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Place (Distribution)
C H A N N E L S O F D I S T R I B U T I O N
D I S T R I B U T I O N S T R A T E G Y
S U P P L Y C H A I N M A N A G E M E N T / L O G I S T I C S
What is a Place?
The 4th component of 4 P’s
 Product
 Price
 Promotion
 Place
Place refers to the distribution of a product – how it
gets from producer to customer.
The Objective of Place (Distribution)
To make products available in
the right place at the right
time in the right quantities
What are Channels of Distribution
 This refers to the chain of intermediaries* a product
passes through from producer to final consumer
* an intermediary is someone between the producer
and consumer – e.g. wholesaler or retailer
Types of Intermediaries
Two-intermediaries channel
Single-intermediary channel
Direct selling to consumer
Functions of Distribution Channels
 Provide a link between production and consumption
 Helps to gather market information
 Communicate promotional offers
 Find and communicate with perspective buyers
 Physical distribution – transporting /storing
 Financing – other parties finance the stock
Recent trends in distribution channels
 Increased use of internet for direct selling of a product
(internet banking, online insurance)
 Large supermarket chains acting as wholesalers as well
as retailers, by holding large amounts of stock in their
own warehouses
 Businesses using a variety of different channels (hotels
might sell directly but also use travel agents)
 Increasing integration of services – packages are sold
to consumers (flights, car hire, accommodation)
Factors influencing the distribution decision
Costs and
Benefits
Market
(mass or
niche)
Time
Distribution
Decision
Laws
Type of
product
(perishable
or fast
moving)
Channel Strategy
 When deciding on a appropriate channel strategy, a
business must consider:
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Should the product be sold directly to consumers?
Should the product be sold through retailers?
How long should the channel be (that is, how many intermediaries)?
Where should the product be made available?
Should electronic methods of distribution be used?
How much will it costs to keep the stock of products on store shelves
and in channel warehouses?
How much control does the business want over the marketing mix?
How will the chosen distribution channel support the other
components of the marketing mix?
Channel Strategy
 The channel strategy must be integrated with the marketing objectives
of the business. For example, if the aim is to secure a niche market
with a high quality image product (e.g. branded cosmetics), then selling
it through street vendors will not achieve this objective.
 If, however, the marketing aim is to achieve maximum sales and
distribution coverage (e.g. candy), then selling through a few carefully
and exclusive food retailers will not be successful.
 As with all components of the marketing mix, distribution channel
strategy must be clearly linked to marketing objectives and to the other
components of the mix for an effective and convincing overall
marketing strategy to be developed.
Supply Chain Management (HL)
 Supply chain management refers to managing the
network of businesses that are involved in the
provision of products to the final consumers
Supply Chain Management
 The purpose of SCM is to ensure that products are
consistently made available to consumers by
integrating supply and demand management across
all of the companies involved. This logistical process
is complex and is now aided by specialised software.
FUNCTIONS OF SMC
Stock Control
Coordination
of Suppliers
network
SMC
Functions
Organize
Transportations
Monitor
Quality
Control
Supply Chain Management Benefits
 This process involves many activities. SCM can increase
the efficiency of a firm’s supply chain by:
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Ensuring all supply companies are kept well informed of the
changing material needs of the business and prevent misakes
Making appropriate transport arrangements for materials and for
finished goods
Reducing the total numbers of suppliers
Planning production to meet consumer demand
Ensuring adequate supplies are delivered, on time, to retailers or
other intermediaries
Tool for achieving lean production( mini input for max output), help
to reduce wastage and inefficiencies.
LIMITATIONS OF SMC
 Globalization results in more complex sourcing
networks established – hard to deal with efficiently
 Time lags may lead to delays in product delivery to
customers in a cost effective way
 Greater interdependence means that any problem in
the supply chain can cause major disruptions.
 Increased need for partners to share information and
collaborate – may lead to conflicts.
Student Task
http://www.bbc.co.uk/news/business-11161723
Watch this BBC video which illustrates the changing
distribution patterns in fashion retailing from retailers
to online retail. Answer the question below.
 Discuss the impacts of technology on the future of
distribution channels.
minimum half a page answer.