Place Chapter 14

What is Place? Any activity involved in making product available to consumers – Decisions involving when, where and how product get to consumers – Ensuring enough quantities available, at the right time, in the right location

2 2 distribution Components to distribution physically distributing goods through those channels selecting, developing, and managing distribution channels

Channels of Distribution refer to the paths of ownership that goods follow as they pass from the producer to consumer

Channels of Distribution Producer ConsumerProducerConsumerRetailerProducerConsumerRetailer Import and/or Wholesaler ProducerConsumer Speciality Channel

Channels of Distribution The route a good takes from its original source (the producer) to the final customer – Example: how would this orange get to me? Also called “Supply Chain”

3 Types of Channels 1.Direct 2.Indirect 3.Specialty

1. Direct Channels Connect buyers to the businesses producing the goods and services Examples?

2. Indirect Channels one or more intermediaries. An intermediary is any business that takes possession of the goods before the consumer does – These intermediaries might be importers, wholesalers, retailers or agents/brokers

Importer: seeks out foreign products to bring into the country he or she is selling in Wholesaler: buys goods from producers or importers and resells them to retailers Retailer: direct link to consumers Agent/Broker: connects buyers and sellers; often used to make arrangements between parties in different countries.

3. Specialty Channels any indirect channel or distribution that does not involve a retail store (aka non-store retailers) – Vending machine:Chips, pop, chocolate bars, coffee – Telemarketing: In-house services – Catalogues: Ikea, Avon – E-Commerce: Websites, internet shopping, ebay – Door-to-door sales: Charities, Avon

Push Strategy: manufacturer or producers pushes the product to the retailer; retailer then promotes it to customers Pull Strategy: attempts to increase consumer demand directly, rather than appealing to retailers.

What kind of distribution? Hair salon? Department store? Apple farm? Food truck? Dollar store? Butcher?

Why use intermediaries? A farmer might produce 100 kgs of apples in a season; how many individual customers would he need to sell all of them? – Instead he can sell to a couple of grocery stores, restaurants or wholesalers

Distribution Strategies Intensive: product is sold in as many places as possible – Consumer encounters product everywhere, ex. Supermarkets, drug stores, gas stations, etc. Selective: product is sold in a few retail outlets – Used for high-end brands Exclusive: contract exists between producer and one distributor – Ex. Apple and Rogers