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Bilal Raja
bill_raj@hotmail.com

Information 4 Everyone
Marketing Mix: Place
Third P: Place (Distribution)
Product ownership has to be transferred
somehow from the person or organization
making it to the customer needing it.
Distribution’s role within a marketing
mix is getting the product to target market
Typically firms called “Middlemen”
perform these intermediary activities
 Middlemen

 Middlemen is a business firm that renders services

directly to the purchase and/or sale of a product as it
flows from producer to end user.

A middlemen either owns the product or actively aids in

transfer of ownership of products or services.

 Middlemenare further classified as Merchant

middlemen and Agent Middlemen.
 Middlemen Classification

 Merchant middlemen actually owns the products they

are helping to market.
 E.g Retailers and wholesalers

 Agent middlemen never actually owns the products but

they do actively assist in transferring the ownership of
the products
 E.g Real estate Agents and travel agents
 Distribution channel
A distribution channel consists of the set
of people and firms involved in the flow
of ownership of a product as it moves
from producer to ultimate user or business
user.

Producer  Middlemen user

 Channel levels
0-level or direct
Channel 1-level 2-level 3-Level
Manufacturer Manufacturer Manufacturer Manufacturer

Wholesalers
Wholesalers

Agent

Retailer Retailer

Retailer

Consumer Consumer
Consumer
Consumer
Factors affecting choice of channels
 Market Considerations:
 Type of Market: business or consumer markets
 Number of potential customers: for few customers,
firms may use its own sales force to sell but for large
number of customers, we need middlemen.
 Geographic concentration: firms may establish sales
branches in densely populated markets and use
middlemen for less concentrated markets.
 Order size: food products manufacturer may directly
sell to large grocery stores due to large order size or the
volume of business. But to reach small stores having
less volume demanded, a firm should first sell to
wholesalers
 Product Considerations
 Unit value: if price of a product is high then a firm may
use direct selling and if its less priced product (Ball pen)
it is wise to use middlemen.
 Perishability: perishable items requires direct selling.
Clothing is perishable in a fashion sense.
Pharmaceutical producers use short channels etc
 Technical nature of a product: a business product that
is highly technical is often distributed directly to
business user. Technical products for consumers
usually involves selling the products directly to retailers.
Middlemen Consideration
 Services provided by the middlemen: A producer should select
middlemen that will provide those marketing services that producer
is either unable to provide or cannot economically perform.
 Availability of desired Middlemen: The middlemen preferred by
a producer may not be available. They may be carrying competitive
products and may not want to take another firm’s product line.
 Attitude of middlemen towards producers’ policies: Sometimes
we face limited choices of channels as our marketing policies are
not acceptable by the middlemen. Some will only carry your
product line if you give them the assurance that their competing
firms will not carry the same product line.
 Company consideration
 Desire for channel control: some companies want to control the
distribution channels by simply establishing short channels.

 Financial resources: financially strong companies can afford

direct channels or establishes its own sales force for selling or they
own their retail outlets and financially week companies needs
middlemen to support distribution

 Services provided by Seller: often a retail store will not stock a

given product unless it is presold through heavy producer
advertising. Some producer base their channel decisions on the
demands of the middlemen involved.
 Intensity of Distribution
 Intensive distribution: A strategy in which the company stocks its
products in as many outlets as possible.
 E.g coca cola, pepsi, candies, tooth paste, soaps etc
 Exclusive distribution: A strategy in which the company gives a
limited number of dealers the exclusive right to distribute the
company’s products in their territories
 E.g in case of luxury automobiles and expensive suiting,
producer may have a single distributor even in large cities
 Selective distribution: between intensive and exclusive
distribution is selective distribution- a strategy in which use of more
than one, but fewer than all, of the intermediaries who are willing
to carry the company’s products.
 Most television, furniture and home appliances brands are
distributed in this manner.
Major types of retail institutions
Specialty stores
Departmental stores
Supermarkets
Convenience stores
Discount stores
Off-price retailers
Superstores
 Specialty Stores

 Carry a narrow product line with a deep assortment,

such as sporting-good stores, furniture stores and book
stores.
 A clothing store would be a single-line store, a men’s
clothing store would be a limited-line store and a men’s
custom-shirt store would be a super specialty store such
as GAP
 Departmental Store
Carry several product lines---typically
clothing, home furnishings and household
goods with each line operated by a
separate department managed by
specialists.
 Supermarkets
A relatively large, low-cost, low margin,
self service operation designed to serve
the consumer’s total need for grocery and
household products
 Convenience Stores
Relatively small stores located near
residential areas , open long hours seven
days a week and carrying a limited line of
high turnover convenience products at
slightly higher prices
Corner shops
 Off-price retailers
Sell merchandise bought at less-than-
regular wholesale prices and sold at less
than retail often leftover goods and
irregulars obtained at reduced prices from
manufacturers or other retailers.
Includes factory outlets
 Superstore
 Very large stores traditionally aimed at meeting
consumers’ total needs for routinely purchased food and
non food items.
 Category killers which carry a deep assortment in
particular category and have knowledgeable staff.
 Supercentres: combined supermarket and discount stores
e.g wall mart supercenters.
 Hypermarkets with up to 220,000 square feet space
combining supermarket, discount and warehouse
retailing e.g carrefour ,hyper star