may not deemed it feasible to conduct business them. Although it was stated that the company have frequent small orders, the company will have a difficulty on adjusting prices from wholesale to retail, losing its frequent clients in the end and a failure in assuming their target markets. King Industries must see to it that its products are consistent in order to prevent misconception and fraudulent transactions with the consumers.
Another problem is that, the subject company has been into three different kinds of distribution of their products. The company has the so-called multiple-channel strategy. According to Rogers (2001), this type of strategy for distribution makes the products or services available to buyers at more than one type of outlet.
In the practice of such strategy by the subject company, problems are minimal. The only that will pull down their success is the effect of any downfall of the economy, which may affect small type of business and also the consumers, hence in return will affect the business conduct of the subject company.
In cases of economic downfall, people or the end-users may not likely put into their top priority the domestic electrical and safety products, which will greatly affect the progress of King Industries. According to Go (2001), specialty products are unique customized products which have their own niches. This products command the highest levels of effort and risk in buying, therefore supplier of specialty of products command utmost loyalty from their buyers. The difference between shopping products and specialty products is based on efforts. The products of the subject company are considered as specialty products because of its use and importance in the market.
An extensive promotion of their products, in an economic downfall, may result into negative. Hence, promotion of their products must not be focusing on what prices it offers but also to the fact that the use of their products is essential to the living of every consumer, hence, creating a long-term perception to consumers that their products are vital to their existence. Their promotion must give focus on the importance of their products and the use of their products must meet the requirement of such importance.
The business-to-business procurement process of the subject company is better than adapting the business to consumer system in talking general about the subject company’s conduct of business. This is seen through the fact that it allows the subject company to get an insight on how its different partners works. However, the company may continuously ensure the effectiveness of their process if it will use an online application to make its transactions which its suppliers more efficient.
The adaptability of business to consumer procurement may result to having with numerous numbers of consumers hence attracting much competition. As the consumer changes in this kind of process, the subject is more likely to be reluctant on making changes because it will may affect the number of consumers that kept their loyalty with it, hence losing its target market.
3.1. Environmental Factors that can affect the company’s business operations
As evaluated by the author of this paper, the following environmental factors may affect the company’s operations: 1. continuous depreciation of trees; 2. the price increase of oil; 3. and the environmental situation in the different regional branches of Australia.
The continuous depreciation of trees may affect the company’s business operations because it uses catalogues in order to increase the business demand. The catalogue uses paper for better viewing. Hence, if the subject company may not be able to learn the importance of recycling and implementing an alternative program to increase business demand, it may suffer a failure.
The other problem is the increase of oil, due to the number of demands from different countries. This will affect the company because especially its expenses vis-à-vis to its profits, as it uses delivery trucks, which uses oil for its distribution. The company will suffer specially, if it continuously accepts orders coming from end users, which has a small order.
Any threat to the environmental aspect of the regional branches of Australia is also a threat to the subject company business operation. Any form of inevitable or unforeseen circumstances will lead to the poor performance to the business conduct, hence, the need to be more precise with its day-to-day operation must be ascertain. The company must ensure that the distribution of products is not greatly affected to any unforeseen events.
3.2. Incentive programs that can help achieve its day-to-day operations
The subject company has been currently adapting certain incentive programs because it has long-term relationships with many of its customers. It includes free giveaways and conference travel, as designed to reward customer loyalty and to increase procurement by individual customers. The said programs were effective as much as what can be inferred from its success. However, the following incentive programs may be of help to its day-to-day operations is adapting a loyalty card system that will earn points every purchase.
The first one works as a loyalty card that will earn points on every purchase of the consumer. The amount of purchase for earning points may depend upon the regular or usual number or purchases, as will be determined by a survey to be conducted. The loyalty card may also be used to avail of any discounts, depending on the number of points. This will ensure that consumers will keep on purchasing because of what benefits it can derive from this incentive program.
The writer concluded that the King Industries has been effectively handling its business on its present state. Only small problem may arise such as the inconsistencies on the prices and the effect of the downfall of the economy to the business, which will tremendously pull its business in the future. However, as the company will continuously show that it is still effective on handling its business, by the steps to be taken for its marketing strategy must be in a wholisitic approach in order not to result in any other problems that may arise to their complex distribution system. In addition, using the products of technology such as the internet will make its business transactions and processes more efficient. Lastly, the incentive programs currently used by the company is effective however, a loyalty card program may improve and provides a progressive business conduct.
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