unit 4 6 place pg 576 n.
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Unit 4.6 - Place pg. 576. What is Place?. The distribution of a product ie . How the product gets to the consumer “getting the right products to the right customers at the right price in the right place and at the right time.” Place can be through: Warehouses Agents Retail stores Internet.

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what is place
What is Place?
  • The distribution of a product ie. How the product gets to the consumer
  • “getting the right products to the right customers at the right price in the right place and at the right time.”
  • Place can be through:
    • Warehouses
    • Agents
    • Retail stores
    • Internet
what is place1
What is Place?
  • Stores have limited space so will only stock products that will sell
    • EX: Cinemas have limited seating so will only show popular movies
    • Marketers must convince stores to stock their product over their rival
  • Businesses use distribution channels (retail, internet) to get their product to customers
traditional channels of distribution
Traditional Channels of Distribution
  • Since most products are not sold straight from manufacturer to customers so businesses must use intermediaries – middle person in the chain of distribution – manufacturers, wholesalers, retailers
  • A long chain of distribution will raise or lower prices?
  • Types of distribution channels:
    • Zero-level channel
    • One-level channel
    • Two-level channel
types of intermediaries
Types of Intermediaries
  • Wholesalers
    • Between producer and retailer
    • Break large quantities into smaller units for retailers
    • Bear the costs of storage
    • Allow producers more time to focus on production
    • Disadvantage: producer passes responsibility of marketing to wholesaler
  • Distributors
    • Trade products of only a few manufacturers
types of intermediaries1
Types of Intermediaries
  • Agents
    • Negotiators on behalf of buyers and vendors
    • Helps sell products
    • EX: real estate agents, insurance agents, door-to-door, telemarketing
    • Charge commission of % of sales made
  • Retailers
    • Sellers of products to consumer (stores)
    • Advantage: can reach large # of consumers
    • Types:
      • Independent – sells small range of products
      • Multiple – several outlets EX: McD’s
      • Supermarkets – sell mostly foods
      • Hypermarkets – superstores; sells food AND consumer durables
      • Department stores – sells furniture, jewelry, clothes, toys
direct marketing as a cod
Direct Marketing as a COD
  • Direct marketing – direct selling of products to consumers. NO intermediaries
  • Advantages:
    • No intermediaries therefore greater profit
    • Direct control over marketing
    • Boom in internet so direct marketing is more popular
    • Can reach customers who live far from retail outlets
    • Usually cheaper than ATL
  • EX: telesales, e-commerce, direct mail, vending machines
direct marketing as a cod1
Direct Marketing as a COD
  • Telesales (telemarketing) – using telephones to sell products directly to customers
    • Can use sales people, automated voice, text message
    • EX: insurance, satellite tv company
    • Disadvantage:
      • Mass telephone calls can be costly
      • Many people do not like ‘cold calls’
direct marketing as a cod2
Direct Marketing as a COD
  • E-commerce – trading via internet
    • More businesses are using websites to entice customers all around the world
    • Reduces costs/risks of international marketing
    • However, not all products can be sold online
      • Cars, jewelry, food
    • This is a growing channel of distribution
direct marketing as a cod3
Direct Marketing as a COD
  • Direct Mail – sending promotional material thru the mail system
    • Used by: banks, local restaurants, fast-food
    • Advantages:
      • personalized communication service bc it uses addresses of customers
      • Low costs
      • Detailed info aimed at diff market segments can be used
    • Disadvantages:
      • Low response rate bc people ignore mail
      • Contact info on customers can be out of date
direct marketing as a cod4
Direct Marketing as a COD
  • Vending Machines – specialist machines that stock certain products such as: cigarettes, drinks, snacks
    • Advantages:
      • Can be placed almost anywhere
      • Multiple payment methods – convenient
      • Low maintenance costs
    • Disadvantages:
      • Prone to vandalism
      • Mechanical failures stops sales
      • Can only sell a small range of products
choosing an appropriate distribution strategy
Choosing an Appropriate Distribution Strategy
  • An efficient and cost-effective distribution strategy increases likelihood of customers purchasing the products
  • 5 factors affecting distribution decision:
    • Cost and benefits – agents are cheaper but retailers can reach more customers
    • Product – flowers/meats would need shorter COD. DVDs/CDs best sold through internet
    • Market – small markets need no intermediaries
    • Time – urgent delivery of product needs direct COD
    • Legal constraints – license to sell alcohol, anti-gambling laws
place and business strategy
Place and Business Strategy
  • Marketing managers must deal w/ 2 key issues:
    • The best COD to use
    • How it will ensure that intermediaries will want to stock their products
  • When choosing a COD or which intermediaries to use they must decide on the most suitable TYPE:
    • Intensive distribution – mass produced products
    • Selective distribution – producer chooses suitable intermediaries
    • Exclusive distribution – less common; specially chosen intermediaries given the right to sell a certain product
place and business strategy1
Place and Business Strategy
  • Some companies want as many outlets to sell their products ie. Coca-Cola
    • Others do not want many outlets ie. Rolls-Royce, Tiffany & Co.
  • To ensure an outlet will sell their product, a company can:
    • Open their own store (expensive) ie. Nike, Adidas
    • Company can use franchise agreements – allow other certified people to run the store under business name

ie. 7-11, Pizza Hut, Burger King

place and business strategy2
Place and Business Strategy
  • If a company wants complete control over all its marketing activities company can use:
    • Vertical integration – growth strategy that unifies supplier, producer, wholesalers, and retailers
      • Will have more direct control over its supply chain and distribution channels
      • However, this is usually not a realistic option, so businesses will have to go back to competing for floor space
place and business strategy3
Place and Business Strategy
  • Companies can use branding as another strategy
    • Companies of popular brands will have preferential distribution channels. Distributors and retail stores will want to stock their products.
  • Exporting has benefited international trade
    • However, exporting has some complications:
      • Fluctuating exchange rates
      • Government intervention
      • Language barriers
      • Cultural differences
  • Internet has greatly decreased costs. Rising popular distribution method