4.5 -- marketing mix place

Place definition

refers to the distribution of products . It is the process of getting the right products to the right customers at the right time and okay in the most cost-effective way

Distribution channel definition

the ways that a product gets from the manufacturer to the consumer

intermediary definition

such as an agent or wholesaler or retailer , is a third-party business that offers distribution services between 2 trading partners

Agents definition

representatives and negotiators who help to sell a vendor’s products

wholesalers definition

businesses that buy large quantities of a product from a manufacturer and then “break” the bulk into smaller quantities for resale , mainly to retailers

Retailers definition

they are the sellers of a products to consumers in outlets

Zero level distribution channel

• does not use any intermediaries , known as direct distribution

the producer sells its goods directly to the consumer

advantages of zero-level distribution channel

1. there are no intermediaries used , the business can keep 100% of the sales revenue it earns , without having to pay commission or fees to the third party intermediaries

2. Direct distribution = maintain direct and personal contact with customers , building professional relationships with clients

3. faster since intermediaries not used

disadvantages of zero level distribution channel

1. relies on the producer to do the marketing to sell the products. Time consuming + costly for the producer, especially if it lacks marketing expertise

2. producer is responsible for storage and delivery costs

one-level distribution channel

involves the use of a single intermediary , such as an agent or retailers

• Eg: airlines and hotels choose to use a travel agent to help sell their flight and accommodation booking

advantages of one level distribution channel

1. producers can focus on production and not on selling products

2. retailers hold stocks and pay for the cost of this

3. retailers are often in locations convenient to consumers

disadvantaged of one level distribution channel

1. retailers take a profit mark up and this could make the product more expensive to consumers

2. Producers lose some control over the marketing mix

3. retailers may sell products from competitors

two level distribution channel

a two channel distribution network involves the use of two intermediaries , usually wholesalers and retailers. the wholesaler buys goods from the producer and sells them to the retailer

• used for massed produced products and when goods need to be distributed over long geographical distances

advantages of two level distribution channel

1. wholesaler buys in bulk and holds the goods. This reduces stock holding costs of the producer

2. A way for producer to enter foreign market where producer has no direct contact with retailers

disadvantages of two level distribution channel

1. producer loses further control over the marketing mix

2. another intermediary takes a profit markup — may make the final products more expensive to the consumers

3. slows down distribution process