Place Unit 5 - slide 10

Place The place relates to the distribution of the product.  The firm must get the product to the consumer at the right place and at the right time.  The consumer must be able to purchase the good easily. Two parts: Channel of distribution The type of retailer that will sell your product. Unit 5 - slide 10

Channel of distribution How the product gets to the market. Will depend upon the product itself. Can involve the: Wholesaler Retailers Agents Importers/exporters http://www.youtube.com/watch?v=ALoo4vrKKUw Unit 5 - slide 10

Wholesaler They provide a link between the producer and the retailer Provides a good source of market information and research Buy in bulk from the retailer and the breaks the product down into small quantities for the retailer. Some wholesalers will finish of the product in terms of packaging and pricing whilst still making a profit. Still have to promote the product in order to make sales. Unit 5 - slide 10

Advantages of Wholesalers to Manufacturers Their channels of distribution are well established and they have strong links with retailers. They allow the manufacturer to concentrate on producing the good, rather than worrying about the channels of distribution. They will bear the cost of storage. Unit 5 - slide 10

Advantages of Wholesalers to Retailers They offer the choice of goods from many different manufacturers. Small retailers can buy in smaller quantities from wholesalers than manufacturers. Unit 5 - slide 10

Wholesale direct to Customer Wholesalers will sometimes sell directly to customers, e.g., Makro and Netto.  Wholesalers are sometimes criticised for not marketing goods in the manner the manufacturers would like, therefore using wholesalers can be a risky business.  Wholesalers also take profit away from the producer and retailer. Unit 5 - slide 10

Retailer Local outlet for the business’s products. Where the consumer physically buys the goods or services. Offer a variety of goods and services from different producers. Store the goods on their premises, prepare and display them for sale. Unit 5 - slide 10

Retailer Provide information to the consumer through advertising, displays and staff. Offer additional services such as credit, hire purchase and after sales service (guarantees and delivery) Number of different types of retailers such as: independent, multiple, supermarkets, consumer cooperatives, department stores, specialists stores, franchises Unit 5 - slide 10

Agent Attract the customer by carrying out promotional activities and then sell the product. Take commission (% of sales). E.g. Estate Agents, Travel agents etc. Have a good knowledge of the local market, local Customs or legal requirements. Unit 5 - slide 10

Importer/Exporter Play an important role in identifying new or potential markets. Similar role to agents as they have a good knowledge of local markets. Generate sales through their own promotional activities. Unit 5 - slide 10

Direct Selling Where the manufacturer sells directly to the public. Common when manufacturer is a small local business like a baker. Widely used where products have to be made to consumers individual specification. Unit 5 - slide 10

Modern Channels Unit 5 - slide 10

Example Bank Unit 5 - slide 10

Physical distribution decision The organisation must decide on the most cost effective method of physically moving the product in order to match the perceived needs of its customers. Distribution management will need to take into account the projected level of demand for each product and the geographical spread of that demand Seasonal fluctuations need to be considered Unit 5 - slide 10

Physical distribution decision Need to consider relative costs and speed of the different methods of transport available to them Nature of product eg perishable goods Stock control, warehousing and transportation need to be considered Unit 5 - slide 10

Choice of Distribution Channel Depends upon the: Product Market Legal requirements Buying habits Business Unit 5 - slide 10

Product Most important factor to consider Is the good perishable (limited life) such as milk, bread etc. Best channel is direct. E.g. McDonalds cannot cook the food and then ship to the outlets. The food must be cooked on site and sold to customer direct. Unit 5 - slide 10

New products will be treated differently. Wholesalers may buy some perishable items/convenience goods from a number of small producers and sell to retailers in bulk. New products will be treated differently. Producers select the retailers or wholesalers to use to keep control over the marketing. High-tech products are normally distributed straight to the buyer. High quality brands will only be sold through selective outlets. Calvin Klein and Levi’s fought to stop Tesco’s selling their products in their store. Felt as if it had a negative affect on the image of the good. Unit 5 - slide 10

Factors Shape and Weight – affects how easy the product is to distribute and handle which can lead to high costs. Protection – must be robust to ensure that product and packaging is not damaged during transit. Convenience – easy for customer to handle; awkward shapes and sizes put customers off. Unit 5 - slide 10

Design – eye-catching to allow it to be distinguished easily from competitors brands. Information – e.g. food products are subject to legal requirements about their ingredients appearing on the packaging; some technical products must show the amp and wattage. Environmental factors – growing concern about recyclable materials being used. Unit 5 - slide 10

Merchandising Unit 5 - slide 10

Merchandising Used in an attempt to encourage the customer to buy at the point of sale. Displays materials such as Window displays In-store posters Unit 5 - slide 10

Related items will be kept together The layout of products can encourage customers to follow particular routes around the store. E.g. popular items at the back in order that customers have to pass other products. Related items will be kept together Position of the item on the shelves is important – eye-level is the best position to achieve sales. Unit 5 - slide 10

Shelves should be well stocked Creation of the right atmosphere within the store will affect customers buying. Bright light next to fresh food items to give an image of cleanliness. Bread and coffee smells to make the customer hungrier. Unit 5 - slide 10

Types of Retailers Unit 5 - slide 10

Independent Retailer Usually one shop. May combine forces with other similar shops to buy in bulk and offer competition to larger chains. E.g. Spar, Mace, 7-11 Unit 5 - slide 10

Multiple Chain Stores Have a number of outlets spread across the country. Usually well known such as Supermarkets and Department stores. Will sell a variety of goods within departments. May range from low priced goods (Asda) to premium quality goods (Frasers). Also included are Franchises who take the opportunity to trade under an established name. Unit 5 - slide 10

Mail Order Used rather than having the expense of a chain of shops. Issue catalogues to consumers who can choose products in their own home Success due to the credit facilities they offer. Unit 5 - slide 10

Others…. Door-to-Door selling is used by companies such as Avon, Betterware etc through the use of a catalogue. Television purchasing has increased due to the growth of cable and satellite TV. Internet shopping has also increased through the increase ownership of personal computers in the home. Unit 5 - slide 10