1.3 Marketing mix and strategy 1.3.4 Distribution Theme 1: Marketing and people Think of a small item you have bought this week e.g. a bar of chocolate or bottle of water. Where did you buy it from? Draw a flow chart to show how the product got from the manufacturer to you. How many stages did it pass through? 1.3 Marketing mix and strategy 1.3.4 Distribution Edexcel Business

1.3.4 Distribution In this topic you will learn about Distribution channels Changes in distribution to reflect social trends: online distribution changing from product to service

the marketing mix - Place Place defines both the physical location where a product is available as well as the distribution channel it has travelled through to get from the manufacturer to the customer Place can be a physical market where buyers and sellers meet face to face or a virtual location i.e. over the internet Increasingly firms are adopting a multi-channel approach to place

Distribution Distribution is the process of getting the firm’s product to the market 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

Channels of distribution

Distribution decisions Distribution decisions will be affected by a number of factors including: Type of Product The 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 Market It 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 Is the businesses targeting a local, national or global market? Quantity and frequency If 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 With reference to travel agents and other businesses in the tertiary sector explain the factors influencing a general move away from the high street. http://www.bbc.co.uk/news/business-27021984 High street travel agent closures rise by 45%

Distribution decisions Distribution decisions will be affected by a number of factors including: Geographical location How 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 Cost This is very important for a firm. An expensive distribution method will reduce the contribution being made to a firm’s profit. Therefore, the firm must ensure that the method is cost effective Degree of control Businesses may want to protect their brand by limiting the spread of the product and keeping tight control of where it is available and at what price To what extent has making Thornton's’ products more widely available damaged the brand image? http://www.bbc.co.uk/news/business-27021984 High street travel agent closures rise by 45%

Test yourself - 5 minutes What is meant by the term multi-channel distribution. State 2 intermediaries a product may pass through from manufacturer to consumer. State 3 factors a business will consider when making distribution decisions. End

Social trends Changes in distribution to reflect social trends include: Online distribution The distribution of media content digitally as opposed to physically News, music, films etc. can all be accessed via the internet without a need to have a physical copy Changing from product to service This has led to a business changing from being a physical, tangible product e.g. a magazine to a service e.g. a provider of downloadable materials Have you ever hired a film or a game from a high street store? http://www.bbc.co.uk/news/business-25345257 https://www.blockbusternow.com/ How would you now access a film or game?

Why sell online? So although it is a Superdry product with the intellectual property owned by Supergroup plc, the company only gets £35 per jacket, while the wholesaler makes £15 and the retailer gets £50 (clothing retailers usually work on a 100 per cent mark-up). How much better, then, for Supergroup if a shopper in Rio simply buys the item from the Superdry website. They can get £100 for the jacket instead of £35.

Place is of particular importance in business because it can represent a major barrier to entry, especially for new small firms. The practical constraint on the amount of shop-floor space makes it hard for new products to gain acceptance, unless they are genuinely innovative. Therefore, existing producers of branded goods can become quite complacent, with little serious threat from new competition. Famously, in the nineteenth century, Ralph Waldo Emerson said: ‘If a man can make a better mousetrap, though he builds his house in the woods the world will make a beaten path to his door.’ In other words, if the product is good enough, customers will come and find you. In a modern competitive world, though, the vast majority of products are not that exciting or different from others. So it is crucial to provide customers with convenient access to your products and/or shelf space in an eye-catching location. Getting products into the right place should not be taken for granted.

Data response

1.3.4 Distribution In this topic you have learnt about Distribution channels Changes in distribution to reflect social trends: online distribution changing from product to service