Marketing

• Place


  In the context of the marketing mix, this is where the product is available for the consumer to purchase. Place could include shops, markets, telephone sales, the internet and so on.
• Distribution Channels


  Involves the routes which goods follow between the manufacturer and the consumer. The route may be direct between the two but the interaction of middlemen is more likely.
• Distribution


  Involves materials being transported or moved to the producer or the final product being moved to the consumer.
• Multi-Channel Distribution


  Involves a business using more than one channel to distribute its goods perhaps through traditional shops and catalogues and online.
• Direct Marketing


  Occurs when there is a direct link from the producer to the customer with no intermediaries.
• Manufacturer


  The maker of products.
• Wholesaler


  Buys goods from the manufacturer and sells these goods in smaller quantities to retailers.
• Retailers


  Sells goods to consumers. Small retailers buy their stock from wholesalers but large-scale retailers buy directly from manufacturers.
• Functions of a Retailer

  • Display goods
  • Promote goods
  • Sell to consumers / sell goods and services
  • Give customers advice / provide customer service
  • Deal with faulty goods / complaints
  • Distribute goods / deliver goods
  • Buy from wholesalers / manufacturers / suppliers
  • Break bulk / buy in large quantities and sell in small quantities
  • Closer to consumer / local
  • Can offer credit
• Warehouse


  A place where resources or finished products are stored before they are sold.
• Factors to Consider When Locating a Store

  • Closeness of shop to market ➔ plenty of customers
  • Availability of shop ➔ town centre or out of town
  • Suitability of shop ➔ size, facilities
  • Cost of shop ➔ to buy or rent
  • Ease of access ➔ for customers and for deliveries
  • Business area/passing trade ➔ plenty of customers
  • Nearness of similar shops ➔ as competition, as attraction
  • Planning permission ➔ can the area be developed?
• Place - Related Terms

  • DISTRIBUTION
  • AGENT
  • CHANNEL
  • ROYALTIES
  • CONTROL
  • RETAILER
  • BROKER
  • PLACE
  • WHOLESALER
  • OUTLET
  • STOCKS
  • LONG
  • SHORT
  • PRODUCER COSTS
  • DISTRIBUTOR
  • EXPORTS
  • DIRECT
  • CUSTOMER
  • CONSUMER
  • SPECIALIST
  • CHOICE
  • COMMISSION
  • COVERAGE
• 1. Commerce


  Involves the buying and selling of goods and services via the internet.
• Advantages of Retailers Selling on the Internet

  • Wider market ➔ so the business will be able to attract more customers ➔ 24/7 ➔ geographical benefits ➔ more sales
  • Expansion/growth possible ➔ without having to locate/fund new sites
  • Internet advertising ➔ might encourage customers to the shops
  • Possible lower costs ➔ of labour ➔ fitting/running shops
  • Keep up with competitors
  • Convenience ➔ for customers who cannot travel to the shop ➔ shop outside business hours
• Disadvantages of Retailers Selling on the Internet

  • Effects on current business ➔ with time ➔ efforts spent with website
  • Reputation may be diminished ➔ website crashes / problems with delivery
  • Costs of setting up website ➔ particularly if professional designer employed
  • More storage space may be needed ➔ so higher warehouse costs
  • Some higher costs ➔ maintenance / special packaging / delivery / returns
  • Possible fraud ➔ related to payments
  • Customer resistance ➔ from people who would want to see the goods before buying (social aspect)
  • Competition
• 1. Commerce


  Involves buying goods and services through hand-held mobile devices such as smartphones.
• Using the Marketing Mix (The 4Ps) to Encourage Customers to use their Business - Advantages

  • Introduce new goods
  • Move to bigger shop, in busier location, sell on internet to reach more customers
  • An example of a pricing strategy is economy pricing to attract budget conscious shoppers
  • Sales promotion where customers are offered incentives to buy from them. Tesco clubcard
• Using the Marketing Mix (The 4Ps) to Encourage Customers to use their Business - Disadvantages

  • Might be difficult to sell, find supplier, expense etc.
  • Might cost more to rent/buy, problems of informing customers, problems of selling on internet, poor site design or usability may lead to reduced sales
  • Some pricing strategies also have their disadvantages. Market penetration pricing which is set low will lose a business money if kept in place for too long
  • Advertising may be expensive and is only a one way communication
• Advantages of Customers Buying on the Internet

  • Can see images of products so can compare many products
  • Prices ➔ many sellers can be compared on one computer
  • No need to travel so costs saved
  • Can pay online saving bank charges
  • Cheaper because seller costs lower
  • Wider choice from many sellers
  • Order 24/7
• Disadvantages of Customers Buying on the Internet

  • Goods not inspected to see if goods meet the need
  • Images may be misleading so quality difficult to judge
  • Delays in receiving goods
  • If goods need to be returned there could be additional costs incurred
  • Possibility of fraud if goods not sent when paying
  • Technical issues e.g. reliability, speed
• Marketing Mix (The 4Ps)

  • Product
  • Price
  • Place
  • Promotion
• Price


  The amount of money a business wants to receive in order to sell a good or service or the amount of money the consumer is willing to pay to buy that product
• Pricing Strategies


  • Definition
  • Advantage
  • Disadvantage
• Penetration Pricing


  • Setting a low price for a new product to encourage sales. The price may be reduced later with increased customer loyalty and market share
• Price Skimming


  • Selling a product at a high price in order to earn high initial profits. Profits may be reduced later to increase sales at the lower prices
• Cost Plus Pricing


  • Involves the producer adding a sum of money (the profit per good) to the cost of producing goods to determine the selling price of the good or service
• Psychological Pricing


  • Involves offering goods and services at prices below whole numbers such as £5.99p or £499, or using words such as "only". It is hoped that the customers believes it is much cheaper than if the price had been £6 or £500
• Competitive Pricing / Market Orientated

  • Involves the producer offering goods for sale at a price at or below that set by competitors
• Price Discrimination


  • Charging different prices to different market segments – e.g. discounted pricing to students
• Loss Leader


  • Products put on sale, usually in supermarkets, at prices which make no profits and may even make losses in order to attract customers into the shop to buy other goods
• Why might a business charge higher prices?

  • Higher costs / better ingredients / higher rent / cost plus
  • Wants more exclusive market / customers willing to pay higher price
  • May be well known / quality brand ➔ people willing to pay higher prices
  • High marketing costs ➔ need to be regained from sale of product
• Advantages of using pricing strategies to maintain the sales of their products

  • Right strategy will increase sales ➔ increase revenue ➔ profits will rise
  • Prices can be applied to specific niche ➔ market segment
  • Prices can reflect the market for the product ➔ skimming may work in some markets i.e. high income and penetration in others
  • Prices can take into account actions of competitors ➔ stopping switching etc.
• Disadvantages of using pricing strategies to maintain the sales of their products

  • Competitors may follow pricing strategy ➔ so no effect ➔ no increase in sales
  • Competitors may not follow pricing strategy ➔ customers not attracted
  • Need for expensive advertising to promote pricing strategy ➔ so profits not as expected
  • Some segments may not be happy with pricing strategy ➔ allowing less well off to afford expensive products
• Product


  The good or service provided by a business
• Brand


  Unique design, sign, symbol, and/or words used in creating a unique image that identifies a product and differentiates it from its competitors
• Branded products


  • They are trusted by consumers
  • They usually have a high price / premium price
  • They are unique / differentiated / stand out / recognised
  • Customers are loyal to the brand and repeat purchase
• Why do businesses brand their product?

  • It differentiates products from rivals
  • Used in advertising to promote range of products
  • Brand/customer loyalty
  • Enables higher prices
  • More likely to succeed in global markets
• Product Portfolio


  The collection/range of all the goods and services offered by a business
• Why Sell High Quality Products?

  • High levels of customer satisfaction
  • Differentiates the goods from rivals
  • Increase sales / market share
  • Improve image
  • Charge higher prices
  • Less complaints / returns
• Why Do Businesses Sell A Wide Range Of Products?

  • Spreading risk
  • Attract more custom
  • Competitor advantage/keep up with competitors
  • Greater revenue
  • Greater profit