Place in Marketing Strategies

Overview

'Place': Logistical component within the marketing mix that ensures products are available efficiently to consumers.

• Role:

  • Manages logistics activities to transport products from production to the consumer.
  • Networks consist of transportation, warehousing, and inventory management.

• Relevance in Marketing Strategy:

  • Significance:

    • Ensures product availability.
    • Contributes to market growth.

  • Examples:

    • Amazon's distribution network: Utilises strategic warehouses globally to enable fast delivery, enhancing customer satisfaction and swiftly meeting market demand.
    • Tesco's local and online channels: Broadens market reach by combining convenient local stores with user-friendly online shopping experiences.
    • Ikea's flat-pack design strategy: Minimises transportation expenses and enhances market entry by simplifying product shipping and assembly, thereby increasing brand visibility.
  infoNote

  Benefits of a Strong Distribution Strategy:

  • Enhances delivery speed.
  • Minimises costs.
  • Expands market reach.

Key Components

Primary components of 'place' in the marketing mix:

• Distribution Channels: Pathways that facilitate the movement of products from producers to consumers.

  • Types:

    • Direct to Consumer: Involves selling directly to consumers, commonly observed in e-commerce platforms.
      • Pros: Direct control over customer relations; cost reduction.
      • Cons: Logistical complexities; potentially limited outreach.
      • Example: Online entities such as Amazon.

    

  • Retail Intermediaries: Utilise retailers to expand consumer access.

    • Example: Macy's department stores.

  • Wholesale Distribution: Wholesalers provide cost-efficient solutions.

    • Example: Walmart leverages wholesale acquisitions.

  • Agent-Led Distribution: Agents facilitate access to larger markets.

    • Example: Common in insurance and real estate sectors.

• Channel Choice:

  • Factors influencing choice include cost, control, and consumer preferences.
  • Nike's strategy: Integrates direct retail outlets and online platforms with indirect channels via authorised dealerships.

• Physical Distribution:

  • Logistics of goods movement. Encompasses shipping, warehousing, and inventory management.

Industry Segment	Distribution Challenges	Strategies
Retail	Last-mile delivery, inventory overflow	Omnichannel logistics
Technology	Cross-border regulations, digital distribution	Flexible supply chain, localised hubs
Food & Beverage	Perishable goods, temperature control	Cold chain management, local sourcing

Definitions and Terminologies

Glossary

• Distribution Channels: Pathways through which products move from producers to consumers.
• Market Coverage: The extent and range of distribution within a geographic region.
• Physical Distribution: Logistics of moving goods, including shipping, warehousing, and inventory management.
• Inventory Management: The process involving the ordering, storing, and utilisation of a company's inventory.
• Supply Chain: A network connecting a company with its suppliers to produce and distribute a product.

Intermediary Roles

• Wholesalers:

  • Purchase in bulk and supply to retailers, reducing the cost per product.
  • Example: Costco offers discounts and facilitates consumer access to products.

• Retailers:

  • Serve as the final consumer contact points, enhancing product accessibility.
  • Example: Tesco supermarkets.

• Agents:

  • Operate on commission and access broader markets.
  • Example: Found in real estate and insurance sectors.

Overview of Channel Choices

Intensive Distribution

• Examples: Used by brands such as Coca-Cola for extensive reach.
• Market Saturation:
  • Aims to maximise accessibility and availability, leading to high sales volumes.
  • Impact: Enhances consumer access, affecting purchasing behaviour and retailer relations.
  • Greater market penetration encourages impulse purchases and fosters brand familiarity.

Selective Distribution

• Examples: Implemented by brands like Apple.
• Balancing Act:
  • Maintains control over product quality and brand image.
  • Fewer outlets ensure precise market coverage and brand exclusivity.

Exclusive Distribution

• Examples: Utilised by luxury brands such as Gucci and automobile brands like Ferrari.
• Characteristics:
  • Preserves brand prestige by strictly controlling outlets.
  • Raises perceived value through exclusivity and rarity.
  • Trade-offs: Limited presence can impact market visibility.

Factors Influencing Channel Choice

• Product Type:

  • Complexity and perishability affect channel preference.
  • Example: Dairy products require shorter channels due to perishability.

• Market Reach:

  • Broad, dispersed markets necessitate diverse channel strategies.

• Company Strategy:

  • Channels align with brand perception, cost management, and customer experience.
  • Example: Luxury brands maintain exclusivity through selective channels.

Physical Distribution Issues

Transport

• Role and Importance:

  • Transportation is pivotal for the efficient movement of products.
  • Ensures cost-effectiveness and prompt delivery.
  infoNote

  Transportation: The process of conveying goods or individuals from one location to another.

• Transport Modes:

  • Rail:

    • Pros: Cost-efficient for bulk goods.
    • Cons: Limited route flexibility.
    • Simplified Example: Long-distance coal transportation.

  • Road:

    • Pros: Flexible and fast.
    • Cons: Potential traffic delays.
    • Simplified Example: Distribution from a warehouse to local retailers.

  • Sea:

    • Pros: Cost-effective for international shipments.
    • Cons: Slower transit times.
    • Simplified Example: Importing sizable machinery.

  • Air:

    • Pros: Rapid delivery.
    • Cons: High expenses.
    • Simplified Example: Swift transport of urgently needed pharmaceuticals.

Measuring the Effectiveness of Distribution Channels

Assessing distribution channels is necessary for improving customer outreach. Below are several methods for evaluating and enhancing channel performance.

1. Evaluation Techniques

• Sales and Market Share Analysis:

  • Sales Data: Serves as a performance measure.
  • Market Share: The proportion of total sales relative to competitors.
  • Tools: CRM software is used for metric tracking.

• Return on Investment (ROI):

  • Definition: ROI: The ratio of profit generated to costs incurred.
  • Significance: Influences channel selection.
  • Calculation:
    • Example: £10,000 investment resulting in £15,000 sales represents a 50% ROI.

2. Consumer Feedback

• Gathering Methods:

  • Employ surveys and focus groups.
  • Identify inefficiencies and areas for growth.

• Utilisation:

  • Adapt strategies for better satisfaction and sales.

3. Performance Metrics

• Key Performance Indicators (KPIs):
  • Transaction Speed: Reflects efficiency.
  • Accuracy: Ensures correct distribution.
  • Customer Satisfaction: Indicative of success.

• Benchmarking and Continuous Improvement:
  • Compare metrics against industry standards.
  • Refine strategies to increase efficiency.

Highlights

• Technology's Role: Boosts data accuracy and channel sustainability.
• Sustainability: Decreases channels' carbon footprint.