4.5d.

The Four Ps – Place

 Place
 How a product reaches its end user/customer from the manufacturer
 Distribution channels
 The different ways the product reaches the customers
 Has different levels depending on how many steps are required before the product
reaches the customer
 Zero level distribution
 Manufacturer sells directly to consumers
 E-commerce makes this more simple, feasible, cost effective and have a
wider market coverage
 e.g. restaurants, Apple, car manufacturers
 Types of direct marketing
 Telesales and marketing
 More expensive
 Direct to consumer, pitch and add more products
 E-commerce
 Cheaper, less cost
 Wide market coverage
 Direct mail or email
 Cheapest (no specialized skill involved)
 Usually ignored, low success rate
 Vending machines
 Physical product can be seen, attracts more customers
 Cost of machinery
 Prone to theft and vandalism
 Advantage: business has control over price, how product is sold, etc.
 Disadvantage: more costly
 One level distribution
 Manufacturer to retailer to consumer
 Advantage: product can reach more markets because of many retailers
 Disadvantage: less control
 Two level distribution
 Manufacturer to warehouse/wholesaler to retailer to consumer
 Can be one level if consumers purchase directly from warehouse
 Intermediaries
 Wholesalers – buy products in bulk, sell to retailers
 Direct agents – independent businesses w/ exclusive right to trade a product in a
territory; agents may act on behalf of buyer or seller
 Retailers – outlets that sell directly to customers
 Distribution Strategy
 Most businesses will use multichannel distribution strategies
 This is affected by:
 Cost and benefits of each level of distribution
 Nature of products
  Perishables are best at zero or one level
 FMCG’s are best at bulk wholesalers
 Type or size of market
 Urgency of use of the product
 Firms must decide on the type of distribution that is most suitable
 Intensive (mass produced products)
 Selective (positioning or branding)
 Exclusive (for large investment or premium products)
 Vertical integration is possible, but not usually feasible/cost-effective
 Branding will give products leverage against power of distribution channels