PLACE AND

DISTRIBUTION
CHANNELS
Yasmina Sbeity
DP1
 WHAT IS PLACE

Place refers to the distribution of products, i.e., how products get from

the producer to the consumer.

For example, products could be available at large warehouses, at retail

outlets, through agents or via the Internet.

 CHANNEL OF DISTRIBUTION

The channel of distribution refers to the means used to get

a product to the consumer

 TYPES OF CHANNELS OF DISTRIBUTION

A zero-level distribution channel (also known as direct

distribution) skips out any intermediaries.

A one-level distribution channel has one intermediary, such as retailers,

agents or distributors being used to sell a manufacturer’s products to
consumers.

A two-level distribution channel uses two intermediaries, such as the use

of wholesalers and retailers to get products to consumers. THese are
typically wholesalers and retailers
 WHAT ARE INTERMEDIARIES

Intermediation is the process used to facilitate the channel

distribution process.

Intermediaries are agents or businesses that act as a middle

person in the channel of distribution between the manufacturer and
consumers of a product.
 WHOLESALERS

Wholesalers are businesses that purchase large quantities of

products from a manufacturer and then separate or ‘break’ the
bulk-purchases into smaller units for resale, mainly to retailers.
They act as the intermediary between producers and retailers.
 TYPES OF DISTRIBUTION CHANNELS

- Wholesalers

- Distributors

- Agents

- Retailers
 DISTRIBUTORS

Distributors are independent and specialist businesses that trade

in the products of only a few manufacturers.
For example, Book distributors usually sell the books and other
publications from a limited range of publishers.
 SALES AGENTS

Agents (or brokers) are representatives and negotiators who act

on behalf of buyers and vendors (sellers) of a product.
They are not usually employed by the producer but are used as an
intermediary to help sell the vendor’s products.
 RETAILERS

Retailers are the sellers of products to the final consumer. They

play an important role in the distribution of most products as
retailers have the ability to reach large numbers of consumers,
especially those that have a global reach.
 TYPES OF RETAILERS

Independent retailers are small local vendors, oſten

owned by a sole trader. They usually sell a small range of products
or are specialist outlets such as a hair salon.
 TYPES OF RETAILERS

Convenience stores are small retail businesses that stock a limited

range of everyday fast-moving consumer goods, such as
beverages, confectionery, groceries.
 TYPES OF RETAILERS

Multiple retailers (or chain stores) are retailers that have

numerous outlets, such as H&M (clothing), Starbucks and
Sunglass Hut. THey can benefit from brand recognition and brand
loyalty.
 TYPES OF RETAILERS

Supermarkets are retailers that sell mainly foodstu ffs and

groceries. Due to their large-scale operations, supermarkets tend to
buy their produce and other products directly from manufacturers,
thereby cutting out wholesalers.
 TYPES OF RETAILERS

Department stores are retail outlets that sell a large

range of products to the general public, such as furniture,
jewellery, kitchen equipment, clothing, toys and cosmetics.
 TYPES OF RETAILERS

Hypermarkets (or superstores) are huge outlets that stock a

broad range of products, such as foodstu ffs and consumer
durables. Due to their enormous size, they tend to be located in
out-of-town areas where the space is available and the cost of land
is more affordable.
 SPECIALITY OF CHANNELS OF
DISTRIBUTION

Speciality channels of distribution is a speciality channel of

distribution is any indirect way to distribute products that does not

involve retailers.
 TYPES OF SPECIALITY OF DISTRIBUTION
CHANNELS

- E-commerce

- Vending Machines

- Mail order
 TYPES OF SPECIALITY OF DISTRIBUTION
CHANNELS

E-commerce is trading via the Internet. The Internet has had a

profound impact on marketing for businesses and is an

increasingly suitable distribution channel for marketing many

products.
 TYPES OF SPECIALITY OF DISTRIBUTION
CHANNELS

Vending machines are specialist machines that stock products for

sale, such as cigarettes, drinks, snacks, toys and even hot meals.
 TYPES OF SPECIALITY OF DISTRIBUTION
CHANNELS

Mail order enables customers to order products via the postal

system. The convenience of being able to order from home helps

to entice customers to purchase a firm’s products.

 FACTORS AFFECTING THE CHOICE OF
DISTRIBUTION CHANNELS

An efficient and cost-effective distribution strategy enables a

business to make its products conveniently available to consumers.

This raises the likelihood of customers purchasing the firm’s

products.
 FACTORS AFFECTING THE CHOICE OF
DISTRIBUTION CHANNELS

An efficient and cost-effective distribution strategy enables a

business to make its products conveniently available to consumers.

This raises the likelihood of customers purchasing the firm’s

products.
 FACTORS AFFECTING THE CHOICE OF
DISTRIBUTION CHANNELS

The product - Perishable goods, such as fresh flowers and fresh

meats, cannot be distributed through long chains of distribution.

Hence, shorter distribution channels will be necessary.

 FACTORS AFFECTING THE CHOICE OF
DISTRIBUTION CHANNELS

The market - Local niche markets can be catered for by a supplier

without the use of intermediaries. By contrast, large and dispersed

markets usually require the use of intermediaries as part of the

channels of distribution.
 FACTORS AFFECTING THE CHOICE OF
DISTRIBUTION CHANNELS

Time - Whilst e-commerce can be a convenient channel of

distribution, there is a time lag between customers paying for a

product and receiving it. Hence, this method is unsuitable for

buying items that require urgent delivery.

 FACTORS AFFECTING THE CHOICE OF
DISTRIBUTION CHANNELS

Legal constraints - Government rules and regulations can prohibit

the distribution of certain products. For example, restaurants need

special licenses to sell alcohol on their premises.

 FACTORS AFFECTING THE CHOICE OF
DISTRIBUTION CHANNELS

Cost and benefits - Direct selling, without the use of

intermediaries, reduces the costs of distribution. However, retailers

and distributors may have better access to customers, especially

where local knowledge of cultural norms can be an advantage.

 IMPORTANCE OF PLACE AND
DISTRIBUTION CHANNELS

Place (distribution) is a vital element of the marketing mix in

order to get a good or service from the producer to the consumer in

cost-effective ways.
 PLACE AND THE CONCEPTS

Creativity and innovation play a crucial role in ensuring that

retailers have the incentive to stock the products and brands of the

producer.

Changes in lifestyles have also influenced distribution

strategies.