Place – Distribution Mr Ahern

Learning starts with a question

• As the business owner of an ice cream manufacturer.

•You’ve just started running the business and are new to the market.

•You need to get retailers to sell your product – who would you approach? How would you persuade them?

What is today's lesson about?

Lesson Outcomes

•Identify the importance of businesses using place and distribution as an element of the marketing mix.

•Explain 4 channels of distribution, available to a business.

•Analyse three businesses use of distribution, considering the affect upon the rest of the marketing mix.

Place

Marketing Mix

Product

Promotion

Place

Price

Place (Distributing the Product)

•The part of the marketing mix that determines where goods are going to be sold and how they are going to get there.

•Where goods are sold will depend on the nature of the goods.

Different Goods – Different Markets

•Most goods are sold through shops. Buyers decide on where they buy from.

•Some shops position themselves so that they are accessible to their type of customer. (Netto, Harrods).

Different Goods – Different Markets

•Other types of shops;▫Wholesalers▫Direct Sales▫Mail Order▫Tele Sales▫Exhibitions▫E-Commerce

Question – why?

Vs

90% of retail outlets64% of retail outlets

Why may The Jammy Dodger be losing out to The Jaffa•Possible reasons include:

▫High consumer demand for The Jaffa▫Jammy Ds may have more direct

competitors▫Differentiation of products▫Jaffa cakes may have more advertising

support▫Market share and product portfolio

Channels of DistributionProducer

Producer

Producer

Producer

Consumer

Consumer

Consumer

Consumer

Retailer

RetailerWholesaler

SellerAgent

This is very simple because it means that producers are selling their products directly to the consumer.

An example of this could be a bakery. The bread and cakes are baked by the shopkeeper and sold directly to the consumer. The product does not pass through any channels.

Producer Consumer

•In this channel, the producer of the goods sells directly to a retail outlet, generally a shop.

•Many large supermarkets are stocked in this way. The manufacturer producers large amounts of a product especially for the supermarket (e.g. bread and milk) and delivers them directly to the supermarket.

•This method also is used in the clothing industry, where fashion garments are supplied directly from the producer to the shops.

ProducerConsumerRetailer

•This channel involves using a wholesaler who buys products from the producers and then divides the stock up into much smaller quantities for retailers to buy.

•The wholesaler takes on the cost of storing the items and also the risk of not selling them. Retailers usually have a wide choice of goods from a wholesaler.

Producer ConsumerRetailerWholesaler

• The job of an agent is to bring buyers and sellers together.

• They are used by sellers to find buyer, a good example would be a travel agent.

• The producer in this case would be the hotel, the Tour Operator will have numerous hotels and holiday packages from lots of different companies which the customer can look at.

• The income of the agent comes from the commission of each sale.

Producer ConsumerSellerAgent

e.g. xBOX

You can buy an Xbox 360 on a website such as play.com

You can walk into a Tesco store and buy one

You can even go straight to Microsoft and buy one (online)

You are likely to buy an Xbox through a retailer such as Tesco but you could buy it straight from the producer.

What factors affect distribution?

Factors Affecting Distribution

•The Product;▫Nature of the product (fragile, explosive etc)▫Technical product (IT based technology)▫Direct Services (call centres)▫Where are the goods needed?▫Presence of wholesalers

•The market (local, national)•Legal restrictions (alcohol)•The company (economies of scale)

Choosing Appropriate Distributors • How should your product get to the consumer?

• You have to think about your product/brand image.

• To a retailer opportunity cost and rental space is important.

• Where would you stock a new ice cream, how would you convince a retailer to stock your product?

Ensuring good links with intermediaries •Products available when customer require

them.•Keeping intermediaries happy to promote

products, through:▫Providing specific product displays.▫Offering retailer competitions.▫Other promotions.▫Offering special deals or higher

commission.▫Offering training or retailers.

Activity

•Three products create a presentation on paper

•Show where products are sold.•Explain the distribution chain the business

uses.•Analyse whether you feel this is the correct

distribution channel inline with the rest of the marketing mix.

•Spot new opportunities in the place product is sold.

Lesson Outcomes

•Identify the importance of businesses using place and distribution as an element of the marketing mix.

•Explain 4 channels of distribution, available to a business.

•Analyse three businesses use of distribution, considering the affect upon the rest of the market mix.