Place also called placement or

distribution, this is the process and

methods used to bring the product or
service to the consumer.

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 Introduction
• In the marketing mix, the process of moving products from the producer
to the intended user is called place.
• 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, wholesalers and retailers.
• In addition, a newer method is the internet which itself is a marketplace
now.
• 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.
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 Meaning
• 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.

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 What is place?

Place is the term that we give to distribution.

Distribution is the process of getting the firm’s
product to the market. It can come in a variety of
forms.
This is a crucial element of the marketing mix – a firm
might have the best products in the market but if the
market cannot access the products then the firm will
not be successful.

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 The Objective of Distribution

To make products available in the right

place at the right time in the right
quantities

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 The Role of Marketing Channels
1. Gather Information about potential and
current customers, competitors, and other
actors and forces in the Marketing
environment.
2. Develop and disseminate persuasive
communications to stimulate purchasing
3. Negotiate and reach agreements on price
4. Place orders with manufactures
5. Acquire the funds to finance inventories at
different levels in the marketing channel
6. Assume Risks connected with carrying out
channel work
7. Provide for the successive storage and
movement of physical products
8. Provide for buyers payment of their bills
through banks and other financial institutions
9. Oversee actual transfer of ownership from
one organization or person to another
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 Where can a business ‘sell’ it’s
products from?

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 Wholesalers

Direct
Agents selling
e.g.Ticket agents

Place Retailers

Authorised
dealers
Personal selling
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 Channel Levels
A zero-level channel, also called a Direct
Marketing channel, consists of a manufacturer
selling directly to the final customer.
Examples are door-to-door sales, home parties,
mail order, telemarketing, TV selling, Internet
selling, and manufacturer-owned stores.

A one-level channel contains one selling

intermediary, such as a retailer.

A two-level channel contains two

intermediaries. In consumer markets, these
are typically a wholesaler and a retailer.

A three-level channel contains three intermediaries.

Channels normally describe a forward movement of products from source to user, but reverse-flow
channels
are also important
(1) Reuse products or containers (such as refillable chemical-carrying drums),
(2) Refurbish products for resale (such as circuit boards or computers)
(3) Recycle products (such as paper), and
(4)© Sasmira’s Business School
(4) Dispose (SBS)
of products and packaging.
 Types of distribution channels

Distribution channels are the routes to 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.

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 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.

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 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.

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 • 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.

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 • 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. Resale too
The reverse flow channel works as follows
Consumer >> Intermediary >> Company.

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 • Here are 4 ways that the reverse flow channel can be used.
1. Reuse products – Many products like containers, drum or
metallic equipment can be reused by other consumers or
companies.
2. Refurbish products – Computers, furniture can be
refurbished. A useless computer body can be used and you
can repair the parts which are useless and use the other old
parts which are working.
3. Recycle products – Above paper and plastic are the best
examples of recycling. In fact, there are many business men
who become rich via recycling.
4. Disposing –Garbage example, it is a disposed object and
can be recycled into organic waste via the reverse flow
channel.

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 Choose the right channel of distribution.

1. Direct to consumer
2. Through a retail outlet
3. Through a wholesaler
4. Using an agent

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 Types of Intermediaries

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© Sasmira’s Business School (SBS)
 • 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.
© Sasmira’s Business School (SBS)
 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.

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 Choosing appropriate outlets/distributors

Outlets are the places that sell a firm’s products. There are a
variety of factors to take into account when choosing
appropriate outlets:

– Type of Product
– Market
– Quantity and Frequency
– Geographical Location
– Cost
– Competition

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 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.

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.
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 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!

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 Distribution Strategies

• A company may need to use different strategies for different

types of products. Three main strategies that can be used are:
• Intensive Distribution – This strategy may be used to distribute
lower prices products that may be impulse purchases. Items are
stocked at a large number of outlets and may include things such
as mints, gum or candy as well as basic supplies and necessities.
• Selective Distribution – In this strategy, a product may be sold at
a selective number or outlets. These may include items such as
computers or household appliances that are costly but need to
be somewhat widely available to allow a consumer to compare.
• Exclusive Distribution – A higher priced item may be sold at a
single outlet. This is exclusive distribution. Cars may be an
example of this type of strategy.
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 Direct Marketing Example

• Apple
Stores

When Apple stores were

launched in 2001, many
questioned their prospects
and BusinessWeek published an article titled, “Sorry Steve, Here’s Why Apple Stores Won’t Work.”

But Apple stores have been an unqualified success.

• Designed to fuel excitement for the brand, they let people see and touch
• Apple products—and experience what Apple can do for them—making it more likely
they’ll become Apple customers.
• They target tech-savvy customers with in-store product presentations and workshops;
• a full line of Apple products, software, and accessories;
• and a “Genius Bar” staffed by Apple specialists who provide technical support, often free of
charge.

Apple Business
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offer(SBS)
a unique brand experience to Apple enthusiasts and prospects !
 EXAMPLE – DIRECT SELLING AT DELL
COMPUTERS

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.
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 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.

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 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.
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