Part 3 of 4: “Place”
Continuing our four-part series on the marketing mix, this segment explores the concept of placement, also known as distribution, or how the product goes from production to the consumer.
Like the previous two P’s this third ring of the marketing mix involves some complex strategies. The economy, delivery choices and research/buying trends of your customers will dictate how you develop your own plan. I’ll highlight a few of the more popular concepts, however it is recommended that you regularly examine your business, adjusting your own strategy to meet the demands of your customers and specifically identify how and at what cost your products or services are being distributed within your target market.
• Consider that product placement or distribution is viewed differently depending on your product or service. It is important to identifying specific segments and address unique buying patterns (young adults, families, business people)
• An e-Commerce solution appeals to a growing generation of buyers where others may prefer to page through a catalog
• An industrial equipment distributor could require customers to pick up their orders at a local retail center, on-site trailer or investing in a truck or van to make deliveries
• Installing vending machines offer some benefits, especially in remote areas
• Counter or Point-of-Purchase (POP) displays create opportunities for impulse sales
• A geographic region and environment plays a factor; if you are located in Pocatello, Idaho there may be added costs or time for a shipment to reach a customer in Plantersville, Texas
If marketing is about drawing the consumer to your product, then distribution is about getting the products out to the consumer. The following are some major placement strategies:
DISTRIBUTION CHANNELS – Two types of channel distribution methods are available
• Indirect distribution involves distributing your product by the use of an intermediary for example a manufacturer selling to a wholesaler and then on to the retailer. This is the case for many industrial safety equipment manufacturers who sell through distribution in order to gain market share and increase their footprint locally as well as globally.
• Direct distribution involves distributing direct from a manufacturer to the consumer. The advantage of direct distribution is that it gives a manufacturer complete control over their product and targets specific customers.
SPECIFIC CHANNEL MEMBERS – refers to an organization who distributes their product at the right place at the right time. Efficient and effective distribution is important if the organization is to meet its overall marketing objectives. If an organization underestimates the demand and customers cannot purchase products because of it, profitability will be affected.
MARKET COVERAGE – Depending on the type of product being distributed there are three common distribution strategies available:
• Intensive distribution: Used commonly to distribute low priced or impulse purchase products. How often have you seen someone pick up a candy bar or gum at the register?
• Exclusive distribution: Involves limiting distribution to a single outlet. The product is usually highly priced, and requires the intermediary to place much detail in its sell. When was the last time you bought a new car? You don’t pick out a BMW at the grocery checkout stand.
• Selective Distribution: A small number of retail outlets are chosen to distribute the product. Selective distribution is common with products such as computers, televisions household appliances, where consumers are willing to shop around and where manufacturers want a large geographical spread.
Source: http://www.learnmarketing.net/
Other functions that need to be considered when designing a placement strategy include inventory management, warehousing, distribution centers, order processing and invoicing and transportation. Again, this is just the tip of a larger concept. Please consult with your industry experts.
Next time we’ll tackle the final piece of the marketing mix puzzle – the packaging and promotion of products and services.
If you remember one thing from this article it is that one of the main keys to the success of any marketing program is the ability to shape marketing mixes that meet the nature and needs of your specified target market
Todd Guenther, SMS Senior Project Manager
September 30, 2009
For more information about SMS, visit www.growwithsms.com/ or email info@growwithsms.com
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