The marketing strategy: Place

Question 1

Place

Answer 1

This refers to how the product is distributed

Question 2

Channels of distribution

Answer 2

A distribution Handel provides a link between production and consumption. It can be very simple with just 2 layers e.g. producer to consumer.

Question 3

Distribution channel links

Answer 3

Producer, wholesaler, retailer, consumer

Question 4

Producer

Answer 4

Manufactures the product

Question 5

Wholesaler

Answer 5

A business that sells/buys in bulk.

Key points:
- They may be important to producers because some producers may be too big to deal directly with every shop that sells their products.
- Whole sales can move goods around the country using their own logistics, reducing costs and valuable time for other business.
- The manufacture and retailers can focus their efforts on their specialist areas.

Question 6

Agent

Answer 6

The agent is a third party who negotiates between the producer (seller) and the buyer. E.g. football agent/sales rep.

Key points:
- Operate in tertiary sector.
- Earn revenue by adding a commission/fee.
- Don’t hold any stock.
- Are often involved in the distribution channel because they significantly reduce the costs of marketing for producers.

Question 7

Retailer

Answer 7

Sells the final product to the consumer

Question 8

types of retailers

Answer 8

Multiples (chain shops, e.g. M&S)
Department stores (e.g. Jhon Lewis)
Convenience stores (e.g. cost cutter)
Independents (a shop run by its owner)
Franchises (e.g. subway)

Question 9

Key trends in retailing

Answer 9

Growth in out of town stores/retail parks
Decline in independent stores
Increase in the use of technology in retailing
High street is in decline (more people use online methods of shopping)

Question 10

Types of distribution channels

Answer 10

Producer - consumer
Producer - retailer - consumer
Producer - wholesaler - retailers - consumer
Producer - agent - consumer
Producer - wholesaler - consumer

Question 11

Online distribution

Answer 11

A tangible product being bought online and then delivered to the customer through means of physical distribution e.g. Amazon

Question 12

Digital distribution

Answer 12

Electronic methods being used to deliver a good to the customer. E.g. spotify

Question 13

Advantage of online distribution (e-commerce)

Answer 13

• Geographical reach to customers increased
• Overheads lowered
• Can be open at all times

Question 14

Reasons against e-commerce

Answer 14

• Selling price-point may be too low
• the business may deal with fast fasion
• some business stores may thrive on attracting large numbers of customers
• shipping and returns can be complicated and costly
• initial capital investment high
• customers may not like to buy some products without physically seeing/trying them first
• opens up business to more security problems

Question 15

Advantages of digital distribution

Answer 15

• Customers can buy and consume products 24 hours a day
• cost saving to either the business or customer, as there is no delivery cost
• it is immediate
• removes the need for the business to store tangible costs
• the business will have to employ little to no employees

Question 16

Disadvantages of digital distribution

Answer 16

• not suitable for all products
• it relies on customers having access to the inter web
• there are high initial costs of setting up the website & systems
• there will be ongoing costs of system/website maintenance as well as costs to maintain security/prevent fraud
• illegal streaming providers may make it difficult to operate