The Marketing Mix: Place
Why is the place of a product an important part of the marketing mix?
The place element of marketing involves where the product will be sold to the consumers and the distribution channel it goes through to reach the consumer.
The business would need to answer the question of where the target market segment would find it most convenient to find the product, where would it be most effective to sell the product and where would it best align with the marketing mix of the product.
For example, an expensive, luxurious perfume’s quality will be questioned if it is sold at a local shop on the street. It would be better off being sold in a large store in a mall.
Distribution Channels
A distribution channel is how a product is passed from the place of production to the customer.
Distribution Channel 1 – Direct to consumers
This distribution channel involves the producer selling their product directly to the consumer.
| Advantages | Limitations |
| It is a very simple distribution channel It is very effective for certain products(eg. farm fresh products) The product is sold at a lower price to the consumers Products can be sold directly via the internet | It is impractical for most products as it may be challenging to reach all consumers. This method is not effective for products that can’t be sold through post. It may be expensive for the producer to sell their product by post or courier. |
Distribution Channel 2 – Retailer as the only intermediary
This distribution channel involves the producer selling their product to a retailer who then sells them to the consumers.
| Advantages | Limitations |
| Producer can sell their product in large quantities Reduced distribution costs for the producer | No direct contact with the consumer The price paid by the consumer is higher than ‘direct selling’ |
Distribution Channel 3 – Wholesalers and retailers as intermediaries
This distribution channel involves the producer selling their product to a wholesaler in bulk, who will sell them to various retailers.
| Advantages | Limitations |
| The price at which retailers buy the products will be higher than if the products are bought directly from the producers A wholesaler may not necessarily have all the products in a market The time from the production of a product and the time it is sold to consumers increases. | The price at which retailers buy the products will be higher than if the products are bought directly from the producers A wholesaler my not necessarily have all the products in a market The time from the production of a product and the time it is sold to consumers increases. |
Distribution Channel 4 – Additional intermediary in the form of an agent
What is an agent: An agent is an independent person or business that is appointed to deal with the sales and distribution of a product or range of products.
| Advantages | Limitations |
| The manufacturer may not be well informed of the market that is being targeted. Agents are aware of local conditions and are the best people to decide where and how to sell the product. | The producer has minimum control over how the product is sold to the consumer. The price paid by the consumer is higher than if directly sold by the manufacturer. |
Methods of Distribution
| Method of Distribution | Description |
| Department stores | Large stores, usually in the center of towns or cities, sell a wide variety of products from a wide range of suppliers. |
| Chain stores | Two or more stores which have the same name and the same characteristics. |
| Discount stores | Retail stores offer a wide range of products, many branded products, at discount prices. Often the product ranges are of similar types of products, for example, electrical goods. |
| Superstores | Very large out-of-town stores which sell a wide range of food and non-food products. |
| Supermarkets | Retail grocery stores with dairy produce, fresh meat, packaged food, and non-food departments. |
| Independent retailers | Single shops, often small, offer a local, personalized service. Prices are often high. |
| Direct sales | Products are sold directly from the manufacturer to the customer – who may be a consumer or another business (distribution channel 1). |
| Mail order | Customers look through a catalog or magazine and order by post. Orders can also often be placed by telephone or Internet. |
| Internet/e-commerce | Instead of looking at a catalog, consumers view the goods on the business’s website and then order on the Internet or possibly by telephone or mail. Businesses can sell through other specialist websites such as eBay and Alibaba.com. |
Factors to keep in mind when selecting a distribution channel
- Technical product?
- Expensive product?
- Purchased often?
- Perishable product?
- Sold to producer or consumer?
- Selling abroad?
- Location of customers?
- Where are competitors’ products sold?
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