The marketing mix- place
Chapter 14
The role of place decisions in the
marketing mix
How and where customers will buy the
product?
When and where must the product/service
will be sold?
Convenience of the location
Distribution channels
Means by which a product is passed from
the place of production to the customer
1. Producer----------consumer
2. Producer---retailer---consumer
3. Producer---wholesaler---retailer---
consumer
4. Producer---agent---wholesaler---
retailer---consumer
Distribution channel 1- direct to
consumers
Advantages
The channel is very simple
Suitable for products which have to be sold directly from the
farm
There is a lower price if sold direct to customers
Product can be sold by mail or via internet
Disadvantages
Impractical for some products as consumers usually don’t live
near factories
Not suitable for products which cannot easily be sent by post
Can be very expensive to send products through courier or
post
Distribution channel 2- using a
retailer as the only intermediary
Advantages
Producer sells large quantities to retailers
Reduced distribution costs compared to
selling directly to consumers
Disadvantages
No direct contact with customers
The price is often higher than direct selling
as the retailer keeps his margin as well
Distribution channel 3- using a
wholesaler and retailer as intermediaries
Advantages
Wholesaler saves storage space for small
retailer and reduces storage costs
Small retailers can purchase fresh products in
smaller quantities from wholesaler because
they have a relatively shorter shelf life
Wholesaler may give credit to retailers
Wholesaler may deliver to the small retailers
Wholesaler can give advice to small retailers
about what is selling well as well to the
manufacturer
Disadvantages
May be more expensive for the small shop
to buy from a wholesaler
Wholesaler may not have the full range of
products to sell
Takes longer for the fresh products 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 retailer and
wholesaler have to cover costs and make a
Distribution channel 4- using an
intermediary such as an agent
Advantages
Manufacturer may not know the best way
to sell the product 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
Disadvantages
The producer has less control over the way
the product is sold to customers
Methods of distribution
Method of description
distribution
Department stores Large stores, selling a variety of goods
Chain stores Two or more stores which have the same
name
Discount stores Retail stores, offering good at discounted
prices
Superstores Very large out of town stores which sell a
wide range of food and non food items
Supermarkets Retail grocery stores
Independent Single shops, offering a personalized service
retailers
Direct sales Products sold directly by the manufacturer
Mail order Customers place order by telephone or
internet after going through the catalogue
or magazine
Internet/e- Consumers view the goods on website and
Selecting the distribution channel
to use
What type of product is it?
Is the product very technical?
How often is the product purchased?
How expensive is the product?
How perishable is the product?
Where are the customers located?
Where do the competitors sell their
products?
Refer to Appendix 2 and other information.
Consider the advantages and
disadvantages of TT purchasing toy cars
either from a wholesaler or manufacturer.
Which channel of distribution should TT
choose? Justify your answer. Paper 2
12 marks june
