Place

Marketing Mix – Place

Organisations must decide where and how they will distribute their product to their customers.  This involves making decisions on:

  • The location of the business – manufacturing or retailing;
  • The method of distributing (transporting) finished goods to customers. 

Business Location – Factors, Advantages and Disadvantages

  • Degree of competition – some organisations choose to locate close to their competitors.

This brings benefits of having a concentration of passing trade from customers who have come looking for particular products.

The downside of locating close to competitors is that it may be necessary to offer lower prices.

  • Distance to customers – a retailer may choose to locate where customers can access them easily eg in town centres or established retail parks with good transport connections.

This brings benefits of passing trade, but a disadvantage of higher rents for prime locations.

  • Access to raw materials – a manufacturer may locate close to its source of raw materials. This brings benefits of reduced chances of delay and lower delivery costs of raw materials.  It may result in higher transportation costs for finished products to customers however.
  • Availability of skilled workers – organisations may choose to locate where there is a workforce with established skills.

This should reduce training costs but may mean they have to offer high salaries to attract employees.

  • Availability and cost of premises – retailers may be attracted to out-of-town shopping centres where they can afford larger premises with ample parking and good public transport.

Manufacturers may choose a location away from centres of population that has capacity for them to expand in the future.

  • Government assistance – organisations may be influenced by financial incentives if they agree to locate in areas of high unemployment eg tax breaks, grants.

The ease with which planning permission is gained may also be a factor.  In doing so however they may experience a shortage of staff with the right skills and/or customers will enough disposable income to spend.

E-Commerce Location Factors

  • On-line sellers do not need to think whether customers can visit, but they do still to think about delivery costs and delivery speed so may choose to locate close to centres of population.
  • However, they will also want to reduce overheads so will locate out-of-town where rents will be cheaper.
  • Transport networks are a consideration when shipping products for delivery to prevent delays in products reaching customers.

E-Commerce – Advantages 

  • Producers get to keep more of the profit from a direct sale rather than selling to a retailer to sell onwards to the customer.
  • Producers can control the way they present their products to customers on their websites – with images and videos.
  • Producers can offer more specialist support to customers through their web-chat facilities.
  • Producers have lower operating costs as they do not need to maintain a physical store front, with more staff involved.
  • Websites can show a larger range of products and customers can check product availability immediately.

E-Commerce – Disadvantages

  • Producers must meet all the costs and risks of holding stocks of products, rather than shifting them on to a retailer.
  • It may be costly having to deal with lots of individual customers – handling complaints, costs of deliveries and returns.
  • Producers must reassure customers that they have secure on-line payments in place.
  • Organisations are exposed to more intense competition as customers can use comparison sites to find the best prices.

Methods of Distribution – Physical Distribution

Physical distribution refers to the method of transport by which products are delivered to wholesalers, retailers or customers.

Road

  • Products can be taken anywhere there is a road eg a remote location.
  • There will be less need to switch transport method and the delivery is not restricted by timetables.

 

 

 

  • Road transport can be affected by congestion and delays due to the weather or repairs to road.
  • Road transportation is heavily regulated by the government eg drivers hours.

Rail

  • Rail transport tends to be cheaper and faster than road as large volumes can be moved at speed without risk of congestion.
  • Goods transported by rail also have to spend time on the road to reach their final destination.

Sea

  • Overseas markets may be reached by sea if the products are bulky and relatively low in value.
  • Sea is usually cheaper when moving large volumes.
  • Container ships can refrigerate perishables.

 

 

 

  • Sea transport can be slow compared to air travel so may not be suitable for products that are low bulk, high value and may go out of fashion quickly.

Air

  • Air transport is the fastest way of transporting goods to overseas markets.
  • It is suitable for products that are high in value and not bulky or heavy to transport.

  • Products transported by air may be unpopular with consumers as they leave a high carbon footprint.
  • Air transport is expensive relative to sea transport.