Place and Product Miss Lay

Objectives To introduce the concept of Place and Product To apply product theories to your coursework To identify where you will sell your product and what channel of distribution you will use To evaluate the place where you will sell your product

Starter – Guess the Place Where would you buy these products? Where do you prefer to buy these products?

Place Place is also known as channel, distribution, or intermediary. It is the mechanism through which goods and/or services are moved from the manufacturer/ service provider to the user or consumer. So ultimately you need to think – how will your product get to the consumer!

Channels of Distribution A channel of distribution is the route a product takes from the producer to the consumer. A product usually passes through intermediaries on the way. E.g. Retailers, wholesalers and agents

Channels of Distribution Manufacturer Consumer Manufacturer Wholesaler Retailer Consumer Manufacturer Retailer Consumer

Distribution Channel 1 Manufacturer Consumer Direct Selling: Manufacturer to Consumer This involves selling the product direct to the consumer. Now very popular, it is the fastest channel and often the cheapest for the consumer. The internet has made it easier for producers of goods to sell direct to the consumer. Direct selling can also be done through door to door sales, TV shopping, telephone sales and mail-order catalogues.

Distribution Channel 2 Manufacturer Retailer Consumer Indirect Selling (1): Manufacturer – Retailer- Consumer The manufacturer uses a retailer to sell their product onto the consumer. E.g. Large supermarkets buy goods direct from the manufacturer. Retailers are shops who sell to consumers. Retailers can be physical shops or online “e-tailers”

Distribution Channel 3 Manufacturer Wholesaler Retailer Consumer Indirect Selling (2): Manufacturer – Wholesaler-Retailer – Consumer This is a traditional method used for fast moving consumer goods Wholesalers buy products cheaply from the manufacturer and sell them onto the retailer. Wholesalers selling smaller quantities onto retailers is called ‘breaking bulk’. Manufacturers have the benefit of not having to wait for the customer to buy the goods before they see the cash. Wholesales make distribution cheaper as they don’t have to make lots of different separate deliveries. Wholesalers can also store more goods than a retailer and therefore act as a storage cupboard.

Multi-Channel Strategy Some products may be sold through multiple channels, for example an ipod is sold via the internet direct from Apple to the consumer and also through a retailer such as a department store. Will you use multiple channels for your product??

Retailers Specialist Stores e.g. HMV, Topshop, Thorntons Department Stores e.g. John Lewis and House of Fraser Supermarkets e.g. Tesco Hypermarkets e.g. Tesco Extra Out of Town Specialist Stores e.g. B&Q, Halfords, Toys ‘R’ Us Convenience Stores e.g. Spar, Co-op, Petrol Stations

Non-Store Retailers Television Sales e.g. QVC Internet e.g. Amazon, Play.com In-home selling – Door to door sales or Party plans Mail Order Catalogues Telesales Vending Machines

The advantages of using the internet: Geographically disperse market. Niche products can reach a wider audience. Low barriers to entry as set up costs are low. E-commerce technology (for payment, shopping software, etc) has improved. Lots of online retailers to sell products through Easy to set up a websites

Points to consider It is more profitable to sell direct to the consumer, as each intermediary will take a slice of the profits. Despite this it is easier to use intermediaries, as it can be hassle to distribute small amounts of products to lots of little shops. Using a wholesaler gives a manufacturer the chance of more market coverage. The fewer the intermediaries the more control the manufacturer has over how its products are sold i.e. how they are promoted and their final selling price

Different distribution channels suit different products Everyday groceries and convenience items need to be distributed as widely as possible. Consumer don’t want to travel miles to get a pint a milk or wait weeks for them to be delivered. Luxury goods don’t need to be as widely distributed . Manufacturers may want there products to be more exclusive and only in a small number of exclusive shops. Specialist goods like electrical products need to be sold through specialist shops. Consumers may need specialist advice and assistance and be able to compare different options.

Product

Product Product is the physical product or service offered to the consumer. In the case of physical products, it also refers to any services or conveniences that are part of the offering.  Product decisions include aspects such as function, appearance, packaging, service, and warranty.

Unique Selling Point (USP) Your product needs to differentiate from the competition. A Unique Selling Point is a feature or benefit that separates your product from its competitors. This could be a lower price, a smaller version of the product, offering extra functions, or even simply producing a standard product in a range of colours or designs. Your product needs a competitive advantage, if you do not have one; you will probably struggle to make your product seem attractive to customers. Your product may be differentiated because of its unique design, brand image or reputation for reliability.

Branding How important is the brand of your product? Does having a brand benefit your product? The style and branding of your products can be very important; it is one of the key methods of helping customers distinguish your product from the competition. Branding can cover everything from the product logo and the colours of packaging to the style of advertising, if done effectively your product will become much more noticeable and distinguished from other similar products.

The Benefits of Branding The Consumer Easier product identification Communicates features and benefits Helps product evaluation Establishes products position in the market Reduces Risk in Purchasing Creates interest. The Manufacturer Helps create loyalty Defends against competition Creates differential advantage Allows premium pricing Helps targeting/positioning Increases power over retailer The Retailer Benefits from brand marketing support Attracts Customers

Design Your product needs to be fit for purpose Design not only affects the overall aesthetic qualities but also ergonomic properties, components and materials Is the appearance of your product special in any way – shape, size, colour, taste. Does it have a unique design feature – toilet duck! An innovative design can help a product gain a sustainable competitive edge.

Quality Does the quality of your product reflect its price? Is your product durable – some products are expected to have longer life spans than others. Will your product be reliable or will it need regular maintenance?

Packaging Packaging is an important part of the product that not only serves a functional purpose, but also acts as a means of communicating product information and brand character.

Is the packaging of your product important? Does you packaging play a key part in the protection, containment and identification of the product? Is packaging key to how your product works? Is your packaging a key tool for product differentiation? Packaging is of key importance with FMCG

Examples of new product opportunities created through packaging changes

http://www.youtube.com/watch?v=zFENz_nnrq8