1. Place (also known as distribution) is the fourth element of the marketing mix, after product, price, and promotion. It involves getting the product to customers through appropriate distribution channels. 2. Physical placement involves planning, implementing, and controlling the flow of materials from origin to points of use to meet customer needs profitably. Marketing logistics networks and demand chain management coordinate supplier, manufacturer, and customer flows. 3. Marketing channels involve interdependent organizations that make a product available to consumers. Channel functions include information sharing, promotion, negotiation, physical distribution, financing, and risk taking.

1. 1
BSBMKG502B – Establish and adjust the
marketing mix
Presentation Four
Place (Distribution)
Fourth of the Four P’s
Product (and service)
Price
Promotion
Place(ment)

2. 2
Physical placement
• The process of planning,
implementing and controlling the
physical flow of materials from point
of origin to points of use for the
purpose of conforming to customer
requirements at a profit. (Kotler)

3. 3
Marketing Logistics Networks
• Logistics
• The process of planning, implementing and controlling the
efficient, cost-effective flow & storage of materials in-process
inventory, finished goods and related information from point of
origin to point of consumption for the purpose of conforming to
customer requirements ( U.S. Council of Logistics)

4. 4
Demand Chain Management
• Value-adding by coordinating flows from suppliers to
ultimate users
• Coordinating suppliers, purchasing agents,
manufacturers, marketers, channel members,
customers & end-users
• Managing information systems such as:
• computers, point-of-sale (P.O.S.) terminals, uniform
product codes, satellite tracking, electronic data
interchange (EDI) and electronic funds transfer (EFT)

5. 5
Demand Chain Management
• Sales Forecasting:
• production schedules, inventory levels, and distribution
• Production planning:
• materials to be ordered by purchasing
• Inbound materials management:
• inbound transportation, goods receiving,
storage and raw-materials inventory

6. 6
Demand Chain Management
(cont)
• Production:
Raw materials converted to finished goods,
recorded in finished-goods inventory, for order by
customers
• Customer Orders
Finished goods flow off the assembly line, pass
through packaging, in-plant warehousing, shipping-
room processing, outbound transportation, field
warehouse, customer delivery and servicing

7. 7
Marketing Channels
• A marketing channel is a set of interdependent
organisations involved in making a product or service
available for use or consumption by the consumer or end
user.

8. 8
Distribution channel Functions
• Information – gathering & distributing marketing
research & intelligence
• Promotion – developing & spreading promotional
communication
• Matching – shaping and fitting the offer to the buyer’s
needs
• Negotiation – reaching a price and agreeing terms

9. 9
Marketing Channel Functions (cont)
• Physical Distribution – transporting & storing goods
• Financing – covering the cost of channel work, often
extending credit to retailers
• Risk Taking – assumes the risk of channel work.

10. 10
13-7
13-7
Marketing Channel Functions
Risk Taking
Risk Taking Information
Information
Financing
Financing Promotion
Promotion
Physical
Physical Contact
Contact
Distribution
Distribution
Negotiation
Negotiation Matching
Matching
Kotler Brown Adam Armstrong Marketing 5th Ed © Copyright 2001 Prentice Hall

11. 11
Number of Marketing Channel
Levels – see slides 12 & 13
• Consumer Market Channels terms:
• M = Manufacturer, W = Wholesaler
• J = Jobber, R = Retail
• C = Customer
• Industrial Marketing Channels terms:
• M = Manufacturer,
• MR = Manufacturer’s Representative,
• ID = Industrial Distributor
• IC = Industrial Consumer

12. 12
Number of Marketing Channel
Levels
13-8
13-8
Channel Levels and Channel Conflict
Consumer Marketing Channels
Channel 1
M C
Channel 2
M R → C
Channel 3
M → W R → C
Channel 4
M → W → J → R → C
Kotler Brown Adam Armstrong Marketing 5th Ed © Copyright 2001 Prentice Hall

13. 13
Number of Marketing Channel
Levels
13-9
13-9
Channel Levels and Channel Conflict
Industrial Marketing Channels
Channel 1
M IC
Channel 2
M ID → IC
Channel 3
M → MR ID → IC
Kotler Brown Adam Armstrong Marketing 5th Ed © Copyright 2001 Prentice Hall

14. 14
Channel Design Decisions
• Types of middle channel members
• Company sales Force
• Manufacturer’s Agency
• Industrial Distributors
• Number of middle channel members
• Intensive Distribution – as many outlets as possible
• Exclusive Distribution – high prestige
• Selective Distribution – good market coverage

15. 15
Responsibility of Channel Members
• Agreement on Price Policies
• Conditions of Sale
• Territory rights (who is authorised to sell in a particular area)
• Specific services to be performed by
each member

16. 16
Evaluating Major Alternatives
• Economic Criteria - Different levels and cost for each
alternative
• Control Criteria – benefits of directing channel against
benefits of using outside businesses
• Adaptive Criteria – benefits of each criteria against loss
of flexibility of long-term contracts

17. 17
Channel Management Decisions
• Selecting Channel Members – to value-add to
process
• Motivating Channel Members – high margins,
special deals, premiums, advertising & promotional
allowances, sales contests
• Evaluating Channel Members – measurement
against criteria for sales, inventory control, customer
delivery time, training, customer service

18. 18
Channel Management Decisions
(cont)
• Cycle time reduction decisions – reduce time to
develop new products & to manufacture & distribute
finished products
• Quick response-systems solution: EDI (electronic data
interchange), EFTPOS, Quick Response Retail
Technology (QRRT), Quick Response Service
Technology (QRST) to reduce cycle time and
increase efficiency and improve customer service

19. 19
Channel Management Decisions
(cont)
• Conversion Operations Location Decisions –
location has major impact on costs
• Make or Buy Vertically Integrated or Network
Decisions
• Input Suppliers Networks - closer economic
relationships between channel members
• Manufacturing & Operations Decisions –to order
or to develop an inventory

20. 20
Channel Management Decisions
(cont)
• Order Processing Decisions – mail, telephone, fax,
salespersons, online, EDI, internet
• Warehousing Decisions – if inventory carried: storage,
distribution, company or intermediary owned
• Inventory Decisions – reduce unnecessary inventory
costs

21. 21
13-4
13-4
Placement
Promotion Process
Price People
Product Physical
Placement evidence
(Customer
Inventory Service) Transportation
carrying costs costs
Logistics Trade-offs
Warehousing costs -
Order-processing
Conversion lot throughput costs, not
& information
quantity costs storage costs
costs
Kotler Brown Adam Armstrong Marketing 5th Ed ©Copyright 2001 Prentice Hall

22. 22
13-5
13-5
Transportation
Air Rail
Transportation
Transportation
Modes
Modes
Pipeline Truck
Water
Kotler Brown Adam Armstrong Marketing 5th Ed © Copyright 2001 Prentice Hall

23. 23
Choosing Modes of Transport
• Speed – measured in door-to-door time
• Dependability – Meeting Schedules on time
• Capability – The ability to handle various products
• Availability – the number of geographic locations served
• Cost – usually in tons-per-mile (US)

24. 24
Conclusion
• Logistics management requires great trade-offs
between functional units
• Management must focus on communication and
strategic objectives to ensure co-operation
• Distribution can often be that part of the mix which
irritates the customer the most e.g. failed deliveries,
damaged goods, wrong orders ....