Marketing Mix- Place Flashcards
What are the channels of distribution?
Channels of distribution are the possible routes taken by a product to reach the consumer from the manufacturer
What are the different channels of distribution?
- manufacturer➡️customer (selling directly to consumers)
- manufacturer➡️retailer➡️customer (selling through retailers)
- manufacturer➡️wholesaler➡️retailer➡️customer (selling through wholesalers)
- manufacturer➡️wholesalers➡️customers
Factors affecting the channels of distribution
- finance available
- desired image for the product
- shelf life of the product
- legal restrictions
- stage of the product life cycle
- technical qualities of the product
Finance available
The manufacturer may not have the finance available to set up e-commerce or print catalogues to sell direct, so using wholesalers or retailers are the only options
Desired image of the product
Certain products have images that dictate where they can be sold. Eg Hugo boss only sell in retailers that have built up a good reputation over at-least 5 years 
Shelf life of the product
Some products need to be shipped to retailers fast as they will go out of date quickly eg fresh fruit
Legal restrictions
Some products can’t be sold through certain channels eg prescription medicines need to be sold through pharmacies 
Stage of the product life cycle
Products may only be sold in exclusive outlets at the beginning of a product life-cycle, but may be sold in discount stores during the decline stage to encourage sales.
Technical qualities of the product
Highly technical products may need to be demonstrated, which means personal selling is the ideal channel.
What is a Manufacturer?
The manufacturer is the company that makes the product.
What is direct selling?
- direct selling means selling direct to the customer from the manufacturer
- this Is the shortest channel of distribution and means there are less ‘middle men’ taking a cut of the profits
- businesses also retain control of how their product is marketed
Methods of direct selling
- E-commerce
- mail order
- direct mail
- personal selling
- shopping channels
What is E-commerce,
Advantages and disadvantages?
-a business sells its products using the internet
Advantages
- customers in the global market can be reached 24/7
- an entire range can be shown online
- online discounts can be offered to attract customers
- product information and customer comments can sway purchasing decisions
Disadvantages
- it can take a lot of time and expense to design attractive, high quality websites
- customers might be wary of providing their personal details online
- customers need to have access to the internet
- customers need to wait for products to arrive and may have to pay delivery costs
What is mail order and what are the advantages and disadvantages?
-a business sells its products using a catalogue, which is usually sent directly to the customer
Advantages
- credit facilites are often offered to customers
- customers can browse for products and place orders from home, at a time that suits them
- mail-order-only companies save money on staffing and store costs
Disadvantages
- glossy catalogues can be expensive to produce
- producing catalogues is not environmentally friendly and may not meet CSR aims
- a level of bad dept might be incurred
What is direct mail and what are the advantages and disadvantages?
-a business posts letters, leaflets and brochures directly to the customer
Advantages
- specific market segments can be targeted, eg by inserting supermarket recipe cards inside cookery magazines
- a wide geographical area can be targeted by placing leaflets inside newspapers and magazines
Disadvantages
- customers can perceive this as ‘junk mail’ and simply throw it away
- customers making lists quickly becomes out of date, meaning a business may target the wrong people and waste money
What is personal selling and what are the advantages and disadvantages?
-a salesperson sells products directly to the customer, often by going ‘door to door’ or over the phone (telesales)
Advantages
- allows a demonstration or explanation of the product to be given
- feedback on products can be gathered from customers
Disadvantages
- customers can find this type of selling nuisance and may not be keen to listen
- staffing costs and commission make this method expensive and increasingly unpopular with businesses
What are shopping channels and what are the advantages and disadvantages of it?
-a business sells products on the TV using dedicated shopping channels
Advantages
- customers can see products being modelled and demonstrated
- customers can be encouraged to buy on impulse due to short-time bargain prices
Disadvantages
- customers need to switch on to the channel before they can be targeted
- customers need to wait for products to arrive and may have to pay delivery costs
What a
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What are retailers?
-retailers sell the product to the customers on behalf of the manufacturer
Why do manufacturers prefer to use retailers ?
- Manufacturers may sometimes prefer to use retailers because retailers can attract large numbers of customers from lots of different target markets.
- Many retailers already have an established loyal customer base and may offer additional services such as free delivery and credit facilities.
What are the 4 distinct functions that retailers perform?
- The retailer breaks down bulk supplies of an assortment of goods and services from a range of suppliers and offers them for sale to the public.
- The retailer provides information to consumers through advertising, displays and signs, and trained sales personnel.
- The retailer stores goods, prepares them for sale, marks prices on them and displays them on the sales floor.
- The retailer physically sells these goods to consumers and offers a range of related services such as credit facilities, hire-purchase, after-sales guarantees and delivery.
Advantages and disadvantages of manufacturers selling their products through retailers
Advantages
- retailers are located close to customers
- retailers often promote the product for the manufacturer
- retailers employ sales assistants to help sell the product
- larger retailers buy in bulk
Disadvantages
- retailers take a cut of the profits
- retailers may alter the price of the product and so have an effect of the image of the product
- the product will face competition from other products stocked by the retailer
What are the different types of retailers?
-hypermarkets and superstores
-convenience supermarkets
-out-of-town retail parks
-online retailers
-discount stores
-department stores
What are hypermarkets and superstores and what are the advantages and disadvantages?
-there has been a growth in massive supermarkets, which sell many goods and services under one roof. The largest of these are known as hypermarkets, eg Tesco extra
Advantages
- most hypermarkets are open 24/7
- a huge range of products is offered to customers
Disadvantages
-lack of competition from high-street stores can lead to poorer quality products
Convenience stores,
Advantages and
Disadvantages?
-due to changing work patterns and lifestyle changes, there has been a growth in smaller supermarkets appearing in convenient locations
Advantages
- cater for the changing needs of customers so are guaranteed football?.??????.?.?..
- prices can be slightly higher than larger supermarkets due to the convenience factor
Disadvantages
- limited choice of products due to smaller store sizes
- there can be high levels of waste as it is harder to predict customer numbers than it is for larger, more traditional supermarkets
Out-of-town retail parks,
Advantages and disadvantages?
out of town retailing is now found on the outskirts of most major towns in the uk with good infrastructure such as road links and free car parking
Advantages
- infrastructure attracts customers
- often near amenities such as restaurant chains and cinemas, which can increase football?????..
- larger store sizes mean a good product range for low prices due to bulk buying by OOT retailers
Disadvantages
- limited choice of stores compared to high-street shopping or more traditional shopping malls
- only suitable for customers with access to transport
- ‘showtooming’ can occur, where customers view/try products in store but buy online for a lower price
Online retailers,
Advantages and disadvantages?
-Amazon is the biggest online retailer in the uk. Rather than setting up their own e-commerce site, some manufacturers will sell through retailers like this
Advantages
- products can be sold to a worldwide market by online retailers
- products can be sold 24/7
Disadvantages
- customers cant try to touch the product before buying
- delivery charges may put some customers off
Discount stores,
Advantages and disadvantages?
-in response to the recession, discount stores have become popular in the UK over the last few years
Advantages
-products are sold for rock-bottom prices, which attracts customers looking for value
Disadvantages
-limited product range compared to other retailers
-some customers don’t like the image of discount stores
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Department stores,
Advantages and disadvantages?
-often flagship stores of any shopping mall or town centre, stores such as John Lewis and Debenhams sell a huge variety of items from clothing to beauty products to home furnishings
Advantages
- many target markets can be catered for
- central locations can attract customers, commuters, tourists ect
- can benefit from impulse buying
Disadvantages
-more and more department stores and closing due to the high rents and other expenses for the prime retail sites they often occupy.
What are wholesalers?
- A wholesaler buys large quantities of items from the manufacturer and then sells them on to retailers, or directly to the customer, in smaller quantities.
- Many larger retailers do not use a wholesaler as part of their distribution channel because they have their own warehouses and transport systems.
Advantages and disadvantages for manufacturers using a wholesaler
Advantages
-packaging and displaying of goods is carried out by the wholesaler, saving the manufacturer time and costs
Wholesalers buy in bulk, saving manufacturers from making lots of small deliveries
-wholesalers can promote products to retailers, which saves the manufacturer promotion costs
-the wholesaler carries the risk of products going out of fashion as manufacturers get rid of goods as soon as they are produced
Disadvantages
- manufacturers make less profit as a cut is taken by wholesalers
- the manufacturer loses control of how the product is marketed
- the manufacturer loses control of which retailers the product is sold to
Advantages and disadvantages for retailers of using a wholesaler
Advantages
- retailers can save on storage facilities by buying smaller quantities from wholesalers and they would get from manufacturers
- retailers can benefit from promotions offered by wholesalers that they may not get direct from manufacturers
- retailers can trial smaller orders of newer products and not be left with large amounts of unsold inventory
Disadvantages
- it is more expensive than going directly to manufacturers as wholesalers add on a margin of profit
- wholesalers offer the same products to retailers competitors, so other areas of the marketing mix have to be relied on
- The retailer may miss out on exclusivity deals by not going direct to manufacturers
