What is a Place?
Place simply does not mean the physical movement of product from the manufacturers to the customers but this also means the ease of access to the products, the way the products are displayed, and in which environment that they are presented. The marketer then needs to adopt different channels of intermediaries to reach their end-user. The marketer then uses the choice of distribution channel which is affected by several factors.
We will further take notice of the distribution channel which suits the place mix of the marketing management.
Channel of Distribution
The channel of distribution means the intermediaries that are involved in the process of how a product passes from the manufacturer to the end-users that are the consumers. This is quite important for the producers to engage the middlemen to reach the consumers. Foremostly, the middlemen reduce the problems of both the producers and the consumers. Then they help in distributing the products over a specific large area.
Different Channels of Distribution are as Follows:
Channel 0
This is called a direct marketing channel with no intermediary level. The producers sell the products directly to the consumers thus, this is called direct marketing. Apart from this, the remaining channels are indirect marketing channels.
Channel 1
This channel includes only one intermediary which is generally a retailer. The retailers buy the products which come directly from the manufacturer and then sold to the consumers. Generally, electronic goods like televisions and computers are sold through this channel 1 level.
Channel 2
Channel 2 contains two intermediary levels of a - wholesaler and a retailer. A wholesaler is one who typically buys and stores the large quantities of these several producers’ goods and then breaks them into bulk deliveries to supply to the retailers in smaller lots.
Channel 3
This channel contains three middlemen levels. The jobbers usually come between the wholesalers and the retailers. Then they buy from the wholesalers, sell to the small retailers who are generally not served by the wholesalers. There can be even more levels in the distribution channel but from a producers’ point of view.
Elements of Place and Place mix
Transportation:
Transportation is an important component of the physical distribution that is very essential for the firm as this increases the market length for the product. The decisions which relate to the transportation here include the choice of mode of transport that is to be used, whether to own the vehicles or to hire them, how the deliveries are scheduled, who will bear this transport cost and then the manufacturer to wholesaler and them to the retailer.
The different modes of transport are - Roadways, Railways, Waterways, Airways, and also Pipelines. Normally this combination of these modes is to be chosen by a business organization. This is important to note here that the choice of a particular mode of transport affects the condition of the goods and the pricing which ultimately affects the customer’s satisfaction.
Warehousing:
Warehousing provides the function of storage to the firm and thereby creates time utility. The long-time gap that is between the production and distribution, the seasonal production of certain commodities, and the continuous demand for the products, and such other factors have made it necessary for the firm to store their own products. The warehousing decisions include decisions that relate to the choice of public or private warehouse or the cold storages, and the number of places where the goods have to be stored which is to be released quickly when it is demanded.
Inventory Level:
This is very necessary for a firm to carry quite enough stock of goods to meet the demand as and when this is required, which involves the decisions as to how much the stock, who long to stock, and at how many places to stock the products.
Channel Level and Intermediaries:
The marketing channels are characterized by the variety of other channel levels, this depends upon the number of intermediaries, which can be of different channel levels - the direct marketing where the manufacturers sell directly to the consumers, one level channel where the goods that are sold through one intermediary and so on. The firm has even to decide the number and the type of intermediaries that are to be employed.
FAQs on Place and Place Mix in Marketing
1. What exactly is 'Place' in the marketing mix (4Ps)?
In the marketing mix, 'Place' refers to the process of making a product or service available to the end consumer. It's not just about the physical location; it's about the entire distribution strategy used to get the product from the producer to the customer at the right time and in the right place.
2. What is the main difference between 'Place' and 'Place Mix'?
Think of 'Place' as the overall goal of distribution. The 'Place Mix' is the specific set of decisions and strategies a company uses to achieve that goal. It includes choosing distribution channels, managing transportation, warehousing, and inventory levels to create an effective delivery system for the product.
3. What are the key components of a company's place mix?
A company's place mix consists of two main components:
- Channels of Distribution: The path or route through which goods move from producer to consumer. This can be direct (from the company) or indirect (through intermediaries like wholesalers and retailers).
- Physical Distribution: The activities involved in moving the products, such as transportation, warehousing, inventory management, and order processing.
4. What are the different channels of distribution in marketing?
Distribution channels can be broadly classified into two types:
- Direct Channel: The producer sells directly to the consumer without any middlemen. For example, a company selling products on its own website.
- Indirect Channels: The producer uses one or more middlemen to reach the consumer. This can involve wholesalers, distributors, agents, or retailers.
5. How do warehouses support a company's distribution strategy?
Warehouses are crucial for an effective distribution strategy because they create time utility. They allow a company to store products when they are produced and make them available when customers demand them. This helps in stabilising prices, ensuring a steady supply, and meeting sudden increases in demand.
6. Why would a company choose a direct distribution channel over an indirect one?
A company might prefer a direct channel to have more control over its brand and the customer experience. It also allows the company to get direct feedback from customers and potentially earn higher profits by eliminating the middleman's margin. This is common for specialised or high-value products.
7. Is 'Place' in the marketing mix the same as 'Place Marketing'?
No, they are two different concepts that are often confused. 'Place' in the marketing mix refers to the distribution of a product. On the other hand, 'Place Marketing' (or destination marketing) is the promotion of a specific geographical location, like a city or country, to attract tourists or businesses.
8. How does the type of product affect the choice of a distribution channel?
The product type has a huge impact. For example, perishable goods like milk or vegetables need a short and fast distribution channel to avoid spoilage. In contrast, durable and standardised goods like FMCG products can be distributed through longer channels involving multiple wholesalers and retailers to achieve wide market coverage.
9. In today's digital world, how has the internet changed the concept of 'Place' in marketing?
The internet has revolutionised the 'Place' element by creating a new distribution channel: e-commerce. It acts as a digital marketplace where customers can buy products directly from a company's website or an online platform. This has made it easier for businesses to reach a global audience without needing a physical store everywhere.
10. What is the role of transportation in making the 'Place' element successful?
Transportation is the physical bridge between the producer and the consumer. It creates place utility by moving goods from the point of production to the point of consumption. The choice of transport mode—like road, rail, or air—directly affects the product's cost, delivery speed, and condition, which are all vital for customer satisfaction.
