marketing mix...place

8/8/2019 Marketing Mix...Place

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Marketing Mix: PlaceMarketing Mix: Place



Third P: Place (Distribution)Third P: Place (Distribution)

y Product ownership has to be transferredsomehow from the person or

organization making it to the customer

needing it.

y Distribution·s role within a marketing mixis getting the product to target market

y Typically firms called ́ Middlemenµperform these intermediary activities



MiddlemenMiddlemen

y Middlemen is a business firm that renders servicesdirectly to the purchase and/or sale of a product as itflows from producer to end user.

y A middlemen either owns the product or actively aidsin transfer of ownership of products or services.

y Middlemen are further classified as Merchantmiddlemen and Agent Middlemen.



Middlemen ClassificationMiddlemen Classification

y Merchant middlemen actually owns the products theyare helping to market.

y

E.g Retailers and wholesalers

y Agent middlemen never actually owns the products butthey do actively assist in transferring the ownership of the products

y E.g Real estate Agents and travel agents



Distribution channelDistribution channel

y A distribution channel consists of the setof people and firms involved in the flow of

ownership of a product as it moves from

producer to ultimate user or businessuser.

y Producer Middlemen user



Channel levelsChannel levels

Manufacturer

Consumer

Manufacturer

Retailer

Consumer

Manufacturer

Wholesalers

Retailer

Consumer

Manufacturer

Wholesalers

Agent

Retailer

Consumer

2-level1-level 3-Level

0-level or direct

Channel



Factors affecting choice of channelsFactors affecting choice of channels

y Market Considerations:

y Type of Market: business or consumer markets

y Number of potential customers: for fewcustomers, firms may use its own sales force to sell but

for large number of customers, we need middlemen.y Geographic concentration: firms may establish sales

branches in densely populated markets and use

middlemen for less concentrated markets.

y

Order size: food products manufacturer may directlysell to large grocery stores due to large order size orthe volume of business. But to reach small stores havingless volume demanded, a firm should first sell towholesalers



Product ConsiderationsProduct Considerations

y Unit value: if price of a product is high then a firm mayuse direct selling and if its less priced product (Ball pen)

it is wise to use middlemen.

y Perishability: perishable items requires direct selling.

Clothing is perishable in a fashion sense. Pharmaceuticalproducers use short channels etc

y Technical nature of a product: a business product

that is highly technical is often distributed directly to

business user.Technical products for consumersusually involves selling the products directly to retailers.



Middlemen ConsiderationMiddlemen Consideration

y Services provided by themiddlemen: A producer shouldselect middlemen that will provide those marketing services thatproducer is either unable to provide or cannot economicallyperform.

y Availability of desired Middlemen:The middlemen preferredby a producer may not be available.They may be carryingcompetitive products and may not want to take another firm·sproduct line.

y Attitude of middlemen towards producers· policies:

Sometimes we face limited choices of channels as our marketing

policies are not acceptable by the middlemen.Some will only carryyour product line if you give them the assurance that theircompeting firms will not carry the same product line.



Company considerationCompany consideration

y Desire for channel control: some companies want to controlthe distribution channels by simply establishing short channels.

y Financial resources: financially strong companies can afford

direct channels or establishes its own sales force for selling or theyown their retail outlets and financially week companies needsmiddlemen to support distribution

y Services provided by Seller: often a retail store will not stock a

given product unless it is presold through heavy produceradvertising.Some producer base their channel decisions on thedemands of the middlemen involved.



Intensity of DistributionIntensity of Distribution

y Intensive distribution:A strategy in which the company stocksits products in as many outlets as possible.

y E.g coca cola, pepsi, candies, tooth paste, soaps etc

y Exclusive distribution:A strategy in which the company gives a

limited number of dealers the exclusive right to distribute thecompany·s products in their territories

y E.g in case of luxury automobiles and expensive suiting,

producer may have a single distributor even in large cities

y Selective distribution:between intensive and exclusive

distribution is selective distribution- a strategy in which use of more than one, but fewer than all, of the intermediaries who arewilling to carry the company·s products.

y Most television, f urniture and home appliances brands are

distributed in thismanner .



Major types of retail institutionsMajor types of retail institutions

y Specialty stores

y Departmental stores

y Supermarkets

y Convenience stores

y Discount stores

y

Off-price retailersy Superstores



Specialty StoresSpecialty Stores

y Carry a narrow product line with a deep assortment,such as sporting-good stores, furniture stores and book stores.

y A clothing store would be a single-line store, a men·sclothing store would be a limited-line store and amen·s custom-shirt store would be a super specialty

store such as GAP



Departmental StoreDepartmental Store

y Carry several product lines---typicallyclothing, home furnishings and household

goods with each line operated by a

separate department managed byspecialists.



SupermarketsSupermarkets

y A relatively large, low-cost, low margin,self service operation designed to serve

the consumer·s total need for grocery and

household products



Convenience StoresConvenience Stores

y Relatively small stores located nearresidential areas , open long hours seven

days a week and carrying a limited line of

high turnover convenience products atslightly higher prices

y Corner shops



Off Off--price retailersprice retailers

y Sell merchandise bought at less-than-regular wholesale prices and sold at less

than retail often leftover goods and

irregulars obtained at reduced pricesfrom manufacturers or other retailers.

y Includes factory outlets



SuperstoreSuperstore

y Very large stores traditionally aimed at meetingconsumers· total needs for routinely purchased food

and non food items.

y Category killers which carry a deep assortment in

particular category and have knowledgeable staff.

y Supercentres: combined supermarket and discountstores e.g wall mart supercenters.

y Hypermarkets with up to 220,000 square feet space

combining supermarket, discount and warehouseretailing e.g carrefour ,hyper star

marketing mix...place

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