15 The marketing mix: place

Revision answers
1 Place ensures the product or service is available where and when customers
want to buy.
2 Probably: producer – agent – wholesaler – retailer – consumer.
3 Probably: manufacturer – consumer, or manufacturer – retailer – consumer.
4 Examples:
i) Because they do not want large quantities.
ii) Credit is given.
iii) Advice on products is supplied.
iv) Retailer is given a lot of choice of products to buy.
v) To save storage space.
vi) Wholesaler can buy cheaper in bulk from producer.
5 Advantages to the manufacturer: bulk buys; storage; reduced administration;
reduced transport costs as fewer journeys; reduced promotional costs.
6 Advantages might include: wider market; potential for growth; new market
segment; cuts out the middleman, creating the possibility of lower prices and
therefore increased sales; no longer dependent on the retailer.
7 E-commerce is the buying and selling of goods and services using computer
systems linked to the internet.
8 Examples:
i) Websites can be used to promote the businesses products.
ii) Promotion of the businesses products is much cheaper.
iii) Orders can go straight to the warehouse for dispatch.
iv) Savings on wage costs as automated processing of orders.
v) Business-to-Business transactions are easier.
vi) Keeps up competitiveness of the business.
9 Examples:
i) Costs of setting up and maintaining website.
ii) No face-to-face contact with customer.
iii) Transport costs higher.
iv) ‘Returns’ can be expensive to administer.
v) Large warehouse and stock control system required.
vi) Not suitable for businesses selling personal services.
10 Factors to consider:
i) What is the type of product?
ii) Is the product very technical?
iii) How often is the product purchased?
iv) How expensive is the product?
v) How perishable is the product?
vi) Where are the customers located?
vii) Where do the competitors sell their products?

Cambridge IGCSE Business Studies 4th edition Teacher’s CD © Hodder & Stoughton Ltd 2013 1
 15 The marketing mix: place

Answers to activities
Activity 15.1
Student’s own answer.

Activity 15.2
Answer will be in the form of a letter and will include some of the following points:
l Breaking bulk
l Reduced storage space
l Purchase in small quantities
l Fewer transactions
l Credit facilities
l Delivery
l Advice on products

Activity 15.3
a) Farm tractor: channel of distribution 1 or possibly 2 would be used. The product
is not something bought very often, it is expensive and expert advice should be
given about the product. A personal sales adviser may well be sent out by the
manufacturer to the potential customer to discuss the product and explain its
qualities. A retailer specialising in agricultural equipment may be used instead
and they would also be able to give expert advice about the product.
b) Children’s clothes for export: because the product is going to be exported and
will be sold in many retail outlets then channel of distribution 4 would probably
be used. This will allow the use of an agent in the export market who will be
familiar with local customs and practices. Whether a wholesaler is also used will
depend on the particular country and how many retail outlets will sell the clothes.
If only a few large outlets are going to be used then the wholesale stage may be
missed out, but if the clothes are sold to many smaller outlets then a wholesaler
will be used to enable a wider distribution and possibly lower the distribution
costs.
c) Tins of peas: channel of distribution 3 will probably be used because the tins
of peas will be sold to many food retailers and it would not be cost effective to
sell straight to the retailer. However, if the retailer was very large, the wholesaler
would be omitted for these customers because large quantities would be
purchased.
d) Made-to-measure suits: channel of distribution 1 will almost certainly be used as
direct customer contact is needed by the manufacturer. You cannot sell made-to-
measure suits from racks of clothes in clothes shops!

Cambridge IGCSE Business Studies 4th edition Teacher’s CD © Hodder & Stoughton Ltd 2013 2
 15 The marketing mix: place

Sample answers to Paper 1 style questions

(with mark annotations for Question 2)
1 a) The means by which a product is passed from the place of production to the
customer or retailer.
b) Suitable examples might include cars, furniture, kitchens, bathroom
equipment.
c) i) Need to sell products in convenient locations for customers, otherwise they
may not see the footballs and sales will be lower.
ii) May sell in the same places as competitors’ products, as if not then
consumers may buy their footballs instead.
d) i) Agent will know the local market for selling footballs and what products
are sold in sports shops so that more suitable marketing methods are used.
ii) Already established in the market, so sales will be higher as the agent will
know what types of footballs are in demand.
iii) No need to find its own outlets in that market; quicker and more efficient
access to market as the agent will be familiar with the different sports
shops and which are the best ones to sell to.
e) Yes, because only need to sell to a smaller number of customers and so
administration costs will be lower.
No, because sold at a discount and so profits lower/lose some control over
the marketing of the footballs.
Overall conclusion/judgement needed.
2 a) A wholesaler performs the function of ‘breaking bulk’, which means the
wholesaler buys products from manufacturers in large quantities and then
divides up the stock into much smaller quantities for retailers to buy. [2K]
b) i) Higher price to buy the clothes.
ii) Restricted choice for Pinkor as the wholesaler may not stock a wide range
of children’s clothes. [2App]
c) i) There will be a wider coverage of customers over a larger area which
means that Pinkor is likely to have higher sales of clothes. [1K; 1App]
ii) Smaller shops can meet the needs of local customers and sell the styles of
children’s clothes that are in demand locally and therefore may increase
profits. [1K; 1App]
d) i) How expensive is the product? Does it have an image of being expensive?
If the clothes are marketed as being expensive and of high quality, they
will probably be sold through only a limited number of the shops. These
shops will be in expensive shopping areas. [1K; 1App; 1An]
ii) Where are the customers located? If most of the customers are located in
the cities, it is no good Pinkor having shops only in rural areas. The internet
might be used for online trading so that more customers can be reached
rather than selling only to those customers who can visit their shops. [1K;
1App; 1An]
e) Yes: it is possibly a different market segment that buy children’s clothes using
the internet and a wider market of parents can be reached. This will mean
that there could be an increased number of sales made.
No: customers might want to try on the clothes and if they buy on the
internet then postage costs for returned clothes might be high.
Student’s overall conclusion. [1K; 1App; 2An] + [2Eval]

Cambridge IGCSE Business Studies 4th edition Teacher’s CD © Hodder & Stoughton Ltd 2013 3
 15 The marketing mix: place

Answers to revision test

1 2)
2 2)
3 4)
4 2)
5 2)
6 3)
7 4)
8 2)
9 3)
10 3)
11 2)
12 4)
13 2)

Cambridge IGCSE Business Studies 4th edition Teacher’s CD © Hodder & Stoughton Ltd 2013 4