P LACE Unit 3 Topic 3.1. T HE MARKETING MIX : PLACE What is place?: Where the product is sold How it gets to the customer – otherwise known as distribution.

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Presentation transcript:

P LACE Unit 3 Topic 3.1

T HE MARKETING MIX : PLACE What is place?: Where the product is sold How it gets to the customer – otherwise known as distribution Making sure products are available

T HE MARKETING MIX : PLACE A channel of distribution is the route taken by a product from the producer to the consumer.

C HANNEL OF DISTRIBUTION 1 Traditional route Producer - the manufacturer/provider of service  Wholesaler - bulk buyer  Retailer - shops  Customer

C HANNEL OF DISTRIBUTION 1 This channel involves using a wholesaler. The functions of a wholesaler are: Breaking bulk – large manufacturers will not sell to small retailers because it is too costly to deliver small amounts. A wholesaler will purchase large quantities and the sell small amounts to these retailers. Stocking a variety of products from which the retailer can choose Lowers delivery costs to retailer, it would be more expensive to have separate deliveries from all the different retailers.

C HANNEL OF DISTRIBUTION 2 Large retailers – supermarkets Producer  Retailer  Customer

C HANNEL OF DISTRIBUTION 2 Large retailers – supermarkets Producer  Retailer  Customer

C HANNEL OF DISTRIBUTION 3 Factory shop, mail order, internet, Bakery, producer to producer Producer  Customer

C HOOSING THE CORRECT CHANNEL The product Will it keep? If no then a short channel is advisable Is it fragile? If yes then a short channel is advisable Does it need installing? If yes then a short channel is advisable The cost Short channels may keep costs down for the consumer

C HOOSING THE CORRECT CHANNEL The market Mass produced products can have a variety of channels Specialist products need to think carefully about channels (usually channel 2 or 3) The competition: Using same methods as competitors

M ETHODS OF DISTRIBUTION Department stores Chain or multiples Discount stores Superstores Supermarkets Local shops Direct sales Internet

Q UESTIONS 1.Answer D Comments A incorrect – costs of production may rise or fall regardless of the seasonality of clothing. B incorrect – an annual increase in price may lead to a downturn in sales volume. C incorrect – this is part of the marketing mix in its own right. D correct – clothing has a high fashion turnover (and a short product life cycle) and a clothing company must react to this change in market taste. 2.Answer A Comments A correct – a premium price is one that is significantly above the market price level and can be associated with strong brands. B incorrect – quality and price do not necessarily go together. C incorrect – the price charged by a company does not necessarily mean that they are automatically more profitable. D incorrect – premium pricing can lead to a reduction in sales levels.

Q UESTIONS 3.Answer B Comments A incorrect – manufacturing costs are unlikely to rise if it is selling fewer televisions. B correct – the supermarket chain was one of the distribution outlets for the television sets. C incorrect – this narrows the distribution chain, not widens it. D incorrect – distribution costs may well fall due to less products being sent out to retailers.

Q UESTIONS 4 Price Helps KFC remain competitive Correct pricing allows for profit to be made Costs can be covered Can maximise the effects of economies of scale Retains existing customers and entices new ones Profits from correct pricing can help a company develop in the future Product Fast food is competitive so quality is a key issue KFC must be seen to continue to give value for money The product must meet the needs and wants of the consumer The market is subject to fashion and trend (Jamie Oliver influence) Product must be adaptable and have easily interchangeable parts

Q UESTIONS 4 Promotion Must entice and attract the right target market Must ‘sell’ the business and its products Must use the right medium Must be cost effective Should support any current campaign Packaging should reflect the current environmental trend whilst remaining functional Place Development of franchises offers more outlets Must be accessible to the target market, many of whom do not drive (too young) Outlets must fit the image of the company Can they attract the impulse purchaser (also linked to promotion) Must match quality of product.