Using the Marketing Mix: Place

“I am the world’s worst salesman, therefore I must make it easy for people to buy.”

F.W. Woolworth

“Don’t open a shop unless you like to smile”Chinese Proverb

2.18 Place

Using the Marketing Mix: PlaceIn this topic you will learn about:

Choosing appropriate outlets/distributors Types of distribution channels

2.18 Place

What is place?

Place is the term that we give to distribution.

Distribution is the process of getting the firm’s product to the market. It can come in a variety of forms.

This is a crucial element of the marketing mix – a firm might have the best products in the market but if the market cannot access the products then the firm will not be successful.

Where can a business ‘sell’ it’s products from?

Place

Wholesalers

Agentse.g.Ticket agents

Retailers

Personal selling

Direct selling

Authorised dealers

Choose the right channel of distribution.

1. Direct to consumer

2. Through a retail outlet

3. Through a wholesaler

4. Using an agent

Stop after 1 min

2.18 Place

Choosing appropriate outlets/distributors

Outlets are the places that sell a firm’s products. There are a variety of factors to take into account when choosing appropriate outlets:

Type of Product Market Quantity and Frequency Geographical Location Cost Competition

2.18 Place

Choosing appropriate outlets/distributors

Type of productThe characteristics of the product need to be taken into account. For example Coca Cola do not ship their product to the UK from the USA. Instead, they ship over the syrup and the actual product is then made in the UK using British water.

The marketIt is important that the customers being targeted can access the product. High streets are accessible by public transport so that all customers can shop, not just those with cars.

Quantity and Frequency of salesIf only a few low cost items are being delivered it would not be cost effective to send them hundreds of miles. If a product is regularly being delivered then a firm might invest in a delivery system.

2.18 Place

Choosing appropriate outlets/distributors

Geographical LocationHow far is the target market from the firm? The firm will have to take into account the nearness of the market. Regional markets are far more accessible than international markets.

CostThis is very important for a firm. An expensive distribution method will reduce the contribution being made to a firm’s product. Therefore, the firm must ensure that the method is cost effective.

CompetitionFirms will take into account distribution methods used by their competitors. In fact, some firms use the same distributors as their competitors!

Choosing appropriate outlets/distributors

Choose a product from the following: Coca Cola Hairdressing Newspapers Computers Health gym

.

.

Explain how the six points listed might affect the distribution of these products.

For example, furniture is large and difficult to transport. Customers will use stores to select their product and it will be delivered at a later date.

Firms will normally deliver more than one item of furniture to different addresses at the same time. This will save on costs, although the delivery firm is likely to charge the final customer as well.

Some firms will have their own, in-house delivery service, but some may use the same delivery firm as their competitors.

These firms are likely to work on a regional basis to save on costs

•Type of Product•Market•Quantity and Frequency•Geographical Location•Cost•Competition

2.18 Place

Types of distribution channels

Distribution channels are the routes to market that a product takes from producers to the final customer.

There are a number of distribution channels available to firms.

Short distribution channels are where the producer sells either directly to the customer or through a retailer.

Long distribution channels are where there are more than one intermediary (middle person) between the producer and the customer.

Types of distribution channels

Producers can use direct selling whereby they sell directly to the final consumer.

Often, producers use retailers who sell products on to the general public.

Wholesalers buy large quantities of supplies from producers and sell them on in smaller quantities. For example, a corner shop might go to a wholesaler to buy their products.

Increasingly, firms are using e-commerce benefiting from the power of the internet to sell on their products.

Amazon distribution network system.

Wholesaler

Act as a link between producer and retailer

Buy in bulk and break down to smaller units to retailer

They act as a storage place.

Examples of Wholesalers

2.18 Place

Types of distribution channels

Short distribution routes are from the producer direct to the customer (direct selling) or via a retailer:

RETAILERCONSUMER

PRODUCER

Types of distribution channels

Long distribution channels can go through a number of intermediaries:

PRODUCER

WHOLESALER

RETAILER

CONSUMER

What BS issues are

shown in the video clip?

2.18 Place

Activities

Each member of the class should choose a product in the classroom.

This could be anything from the white board to the clothes that you are wearing.

Describe the distribution channel that the item you have chosen has gone through.How do you think this affected the price of the item?

To what extent do you believe that shortening the distribution channels would reduce food miles?

You will need access to the internet to watch this video clip

Homework

Use your time wisely for revision