Place Mixs

PLACE MIX PLACE – also called DISTRIBUTION, it refers to the process of making a product available for the consumption or use of the consumer or business user. Distribution Channel – a set of interdependent organizations involved in making a product or service available for use by the target market. Direct Marketing Channel – direct selling of products to consumers. Indirect Marketing Channel – makes use of marketing intermediaries Marketing Intermediaries – companies that act as middlemen who facilitate the transfer of products from the company to the consumer because of their specialization, contacts, experience, and scale of operations.

Function of Distribution Channels 1. Information Gathering and Dissemination – performing marketing research needed for planning and exchange. 2. Promotion – developing and spreading persuasive communication to attract buyers. 3. Contact – looking and communicating with prospects. 4. Matching – shaping and fitting customer requirements with company activities like manufacturing, assembly, packaging, etc. 5. Negotiation – reaching an agreement with customers to make an exchange. 6. Physical Distribution – transporting and warehousing products. 7. Financing – acquiring and using funds to cover costs of channel work. 8. Risk-taking – assuming the risks that go with carrying out channel work. Factors Influencing Channel Structure 1. Customer characteristics. Pharmaceutical manufacturers use both wholesalers and retailers because their customers are dispersed across the world, and because their customers make relatively small and frequent purchases. It would be expensive for a manufacturer to establish its own distribution channel to serve many customers in many different locations. 2. Product characteristics. Non-perishables can be shipped and stored for extended periods of time. Products that are not bulky are economical to ship and store. Non standardized products must be inspected and graded each time they are sold. Holding inventories of very expensive products is less feasible. Nuclear pharmacy products have extremely short half-lives, so it is not feasible to store them. 3. Manufacturer characteristics. No manufacturer has a sufficiently broad line of products that can serve all consumers. As a result, manufacturers need intermediaries that will buy from many manufacturers and offer consumers a proper assortment of products. Serving national and international markets requires many outlets. Distribution Strategies 1. Intensive Distribution – a company distributes its products in as many outlets as possible based on the belief that the product must be available when and where customers want them. 2. Selective Distribution – permits at least two intermediaries handling their products to sell a company’s products.

3. Exclusive Distribution – a company gives only one dealer the exclusive right to distribute its products in the territory.

BASIC ASPECTS OF PHYSICAL DISTRIBUTION Physical Distribution – or MARKETING LOGISTICS, involves planning, analyzing, implementing, and controlling the physical flow of materials, finished products, and related information from the point of production to the point of consumption to meet customer requirements at a profit. Three Basic Aspects 1. Inventory – stock of goods intended for sale. There are two types of costs related to the maintenance of inventory in a firm. a. Carrying Costs – insurance, security, breakage, obsolescence b. Ordering Costs – processing fees, transportation 2. Warehouse – refers to a place where goods awaiting sale are stored temporarily. Warehousing decisions revolve around cost, reliability, and accessibility. 3. Transportation a. Water – low cost for shipping bulky, low-value, non-perishable products. It is also the slowest transportation mode and is always affected significantly by weather conditions. b. Rail – one of the most cost-effective modes for shipping large amounts of bulk products over long distances. c. Truck – highly-flexible in their routing and time schedules. They are efficient for hauling highvalue merchandise over short distances. d. Air – most expensive and the fastest mode of transportation that is common for perishables and high-value, low-bulk items.

RETAILING – includes all activities involved in selling goods and services to the final consumers for their personal, nonbusiness use. Types of Retail Store Based on Amount of Service 1. Self-Service Retailers – customers “locate-compare-select” 2. Limited-Service Retailers – provide more sales assistance because they carry more shopping goods about which customers need information. Their increased operating costs translate to higher prices. 3. Full-Service Retailers – carry more specialty goods that create the need for sales people to assist customers in every phase of the shopping process. Types of Retail Store Based on Product Line 1. Specialty Stores – carry a narrow product line with a deep assortment within the line. This means that the stores sell only a limited number of product lines but each product line has several varieties. 2. Department Stores – carry a wide variety of product lines and each line is managed as a separate department.

3. Supermarkets – these are large, low-cost, low-margin, high-volume, self-service stores that carry a wide variety of items. 4. Convenience Stores – carry a limited line of high turnover goods and are open over long hours, seven days a week. Because of the extent of their service operations, these stores normally charge higher prices as compared to supermarkets. 5. Superstores – twice as large as regular supermarkets and carry a large assortment of commonly purchased food and non-food items. 6. Service Businesses – the product line is service.

Types of Retail Store Based on Relative Prices 1. Discount Stores – sell standard merchandise at lower prices by accepting low margins and selling large volumes. 2. Off-Price Retailers – sell at prices lower than retail, because they buy at less than the wholesale price so they can charge customers at prices even lower than retail. 3. Catalog Showrooms – sell a wide selection of high mark-up, fast moving, branded name goods at discounted prices. Types of Retail Store Based on Control of Outlets 1. Corporate Chains – “chain stores”; two or more outlets that are owned and controlled by one big company, employ centralized buying and merchandising, and sell the same line of merchandise. 2. Voluntary Chain – wholesaler-sponsored group of independent retailers engaged in groupbuying and common merchandising. 3. Retailer Cooperative – group of independent retailers that setup jointly-owned central wholesale operation and conduct joint merchandising and promotion efforts. 4. Franchises – contractual associations between manufacturers and independent businessmen. The businessman buys the right to own and operate one or more units of franchise from the manufacturer. 5. Merchandising Conglomerates – these are corporations that combine several different retailing forms under central ownership and share some distribution and management functions. Types of Retail Store Based on Store Cluster 1. Central Business District – “downtown,” where many independently owned and managed stores conduct operation. 2. Shopping Center – group of retail stores or businesses which are owned, planned, developed, and managed as one single unit. a. Neighborhood Shopping Center (Strip Mall) – 5-15 stores b. Community Shopping Center – 15-50 stores c. Regional Shopping Center – 50-100 stores

Non-Store Retailing 1. Direct Marketing – retailing is done through the use of various advertising media to interact directly with consumers, generally calling for the consumer to make a direct response. 2. Direct Selling – “In-home” selling, or house-to-house selling that provides customers with convenience and personal attention. 3. Automatic Vending Machines

WHOLESALING – includes all activities of wholesalers in selling products to those people or companies buying for resale or for business purposes. 1. Merchant Wholesalers – are independently-owned businesses that take title to the merchandise they sell. a. Full-Service Wholesalers – provide a full line of services like warehousing, credit, delivery, and management assistance. b. Limited-Service Wholesalers: Cash-and-Carry Wholesalers – have a limited line of fast-moving goods sold to small retailers for cash and normally do not deliver. Truck Wholesalers or Truck Jobbers – perform selling and delivery functions and they sell only for cash. Drop Shippers – operate in bulk industries and do not hold inventory or handle the product they sell. Rack Jobbers – serve grocery and drug retailers, mostly in the area of non-food items. They provide services like delivery and financing but do little promotion because they carry many branded items that are already highly-advertised. Producers’ Cooperatives – owned by member-farmers who assemble farm products to sell in local market. Their profits are divided among members at the end of the year. Mail-Order Wholesalers – send catalogs to retail, industrial, and institutional customers offering products like cosmetics, special foods, jewelry, and other small items. They have no sales force to call on customers. 2. Brokers – brings the seller and the buyer together and assists in their negotiations. He is paid by the parties hiring him. He does not carry inventory; he does not get involved in financing and does not assume any risk. 3. Agents – represents a buyer or a seller on a more permanent basis. He enters into formal agreement with the other party and negotiates in behalf of the party hiring him and thus has influence over factors in the negotiation like prices and terms. He normally has no territorial limits. 4. Manufacturers’ Sales Branches and Offices Manufacturer’s Sales Branch – carries inventory and is found in such industries as drug manufacturing calibration, parts, and equipment. Manufacturing Sales Office – does not carry inventory and is more common in the dry goods industry.