The role of place in the marketing mix

Place forms a key part of the marketing mix, focusing on how products reach customers effectively.

Key aspects of place decisions

• Making products available - Place decisions centre on distribution strategies to get products to consumers, rather than solely on where a business is based.
• Influence on brand and price - The chosen distribution method affects brand image; for example, premium products need channels that match their high-end positioning, which can also impact pricing strategies.

Common misconceptions about place

• Place is not limited to physical locations but emphasises accessibility and distribution networks.
• Place does not primarily involve transport logistics.
• Place decisions are not isolated; they interact with other marketing mix elements to create a cohesive strategy.

Methods of distribution

• Department stores
• Chain stores
• Discount stores
• Supermarkets
• Direct sales
• Mail order
• Local retail stores
• E-commerce

Factors influencing distribution channel choice

Selecting the right distribution channel depends on various product and market factors.

Key factors affecting channel selection

• Type of customer - Business customers may require different channels compared to individual consumers.
• Product characteristics - Perishable items need quick channels, while large or bulky products may require specialised handling.
• Competitor strategies - Businesses often align with channels used by rivals to stay competitive.
• Price and image - High-priced, premium products suit exclusive channels to enhance brand perception, whereas low-priced items fit mass-market outlets.
• Customer location - Channels must reach consumers effectively, considering geographic spread.
• Purchase frequency - Frequently bought items benefit from convenient, widespread channels.
• Technical requirements - Products needing expert advice may use channels with knowledgeable staff.

Types of distribution channels

Distribution channels describe the paths products take from producers to consumers.

Main types of distribution channels

1. Producer to consumer:

   • The most direct channel, common for services like hairdressing.
   • Eliminates intermediaries, reducing costs and often prices.
   • Producers manage all inventory.
   • Not ideal for all goods.

2. Producer to retailer to consumer:

   • Involves large deliveries to retailers, lowering transport costs.
   • Retailers hold stock, freeing producers from inventory burdens.
   • Producers lose direct consumer contact.

3. Producer to wholesaler to retailer to consumer:

   • Wholesalers break down large quantities into smaller ones for retailers.
   • Allows retailers to buy in small amounts.
   • Adds an extra cost layer through wholesaler margins.

4. Producer to agent to wholesaler to retailer to consumer:

   • Common in exporting, where agents provide local market knowledge.
   • Increases costs due to additional intermediaries.
   • Reduces producer control over final marketing.

Roles of intermediaries in distribution

Intermediaries like retailers, wholesalers, and agents play essential roles in bridging producers and consumers.

Functions of key intermediaries

Retailers:

• Provide direct contact with consumers.
• Display and promote products.

Wholesalers:

• Buy in bulk from producers and sell smaller quantities to retailers.
• Manage storage and inventory, reducing producer risks.
• Handle distribution logistics to multiple outlets.

Agents:

• Act as independent representatives for producers, often in foreign markets.
• Use local expertise to boost sales.

Advantages and disadvantages of using intermediaries

Using intermediaries can streamline distribution but also introduces challenges.

Advantages of using intermediaries

• Inventory management - Producers maintain lower stock levels, improving cash flow and reducing risks from unsold or obsolete goods.
• Wider reach - Intermediaries like wholesalers and retailers expand market access.
• Specialised functions - Agents provide market knowledge, especially abroad, while retailers offer consumer-facing services.

Disadvantages of using intermediaries

• Increased costs - Each intermediary adds a margin, raising the final price to consumers.
• Loss of control - Producers have less influence over how products are sold or presented.
• Channel suitability - Premium products risk damage to positioning if sold through inappropriate channels.