Place – Marketing Mix 4.5 The four Ps

Learning Objectives Place The importance of place in the marketing mix (AO2) The effectiveness of different types of distribution channels (AO3)

Place in the Marketing Mix

PLACE IS ALL about how the product reaches its consumers Its concerned with how the product is distributed to make it available to consumers Place decisions are concerned with how products should pass from manufacturer to final consumer Distribution system includes making the right product in the right place at the right time with the right quantities.

Place represents the location where a product can be purchased It can include any physical store as well as virtual stores on internet It is often referred to as the distribution channel A distribution channel is the path taken by a product from the producer to the consumer

A business has to focus on the segment of people they are targeting in order to locate the place where the products or services will be sold EXAMPLE: A Ralph Lauren clothing store will be located in a wealthy area because their segment is directed to wealthy people, or people that look more for fashion or for quality Malls High end stores Online stores

Importance of place in the marketing mix Place is very important in the marketing mix, because it’s where the consumer receives the product or service They have to focus not only on the locations of the business, but also in the location of the customers Businesses should develop strategies to get goods from their present location of consumers The use of intermediaries such as wholesalers and retailers helps the business to store and market their products and enhance their brand image The growing global use of the Internet is making it easier for businesses to reach a wide range of consumers directly with their products

IMPORTANCE OF PLACE IN THE DECISIONS OF THE CONSUMERS Consumers may need easy access to a firm’s products to allow them to see and try them before they buy to make purchasing easy and to allow the return of goods if necessary Manufacturers need outlets for their products that will help promote their product and at the same time have a better market coverage

Distribution Channels

Distribution Channels Channel of distribution: the chain of intermediaries a product passes through from producer to final consumer

Appropriate Distribution Channels Recent trends Types

Recent trends The increased use of the internet for direct selling of goods and services. In the service sector this can be seen with internet banking and direct selling of insurance policies online Large supermarket chains perform the function of wholesalers as well as retailers, as they hold large stocks in their own central warehouse. By owning another link in the distribution chain, the business is engaging in vertical marketing

Recent trends Businesses are increasingly using a variety of different channels – for example, an ice-cream manufacturer may have its own ice-cream vans to sell directly to consumers as well as supplying retailers. Hotels may sell room accommodation directly as well as through travel agents and holiday companies There is increasing integration of services where a complete package is sold to consumers – for example, air flights, car hire, hotel accommodations all sold or distributed to consumers at the same time

Types Direct selling Single-intermediary channel Two-intermediaries channel

Direct Selling Direct selling: no intermediaries are involved and it is sometimes referred to as ‘zero intermediary’ channel. Examples: airline tickets hotel accommodation sold over the internet by the service providers farmers’ markets – selling products directly to consumers

Benefits No intermediaries so no mark-up or profit margin taken by other businesses Producer has complete control over the marketing mix – how the product is sold, promoted and priced to consumers Quicker than other channels May lead to fresher food products Direct contact with consumers offers useful market research

Drawbacks All storage and stock costs have to be paid for by producer No retailer outlets limits the chances for consumers to ‘see and try’ before they buy No advertising or promotion paid for by intermediaries and no after sales service offered by shops Can be expensive to deliver each item sold to consumers

Single-intermediary Single-intermediary channel: usually used for consumer goods but could also be an agent for selling industrial products to businesses Examples: Holiday companies selling holidays via travel agents Large supermarkets that hold their own stocks rather than using wholesalers Agent: a business with the authority to act on behalf of another firm

Benefits Retailer holds stocks and pays for cost of this Retailer has product displays and offers after-sales service Retailer offers in locations that are convenient to consumers Producers can focus on production – not on selling the products to consumers

Drawbacks Intermediary takes a profit mark-up and this could make the product more expensive to final consumers Producers lose some control over marketing mix Retailers may sell products from competitors too, so there is no exclusive outlet Producer has delivered costs to retailer

Two-intermediaries channel Two-intermediaries channel: wholesaler buys goods from producer and sells to retailer Examples: In a large country with great distances to each retailer, many consumer goods are distributed this way, e.g. soft drinks, electrical goods, and books

Benefits Wholesaler holds goods and buys in bulk from producer Reduces stock-holding costs of producer Wholesaler pays for transport costs to retailer Wholesaler ‘breaks bulk’ by buying in large quantities and selling to retailers in small quantities May be the best way to enter foreign markets where producer has no direct contact with retailers

Drawbacks Another intermediary takes a profit mark-up – may make final goods more expensive to consumer Producer loses further control over marketing mix Slows down the distribution chain

Video

Here’s how it works There are 9 questions with three levels of difficulty and for each you get certain amount of points (100-200-300) If you reach 1500 points you don’t get homework But for every incorrect answer you get points off, the same amount you would get if you answer the question right

Jeopardy Definitions Types T or F 100 100 100 200 200 200 300 300 300 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18

End Definitions - 100 Define single-intermediary and give an example 1 minute Define single-intermediary and give an example End A type of distribution channel in which a mediator, such as a retailer, buys from manufacturer and then sells to final customer

End Definitions - 200 What is place in the marketing mix? 1 minute What is place in the marketing mix? End The process of moving products with various methods of transporting and storing goods from the producer to the customer

End Definitions - 300 What is an agent? Give an example 1 minute What is an agent? Give an example End A business with the authority to act on behalf of another firm

Types of Channels- 100 1 minute Give an example of a benefit for customers from buying a product from retailers End Retailer have the product displays and offers after-sales service Retailers offer products in locations that are convenient to consumers

Types of Channels - 200 1 minute Give an example of a company that sells in more than one type of distribution channel, and one from a company that sells without intermediaries End Adidas – Oneplus

Types of Channels - 300 1 minute Give two examples of benefits and two from drawbacks of direct-selling for manufacturers End + Producer has complete control over the marketing mix + Direct contact with consumers offers useful market research - All storage and stock costs have to be paid for by producer - Can be expensive to deliver each item sold to consumers

True or False - 100 1 minute Place in the marketing mix cannot be applied to services End False

True or False - 200 1 minute The increasing use of the internet is causing direct-selling to be more popular End True

True or False - 300 1 minute The type of channel does not affect the price of the final product End False

Homework