Principles of Marketing

Quarter 2 – Module 3:
The Place
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Principles of Marketing
Quarter 2 – Module 3:
The Place
Introductory Message
For the facilitator:

Welcome to the Principles of Marketing – Grade 12 Alternative Delivery Mode (ADM)

Module on The Place!

This module was collaboratively designed, developed and reviewed by educators both
from public and private institutions to assist you, the teacher or facilitator in helping
the learners meet the standards set by the K to 12 Curriculum while overcoming
their personal, social, and economic constraints in schooling.

This learning resource hopes to engage the learners into guided and independent
learning activities at their own pace and time. Furthermore, this also aims to help
learners acquire the needed 21st century skills while taking into consideration their
needs and circumstances.

In addition to the material in the main text, you will also see this box in the body of
the module:

Notes to the Teacher

This contains helpful tips or strategies that
will help you in guiding the learners.

As a facilitator you are expected to orient the learners on how to use this module.
You also need to keep track of the learners' progress while allowing them to manage
their own learning. Furthermore, you are expected to encourage and assist the
learners as they do the tasks included in the module.
For the learner:

Welcome to the Principles of Marketing – Grade 12 Alternative Delivery Mode (ADM)

Module on The Place!

The hand is one of the most symbolized part of the human body. It is often used to
depict skill, action and purpose. Through our hands we may learn, create and
accomplish. Hence, the hand in this learning resource signifies that you as a learner
is capable and empowered to successfully achieve the relevant competencies and
skills at your own pace and time. Your academic success lies in your own hands!

This module was designed to provide you with fun and meaningful opportunities for
guided and independent learning at your own pace and time. You will be enabled to
process the contents of the learning resource while being an active learner.

This module has the following parts and corresponding icons:

What I Need to Know This will give you an idea of the skills or
competencies you are expected to learn in the
module.

What I Know This part includes an activity that aims to

check what you already know about the
lesson to take. If you get all the answers
correct (100%), you may decide to skip this
module.

What’s In This is a brief drill or review to help you link

the current lesson with the previous one.

What’s New In this portion, the new lesson will be

introduced to you in various ways such as a
story, a song, a poem, a problem opener, an
activity or a situation.

What is It This section provides a brief discussion of the

lesson. This aims to help you discover and
understand new concepts and skills.

What’s More This comprises activities for independent

practice to solidify your understanding and
skills of the topic. You may check the
answers to the exercises using the Answer
Key at the end of the module.

What I Have Learned This includes questions or blank

sentence/paragraph to be filled in to process
what you learned from the lesson.

What I Can Do This section provides an activity which will

help you transfer your new knowledge or skill
into real life situations or concerns.
 Assessment This is a task which aims to evaluate your
level of mastery in achieving the learning
competency.

Additional Activities In this portion, another activity will be given

to you to enrich your knowledge or skill of the
lesson learned. This also tends retention of
learned concepts.

Answer Key This contains answers to all activities in the

module.

At the end of this module you will also find:

References This is a list of all sources used in developing

this module.

The following are some reminders in using this module:

1. Use the module with care. Do not put unnecessary mark/s on any part of the
module. Use a separate sheet of paper in answering the exercises.
2. Don’t forget to answer What I Know before moving on to the other activities
included in the module.
3. Read the instruction carefully before doing each task.
4. Observe honesty and integrity in doing the tasks and checking your answers.
5. Finish the task at hand before proceeding to the next.
6. Return this module to your teacher/facilitator once you are through with it.
If you encounter any difficulty in answering the tasks in this module, do not
hesitate to consult your teacher or facilitator. Always bear in mind that you are
not alone.

We hope that through this material, you will experience meaningful learning and
gain deep understanding of the relevant competencies. You can do it!
 What I Need to Know

The third P in the four P’s of marketing (marketing mix), Place, is covered in this
module. It includes issues such as types and functions of distribution channels and
the nature of supply chain management. It will give a clear idea on making channel
decisions.

At the end of the lesson, the learners will be able to:

1. Discuss the structure of distribution channels - ABM-PM11-l1a-e-18;
2. Identify types and functions of distribution channel;
3. Explain the nature of supply chain management; and
4. Determine the differences between distribution channels and supply chain
management.
 What I Know
Products are really meant to be sold to buyers. This is possible if the
products are able to reach the customers. The gap between the firm and its
customers must be closed by a facilitating tool.

Your task now is to fill in the necessary distribution channel so that products will
reach the consumer. Take note that marketing channels listed in the word pool can
be used as many times as it is necessary.

Wholesaler Direct distribution

Indirect distribution Agent

Consumer Retailer Producer

Producer 1 2 3

8 5
14

11 9 6

13 12 10 7

15
 Lesson

3 The Place

In the marketing mix, the process of moving products from the

producer to the intended user is called place (a.k.a.
distribution channel). In other words, it is how your product
is bought and where it is bought. This movement could
be through a combination of intermediaries such as
distributors or wholesalers and retailers.

Through the use of the right place, a company can

increase sales and maintain these over a longer period of time. In turn, this would
mean a greater share of the market and increased revenues and profits.

Correct placement is a vital activity that is focused on reaching the right target
audience at the right time. It focuses on where the business is located, where the
target market is placed, how best to connect these two, how to store goods in the
interim and how to eventually transport them.

What is a distribution channel?

A distribution channel can be defined as the activities and

processes required to move a product from the producer to the
consumer. Also included in the channel are the intermediaries that
are involved in this movement in any capacity. These
intermediaries are third party companies that act as wholesalers,
transporters, retailers and provide warehouse facilities.

Types of Distribution Channels

There are four main types of distribution channels. These are:

Direct

In this
channel, the manufacturer directly provides the product to the consumer. In this
instance, the business may own all elements of its distribution channel or sell
through a specific retail location. Internet sales and one on one meetings are also
ways to sell directly to the consumer. One benefit of this method is that the company
has complete control over the product, its image at all stages and the user experience.

Indirect

In this
channel, a company will use an intermediary to sell a product to the consumer. The
company may sell to a wholesaler who further distributes to retail outlets. This may
raise product costs since each intermediary will get their percentage of the profits.
This channel may become necessary for large producers who sell through hundreds
of small retailers.

Dual Distribution

In this type of channel, a company may use a combination of direct and indirect
selling. The product may be sold directly to a consumer, while in other cases it may
be sold through intermediaries. This type of channel may help reach more consumers
but there may be the danger of channel conflict. The user experience may vary and
an inconsistent image for the product and a related service may begin to take hold.

Reverse Channels

The last, most non tradition channel allows for the consumer to send a product to
the producer. This reverse flow is what distinguishes this method from the others.
An example of this is when a consumer recycles and makes money from this activity.
Types of Intermediaries

Distribution channel intermediaries are middlemen who

play a crucial role in the distribution process. These
middlemen facilitate the distribution process through
their experience and expertise. There are four main
types of intermediaries:

1. Agents
The agent is an independent entity who acts as an
extension of the producer by representing them to the
user. An agent never actually gains ownership of the
product and usually make money from commissions and
fees paid for their services.
 2. Wholesalers
Wholesalers are also independent entities. But they
actually purchase goods from a producer in bulk and
store them in warehouses. These goods are then resold
in smaller amounts at a profit. Wholesalers seldom sell
directly to an end user. Their customers are usually
another intermediary such as a retailer.

3. Distributors
Similar to wholesalers, distributors differ in one regard.
A wholesaler may carry a variety of competition brands
and product types. A distributor however, will only carry
products from a single brand or company. A distributor
may have a close relationship with the producer.

4. Retailers
Wholesalers and distributors will sell the products that
they have acquired to the retailer at a profit. Retailers will
then stock the goods and sell them to the ultimate end
user at a profit.

Functions of a Channel

T
he primary purpose of any channel of distribution is to bridge the gap
between the producer of a product and the user of it, whether the parties are
located in the same community or in different countries thousands of miles
apart. The channel of distribution is defined as the most efficient and effective
manner in which to place a product into the hands of the customer. The channel is
composed of different institutions that facilitate the transaction and the physical
exchange.

Institutions in channels fall into three categories:

 The producer of the product: a craftsman, manufacturer, farmer, or other

extractive industry producer

 The user of the product: an individual, household, business buyer, institution,

or government

 Certain middlemen at the wholesale and/or retail level

A channel performs three important functions. Not all channel members perform the
same function. The functions are:

 Transactional functions: buying, selling, and risk assumption

  Logistical functions: assembly, storage, sorting, and transportation

 Facilitating functions: post-purchase service and maintenance, financing,

information dissemination, and channel coordination or leadership

These functions are necessary for the effective flow of product and title to the
customer and payment back to the producer.

What’s In
Directions: The following quadrants expresses conceptual
information about place or distribution channel. Identify and mark X
those unrelated information.

1. The channel of 2. Through PLACE, 3. A channel might

distribution is
defined as the most
efficient and effective
manner in which to
place a product into
the hands of the
customer.
the organization be a retail store, a
manages to support web site, a mail order
the cost of catalogue, or direct
production, the cost personal
of distribution, and communications by a
the cost of letter, email or text
promotion. message.

6. middlemen
5. ATM machines are facilitate the
4. Low price usually distribution process
one of the ways
equates to low through their
banks responded to
quality. experience and
channel issues.
expertise.

7. A company has to
8. The type of
be good at both 9. Disposable goods
product being
developing new or those of everyday
manufactured is
products and use do not require
often the deciding
managing them in too many special
factor in distribution
the face of changing channels.
decisions.
tastes, technologies,
and competition.
 ´Fair chain deduce market dynamics that enables optimization of
distribution process.’

(Dizon C., 2020)

What’s New

Dell Computers was founded by a college freshman Michael Dell. By 1985, the
company had developed its unique strategy of offering made to order
computers. As a result of this, sales went from 6 million dollars in 1984 to 70
million in 1985. In another 5 years the sales jumped to 500 million dollars
and by the end of 2000 they had crossed 25 billion dollars.

A superior supply chain and innovative manufacturing had an important role

to play in this phenomenal success. Another important contributing factor
was the unique distribution strategy employed by the company. Identifying
and capitalizing on an emerging market trend, Dell eliminated the middleman
or retailers from their distribution channel. This was done after studying and
analyzing the personal computer value chain.

Dell became a strong direct seller, by using mail-order systems before the
spread of the internet. After the internet became more mainstream, an online
sales platform was established. Early on in the internet era, Dell began
providing order status reports and technical support to their customers
online. Online sales reached 4 million dollars a day in 1997.

While competitors sold pre-configured and assembled PCs in retail stores, Dell
offered something new and attractive to the customers by providing the option
to pick desirable features and that too at a discounted price. This was possible
because Dell did not have to bear the costs of the middleman.

Another useful aspect of this model was the information available regarding
customers and their needs and requirements. This helped the company
predict market trends and segment its market. This segmentation helped
product development efforts and an understanding of what creates value for
each segment.

Through careful analysis of the target market, a study of available channel

options and effective use of a novel idea, Dell computers managed to reach
early success in its industry.
 What is It

We have discussed the

channel partners, the roles
they fill, and the structures
they create. Marketers have
long recognized the
importance of managing
distribution channel partners.
As channels have become
more complex and the flow of
business has become more global, organizations have recognized that they need to
manage more than just the channel partners. They need to manage the full chain of
organizations and transactions from raw materials through final delivery to the
customer— in other words, the supply chain.

The supply chain is a system of organizations, people, activities,

information, and resources involved in moving a product or service
from supplier to customer. Supply chain activities involve the
transformation of natural resources, raw materials, and components
into a finished product that is delivered to the end customer.

The marketing channel generally focuses on how to increase value to the customer
by having the right product in the right place at the right price at the moment the
customer wants to buy. The emphasis is on the providing value to the customer, and
the marketing objectives usually focus on what is needed to deliver that value.

S
upply chain management takes a different approach. The Council of
Supply Chain Management Professionals (CSCMP) defines supply chain
management as follows:
Supply Chain Management encompasses the planning
and management of all activities involved in sourcing and
procurement, conversion, and all logistics management
activities. Importantly, it also includes coordination and
collaboration with channel partners, which can be suppliers,
intermediaries, third-party service providers, and customers.

Supply Chain vs. Distribution Channels

The supply chain is broader than distribution channels. It begins

with raw materials and delves deeply into production processes
and inventory management. Distribution channels are focused on
bringing together the partners who can most efficiently deliver the
right marketing mix to the customer in order to maximize value.
Distribtuion channels provide a more narrow focus within the
supply chain

Distribution channels are purely customer facing. Supply chain

management seeks to optimize how products are supplied,
which adds a number of financial and efficiency objectives that
are more internally focused. Distribtuion channels emphasize a
stronger market view of the customer expectations and
competitive dynamics in the marketplace

Distribution channels are part of the marketing mix. Supply chain

professionals are specialists in the delivery of goods. Marketers
view distribution as one element of the marketing mix, in
conjunction with product, price, and promotion. Supply chain
management is more likely to identify the most efficient delivery
partner. A marketer is more likely to balance the merits of a
channel partner against the value offered to the customer. For
instance, it might make sense to keep a channel partner who is
less efficient but provides important benefit in the promotional
strategy
 Successful organizations develop effective, respectful
partnerships between the marketing and supply chain
teams. When the supply chain team understands the
market dynamics and the points of flexibility in product
and pricing, they are better able to optimize the
distribution process. When marketing has the benefit of
effective supply chain management—which is analyzing
and optimizing distribution within and beyond the
marketing channels—greater value is delivered to
customers.

Direction: Tick (/) the sentence that expresses what is true about supply chain
management.

________1. The supply chain is broader than distribution channels.

________2. Distribution channels involve the transformation of natural resources,

raw materials and components into a finished product.

________3. There is a need to manage the full chain of organization and transactions
from raw materials to final delivery.

________4. The emphasis of supply chain is on providing value to the customer.

________5. Distribution channel is broader than supply chain.

________6. Distribution channels are purely customer facing.

________7. Supply chain professionals are specialists in the delivery of goods.

________8. Supply chain is part of the marketing mix.

________9. Distribution channel emphasize a stronger market view of the customer

expectations.

________10. Supply chain management can analyze and optimize distribution within
and beyond the distribution channels.
 What’s More
Directions: Below is a system without a distribution channel
(COLUMN A). Now, your task is to minimize the number of transactions by
framing a new structure (Column B). Use distributor at the middle as a guide

COLUMN A
System without a distribution channel

Manufacturer 1 Customer 1

Manufacturer 2 Customer 2

Manufacturer 3 Customer 3

Manufacturer 4 Customer 4

Manufacturer 5 Customer 5

M1 COLUMN B

System with a distribution channel

Distributor
 What I Have Learned
Direction: Fill in the blanks to complete the conceptual information
about place(distribution).
In the marketing mix, the process of moving products from the producer to the
intended user is called 1. _______________________. In other words, it is how your
product is bought and 2. _______________________ it is bought. This movement could
be through a combination of 3. _______________________ such as distributors or
wholesalers and retailers.

Through the use of the 4. _______________________, a company can increase sales and
maintain these over a longer period of time. In turn, this would mean a greater share
of the market and increased revenues and profits.

Correct placement is a vital activity that is focused on reaching the right target
audience at the right time. It focuses on where the business is 5.
_______________________, where the target market is placed, how best to connect these
two, how to store goods in the interim and how to eventually transport them.

There are four main types of distribution channels. These are: Direct, Indirect, Dual
Distribution and 6. _______________________.

Distribution channel intermediaries are 7. _______________________ who play a

crucial role in the distribution process. These middlemen facilitate the 8.
_______________________ through their experience and expertise.
9. _______________________ encompasses the planning and management of all
activities involved in sourcing and procurement, conversion, and all
logistics management activities. Importantly, it also includes coordination and
collaboration with 10. _______________________, which can be suppliers,
intermediaries, third-party service providers, and customers.
 What I Can Do
Directions: Place Choice Board. Below are pictures related to
PLACE (distribution channel). Pick the number of unrelated pictures and write the
type of the identified distribution channel/intermediaries.

1 2 3

4 5 6

7 8 9
 Assessment
Directions: Read and analyze the following statements. Write the type
of intermediaries best described below.

__________1. Intermediaries that carry a variety of competition brands and product

types.
__________2. It has a close relationship with the producer.
__________3. An independent entity who acts as an extension of the producer by
representing them to the user.

__________4. They will then stock the goods and sell them to the ultimate end user at
a profit.

__________5. They never actually gains ownership of the product and usually make
money from commissions and fees paid for their services.
__________6. They seldom sell directly to an end user.
__________7. Their customers are usually another intermediary such as a retailer.

__________8. They will only carry products from a single brand or company.
__________9. They actually purchase goods from a producer in bulk and store them
in warehouses.

__________10. They will sell the products that they have acquired to the retailer at a
profit.

Additional Activities

Directions: Write the letter of the channel functions that best

described below.

a. Transactional functions
b. Logistical functions
c. Facilitating functions

1. Risk assumption
2. Post purchase service
3. Storage
4. Leadership
5. Selling
6. Sorting
7. Transportation
8. Financing
9. Information dissemination
10. Buying
 What I have learned:
Additional Activities: Assessment: What I Can Do:
1.Place
1. a 1.Wholesaler Unrelated pics- 3, 6, 8 2.Where
2. c 2.Distributor 1. Manufacturer 3.Intermediaries
3. b 3.Agent 2. Distributor 4.Right place
4. c 4.Retailer 4.retailer 5.Located
5. a 5.Agent
6.Reverse channel
6. b 6.Wholesaler 5.distributor 7.Middlemen
7. b 7.Wholesaler
8.Distribution process
8. c 8.Distributor 7.customer
9.Supply chain
9. c 9.Wholesaler
9.manufacturer management
10. a 10.Wholesaler and
10.Channel partners
distributor
What’s More: What is It:
Manufacture 1 1./ What I Know:
2. What’s In:
Manufacturer 2 1.Producer
3./ 1.. 2.Producer
Manufacturer 3 2.X 3.Producer
4. 3.. 4.Agent
Manufacturer 4 4.X 5.Wholesaler
5. 5..
Manufacturer 5 6.Retailer
6.. 7.Consumer
6./
Customer 1 7.X 8.Wholesaler
7./ 8.. 9.Retailer
Customer 2 9.. 10.Consumer
8.
Customer 3
9./
Customer 4
10./
Customer 5
Answer Key
References

2020.
http://www.georgeacademics.com/LessonPlans/Marketing/lessonMarketing.
2020. Google.Com.
https://www.google.com/search?q=manufacturer+clip+art&tbm=isch&hl=en&t
bs=sur:fc&chips=q:manufacturer+clip+art,g_1:factory:o4mrA8ecI3c%3D&hl=en
&sa=X&ved=2ahUKEwj6yJbH1PHqAhURHqYKHWj-
CuoQ4lYoAXoECAEQFw&biw=1519&bih=754.
Alcoran Alaric Brian. 2018. Principles of Marketing. Philippines: Bookline
Publishing Corporation.

"Geographical Pins | Free SVG". 2020. Freesvg.Org.

https://freesvg.org/geographical-pins.
Ilano A.B. 2017. Principles of Marketing. Philippines. Rex Book Store.

"Marketing Channels In The Supply Chain | Boundless Marketing".

2020. Courses.Lumenlearning.Com.
https://courses.lumenlearning.com/boundless-marketing/chapter/marketing-
channels-in-the-supply-chain/.

"Marketing Mix | Place In Four P's". 2020. Cleverism.

https://www.cleverism.com/place-four-ps-marketing-mix/.

"Place: Distribution Channels | Introduction To Business [Deprecated]".

2020. Courses.Lumenlearning.Com.
https://courses.lumenlearning.com/wmopen-introbusiness/chapter/place-
distribution-channels/.
"Supply Chain Management (SCM): What You Need To Know". 2020. Investopedia.
https://www.investopedia.com/terms/s/scm.asp.
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Department of Education – Region III,

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Email Address: bataan@deped.gov.ph