Place Flashcards
What is Place?
Place is all about where the business sells their products and what methods are used to distribute the goods to the consumer.
Distribution
Distribution is all about how to get the goods to the customer.
Methods of distribution - Wholesaler
Traditional methods of distribution have relied upon the ‘manufacturer - wholesaler - retailer - consumer.
The wholesaler has a role in breaking bulk - this means buying large quantities from the manufacturer and selling smaller quantities to the retailer.
This relationship is useful to all parties concerned. The manufacturer has the convenience of selling in bulk to the wholesaler. The small retailer, who buys in small quantities, benefits because they don’t have to store large quantities of stock
Methods of distribution - Manufacturer to retailer
Manufactures supply most of their product direct to the big retailers, which buy in big quantities. This has meant to a reduction in need for middleman as wholesales are cut out of the chain.
This reduction in the length of the distribution chain cuts costs for large business.
Methods of distribution - direct selling
Direct selling, whether through junk mail, magazines and increasingly through the internet, has allowed manufacturers to charge much lower prices.
Eg Books brought over internet can be 40% cheaper than high street prices.
Selling direct allows manufacturers to keep more of the profits.
Internet Marketing
Internet sales are increasing massively. Click and collect is becoming more popular. Business to business trade on the internet, looks like becoming the new method of cost reduction
E-commerce can offer a low cost way for small business to compete against much larger rivals. To set up an internet based shop can cost just a few hundred pounds
Multi-channel distribution
It makes sense to try and use a combination of distribution channels.
For example, Apple sets up its own shops in major cities. It also sells through a huge range of retailers and has a massive online presence.
