Place Dynamics

1. Place Dynamics Principles of Marketing Chapter 26 Mrs. Sorrell

2. Place Decisions • Definition: Place is the term for marketing activities involved in making products available to customers, which includes distribution • When, where, and how products get to customers • Making sure there are enough quantities of the products available • Marketers study the buying habits of customers to determine the most convenient and efficient locations (Place utility); available at the best place and the best time (Time utility)

3. Location of the Business • Location, location, location • Surfboard shops are located near beaches used by surfers • Doctors practice near hospitals • Site is another term for location • Locate where they can easily get inputs • Locate where they can easily get outputs to customers

4. Retail Site Selection • Location • Largest number of potential customers • Geographic areas that are growing • Competition in the area • Other business in the area, such as a mall • Good site is… • Easy to get to • Visible to passing traffic • safe

5. Market Coverage • Definition: refers to the number of stores a retailer chooses to have in a specific geographic area • Intensive Market Coverage—as many stores as possible in one market area, i.e. Starbucks • Selective Market Coverage—just enough locations to adequately serve the target market, i.e. Wal-Mart, Gap • Exclusive Market Coverage—Only one store to serve the entire market area, i.e. Macy’s

6. Hours • Which days of the week and what hours will the store be open? • Some stores stay open 24 hours a day

7. Site Selection for Other Businesses • Manufacturer’s major costs is transporting raw materials and supplies to the factory • Locate where the finished product can be quickly and easily delivered to customers • Post and Kellogg are located in Michigan; grain is the major input; many grain farms in state • Pewter and silver manufacturers are located in Rhode Island to be near sources of precious metals; located near East Coast transportation systems to send their output to stores

8. Channels of Distribution • Definition: the route a good takes from its original source to its final customer • Apple goes from orchard to apple buyer, to grocery store, to you

9. Wholesalers and Retailers • Intermediaries: the businesses between the original source (apple farmer) and the customer; aka middlemen • Also called resellers because they resell products that they have purchased to another intermediary • Most common intermediaries • Wholesaler—business that buys products from a producer, then sells to another business • Retailer—business that buys products from a producer or a wholesaler, then sells to the customer

10. Wholesalers and Retailers, con’t. • Channel member: a specific business that is part of the channel of distribution for a specific product • Retailers also include nonstore retailers • TV shopping channels, websites, Avon

11. Supply Chain • Definition: a channel of distribution • Each step in the chain is a segment • Each segment is a customer of the preceding segment • Each segment is a supplier of the following segment

12. Common Channel of Distribution

13. Agents and Brokers • Agent: an intermediary who brings buyers and sellers together • Broker is another term for agent, connect sellers and buyers • Agents never buy or handle the products • Commonly used in the selling of residential real estate

14. Role of Intermediaries • Direct distribution: A channel of distribution with no intermediaries • Manicure, haircut • Indirect distribution: uses one or more intermediaries • Choosing the best channel of distribution for a product is critical to the success of the product • Distribution includes shipping, storing, inventory, and stocking

15. Functions of Intermediaries • Facilitation Exchanges • Definition: make an action easier • Customer: One place, Many goods • Consumers don’t have to go to the apple farm for apples, or the chicken farm for eggs, or the soup factory for soup! • Producer: One transaction, many customers • The apple producer wants to sell as many apples as possible, but not away from the farm • The farmer wants to sell 20 bushels of apples, the most that one customer wants is 1 bushel. He would have to meet at least 20 individuals to sell them.

16. Bulk-Breaking • Bulk-breaking is the process of separating a large quantity of good s into small quantities for resale. • Wal-Mart buys many of its goods directly from manufacturers because they buy very large quantities • Wal-Mart breaks the shipment into smaller quantities to be delivered to each Wal-Mart store

17. Channel Management • Definition: managing all aspects of place and distribution • Selecting channel members • Number of years in business • Other product lines carried • Reputation • Previous experience with the compnay • Financial stability • Quality of the sales force

18. Channel Management, con’t. • Motivating channel members • Producers may offer special deals, premiums, and sales contests to maintain long-term relationships • Evaluating channel members • Set measurable standards • Prompt delivery time • Cooperative advertising • Meeting sales quotas • Product quality • Treatment of lost or damaged goods • Overall satisfaction

19. Ownership in the Distribution Channel • Intermediaries take ownership of the product as it moves through the channel • As ownership transfers, responsibility for the product is transferred • The new owner is the one who will suffer any loss if the product is damaged or lost