Marketing Mix Place Management of Marketing Higher Business

Marketing Mix - Place Management of Marketing Higher Business Management

Channels of Distribution Manufacturer Customer Manufacturer Wholesaler Retailer Customer

Choice of Distribution Channel The Product – perishable, unique, technical, The Market – size – Mars Bars Legal Requirements – alcohol, drugs Buying Habits – expectations of customers The Business – own distribution network Finance Available – can they afford a retail outlet?

Physical Distribution of Products Road, Rail, Air, Ship, Pipeline • Most cost effective • Relative speed, cost and distance • Nature of the product eg perishable • Customer expectation/preference

Direct Selling ADVANTAGES Manufacturer DISADVANTAGES Product can be made to customers specific requirements Convenience for customers of shopping from home (internet, tel, catalogue) Increased costs of stock holding Increased admin costs associated with selling to individual customers (delivery, invoices) Save costs of setting up shops Product can be demonstrated Producer can control marketing of the product High advertising costs Customer

Methods of Direct Selling • Internet Selling: global market, convenience, 24/7, credit card security • Mail Order: credit facilities, exclusive, cost of stores, high advertising costs, lack of personal service • Direct Mail: specific groups target (more efficient use of ad budget), wide reach, poor response junk mail • Specialist Magazines: specific groups targeted, avoids disturbing people at home • Personal Selling (door-to-door, tele sales): demonstration, technical aspects can be addressed, feedback, can be intrusive • TV Selling: wide reach, targeted audience within limits, 24/7, convenient, high cost

Using a Wholesaler ADVANTAGES Wholesaler buys in bulk, reducing cost of transport, paperwork and sales staff required by the producer Wholesaler bears the risk and cost of holding large stocks Wholesalers breaks down bulk supplies to smaller quantities for retailers Wholesaler may package the product, saving the producer time Gives producer advice on what and how much is selling to retailers Manufacturer DISADVANTAGES Wholesaler Loss of control over the marketing and selling of their products Wholesaler will take some of the profit ie using a middle man Costs involved in producing point of sale merchandising for the wholesaler Customer

Using a Retailer ADVANTAGES Retailer breaks down bulk supplies and offers to the public Retailer stores goods, displays them and marks prices Retailer may offer credit terms, guarantees, delivery, after sales service Retailers provide demonstrations and information on products Retailers are more accessible Retailers can trial smaller orders of newer products and not be left with large amounts of unsold stock Manufacturer DISADVANTAGES Wholesaler Retailer Customer The product may be next to a competitors The more stages in the channel of distribution, the more expensive the product becomes The retailer may miss out on exclusivity deals by not going direct to manufacturers.

Types of Retailers • Independent store – small business, higher prices – corner shops, boutiques, gift shops • Supermarket – self-service, food and household products, sell branded and own label products, >2000 sq ft – Tesco, Asda • Hypermarkets – wider range – Asda • Chain stores – specialise in particular type of product eg Next, HMV (Multiple Chains Stores >10 eg M&S, Boots) • Department stores – stock branded goods, variety of depts, prime city centre locations eg Debenhams, John Lewis • Specialist Stores – B&Q, IKEA • Discount Store – sell large quantities of limited range of products eg Matalan, The More Store • Franchises – Mc. Donalds, Benetton, BSM

Retailing Trends • • • Out of town (OOT) shopping centres – now found on the outskirts of most major towns as they have good infrastructure and free car parking Hypermarkets and Superstores – these sell many goods and services all under the one roof (sell petrol, pharmacy, post office) Convenience supermarkets – changing work patterns and lifestyle changes, growth of smaller supermarkets in convenient locations Online retailers – rather than setting up their own ecommerce site, some manufacturers will sell through sites such as Amazon (dubbed e-tailer – the largest online retailer) Discount stores – in response to the recession, discount stores have become popular in the UK Extended opening hours 24/7 https: //www. investopedia. com/terms/e/ecommerce. asp

Discuss the advantages and disadvantages to a manufacturer of using a wholesaler. (5 marks) (Saves on a number of smaller deliveries. ) (Administration costs are reduced. ) (Less money tied up in stock. ) (Less stock goes obsolete. ) (Wholesalers may label the product. ) (Wholesalers break product down into smaller more saleable size. ) (Wholesalers can give market research direct to manufacturer. ) (Loss of control of how the product is presented. ) (Less profits as wholesaler makes profit, ie using middle men. ) (Costs involved in producing point of sale merchandising for wholesalers) 5

Explain the impact that recent trends in retailing have had on organisations. (4 marks) (Increase in customers shopping at large retail parks have meant that organisations are moving from high street stores to retail parks. ) (Increase in large superstores have meant many small local shops going out to business. ) (Vast use of e-commerce has meant organisations now must have websites with access to online purchasing. ) (Changes to opening hours means many organisations have to pay overtime to staff to work on Sundays and late evenings. ) (Large supermarkets selling a wide range of products has meant customers needs can be catered for under the one roof. ) (Increase in discount stores selling products at discounted prices has meant competitor organisations have had to reduce prices in order to keep customers. ) 4