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  • 1. PLACE Marketing
  • 2. Place
    • Refers to how product is taken from the production line and made available to consumers.
    • Two parts:
      • Channel of distribution
      • Type of retailer or outlet that will sell product to customer
    • Important influence on public perception of the product
    • Not an easy decision and failure to choose most appropriate channel will damage sales .
  • 3. CHANNELS OF DISTRIBUTION How the product gets to the market
  • 4. Methods of distribution
    • Direct selling
    • Retailer
    • Wholesaler
    • Agent
    • Importer/Exporter
  • 5. Direct Selling
    • Principle: by cutting out middle-men, organisation can sell goods at competitive prices.
    • Manufacturer sells directly to public e.g. bakers
    • Mail order e.g. ordering through catalogues, i.e. GUS.
    • Direct response advertising e.g. ads in papers or mags
    • Telephone selling e.g. double glazing, insurance
    • Television selling
    • Where products are highly technical e.g. machines made for another manufacturer.
    • Growth of internet made it easier e.g. Dell
  • 6. Marketing Task 1
    • Describe different forms of direct selling available to organisations.
    • (4 marks)
  • 7. Solution
  • 8. Retailer
    • Local outlet for business’s products.
    • Perform 4 functions:
      • breaks down bulk supplies for sale to public
      • provides information to consumers through advertising, displays and trained sales personnel
      • stores goods and prepares them for sale by displaying and pricing
      • physically sells goods to consumers and offers range of related services - credit, HP, delivery
  • 9. Types of retailer
    • Independent retailer
      • E.g. local corner shop. Almost 80% of all retailers.
    • Multiple chain stores
      • Specialist e.g. River Island or variety e.g. Boots, M&S etc.
    • Supermarkets/Hypermarkets/Superstores
      • Tescos, Sainsburys, Asda
    • Consumer Cooperatives
      • Owned by ‘members’
    • Department stores
      • House of Fraser, John Lewis, Selfridges, Jenners
    • Specialist Stores
      • Comet, B&Q, IKEA
    • Franchises
      • McDonalds, Body Shop etc.
  • 10. Wholesaler
    • General function is to buy goods from the manufacturer and sell them on to the retailer.
    • Good source of market research, marketing information and services for retailer to improve sales.
    • Wholesaler has to make a profit
    • Has to play a part in marketing strategy
  • 11. Advantages of using a wholesaler
    • Buys in bulk which relieves manufacturer of cost of making large number of small deliveries - cuts costs of transportation, sales staff and paperwork
    • Bears risk of holding large stocks. No need to tie up capital in holding stocks.
    • Breaks down bulk supplies and offers smaller quantities to retailer.
    • May finish off packaging and labelling
    • Provides advice to manufacture - what is selling, what to produce, what not to produce etc.
    • Provides advice to retailer - what to buy, what not to buy
  • 12. Advantages of NOT using a wholesaler
    • Manufacturer can maintain greater control over marketing of products.
    • Going direct to retailer allows manufacturer to coordinate the efforts of sales force with advertising, promotion and in-store merchandising
    • Growth in large supermarket chains and improvement in road haulage make it easier to deliver direct to retailer.
  • 13. Marketing Task
    • Wholesalers buy goods in large quantities directly from manufacturers. Discuss the advantages and disadvantages to a manufacturer of using a wholesaler.
    • 5 marks
    • HBM Exam 2008
  • 14. Solution
  • 15. Agent
    • Provide link between buyer and seller in exchange for commission.
    • E.g. estate agents, travel agents etc.
    • Often used to enter a foreign market - knowledge of markets inc. local customs or legal requirements
    Importer/Exporter Identify new/potential markets around the world Good knowledge of markets inc. legal requirements Similar to agent
  • 16. Factors affecting choice of distribution channel
    • The product
      • Probably most important factor - is it perishable, new, premium?
    • The market
      • Is the market large and spread throughout country or small and local?
    • Legal requirements
      • Goods sold through licensed premises or authorised outlets e.g. alcohol, drugs, Post Office
    • Buying habits
      • Growth in out-of-town shopping centres, freezer ownership
  • 17. Factors affecting choice of distribution channel
    • The business
      • Own distribution networks, mail order, television shopping, door-to-door selling
    • Cost and speed of transport available
      • If product is perishable, may be cost-effective to use air transport
    • Projected level of demand
    • Seasonal fluctuations
  • 18. Marketing Task
    • Explain the factors that an organisation should consider when deciding on a channel of distribution for its finished stock.
    • (5 marks)
  • 19. Solution