The marketing mix: Place

Question 1

Distribution channel

Answer 1

is the means by which a product is passed from the place of production to the customer

Question 2

(Direct to consumers) pros

Answer 2

• Involves manufacturer selling products directly to customer
• Suitable for products such as food products straight from the farm
• Lower price wasted, as wholesaler/retailer costs are cut
• Can be sold via internet or emails

Question 3

(Direct to consumers) cons

Answer 3

• Consumer probably dosent live near the factory, so it is impractical for most businesses
• Not suitable for products that cannot be easily sent by post
• Expensive so not cost effective

Question 4

(Using a retailer as the only intermediary) pros

Answer 4

• Producer sells large quantities to retailers

- Reduced distribution cost

Question 5

(Using a retailer as the only intermediary) cons

Answer 5

• No direct contact with customer

- The price is often higher than ‘direct selling’ as retailer has to cover costs and make profits

Question 6

(Using a wholesaler and retailer as the only intermediary) pros

Answer 6

• Wholesaler saves storage space for small retailer (storage cost reduces)
• Small retailers can purchase fresh products from wholesaler at small quantity.
• Wholesaler may give credit to retail customer, so they take goods straightaway and pay at a later date
• Wholesaler can advise small retailer about what is selling well
• Wholesaler might offer transportation

Question 7

(Using a wholesaler and retailer as the only intermediary) cons

Answer 7

• More expensive to buy from wholesaler than retailer
• Wholesaler may not have full range of goods
• Takes longer for fresh produce
• Wholesaler may be long way from the small shops
• the customer price maybe high as both wholesaler and retailer must make a profit

Question 8

(Using an additional intermediary such as an agent) pros

Answer 8

• Manufacturer may no know how to sell products in other markets
• Agents are aware of local conditions and will select the most effective places which to sell

Question 9

(Using an additional intermediary such as an agent) cons

Answer 9

• Producer has less control over the way products are sold.

Question 10

Agent

Answer 10

is an independent person or business that is appointed to deal with the sales and distribution of a product or range of products.

Question 11

Factors affecting distribution channels

Answer 11

• Technical product?
• Expensive product?
• Purchased often?
• Perishable product?
• Sold to producer or consumer?
• Selling abroad?
• Location of customers?
• Where are competitor products sold?