Business 4.5 (Place, people, processes, and physical evidence)

Question 1

What is place in marketing P’s

Answer 1

Place (more commonly known as distribution) refers to business activities that make the product available to consumers.​

Question 2

What are the different levels of distribution

Answer 2

Zero-level​

One-level​

Two-level​

Businesses can choose one or more levels of distribution.​

Long chains of distribution are not suitable for perishable products.

Question 3

Example of zero level distribution

Answer 3

Producer to consumer

Question 4

Example of one level distribution

Answer 4

Producer -> retailer -> consumer
Producer -> distributor-> consumer
Producer -> agents -> consumer

in the middle they count as intermediaries

Question 5

Example two level distribution

Answer 5

Producer-> wholesaler -> retailer -> consumer

the wholesaler and retailers count as intermediaries

Question 6

Wholesaler advantages and disadvantages

Answer 6

Wholesalers are businesses that purchase large quantities of products from a manufacturer and then ‘break’ the bulk purchase into smaller units for resale to retailers.

benefits:
Wholesalers bear the cost of storage.​

Retailers don’t have to purchase in large quantities.​

Producers have lower transaction costs.​

Wholesalers deal with distribution issues.

Cons:
Producer takes a risk when passing on the marketing.​

Wholesalers may not promote products the way the producer wants.​

Some retailers do not use wholesalers in order to cut their costs.

Question 7

What are distributors

Answer 7

Distributors are independent and specialist businesses that trade in the products of only a few manufacturers. ​

The motor vehicle industry often uses distributors.

Question 8

What are agents

Answer 8

Agents (a.k.a. brokers) are negotiators who act on behalf of buyers and vendors (sellers) of a product. ​

They charge a commission for their services. ​

Real estate agents, travel agents and insurance brokers are all examples of this type of intermediary.

Advantages of using agents include:

Specialised services provided by experts can help to increase sales.

Producers may not have the human and financial resources to be able to reach customers in the same way as agents.

Agents have the incentive to work hard as they rely on being able to earn their commission.

Disadvantages of using agents include:

As an intermediary, commission needs to be paid so this reduces the producer’s share of the sales revenue earned.

Manufacturers are reliant on a third party to sell their products.

The reputation of the producer could be hindered if an agent delivers poor customer service.

Question 9

What are retailers

Answer 9

Retailers are often referred to as ‘shops’ or ‘stores’. They are the sellers of products to the final consumer.

Advantages of using retailers as a distribution channel include:

Retailers take responsibility for marketing the manufacturer’s products.

They tend to attract a large customer base, so helps to increase the sales of the manufacturer.

As an intermediary, the services provided by retailers allow the producer to concentrate on its core business activity.

They also offer convenience (such as the location of the retail stores) and customer services that a producer does not have the resources or expertise to do (such as offering a large and wide range of goods). This means customers have a convenient one-stop shopping experience, being able to purchase all their products under one roof.

Disadvantages of using retailers as a distribution channel include:

Retail outlets often have high costs, such as rent and staff salaries. The higher costs result in higher prices being charged for the producer’s goods.

The producer has no control over how its products are sold or marketed, e.g., Coca-Cola does not know where Tesco or 7-Eleven will place its canned drinks in their supermarkets.

As an intermediary, retailers add to the price of the final product. Higher prices can make products less competitive or attractive to customers.

Question 10

What is specialty channels of distribution

Answer 10

A specialty channel of distribution is any indirect way to distribute products that does not involve retailers.​
(zero level distribution)
i.e. avoiding the use of intermediaries.​

Examples include producer directly to consumer using:
Telemarketing
E-commerce
Vending machines​
Mail order​

Question 11

What is telemarketing

Answer 11

Telemarketing is the use of telephone systems to sell products directly to potential customers.​

This can be done by automated voice or text messages that promote goods and services.​

Using sales people to ‘cold-call’ potential customers is often commonly used by businesses that have an existing database of customers.

Question 12

What is ecommerce

Answer 12

Seling goods online

Question 13

What is vending machine

Answer 13

These are specialist machines that stock products for sale (e.g. drinks, snacks and cigarettes).​

Due to their compact size, vending machines can be placed almost anywhere.​

Modern machines accept payment by debit, credit and stored value cards, enhancing convenience.

Question 14

What is mail order

Answer 14

Mail order involves a business sending promotional material such as a catalogue, via the postal system to entice customers to buy a firm’s products.​

Businesses that have a customer database tend to use this channel of distribution.

Question 15

Benefits of specialty channels of distribution

Answer 15

Increased profits (as firms do not have to share profit margins with intermediaries)​

Greater control over distribution.​

Growing demand for the convenience of e-commerce.​

Can reach consumers who cannot access retail outlets.

Question 16

Factors affecting the choice of distribution channels

Answer 16

Product: The more perishable a product, the better it is to choose shorter distribution channels and vice versa.​

The market: Local niche markets can be catered for directly by a supplier. Large, dispersed markets usually require intermediaries.​

Time: Items requiring urgent delivery need short distribution channels, but not all are suitable (e.g. e-commerce is not suited for many urgent deliveries).​

Legal constraints: Some products are prohibited from being distributed (e.g. alcohol, tobacco and cannabis).​

Cost and benefits: Direct selling increases profit margins, but limits access to consumers. Firms need to weigh the pros and cons of selected distribution channels.

Question 17

Explain what people is in marketing

Answer 17

the importance of employee-customer relationships in the marketing of a service.

Question 18

Talk about employee customer relashionships

Answer 18

The provision of services relies on the goodwill of all employees.​

It is important for service-oriented businesses to build good relationships and trust with their customers.​

Customer service quality can be measured but will be influenced by variations in culture.​

Question 19

Methods of measuring customer service quality

Answer 19

Appearance and body language​

Aptitudes and attitudes​

Feedback (from customers and other stakeholders)​

Efficiency (by working quickly, free of careless mistakes)

Question 20

Examples of cultural variations in customer service interactions (continued)

Answer 20

Appearance and body language:
Sociologists studying personal space suggests there are contact and non-contact cultures in the world.​

Non-contact cultures stand further apart from people and touch less than contact cultures.​

Standing too close or too far from customers with different contact cultures may inadvertently create poor impressions of customer service.

Feedback:
Dominant cultures in India and Japan are averse to critical disagreements, thus saying ‘no’ is regarded as being too direct and rude.​

Instead, disagreements should be expressed with the use of diplomatic language.

Efficiency:
Some cultures focus on highly reliable, accurate and timely customer service (e.g., Switzerland and Germany).​

However, in some cultures the norm is to operate with the expectation of flexibility and understanding from customers for operational inefficiencies.

Aptitudes and attitudes:
It is common in some cultures (such as the UK) for customer service personnel to be formal and conservative, whereas in cultures such as Australia, customer service is more relaxed and informal in their approach.

Question 21

What is processes in marketing

Answer 21

Processes is the way in which a service is provided or delivered

Question 22

What are the different parts of processes in marketing

Answer 22

Payment systems, e.g. credit card, smartcards, store loyalty cards, smart payment system such as Apple Pay, online bank transfers, and instalment (hire purchase) payment options

Website design, navigation and functionality

Value-added services, such as complimentary car parking and operational support

Customer services, such as refunds/returns policy, systems for dealing with customer complaints

Delivery services, such as free delivery of items purchased in-store

Environmental sustainability practices, such as using opt-in receipts (where printed receipts are only given to customers if they request one - otherwise they can be emailed to customers instead)

After-sales care, including insurance, product warranties and guarantees

Queueing systems and waiting times.

Businesses that do not effectively manage the waiting time for their services will upset customers. The consequences include: disgruntled customers, customer complaints, a poorer corporate image and negative word of mouth marketing. Customers might seek compensation and/may switch to alternative suppliers.

Many businesses attempt to detract customers from conscientiously thinking about the opportunity cost of waiting in line to be served. For example, Le Petit Chef (The Little Chef) has used 3D projection technology since April 2015 to entertain diners at their restaurants whilst they wait for their food to be prepared and served. The company uses these creative processes as part of its marketing mix to bring food to life.

Question 23

What is physical evidence in marketing

Answer 23

Physical evidence (or the physical environment) in the extended marketing mix refers to the tangible aspects of a service, such as the physical appearance or tangible aspects of a restaurant, coffee shop, retail outlet, school or hotel. In the hotel industry, the appearance of the lobby, the variety and prices of products on the restaurant menu, staff uniforms and the linen used for the bedsheets in the guest rooms are all examples of physical evidence in the extended marketing mix for services. Physical evidence has a direct impact on customers’ perceptions of a business and the quality of the services it provides.

Question 24

What are different parts of physical evidence in marketing

Answer 24

Décor
Atmosphere / ambience
Store layout
Cleanliness
Presentation of staff, such as uniforms and business attire

Students choosing a university for higher education will be interested in the physical environment as well as the quality of the courses on offer. For example, students (the customers) will be concerned about the quality of their accommodation and learning environment (such as learning spaces on campus and other on-site facilities).

Employees are also directly affected by the physical environment of the workplace. This can have a direct impact on their level of productivity and motivation.