2. Discussion Points
The Role of Place decisions in the Marketing Mix
Advantages and disadvantages of different
Channels
Distribution Channel
3. Place
This refers to the channels of
distribution that are selected. That is,
selecting a method of getting the
product to the market and to the final
customer.
Will the manufacturer sell its
product to shops that sell to the public,
or to wholesalers, or direct to the
customers?
4. The Role of Place Decisions in
the Marketing Mix
The product must be available where and when customers want to buy it.
5. Distribution Channel A distribution channel is the means by which a
product is passed from the place of production
to the customer.
Retailer A person or business that sells goods to the
use or
public in relatively small quantities for
consumption rather than for resale.
Wholesaler A person or company that sells goods in large
quantities at low prices, typically to retailers.
Agent An agent is an independent person or business
that is appointed to deal with the sales and
distribution of a product or range of products.
6. Distribution Channel 1 - Direct Customer
Advantages
It involves manufacturers selling their products
directly to the customer.
It is suitable for certain types of food products.
There is a lower price if sold direct to customers.
Products can be sold by mail order catalogue or via
the internet
Disadvantages
This is usually impractical for most products
This method may not be suitable for products
which cannot easily be sent by post
It may not be cost effective
7. Distribution Channel 2 - Using a retailer
as the only intermediary
Advantages
Producer sells large quantities to retailers.
Reduced distribution cost compared to selling
directly to consumers
Disadvantages
No direct contact with customers.
The price is often higher than direct selling as
the retailer has to cover its cost and making a
profit.
8. 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
small quantities from wholesalers
Wholesaler may give credit to retail customers.
Saving transport costs.
Wholesaler can give advice to small retailers about
what is selling well.
Disadvantages
May be more expensive for the small shop to buy
from a wholesaler than if it bought straight from
the manufacturer.
Wholesaler may not have the full range of
products to sell.
Takes longer for fresh produce to reach the shops.
Wholsalers may be a long way from the small
shops.
The consumer price is often higher than direct
selling.
9.
10. Distribution Channel 4 - Using an additional
intermediary such as an agent
Manufacturer may not know the best way to sell
the product in other market.
Agents will be aware of local conditions and will be
in the best position to select the most effective
places in which to sell.
Advantages Disadvantages
The producer has less control over the way the
product is sold to customers.
13. Selecting The Distribution Channel To Use
1. What type of product is it?
2. Is the product very technical
3. How Often is the product Purchased?
4. How expensive is the product?
5. How perishable is the product?
6. Where are the customers located?
7. Where do the competitors sell their products?
