Place Flashcards
Define place
Places concerned with how to get the product to the right place so customers can buy it
What is the toughest P for new firms?
Place can be
Distribution channels
Producer - consumer
Producer-retailer-consumer
Producer-wholesaler-retailer-consumer
Define direct channel
He sells directly to the consumer for example, own website mail order, etc
What are the pros of direct channel?
Higher profit margin
Producer keeps all selling price which can be spent on advertising
Lower cost if it’s online only
keep control over our products are sold
Cons of direct channel
Setting up Own stores can be expensive
Less exposure of product as it’s not sold to retailer
Describe the channel from the producer to the retailer to the consumer?i
The large retailer buys directly from the producer then organises its own distribution to its stores
Pros of the producer retailer consumer channel ?
Producer gains more exposure of product
Cons of the producer retailer consumer channel?
Huge selling power of a large retailer gives them huge buying power negotiating large discounts from the producer
The producer may only receive half the retailer price
The producer loses control over how the product is sold eg the retailer chooses the final price displayed
What do wholesalers do?
Wholesalers break bulk. They buy in large quantities from producers and then sell in in smaller quantities to small retailers
How do wholesalers make money?
By buying at lower price from the producer and adding a profit margin onto the price paid by the retailer
What are the pros of using producer – wholesaler – retailer – consumer?
Reduce transport cost for the producer as they make few journeys to the wholesale are rather than too many retailers
Fewer storage costs of the producer as a wholesale store good consumer
wholesaler sell products from different manufacturers meaning retailers can choose the best product/price
Cons of using producer – wholesaler – retailer-consumer
Reduce profit margins for the producer and loss of control
What affects the distribution channel chosen?
Degree of coverage: selling nationally or internationally – likely to need intermediaries to reach them
Product type: high value product sold in small quantities can be sold directly. Cheap high volume use intermediaries
Cost of different distribution of strategies e.g. setting up chain of own retailers owners is costly into meters also reduced profit
Degree of control the firm over the way it’s products a priced and promoted
How customers expect access to product customers often expect multi channel distribution
Describe multi channel distribution
Involves a business using more than one type of distribution channel
Pros of multi channel distribution
Allows more large market segments to be reached
Customers expects products to be available via more than one channel
Enable higher revenues
Cons of multichannel distribution
Potential for channels conflict for example competing with retailers but also selling directly
it can be complex to manage
danger that pricing strategies get confused and customers
