Unit 14 : Place Flashcards
3 Roles of Place Decisions in the Marketing Mix
- products should be available when and where customers need them
- wrong place, low sales and profits
- the place must be convenient for consumers
Define Distribution Channels
how a product is passed from the place of production to the customer
Distribution Channel 1
producer → consumer
4 Advantages of Distribution Channel 1
- very simple
- suitable for products which are sold out of factories
- lower price for consumer ( cuts out retailer )
- products can be sold by mail order / internet
3 Disadvantages of Distribution Channel 1
- impractical as consumers don’t usually live near factories
- not suitable for fragile goods as they can’t be sent by post
- not cost effective as sending products by post is expensive
Distribution Channel 2
producer → retailer → consumer
3 Advantages of Distribution Channel 2
- manufacturer sends large stock to retailers
- cheaper transportation costs as all products go to one place
- low storage costs for manufacturer
2 Disadvantages of Distribution Channel 2
- no direct contact with consumers, hard to create customer loyalty
- price is higher than direct selling as retailer has to cover costs and make a profit
Distribution Channel 3
producer → wholesaler → retailer → consumer
3 Advantages of Distribution Channel 3
- reduces storage costs for small retailers
- small quantities, transport costs are low
- wholesalers can give feedback to producers on what sells well
5 Disadvantages of Distribution Channel 3
- more expensive to buy from wholesaler then manufacturer
- wholesaler might not have everything a retailer wants
- takes longer to get to consumer
- huge gap between manufacturer and customer
- consumer prices are higher than direct selling as retailers and wholesalers need profit
Distribution Channel 4
producer → agent → wholesaler → retailer → consumer
3 Advantages of Distribution Channel 4
- agents know profitable places / prices to sell in other markets which manufacturers may not know
- agents provide advice on how to survive new markets
- gives manufacturer some control over way product is sold
2 Disadvantages of Distribution Channel 4
- manufacturers lose control over amount of product sold to consumers
- higher costs for consumers as agents also need to cover expenses
9 Methods of Distribution
e-commerce, department stores, discount stores, chain stores, superstores, independent retailers, direct sales, supermarkets, mail order
Define E-Commerce
selling of goods and services through the internet
Define Department Stores
large stores with wide varieties of products
Define Discount Stores
stores with wide range of products but with discounts
Define Chain Stores
2 or more stores with the same name / characteristics
Define Superstores
large out of town stores with wide range of products
Define Independent Retailers
single stores that offer local, personalised services
Define Direct Sales
products sold directly from manufacturer to consumer
Define Supermarkets
retail grocery stores
Define Mail Order
customers use catalogues / magazines and order by post