Page 446 - Foundations of Marketing

Retailing, Direct Marketing, and Wholesaling | Chapter 14 413

Direct Selling
Mary Kay engages in direct
selling by using the party plan
approach through its at-home
consultants. The company also
markets products online.

© iStockphoto.com /AWSeebaran

where a salesperson demonstrates products. The informal atmosphere helps salespeople to
overcome customers’ reluctance and encourages them to buy. Tupperware and Mary Kay were
the pioneers of this selling technique and remain global leaders.
Direct selling has benefits and limitations. It gives the marketer an opportunity to dem-
onstrate the product in an environment—usually customers’ homes—where it most likely
would be used. The seller can give the customer personal attention, and the product can be
presented to the customer at a convenient time and location. Product categories that have
been highly successful for direct selling include cosmetics and personal-care products, health
products, jewelry, accessories, and household products. Personal attention to the customer
is the foundation on which direct sellers have built their businesses. However, because com-
missions for salespeople are high, ranging from 30 to 50 percent of the sales price, and great
effort is required to isolate promising prospects, overall costs of direct selling make it the
most expensive form of retailing. Furthermore, some customers view direct selling negatively,
owing to unscrupulous and fraudulent practices used by some direct sellers. Some communi-
ties even have local ordinances that control or, in some cases, prohibit direct selling. Despite
these negative views held by some individuals, direct selling is still alive and well, bringing
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in annual revenues of over $ 28.5 billion in the United States and $ 117 billion worldwide.
Automatic Vending

Automatic vending is the use of machines to dispense products. Automatic vending is one of
the most impersonal forms of retailing and it accounts for a very small minority of all retail sales.
Small, standardized, routinely purchased products, such as snacks and drinks, are best suited for
sale in vending machines because consumers buy them out of convenience. Machines in areas
of heavy foot traffic provide efficient and continuous service to consumers. High-volume areas,
such as in commercial centers of large cities or in airports, may offer a wider range of automatic
vending product options. Vending machines have even taken on cult popularity among some
urban-dwelling consumers. In some cities, customers can find a wide variety of products dis-
pensed via vending machine, even high-end items. For example, the Semi-Automatic machine,
located in luxury hotels, dispenses $ 500 watches and $ 22 eye cream to travelers who forgot automatic vending The
items at home. InstyMeds vending machines dispense prescription medications to customers. use of machines to dispense
Fishermen in Pennsylvania can even buy live bait via PA Live Bait Vending. products
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