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