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Business AS CIE

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  1. enterprise as
    6 主题
  2. business-structure as
    6 主题
  3. size-of-business as
    3 主题
  4. business-objectives as
    3 主题
  5. stakeholders-in-a-business as
    2 主题
  6. human-resource-management as
    8 主题
  7. motivation as
    4 主题
  8. management as
    2 主题
  9. the-nature-of-marketing as
    7 主题
  10. market-research as
    3 主题
  11. the-marketing-mix as
    6 主题
  12. the-nature-of-operations as
    3 主题
  13. inventory-management as
    2 主题
  14. capacity-utilisation-and-outsourcing as
    1 主题
  15. business-finance as
    2 主题
  16. sources-of-finance as
    3 主题
  17. forecasting-and-managing-cash-flows as
    1 主题
  18. costs as
    4 主题
  19. budgets as
    1 主题
  1. Business AS CIE
  2. the-marketing-mix as
  3. the-marketing-mix marketing-mix-place
课 11, 主题 6
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the-marketing-mix marketing-mix-place

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Exam code:9609

An introduction to place

  • Place in the marketing mix refers to where customers purchase a business’s products and the distribution channels used to move the product from producer to consumer

  • In a competitive environment, location and distribution decisions can give a company a competitive advantage

    • Businesses could locate themselves in areas with high foot traffic to achieve high sales volumes

    • They may use innovative online channels to reach customers who prefer to shop online

  • Changing consumer needs can impact the way businesses distribute their products

    • E-commerce makes it easier for consumers to shop online and have products delivered to their doorstep

      • Many businesses have therefore invested in their online presence, offering convenience and fast delivery to meet customer needs

Channels of distribution

  • Channels of distribution are the intermediaries through which physical products move from the business to the end consumer

Different distribution channels

Flowchart showing distribution channels: producers to wholesalers, wholesalers to retailers, and finally retailers to consumers.
The two different types of distribution channels businesses can use to move products to the end customer

Explanation of the distribution channels

Channel

Explanation

Example

Producer → Wholesaler → Retailer → Consumer

  • This channel is commonly used by smaller retail businesses that lack space or sufficient cash flow to hold large amounts of inventory

  • Advantage: Small shops can buy little and often from the wholesaler, so they do not need big, costly storage space

  • Disadvantage: Two extra markups (wholesaler and retailer) push the selling price up for customers

  • The Coca-Cola Company produces soft drinks, which are sold in bulk to a wholesaler

  • The wholesaler sells smaller quantities to a convenience store

  • The convenience store then sells individual soft drinks to the customer

Producer → Wholesaler → Consumer

  • This channel is less common but can be used when there are no physical retail stores, or for products where the wholesaler can sell directly to bulk-buying consumers (e.g. institutions or large events)

  • Advantage: It can reduce distribution costs by cutting out the retailer, allowing slightly lower prices for large-scale buyers

  • Disadvantage: It is not suitable for everyday consumers who want to buy in small quantities or need advice before purchasing

  • CleanPro Chemicals, a manufacturer of industrial cleaning supplies, sells bulk quantities of detergent to a wholesaler

  • The wholesaler then sells large tubs of cleaning products directly to schools, hotels or industrial users without going through a retail store

Producer → Retailer → Consumer

  • This channel is often used for products with high demand or where the cost of distribution is high

  • This method is also common where customers require support or advice in selecting the product

  • Advantage: Retail staff can give advice and after‑sales help, which suits complex goods such as laptops

  • Disadvantage: Inventory sits in the retailer’s warehouse or shop, tying up cash until each item is sold

  • Toshiba produces laptops and sells them directly to electronics retailers

  • Currys employs knowledgeable sales staff who sell Toshiba laptops to end customers
     

Producer → Consumer

  • This channel is commonly used for products that are sold online or through direct sales channels

  • Advantage: No intermediaries mean lower costs, so the firm can offer low online prices or keep more profit

  • Disadvantage: The producer must handle delivery, returns and customer service itself, which can be expensive and time-consuming

  • GermanWings sells its service (airline passenger tickets) directly to the end customer on its website

Digital versus physical distribution

  • Digital distribution is the process of delivering products or services electronically, usually over the internet, without the need for physical transportation or traditional retail outlets

  • It allows businesses to reach customers directly and instantly, using online platforms, software or digital files

Examples of digital distribution

  • E-commerce platforms

    • Websites or apps where goods are purchased and delivered digitally

    • Examples include

      • Amazon for eBooks

      • Steam for games

      • Udemy for online courses

  • Downloads and streaming

    • Files are delivered digitally to the user’s device or accessed on-demand

    • Examples include

      • Spotify for streaming

      • Netflix for video

      • Adobe Creative Cloud for software

  • Cloud-based delivery

    • Products are accessed online through cloud services rather than downloaded

    • Examples include

      • Google Docs

      • Microsoft 365

  • Digital wallets and app stores

    • Payment and delivery systems that host apps, games and tools for immediate use

    • Examples include

      • Apple App Store

      • Google Play

Comparison of digital and physical channels of distribution

Digital distribution

Traditional distribution

  • Delivered electronically – no physical stock or transport needed

  • Physical delivery through wholesalers, retailers, or direct sellers

  • Instant access for consumers, often 24/7

  • Delivery takes time and depends on stock and location

  • Can be global from the start, reaching wide markets

  • Often restricted by geography, transport and store networks

  • Typically lower cost per unit (no packaging or delivery)

  • Higher cost due to shipping, warehousing, and staff

  • Ideal for intangible goods (e.g. media, software, NFTs)

  • Required for tangible goods (e.g. clothing, furniture)

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