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The Marketing Mix - Place

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Christine Shih

on 7 January 2014

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Transcript of The Marketing Mix - Place

The Marketing Mix - Place
Distribution Channels
'the buying and selling of goods and services on the internet'
Channels of Distribution
Channel of Distribution
- how products should pass from the manufacturer to the final customer
Channel of distribution
- the chain of intermediaries a product passes from producer to final customer
Why is the choice of distribution channel important?
Consumers need easy access to firm's products
Manufacturers need outlets for their products
Retailers need to consider the cost of distribution
When deciding an appropriate channel strategy...
Should the product be sold directly to customers?
How long should the channel be?
Should electronic methods be used?
How much will it cost to keep stocks in warehouses?
How much control does the business want to have?
How will the distribution channel selected support the other components of the marketing mix?
Factors influencing distribution choice:
Industrial products v.s. consumer goods
Geographical dispersion of the target market
Level of service expected by consumers
Technical complexity of product
Unit value of the product
Number of potential customers
Direct selling to customer
Recent trends in distribution channels:
Increased use of the internet for direct selling
Large supermarket chains aft as wholesalers as well as retailers
Businesses using a variety of different channels
Increasing integration of services
Single-intermediary channel
Two-intermediaries channel
International Marketing
Why sell products in other countries?
Saturated home markets
Potential to increase profits
Spreading risks
Entry of new rivals
Why is international marketing different?
Political Differences
Economic & Social Differences
Legal Differences
Cultural Differences
Administration Differences

Entry to international markets
International Franchising
Joint Ventures
Direct Investment in Subsidiaries
Pan-global Marketing
1. Upmarket Brands
2. Mass-appeal Brands
Common Identity for the product
Possible Benefits

Possible Drawbacks
Mail order from manufacturer
No intermediaries (lower cost)
Complete control
Quicker than other channels
Fresher food
Direct contact with consumers (market research opportunity)
Airpline tickets and hotel accomodation sold online
Farmers' markets
All storage costs paid by producer
No retail outlets (customers can't try products)
May be inconvenient
No advertising/promotion paid by intermediaries
No direct after-sales service
Can be expensive to deliver
Possible Benefits

Possible Drawbacks
Retailer holds stocks and pays for storage
Retailer has product displays and after-sales service
Convenient locations
Producers can focus on production
Holiday companies selling holidays via travel agents
Large supermarkets that hold their own stocks
Intermediary takes a profit mark-up (higher price)
Products lose some control
Retailers may sell products of competitors
Delivery costs to retailer
Possible Benefits

Possible Drawbacks
In a large country with great distances to each retailer, many consumer goods are distribted this way (e.g. soft drinks, electrical goods, books)
Wholesaler buys in bulk from producer
Reduces stock-holding costs of producer
Wholesaler pays for transport costs to retailers
Wholesalers 'break bulk'
Enter foreign markets (producer has no direct contact with retailers)
Intermediaries take a profit mark-up (higher price)
Producer loses further control
Slows down distribution
- Aids consumer recognition
- 'International' advertising
Cost Reduction
- Same product produced
- Economies of scale
- R&D
- One marketing Strategy
Recognizes reduced differences between consumers
- Globalization
- Teenagers
Different consumer tastes
- Different tastes in different countries
- Cultural and religious variations
- Different products to be provided
Different logal restrictions
- Product restrictions
- Promotions restrictions
(e.g. certain games, gambling)
Brand name translations
- Difficulty to translate
- Offence, embarrassment
Global Localization
'adopting a standardized product across the globe as if the whole world were a single market'
'Adapting the marketing mix (including differentiated products) to meet national and regional tastes and cultures'
Local needs, tastes, culure reflected
- marketing mix
- higher sales and profits
No attempt to impose foreign brands on regional markets
Meet local/national legal requirements
Economies of scale reduced
International brand lose identity
- Can't buy in bulk
- Higher prices
Additional costs
- Adapt products, adverts, store layouts to specific local needs
- higher prices
- more widely accepted
- less local opposition
- brands, products, advertisements

- If locally adapted products become more popular than the original/ 'international' product
'Business to consumer'
'Business to business' (b2b)
Advertising (Website, advert)
Sales leads
Market Research
Impact on the Marketing Mix:
- individual specification, stock wider range of goods
- competitive, price comparison
- banners, pop-ups, websites, cost reduction
- online
Relatively inexpensive
Lower fixed costs than traditioanl retail stores
Reach worldwide audience
Convenient for consumer use
Accurate records kept
Computer ownership and usage are increasing
Attractive ads
Some countries have poor connections
Consumers cannot touch / try on tangible goods
Product returns may increase
Cost and reliability of postal services
Website must be up to date and user friendly
Worries about internet security
Direct selling to customer
Single-intermediary channel
Two-intermediary channel
International Marketing
Entry to international markets
Pan-global Marketing
Upmarket brands
Mass-appeal brands
Global Localization
business to consumer
business to business
sales leads
market research
Full transcript