THE

MARKETING
MIX: PLACE
By Daksha
 WHAT ARE Producer Consumer

DISTRIBUTION
CHANNELS? Producer Retailer Consumer
 A distribution channel is the
means by which products are
passed from the place of
production to the customer
Producer Wholesaler Retailer Consumer
 Some businesses sell directly
to consumers, while some use
other businesses to do this
 There are 4 main types of
distribution channels:
Producer Agent Wholesaler Retailer Consumer
DISTRIBUTION
CHANNEL 1-
DIRECTLY WITH
CONSUMER Advantages Disadvantages
The distribution channel is very It could be impractical because some
• This channel is also common simple consumers may not live close by to a
when selling directly from one production zone
manufacturer to another. It is suitable for products which are It may not be suitable for products
• Ex: Car components sold to a directly sold from the production that cannot be sent easily via the post
car manufacturer zone. e.g. food produce
Lower cost price if goods are directly It is very expensive to send products
sold to customers through post or courier
Products can be sold by mail order
catalogue or via the internet
 DISTRIBUTION CHANNEL
2: USING RETAILER AS
THE ONLY MEDIAN
Advantages Disadvantages

Producers can sell large No direct contact with

• In the second distribution channel the
producer directly sells to a retail outlets
where they sell products to customers
• This is usually common when the outlet
is large and developed or if the product
is expensive, such as jewellery.
quantities to retailers
Reduced distribution costs
compared to directly selling
to customers
customers
Price is usually higher than
direct selling as the retailer
needs to cover its own costs
and make profit
 Advantages Disadvantages
DISTRIBUTION CHANNEL 3- Wholesaler saves storage space & May be more expensive for a small
USING A WHOLESALER AND reduces storage costs retailer to buy from wholesalers
RETAILER AS A MEDIAN Small retailers can purchase fresh Wholesaler may not have the full
produce in small quantities from range of products to sell
wholesaler
Wholesaler is more likely to give Takes longer for fresh produce to
goods on credit to retail customers reach small retailers, hence quality is
compromised
• This distribution channel involves a
Wholesalers can save on transport Wholesaler’s may be far away from
wholesaler who performs the function of costs when supplying to small the retailer’s outlet
breaking bulk retailers
• Breaking bulk involves buying products
Wholesaler can advice retailers & the Consumer price is often higher than
from manufacturers in large quantities and
manufacturer direct selling price as the retailer and
divide the inventory into smaller quantities wholesaler have to make a profit
for retailers to buy
 DISTRIBUTION CHANNEL
4- USING AN ADDITIONAL
MEDIAN: AGENT
• When products are exported, the
manufacture sometimes uses an agent in
the other country
• The agent sells products on behalf of the
manufacturer
• This allows the manufacturer to have
some control on how a product is sold
• The agent will usually put an additional
amount on the price to make a profit and
receive commission on sales.
Advantages
The manufactures may not
know the best way to sell the control over the way the
product in other markets,
decreasing competition.
Agents will be aware of
local conditions and will
know the most effective
places to sell the products
Disadvantages
The producer has lesser
product is sold to customers
The cost of the product will
be higher, because all the
distribution channels &
manufacturer need to make a
profit.
 METHODS OF DISTRIBUTION
 Department stores- Large stores located in the centre  Direct sales- Products that are sold directly sold from
of the town, that sell a wide variety of products the manufacturer to customers
 Chain stores- two or more stores with the same name  Mail order- Customers look through catalogues or
& characteristics magazines and order by post
 Discount stores- Offering a wide variety of branded  Ecommerce- Consumers look through the business’s
products at a discounted price website then order through the internet or by
telephone/mail.
 Superstores- Very large out-of-town stores which sell
a wide range of food and non-food products
 Supermarkets- Retail grocery stores
 Independent retailers- Single shops, often small often
offering personalised services
 SELECTING THE BEST
DISTRIBUTION CHANNEL TO
USE
 What type of product is the business selling?
 Does the product require technical knowledge to use?
 How often is the product purchased? (Recurring purchase)
 How expensive is the product?
 How perishable is the product?
 Where are customers located?
 Where do competitors sell their products?
THANK YOU FOR LISTENING