Marketing Mix (Part 3): Place - Distribution Channels Explained
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Chapter 3.3: The Marketing Mix - Place
This note summarizes the importance of "place" in the marketing mix, focusing on various distribution channels and factors influencing their selection. "Place" refers to ensuring product availability when and where customers desire to purchase. This discussion is specifically relevant to manufactured products, aligning with examination trends since 2020.
Distribution Channels:
- Direct-to-Customer: Businesses sell directly to end customers without intermediaries (e.g., Apple Store).
- Advantages: Greater control over marketing, all revenue goes to the business, direct customer feedback.
- Disadvantages: High delivery costs, business bears storage and promotion expenses.
- Retailers: Businesses sell products through retail stores.
- Advantages: Retailers bear inventory, advertising, and promotion costs; wider customer reach through multiple store locations.
- Disadvantages: Retailers take a cut of profits, reduced control over marketing, retailers stock competitor products.
- Wholesalers: Intermediaries purchase products in bulk and sell smaller quantities to retailers.
- Advantages: Large quantity purchases, simplified delivery logistics to a single location (wholesaler).
- Disadvantages: No direct customer feedback, reduced marketing control, wholesalers take a profit cut.
- Agents: Facilitate sales on behalf of producers for a commission.
- Advantages: Local market knowledge, specialized understanding of customer needs.
- Disadvantages: Limited control over the sales process.
Factors Affecting Distribution Channel Selection:
Several factors influence the choice of distribution channel:
- Product Type/Technicality: The nature of the product and its complexity influence distribution.
- Purchase Frequency: How often the product is purchased affects channel selection.
- Product Price: Price point impacts channel suitability.
- Product Durability: Perishability or robustness influences handling and distribution requirements.
- Customer Location: Geographic distribution of the target market dictates channel reach.
- Competitor Practices: Observing competitor distribution strategies can inform channel selection.
Businesses must consider these factors to choose the most effective distribution channel for their specific product and target market.
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