PLACE

This all about the distribution of the product to the customer.

How the firm gets it’s product to the market.

CHANNELS OF DISTRIBUTION

PRODUCER

CONSUMER

E.g. Farm Shop, Selling Online

1. Direct Method

2. Modern Method

PRODUCER

RETAILER

CONSUMER

3. Traditional Method

WHOLESALER

PRODUCER

RETAILER

CONSUMER

Some products may be sold through agents.

Agents provide a link between the buyer and the seller in exchange for a commission.

Could be used to enter a foreign market, where a local agent would have more knowledge of the area

Brokers may also be used in the distribution channel.

They tend to be used in markets such as insurance and share dealing.

Why use them?

Buys in bulk – saves manufacturer money Bear the risk of holding stock Will break down bulk into smaller numbers Provides advice to producer on what is selling

well.

However, the use of a wholesaler makes it expensive on the customer.

WHOLESALERS

Perform 4 functions:

breaks down bulk supplies provides information to consumers stores goods and prepares them for sale physically sells to the consumer

RETAILERS

Independent Retailers Multiple chains – Boots Supermarkets Co-operatives Department Stores – Jenners Specialist Stores – B&Q Franchises.

TYPES OF RETAILERS

SELLING DIRECT Cutting out the middle man will save

money

Mail Order – catalogues Direct-response adverts Telephone selling Television selling Selling online

WHICH METHOD? Must take into consideration 4 things:

1. THE PRODUCT

May be perishable Physical dimensions Depth of technology used Volume of sales

2. THE MARKET

The size of the market – larger markets need more channels

Appropriateness of the outlet

Time period of the market

3. LEGAL RESTRICTIONS

Tobacco Alcohol Prescription Drugs Gambling Laws in other countries

4. THE COMPANY

Use of economies of scale – the advantages of being big.

May have ownership of ALL parts of place. E.g. makes, distributes and retails its own products.