Direct to Consumer Business Model
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Added on 2020-05-11
Direct to Consumer Business Model
Added on 2020-05-11
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E-BUSINESS: P&G DIRECT TO MARKET STRATEGYNAME DATE
1.0 EXECUTIVE SUMMARY Proctor and Gamble (P&G), a leading multinational company is keen on adopting the direct to consumer (D2C) model in providing its products to consumers and bypass possible middle players such as retailers and wholesalers. However, the model, despite its touted benefits, has some pitfalls that P&G must take into consideration. This report discusses literature on the concept of D2C business model in part one, identifying its weaknesses and threats before evaluating past case studies where the model was used in which the weaknesses and threats identified in part one were experienced. Finally, this report discusses a business plan for a solution to P&G that will offset the identified threats and weaknesses and ensure a successful adoption of the D2C business model by P&G.
TABLE OF CONTENTS1.0 EXECUTIVE SUMMARY...........................................................................................................................22.0 PART ONE...............................................................................................................................................42.1 DIRECT TO CONSUMER BUSINESS MODEL........................................................................................42.2 WEAKNESSES....................................................................................................................................42.3 THREATS............................................................................................................................................53.0 PART TWO: CASE STUDY ANALYSES........................................................................................................64.0 PART THREE............................................................................................................................................84.1 THE BUSINESS CONCEPT...................................................................................................................84.2 PRODUCTS AND MARKETING............................................................................................................95.0 CONCLUSION.......................................................................................................................................106.0 REFERENCES.........................................................................................................................................12
2.0 PART ONE 2.1 DIRECT TO CONSUMER BUSINESS MODELThe Direct to Consumer business model is one in which producers/ sellers sell products directly to the customer, completely cutting out middlemen such as wholesalers and retailers and advertising networks such as radio and TV (Meyer & Crane 2013). In the context of the modern era, it mainly involves selling products through online/ e-commerce websites directly to the consumer. The model enables sellers to advertise online using descriptions and images based on which customers can make purchase decisions and either buy online or buy off-line (Klaassen 2011), (Chapin 2016). While it is a good model that makes selling fast, efficient, and with highermargins, the model in the context of the P&G strategy has inherent risks and weaknesses.2.2 WEAKNESSESIn the P&G case, the biggest weakness is in its product line/ types. P&G produces and sells consumer goods, such as cleaning products that are not traditionally sold online. These are traditional store/ supermarket bought products, along with soaps and similar items that would notcreate much enthusiasm for online purchases. There are just consumers that will not make purchases of such products online, unless there is a very compelling reason. The ‘feel’ factor is still lacking in the online direct to customer (D2C) sales model (Putnam 2013)Using established e-commerce platforms such as E-Bay and Amazon will dilute the brand presence of P&G because it has several different brands that consumers may perceive to be just ‘another brand’ or even imitation. People really do not go to buy P&G, but the various consumer products made by P&G and this D2C model will dilute the brand, especially using platforms such as Amazon (Chaudhry 2017)The model will require P&G to have additional technical investments and systems, in terms of several databases that require personnel and money to set up and maintain. To create a visible online presence with their brand, the firm must advertise extensively, leading to increased costsThe model has a long cycle of sales where a customer selects products from the online portal, evaluates them, and then makes a payment such as using credit cards. The products then have to be packaged and shipped to the consumer; this is unlike the usual model where customers walk
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