Place

Chapter 14

What is Place?

• Any activity involved in making product available to consumers– Decisions involving when, where and how product

get to consumers– Ensuring enough quantities available, at the right

time, in the right location

2Components to distribution

physically distributing

goods through

those channels

selecting, developing, and

managing distribution

channels

Channels of Distributionrefer to the paths of ownership

that goods follow as they pass from the

producer to consumer

Channels of Distribution

Producer Consumer

Producer ConsumerRetailer

Producer ConsumerRetailerImport and/orWholesaler

Producer ConsumerSpeciality Channel

Channels of Distribution

• The route a good takes from its original source (the producer) to the final customer– Example: how would this orange get to me?

• Also called “Supply Chain”

3 Types of Channels

1. Direct2. Indirect3. Specialty

1. Direct Channels

• Connect buyers to the businesses producing the goods and services

• Examples?

2. Indirect Channels

• one or more intermediaries. • An intermediary is any business that takes

possession of the goods before the consumer does

– These intermediaries might be importers, wholesalers , retailers or agents/brokers

• Importer: seeks out foreign products to bring into the country he or she is selling in

• Wholesaler: buys goods from producers or importers and resells them to retailers

• Retailer: direct link to consumers

• Agent/Broker: connects buyers and sellers; often used to make arrangements between parties in different countries.

3. Specialty Channels• any indirect channel or distribution that does

not involve a retail store (aka non-store retailers)

– Vending machine: Chips, pop, chocolate bars, coffee

– Telemarketing: In-house services– Catalogues: Ikea, Avon– E-Commerce: Websites, internet shopping , ebay– Door-to-door sales: Charities, Avon

• Push Strategy: manufacturer or producers pushes the product to the retailer; retailer then promotes it to customers

• Pull Strategy: attempts to increase consumer demand directly, rather than appealing to retailers.

What kind of distribution?

• Hair salon? • Department store? • Apple farm? • Food truck? • Dollar store? • Butcher?

Why use intermediaries?

• A farmer might produce 100 kgs of apples in a season; how many individual customers would he need to sell all of them? – Instead he can sell to a couple of grocery stores ,

restaurants or wholesalers

Distribution Strategies

• Intensive: product is sold in as many places as possible– Consumer encounters product everywhere, ex.

Supermarkets, drug stores, gas stations, etc.

• Selective: product is sold in a few retail outlets– Used for high-end brands

• Exclusive: contract exists between producer and one distributor– Ex. Apple and Rogers