MARKETING MIX: PLACE

CONTENT
- CHANNEL OF DISTRIBUTION ( ADVANTAGES & DISADVANTAGES)
- CHOOSING AN APPROPRIATE METHOD
- PLACES WHERE CONSUMERS ARE ABLE TO BUY THE PRODUCTS

Channel Of Distribution
Channel of distribution is how a product gets from the producer to the final consumer. There are 4 different types of channel of distribution in which businesses may use

TYPES OF CHANNEL DISTRIBUTIONS

• Producer to Consumer
• Producer to Retailer to Consumer
• Producer to Wholesaler to Retailer to Consumer
• Producer to Agent to Wholesaler to Retailer to Consumer

PRODUCER > CONSUMER
In this channel, the producer sells the product directly to the consumer, this is also known as direct selling

ADVANTAGES
1) The producer will get all the profits.
2) The producer controls all 4 marketing mix. ( 4 Ps )
3) Quickest method

DISADVANTAGES
1) Consumers wont be able to see/try the product
2) Delivery costs may be high if customers are far away
3) Producer pays the storage costs and finances any promotional activity.

PRODUCER > RETAILER > CONSUMER
In the second channel, the producer sells the products to the retailers ( shops and outlets eg: Nike store in KLCC), then the retailers sells the product in their shops to the consumers

ADVANTAGES
1) Consumers can see/try products
2) Storage costs is shared with both producers and retailers, this benefits the producer
3) Retailers pay for any advertisements or promotional activity
4) Convenient for consumers

DISADVANTAGES
1) Retailers take a portion of the profit
2) Producers lose control over marketing mix ( 4 Ps )
3) Retailers also sell competitors products in their shops, increases competition for the Producer's products

PRODUCER > WHOLESALER > RETAILER > CONSUMER
In the third channel, the producers sells in large quantities to the wholesalers. The wholesalers then sell in smaller quantities to the retailers , who then sells it to the consumers

ADVANTAGES
1) The wholesaler buys in bulk from the producer and sells in small quantities to retailers
2) Transport cost to retailers is paid by wholesaler.
3) Wholesaler pays for storage costs
4) Sells the product to a larger market

DISADVANTAGES
1) Less profit for the producer
2) Less control over marketing mix ( 4 Ps )

PRODUCER > AGENT > WHOLESALER > RETAILER > CONSUMER
In this channel, an agent is used when a business enters a foreign market usually, this is done because agents have specialist knowledge about a particular country and its market. This helps the product to find the right wholesaler and retailer in a foreign market

ADVANTAGES
1) When entering a foreign marker, it is better to use an agent as they have specialist knowledge about a particular foreign country and its market

DISADVANTAGES
1) Less profit to the producer

CHOOSING A METHOD OF DISTRIBUTION ( factors)
1) COST: Often, costs need to be considered. Transportation costs, the most common,plays a role in deciding the best method. Usually, if a business is to choose the most CHEAPEST method, it would choose the 3rd Channel as transportation costs is shared between the Producer and Wholesaler. If a business wants its products to reach as early as possible, it would opt for the first channel. On the other hand, if a business wants it products to be delivered in perfect condition, it would choose either the 3rd or 4th channel.

2) Nature of the product: If the product is perishable ( decays very quickly eg milk ) then it should reach the consumer as soon as possible so a long channel would not be suitable. Likewise if a product needs special delivery conditions which the Producer has no access to then a channel including a wholesaler or even a retailer would be more appropriate.

3) Market : If a market is spread widely over an area, it would be wise to use a wholesaler as they would break down the units of the products to retailers

Places where consumers can buy products:
1) Department stores (OTK)
2) Chain stores ( 7-11)
3) Superstores ( Carrefour)
4) Supermarket ( Cold Storage)
5) Internet/ e-commerce ( Amazon.com )