4.5d-

• Place (Distribution)


  Refers to the distribution of products, i.e., how products get from the producer to consumer
• Ways products could be available

  • Large warehouses
  • Retail outlets
  • Through agents
  • Via the Internet
• Most products are not sold directly from the manufacturer to the final customer
• Customers buy their products at a grocery store, and manufacturers sell directly to large retailers
• Distribution decision

  • Requires management skills in persuading retailers to stock a firm's products
  • Addresses geographical distribution of products (local, national or international)
• Channel of distribution


  Refers to the means used to get a product to the consumer
• Intermediation


  The process used to facilitate distribution
• Intermediaries


  Agents or businesses that act as a middle person in the channel of distribution between the manufacturer and consumers
• Traditional channel of distribution

  • Manufacturers
  • Wholesalers
  • Retailers
• A long channel of distribution tends to raise prices for consumers
• The longer length of distribution channels means they are not appropriate for perishable products
• Zero level distribution channel


  Skips out any intermediaries, i.e., the producer sells directly to the consumer
• Zero level distribution channel methods


  • Mail order
  • E-commerce
  • Telesales
• Direct distribution is common in the service industry
• One level distribution channel


  Has one intermediary, such as retailers, agents, or distributors
• Two level distribution channel


  Uses two intermediaries, such as wholesalers and retailers
• Wholesalers


  Businesses that purchase large quantities of products from a manufacturer and then separate or ‘break’ the bulk-purchases into smaller units for resale
• Advantages of wholesalers

  • Bear the costs of storage
  • Lower transaction costs for the manufacturer
  • Free up time for manufacturers
• Disadvantages of wholesalers

  • Producer takes a risk in passing on marketing responsibility
  • Wholesalers might not promote the manufacturer's products as desired
  • Some larger retailers do not use wholesalers
• Distributors


  Independent and specialist businesses that trade in the products of only a few manufacturers
• Agents (or brokers)


  Representatives and negotiators who act on behalf of buyers and vendors of a product
• Characteristics of agents

  • Usually not employed by the producer
  • Experts in their particular markets
  • Change commission for their services
• Retailers


  • Sellers of products to the final consumer
  • Play an important role in the distribution of most products
• Types of retailers

  • Independent retailers
  • Convenience stores
  • Multiple retailers
  • Supermarkets
  • Department stores
  • Hypermarkets
• Speciality channel of distribution

  Any indirect way to distribute products that doesn't involve retailers
• Advantages of speciality channels

  • No intermediaries, allowing for direct control over distribution
  • Growing popularity of e-commerce
• Disadvantages of speciality channels

  • May lack market access
  • Potentially higher costs
• 1. commerce

  Trading via the Internet
• The internet has had an immense impact on marketing for business
• Advantages of vending machines


  • Running costs are minimal
  • Compact size allows for placement anywhere
  • Multiple payment methods enhance convenience
• Disadvantages of vending machines

  • Prone to vandalism and mechanical failures
  • Low capacity limits product range
• Mail order


  Enables customers to order products via the postal system
• Advantages of mail order

  • Convenience of ordering from home
  • Business can have customer database
• Disadvantages of mail order

  • High cost of producing catalogues
  • Low response rate for direct mail
  • Information in a database often goes out of date
• Businesses often utilize a range of channels to distribute their products
• Multichannel distribution strategy


  Utilizing multiple channels to distribute products
• Factors affecting the choice of distribution channels

  • Time
  • Legal Constraints
  • Cost and Benefits
  • Product
  • Market
• Time factor

  • E-commerce has a time lag between payment and product receipt
• Legal Constraints

  • Government regulations can restrict product distribution
• Cost and Benefits

  • Direct selling reduces distribution costs but may lack market access