1. Principles of Marketing Chapter 26 Mrs. Sorrell
Place Dynamics
Principles of Marketing
Chapter 26
Mrs. Sorrell

2. Place Decisions
Definition: Place is the term for marketing activities involved in making products available to customers, which includes distribution
When, where, and how products get to customers
Making sure there are enough quantities of the products available
Marketers study the buying habits of customers to determine the most convenient and efficient locations (Place utility); available at the best place and the best time (Time utility)

3. Location of the Business
Location, location, location
Surfboard shops are located near beaches used by surfers
Doctors practice near hospitals
Site is another term for location
Locate where they can easily get inputs
Locate where they can easily get outputs to customers

4. Retail Site Selection Location Good site is…
Largest number of potential customers
Geographic areas that are growing
Competition in the area
Other business in the area, such as a mall
Good site is…
Easy to get to
Visible to passing traffic
safe

5. Market Coverage
Definition: refers to the number of stores a retailer chooses to have in a specific geographic area
Intensive Market Coverage—as many stores as possible in one market area, i.e. Starbucks
Selective Market Coverage—just enough locations to adequately serve the target market, i.e. Wal-Mart, Gap
Exclusive Market Coverage—Only one store to serve the entire market area, i.e. Macy’s

6. Hours Which days of the week and what hours will the store be open?
Some stores stay open 24 hours a day

7. Site Selection for Other Businesses
Manufacturer’s major costs is transporting raw materials and supplies to the factory
Locate where the finished product can be quickly and easily delivered to customers
Post and Kellogg are located in Michigan; grain is the major input; many grain farms in state
Pewter and silver manufacturers are located in Rhode Island to be near sources of precious metals; located near East Coast transportation systems to send their output to stores

8. Channels of Distribution
Definition: the route a good takes from its original source to its final customer
Apple goes from orchard to apple buyer, to grocery store, to you

9. Wholesalers and Retailers
Intermediaries: the businesses between the original source (apple farmer) and the customer; aka middlemen
Also called resellers because they resell products that they have purchased to another intermediary
Most common intermediaries
Wholesaler—business that buys products from a producer, then sells to another business
Retailer—business that buys products from a producer or a wholesaler, then sells to the customer

10. Wholesalers and Retailers, con’t.
Channel member: a specific business that is part of the channel of distribution for a specific product
Retailers also include nonstore retailers
TV shopping channels, websites, Avon

11. Supply Chain Definition: a channel of distribution
Each step in the chain is a segment
Each segment is a customer of the preceding segment
Each segment is a supplier of the following segment
Producer
Wholesaler
Retailer
Consumer
Roberto’s Apple Orchard
Tamar’s Apple Distributors, Inc.
Jane’s Convenience Store
You

12. Common Channel of Distribution
Raw Materials Suppliers
(mines, farms)
Product Manufacturers
(factories)
Wholesalers
(warehouses)
Retailers
(stores)
Final
Consumer
(end users)

13. Agents and Brokers
Agent: an intermediary who brings buyers and sellers together
Broker is another term for agent, connect sellers and buyers
Agents never buy or handle the products
Commonly used in the selling of residential real estate

14. Role of Intermediaries
Direct distribution: A channel of distribution with no intermediaries
Manicure, haircut
Indirect distribution: uses one or more intermediaries
Choosing the best channel of distribution for a product is critical to the success of the product
Distribution includes shipping, storing, inventory, and stocking

15. Functions of Intermediaries
Facilitation Exchanges
Definition: make an action easier
Customer: One place, Many goods
Consumers don’t have to go to the apple farm for apples, or the chicken farm for eggs, or the soup factory for soup!
Producer: One transaction, many customers
The apple producer wants to sell as many apples as possible, but not away from the farm
The farmer wants to sell 20 bushels of apples, the most that one customer wants is 1 bushel. He would have to meet at least 20 individuals to sell them.

16. Bulk-Breaking
Bulk-breaking is the process of separating a large quantity of good s into small quantities for resale.
Wal-Mart buys many of its goods directly from manufacturers because they buy very large quantities
Wal-Mart breaks the shipment into smaller quantities to be delivered to each Wal-Mart store

17. Channel Management
Definition: managing all aspects of place and distribution
Selecting channel members
Number of years in business
Other product lines carried
Reputation
Previous experience with the compnay
Financial stability
Quality of the sales force

18. Channel Management, con’t.
Motivating channel members
Producers may offer special deals, premiums, and sales contests to maintain long-term relationships
Evaluating channel members
Set measurable standards
Prompt delivery time
Cooperative advertising
Meeting sales quotas
Product quality
Treatment of lost or damaged goods
Overall satisfaction

19. Ownership in the Distribution Channel
Intermediaries take ownership of the product as it moves through the channel
As ownership transfers, responsibility for the product is transferred
The new owner is the one who will suffer any loss if the product is damaged or lost