Place (Distribution) in Marketing
Place refers to how products are distributed from the producer to the consumer.
Key Elements of Place:
- Channels: Warehouses, retail outlets, agents, internet.
- Accessibility: Making products available to customers at the right time and place.
What Is a Channel of Distribution?
- Distribution channel refers to the path a product takes from the manufacturer to the consumer.
- Intermediaries are middlemen who facilitate this process.
Zero-Level Distribution Channel
- A zero-level distribution channel (also known as direct distribution) skips out any intermediaries, i.e., the producer sells directly to the consumer.
- Examples include the use of mail order, e-commerce and telesales. Direct distribution is common in the services industry.
- For example, customers can book their rooms at a hotel or make restaurant reservations without using an intermediary such as a travel agent.
Wholesalers
Wholesalers buy large quantities of products from manufacturers and sell them in smaller quantities to retailers.
Benefits for Producers and Retailers:
- Storage: Reduces storage costs for manufacturers and retailers.
- Smaller quantities: Allows retailers to buy smaller amounts.
- Lower transaction costs: Fewer invoices and transportation costs for manufacturers.
- Focus on production: Manufacturers can focus on production instead of distribution.
Limitations:
- Risk of marketing control: Wholesalers may not promote products as desired.
- Reduced demand from large retailers: Some retailers bypass wholesalers and buy directly from manufacturers.
Distributors
Distributors are independent businesses that specialize in selling products from a specific manufacturer to consumers. They act as intermediaries between the manufacturer and the end-user.
Key Points:
- Specialization: Distributors focus on a particular product type (e.g., car distributors).
- Intermediary role: They connect manufacturers with consumers.
- Product knowledge: Distributors have a deep understanding of the products they sell.
- Distribution expertise: They handle the distribution process for manufacturers.
Vending Machines
Vending Machines
- Specialized machines: Stock and sell products like drinks, snacks, toys, and even hot meals.
- Location: Can be placed in various locations like offices, malls, parks, schools, airports.
- Payment methods: Modern machines accept smartcards, credit/debit cards for convenience.
- Advantages:
- Minimal running and maintenance costs.
- No need for salespeople.
- Can sell products 24/7.
- Disadvantages:
- Limited product range due to size constraints.
- Prone to vandalism and mechanical failures.
Key Points:
- Vending machines offer a convenient way for customers to purchase products.
- They have low operating costs but can be limited by size and maintenance issues.
- Vending machines are suitable for selling small, frequently consumed products.
Mail Order
Mail Order
- Selling products through the postal system: Customers order products by mail using catalogs or other materials.
- Advantages:
- Can reach customers who don’t have easy access to retail stores.
- Can provide detailed product information.
- Disadvantages:
- High production costs for catalogs.
- Low response rates due to junk mail perception.
- Outdated information in databases.
Key Points:
- Mail order is a traditional method of selling products.
- It can be effective for reaching customers who prefer to shop from home.
- Businesses need to overcome the challenges of junk mail and outdated information to make mail order successful.
Factors Influencing Channel of Distribution
Product:
- Perishable goods: Require shorter channels (e.g., fresh produce).
- Fast-moving consumer goods: Benefit from wider distribution networks (e.g., wholesalers, retailers).
- E-commerce suitability: Some products (e.g., books, music) are well-suited for online sales.
Market:
- Local niche markets: Can be reached without intermediaries.
- Large, dispersed markets: Require intermediaries for wider reach.
Time:
- Urgent delivery: Direct channels are better for products needing quick delivery.
- E-commerce: May have delays in delivery.
Legal Constraints:
- Government regulations: Can prohibit certain products from being sold in specific channels (e.g., alcohol in restaurants).
Cost and Benefits:
- Direct selling: Reduces costs but may limit reach.
- Intermediaries: Can increase costs but offer better access to customers.
- Transportation: Consider costs and efficiency of different transportation methods.
