Market Mix - Place

Question 1

what is place?

Answer 1

Businesses must decide where to locate – this means locations of shop, selling online only

Question 2

what must be considered when deciding where a business should be located?

Answer 2

• Competition – a business might want to set up as far away as possible from its competitors.
• Availability of resources – business may need a suitable premises (size, car park) or to be located close to their suppliers if they sell products with short-self life.
• Costs – it may be more expensive to locate in certain areas, so a company needs to know how much finance it has available to spend.
• High street decline – maybe more beneficial to exist solely online, 24 hours and worldwide customers can be targeted.
• Government incentives – the government offers financial incentives to business if they locate in specific areas (usually levels of deprivation).
• Transport links – it is important that the location of the business is easily accessible for customers. If it is too difficult to access, then they will not want to shop there.

Question 3

what are the 4 channels of distribution?

Answer 3

• Manufacturer to Customer = direct selling
• Manufacturer to retailer to customer = retailers
• Manufacturer to wholesaler to retailer to customer = wholesalers
• Manufacturer to wholesaler to customer = wholesalers

Question 4

what factors should be considered when choosing a distribution channel?

Answer 4

The product must be sold – perishable – e.g. frozen food. Must be quick and stored correctly during transportation.
Reliability of companies in the distribution chain (wholesalers/ retailers)
Legal requirements/ licencing restrictions (alcohol etc)
The image of the product to have - higher quality distributed through exclusive, up market retailers

Question 5

what is direct selling?

Answer 5

Direct selling means selling directly to the customer from the manufacturer.
Shortest channel and less ‘middlemen’ taking cuts of the profit.

Question 6

what are methods of direct selling?

Answer 6

• E-commerce – business selling its product through a website.
• Mail order – catalogue
• Personal selling – direct to customers – ‘door to door’
• Online shopping channels

Question 7

what are the advantages of direct selling?

Answer 7

• Can offer credit facilities
• Exclusive products
• Prices can be cheaper due to saving money on high street locations.
• Available 24/7 to customers
• Wider area can be targeted
• Save money on staffing costs

Question 8

what are the disadvantages of direct selling?

Answer 8

• Lack of personal service
• High advertising/ website costs
• Bad debts can occur through credit services
• Delay between purchasing and receiving
• Unable to ‘try on’ may put customers off
• Delivering costs

Question 9

what is retailers?

Answer 9

Manufacturers sell products to a retailer sells these products to customers.

Question 10

what types of retailers are there?

Answer 10

• Department store – John Lewis – (huge range of products offered)
• Superstores and hypermarkets – Tesco extras (can be open 24/7)
• Online retailers – amazon (open 24/7 and worldwide market is targeted)
• Discount stores – B&M, home bargains (attracts customers who want good value)

Question 11

what are the advantages of retailers?

Answer 11

• Retailers are usually located closer to customers than the manufacturer
• Retailers can take care of promoting the product
• Large retailers buy in bulk from the manufacturer

Question 12

what are the disadvantages of retailers?

Answer 12

• Retailers take cut of the profit
• Retailers may alter the products price- may affect the product image
• Product will face competition from similar products sold by the retailers.

Question 13

what are wholesalers?

Answer 13

Manufacturers can sell goods to wholesalers to distribute to smaller retailers or, from wholesalers direct to customers

Question 14

what are the advantages of wholesaler to manufacturer?

Answer 14

• Packaging and displaying of goods are taken care by the wholesaler.
• Wholesalers buy in bulk – saves smaller, more frequent deliveries.
• Wholesalers take care of the promoting to retailers.

Question 15

what are the disadvantages of wholesaler to manufacturers?

Answer 15

• Manufacturers make less profit as wholesalers take a cut.
• Manufacturer can’t control how products are marketed.
• Manufacturer can’t control which retailers sell the product.

Question 16

what are the advantages of wholesalers to retailers?

Answer 16

• Retailers can save on storage facilities by buying small quantities. Also means that they are not left with lots of unsold inventory.
• Retailers can benefit from promotions offered by wholesalers that manufacturers may not offer.

Question 17

what are the disadvantages of wholesaler to retailers?

Answer 17

• It is more expensive than going directly to manufacturer as wholesalers add on their own profit margins.
• Competitors also have access to wholesalers.
• Retail does not have access to exclusive deals only offered by the manufacturer.