Marketing Mix- Place Flashcards
What is place?
-Place is concerned with how to get the product to the right place so customers can buy it ie it is about the distribution of the product
-place can be the toughest P for new firms
What is a direct channel?
-the producer sells directly the the consumer e.g own website, mail order, telephone, own store
Example: Tesco, farm shop, next, M and S
What are the pros and cons of a direct channel?
Pros:
-higher profit margins as keeps all of selling price
-lower costs if online only
-keep control over how the product is sold
Cons:
-not as much exposure
-setting up own store can be expensive
What is a retailer?
Retailer buys directly from the producer then organises its own distribution to its stores.
What are the pros and cons of a retailer?
Pro:
-the producer gains more exposure of their product
Cons:
-huge selling power of the retailer gives huge buying power negotiating large discounts from the producer
-the producer may only revenge half of the retail price
-producer loses control over how the product is sold
What is a wholesaler?
-wholesalers ‘break bulk’. They but in large quantities from producers then sell on in smaller quantities to small retailers
-wholesalers make money by buying at a lower price from the producer and adding a profit margin onto the price payed by the retailer
What are the pros and cons of a wholesaler?
Pro:
-reduce transport cost for the producers- wholesalers makes trip to retailer rather than producers
-lower storage costs for producer as wholesaler store the good until consumer wants it
-retailers have more choice in wholesalers
Cons:
-reduce profit margins
-loss of control
What affects the distribution channel chosen?
-degree of coverage
-type of product
-costs of different distribution strategies
-how customers expect to access the product
-the degree of control the firm wants over the way it’s products are priced and promoted
What is multichannel distribution?
-Multi channel distribution involves a business using more than one type of distribution channel
What are the benefits of multichannel distribution?
-allows more target segments to be reached
-customers expect products to be available via more than one channel
-enabled higher revenues e.g if retail lets have no stock, customers can buy online
What are the drawbacks of multichannel distribution?
-potential for channel ‘conflict’ ,for example competing with retailers by also selling direct
-complex to manage
-danger that pricing strategy becomes confused ( in eye of the customers)
What are two key issues?
-a successful business needs to find out where customers want to buy and stock in that place. Naive business people try to get their product stocked everywhere without considering costs
-barriers to entry as retailers may not stock new businesses
