Definition of Place
1. The place element of the marketing mix involves decisions about
the location in which goods & services can be purchased
2. The distribution channels through which they pass from producer
to final user, and the physical distribution methods used
Intermediaries
These are groups that operate between producers & consumers on a
number of different channel levels. They include:
1. Agents
2. Wholesalers
3. Distributors
4. dealers
5. Retailers
Intermediaries and their roles
1. Channel members share certain significant characteristics.
2. Each member has different responsibilities within the overall
structure of the distribution system -but mutual profit
and success can be attained only if channel members co-operate
in delivering products to the market
Typical marketing channels for consumer product
Typical marketing channels for industrial, business-to-business
products
Value added services provided by intermediaries
1. Facilitating value - financing, training, information & after sales
2. Logistic value - assortment, storage, sorting, bulk breaking,
transportation
3. Transactional value - risk, marketing, administration
Factors affecting physical distribution
1. Perishability
2. After sales service
3. Customer shopping habits
4. Number of sales outlets
5. Quality image
6. Cost (transport, warehousing, packaging etc)
Specific ways distribution of services differ from distribution of
goods
1. Intangibility of services makes their distribution different from
the distribution of products
2. Intangibility also means that there are no titles or rights to
services & inventory cannot exist
3. Therefore, some of the primary functions of distributors
Inventorying, Securing & Taking title of goods - do not
exist in services
Types of distribution those are appropriate for services
The main distribution channels that bring sellers & buyers to services
together include:
1. Franchises
2. Agents
3. Brokers
4. Electronic channels
Some services that can be distributed on the internet
1. Entertainment – e.g. movies & concerts
2. Doing research or literature search
3. Playing electronic games
4. Shopping for unique items
For the above products and services, quality can be controlled and
they appeal to adequately large audience
Different levels of market coverage
A marketing channel is managed so that products receive appropriate
market coverage. Three methods are used:
1. Intensive distribution - use of all available outlets for
distributing a product
2. Selective distribution - use of only some available outlets in
an area to distribute a product
3. Exclusive distribution - use of only one outlet in a relatively
large geographical area to distribute a product
How product characteristics influence channel strategy
1. High value or technically complex products tend to be distributed
directly through a short channel (e.g. computers, cars, designer
jewellery)
2. Perishable products need short, fast specialised distribution (e.g.
dairy products, fresh fruits, meat products, daily newspapers)
3. Well packaged, routinely purchased long shelf-life products tend
to be intensively distributed through a variety of channels
Channel Strategies
Channel strategies cover the selection & management of
distribution systems.
1. Selection involves decision on the direction and intensity of
distribution.
2. Channel management decisions attempt to overcome conflict
and create efficiencies through:
3. Vertical channel integration: the combination of two or more
stages in the channel under one management
4. Horizontal channel integration: the combination of
institutions at the same level of operation under one
management
Vertical Marketing System
1. Corporate ( e.g. Supermarkets who own food processing plants)
2. Contractual (e.g. Franchise such as McDonald’s & KFC)
3. Administered (e.g. Marks & Spencer exercising strong influence
over small independent suppliers)
Factors influencing channel strategies
1. Organisational objectives, capabilities & resources
2. Market structure, size, dispersion & remoteness
3. Buying complexity & buying behaviour
4. Product characteristics
5. The changing marketing environment
Legal Issues in Channel Management
1. Restricted Sales Territories
2. Tying Contract
3. Exclusive Dealing
4. Refusal to Deal
