Short Case $-$ Physical Distribution & Strategy

There is an interesting perspective on the relationship between strategy and physical distribution practices. The

story of the development of the cut flower market in the USA is the point of case for the same.

Cut flowers have to be distributed very quickly. Even if they are treated with a preservative, such as silver

nitrate, their shelf$-$life is fairly limited$.$ Californian growers were among the first to develop special containers

which helped slow the rate of deterioration in cut flowers. These containers pre$-$cooled freshly cut flowers in the

field, held flowers in different quantities, were designed to fit aircraft hold dimensions and were easy to handle.

The traditional marketing channel for cut flowers was flower shops. These were considered inappropriate when

the objective was to expand demand for cut flowers. Market research suggested that only $2\mathrm{.}5$ percent of

households regularly purchased cut flowers but that there were opportunities to induce the public to buy more

flowers and more often. Flower shops, however, were oriented towards special occasions such as weddings,

funerals, gift days etc. Growers wanted to mass market their produce and so department stores and food chains

were targeted because these outlets enjoyed much higher levels of customer traffic.

Research also revealed that many consumers considered the unit price too high for them to purchase cut flowers

regularly. The grower's response was to abandon the convention of selling in packs of a dozen stems. They

brought down the unit price by packaging in smaller bundles. Roses, for instance, were marketed in lots of three.

Having decided on the size of the sales units, flowers were packed in the field accordingly.

To persuade retailers to stock cut flowers margins had to be competitive with those of other products competing

for the limited floor space available. Growers invested in the design of a merchandising unit which minimized the

floor space required and maximized the impact on prospective purchasers. In addition, because research showed

flowers to be an impulse purchase and more likely to take place at the end of a store visit than at the beginning,

growers encouraged retailers to position the merchandising units at the checkout counters. These tactics served to

increase the profitability of cut flowers to retailers. The changes in physical distribution practices required a

change in business strategy in order to be effective.

Answer the following:

Q $1.$ With the help of suitable diagram $($refer basic structure$),$ illustrate the new distribution channel of cut flower

market with reference to the above case & also discuss the changes made in the business strategy while

changing the distribution system.