The Marketing Mix

1. The Marketing Mix The 4 P’s Place

2. Learning Objectives • Discuss different distribution channels and assess their appropriateness in different circumstances • HL – Evaluate the effectiveness of distribution channels • HL – Examine how organisations can increase the efficiency of the supply chain

3. Place • Decisions concerned with how products should pass from manufacturer to the final customer • There are several different channels of distribution available for firms to use • Channel of distribution • This refers to the chain of intermediaries a product passes through from producer to final consumer

4. Wholesalers Place Direct selling Agents e.g.Ticket agents Retailers Authorised dealers Personal selling

5. Channels of Distribution Producer Consumer Producer Retailer Consumer Producer Wholesaler Retailer Consumer Agent Producer Retailer Consumer Producer Agent Wholesaler Retailer Consumer Intermediaries

6. Types of distribution channels Distribution channels are the routes to the market that a product takes from producers to the final customer There are a number of distribution channels available to firms Short distribution channels are where the producer sells either directly to the customer or through a retailer Long distribution channels are where there are more than one intermediary (middle person) between the producer and the customer

7. Types of distribution channels Short distribution routes are from the producer direct to the customer (direct selling) or via a retailer: PRODUCER CONSUMER RETAILER

8. Types of distribution channels Long distribution channels can go through a number of intermediaries: PRODUCER WHOLESALER RETAILER CONSUMER

9. Types of distribution channels Producers can use direct selling whereby they sell directly to the final consumer Often, producers use retailers who sell products on to the general public Wholesalers buy large quantities of supplies from producers and sell them on in smaller quantities. For example, a corner shop might go to a wholesaler to buy their products Increasingly, firms are using e-commerce benefiting from the power of the internet to sell on their products

10. Act as a link between producer and retailer Buy in bulk and break down to smaller units to retailer They act as a storage place Wholesaler

11. Choosing a distribution channel • Important because • Consumers may need easy access to a firms products • Manufacturers need outlets for their products that give as wide a market coverage as possible • Retailers will sell producers’ goods and will demand a mark up so using few intermediaries would be an advantage

12. Choose the right channel of distribution. • Direct to consumer • Through a retail outlet • Through a wholesaler • Using an agent

13. Choosing appropriate outlets/distributors Type of product The characteristics of the product need to be taken into account. For example Coca Cola do not ship their product to the UK from the USA. Instead, they ship over the syrup and the actual product is then made in the UK using British water. The market It is important that the customers being targeted can access the product. High streets are accessible by public transport so that all customers can shop, not just those with cars. Niche markets / Mass markets? Quantity and Frequency of sales If only a few low cost items are being delivered it would not be cost effective to send them hundreds of miles. If a product is regularly being delivered then a firm might invest in a delivery system.

14. Choosing appropriate outlets/distributors Geographical Location How far is the target market from the firm? The firm will have to take into account the nearness of the market. Regional markets are far more accessible than international markets. Cost This is very important for a firm. An expensive distribution method will reduce the contribution being made to a firm’s product. Therefore, the firm must ensure that the method is cost effective. Competition Firms will take into account distribution methods used by their competitors. In fact, some firms use the same distributors as their competitors.

15. Choosing appropriate outlets/distributorsChannel Strategy • Type of Product • Market • Quantity and Frequency • Geographical Location • Cost • Competition Choose a product from the following: • Hairdressing • Newspapers • Computers • Health gym Explain how the six points listed might affect the distribution of these products. For example, furniture is large and difficult to transport. Customers will use stores to select their product and it will be delivered at a later date. Firms will normally deliver more than one item of furniture to different addresses at the same time. This will save on costs, although the delivery firm is likely to charge the final customer as well. Some firms will have their own, in-house delivery service, but some may use the same delivery firm as their competitors. These firms are likely to work on a regional basis to save on costs

16. Appropriate distribution channels • Recent trends in distribution channels in recent years include: • Increased use of the internet for direct selling • Large supermarkets performing function of wholesaler

17. HL Effectiveness of distribution channels

18. HL Supply Chain Management • Managing the network of businesses that are involved in the provision of products to the final consumer • SCM can increase the efficiency of a firms supply chain by: • Ensuring all supply companies are kept well informed of the changing material needs of the business • Making appropriate transport arrangements for materials and for finished goods • Reducing the total number of suppliers • Planning production to meet consumer demand • Ensuring adequate supplies are delivered, on time, to retailers in other intermediaries

19. Task • Page 303 teacher textbook