Place and ProductMiss Lay

To introduce the concept of Place and Product

To apply product theories to your coursework To identify where you will sell your product

and what channel of distribution you will use To evaluate the place where you will sell

your product

Objectives

Where would you buy these products? Where do you prefer to buy these products?

Starter – Guess the Place

Place is also known as channel, distribution, or intermediary. It is the mechanism through which goods and/or services are moved from the manufacturer/ service provider to the user or consumer.

So ultimately you need to think – how will your product get to the consumer!

Place

A channel of distribution is the route a product takes from the producer to the consumer. A product usually passes through intermediaries on the way. E.g. Retailers, wholesalers and agents

Channels of Distribution

Channels of Distribution

Manufacturer

Consumer

Manufacturer

Retailer

Consumer

Manufacturer

Wholesaler

Retailer

Consumer

Distribution Channel 1

Manufacturer Consumer

Direct Selling: Manufacturer to Consumer

• This involves selling the product direct to the consumer.• Now very popular, it is the fastest channel and often the

cheapest for the consumer.• The internet has made it easier for producers of goods to sell

direct to the consumer.• Direct selling can also be done through door to door sales, TV

shopping, telephone sales and mail-order catalogues.

Distribution Channel 2

Manufacturer Retailer Consumer

Indirect Selling (1): Manufacturer – Retailer- Consumer

• The manufacturer uses a retailer to sell their product onto the consumer.

• E.g. Large supermarkets buy goods direct from the manufacturer.• Retailers are shops who sell to consumers.• Retailers can be physical shops or online “e-tailers”

Distribution Channel 3

Manufacturer Wholesaler Retailer Consumer

Indirect Selling (2): Manufacturer – Wholesaler-Retailer – Consumer • This is a traditional method used for fast moving consumer

goods• Wholesalers buy products cheaply from the manufacturer and

sell them onto the retailer.• Wholesalers selling smaller quantities onto retailers is called

‘breaking bulk’.• Manufacturers have the benefit of not having to wait for the

customer to buy the goods before they see the cash.• Wholesales make distribution cheaper as they don’t have to

make lots of different separate deliveries.• Wholesalers can also store more goods than a retailer and

therefore act as a storage cupboard.

Multi-Channel Strategy

• Some products may be sold through multiple channels, for example an ipod is sold via the internet direct from Apple to the consumer and also through a retailer such as a department store.

• Will you use multiple channels for your product??

Specialist Stores e.g. HMV, Topshop, Thorntons Department Stores e.g. John Lewis and House of

Fraser Supermarkets e.g. Tesco Hypermarkets e.g. Tesco Extra Out of Town Specialist Stores e.g. B&Q, Halfords,

Toys ‘R’ Us Convenience Stores e.g. Spar, Co-op, Petrol Stations

Retailers

Television Sales e.g. QVC Internet e.g. Amazon, Play.com In-home selling – Door to door sales or Party

plans Mail Order Catalogues Telesales Vending Machines

Non-Store Retailers

Geographically disperse market. Niche products can reach a wider audience. Low barriers to entry as set up costs are low. E-commerce technology (for payment,

shopping software, etc) has improved. Lots of online retailers to sell products

through Easy to set up a websites

The advantages of using the internet:

It is more profitable to sell direct to the consumer, as each intermediary will take a slice of the profits.

Despite this it is easier to use intermediaries, as it can be hassle to distribute small amounts of products to lots of little shops.

Using a wholesaler gives a manufacturer the chance of more market coverage.

The fewer the intermediaries the more control the manufacturer has over how its products are sold i.e. how they are promoted and their final selling price

Points to consider

Everyday groceries and convenience items need to be distributed as widely as possible. Consumer don’t want to travel miles to get a pint a milk or wait weeks for them to be delivered.

Luxury goods don’t need to be as widely distributed . Manufacturers may want there products to be more exclusive and only in a small number of exclusive shops.

Specialist goods like electrical products need to be sold through specialist shops. Consumers may need specialist advice and assistance and be able to compare different options.

Different distribution channels suit different products

Product

Product is the physical product or service offered to the consumer. In the case of physical products, it also refers to any services or conveniences that are part of the offering.  Product decisions include aspects such as function, appearance, packaging, service, and warranty.

Product

Your product needs to differentiate from the competition. A Unique Selling Point is a feature or benefit that

separates your product from its competitors. This could be a lower price, a smaller version of the

product, offering extra functions, or even simply producing a standard product in a range of colours or designs.

Your product needs a competitive advantage, if you do not have one; you will probably struggle to make your product seem attractive to customers.

Your product may be differentiated because of its unique design, brand image or reputation for reliability.

Unique Selling Point (USP)

How important is the brand of your product? Does having a brand benefit your product? The style and branding of your products can be very

important; it is one of the key methods of helping customers distinguish your product from the competition.

Branding can cover everything from the product logo and the colours of packaging to the style of advertising, if done effectively your product will become much more noticeable and distinguished from other similar products.

Branding

The Benefits

of Brandin

g

The ConsumerEasier product identificationCommunicates features and

benefitsHelps product evaluation

Establishes products position in the market

Reduces Risk in PurchasingCreates interest.

The ManufacturerHelps create loyalty

Defends against competitionCreates differential advantage

Allows premium pricingHelps targeting/positioning

Increases power over retailer

The RetailerBenefits from brand marketing

supportAttracts Customers

Your product needs to be fit for purpose Design not only affects the overall aesthetic

qualities but also ergonomic properties, components and materials

Is the appearance of your product special in any way – shape, size, colour, taste.

Does it have a unique design feature – toilet duck! An innovative design can help a product gain a

sustainable competitive edge.

Design

Does the quality of your product reflect its price?

Is your product durable – some products are expected to have longer life spans than others.

Will your product be reliable or will it need regular maintenance?

Quality

Packaging is an important part of the product that not only serves a functional purpose, but also acts as a means of communicating product information and brand character.

Packaging

Is the packaging of your product important?

• Does you packaging play a key part in the protection, containment and identification of the product?• Is packaging key to how your

product works?• Is your packaging a key tool for

product differentiation?• Packaging is of key importance with

FMCG

Examples of new product opportunities created through packaging changes

http://www.youtube.com/watch?v=zFENz_nnrq8