The marketing mix: place Flashcards
What is the role of place decisions in the marketing mix?
- Place = Distribution
- Businesses have to decide on how to get the product to the customers
- If the product is not available to consumers in convenient locations, this may cause the consumers to look for competitors’ shops.
What is a distribution channel?
A distribution channel is the means by which a product is passed from the place of product to the customer.
What is distribution channel 1?
Producer -> Consumer
(Direct to consumer)
What are the advantages of distribution channel 1?
- It is suitable for products such as certain types of food products, which are sometimes sold straight from the farm
- There is a lower price if sold directly to consumers
- Products can be sold by mail order catalogue or the internet
What are the disadvantages of distribution channel 1?
- Impractical for most products as the consumers probably do not live near the factory and could not go there to buy the products
- Not suitable for products which cannot easily be sent by post
- Very expensive to send products by post therefore it may not be cost effective
What is distribution channel 2?
Producer -> Retailer -> Consumer
What are the advantages of distribution channel 2?
- Producer sells large quantities to retailers
- Reduced distribution costs compared to selling directly to consumers
What are the disadvantages of distribution channel 2?
- No direct contact with customers/Loss of control
- The price is often higher than ‘direct selling’ as the retailer has to cover its costs and make a profit
What is distribution channel 3?
Producer -> Wholesaler -> Retailer -> Comsumer
What are the advantages of distribution channel 3?
- Wholesaler saves storage space for small retailer and reduce storage costs
- Small retailers can purchase fresh products in small quantities from wholesaler because they have a relatively short ‘shelf life’ before they deteriorate
- Wholesaler may give credit to retail customers so they can take the goods straightaway and pay at a later date
- Wholesaler may deliver to the small retailer thus saving on transport costs
- Wholesaler can give advice to small retailers about what is selling well
What are the disadvantages of distribution channel 3?
- May be more expensive for the small shop to buy from a wholesaler than if it bought straight from the manufacturer
- Wholesaler may not have the full range of products to sell
- Takes longer for fresh produce to reach the shops
- Wholesaler may be a long way from the small shops
- The consumer price is often higher than direct selling as both the wholesaler and retailer have to cover costs and make a profit
What is distribution channel 4?
Producer -> Agent -> Wholesaler -> Retailer -> Consumer
What are the advantages of distribution channel 4?
- Manufacturers may not know the best way to sell products in other markets
- Agents will be aware of local conditions and will be in the best position to select the most effective places in which to sell
What are the disadvantages of distribution channel 4?
The producer has less control over the way the product is sold to customers
What is a retailer?
Retailers are sellers of products to the general public (consumers) that operate in outlets (shops)
