Place: Types of Distribution Channels | Business Studies for GCSE/IGCSE - Year 11 PDF Download

The Role of Place in the Marketing Mix

• 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 might position themselves in high-foot-traffic areas to boost sales. They could also utilize innovative online channels to cater to customers who prefer shopping on the internet.
• Changing consumer demands can influence how businesses distribute their products. The rise of e-commerce has simplified online shopping, enabling consumers to order products and have them delivered to their doorsteps. Consequently, many companies have enhanced their online presence, providing convenience and swift delivery to meet customer expectations.

Types of Distribution Channels

• Distribution channels encompass the intermediaries involved in the movement of products from the manufacturer or business to the end customer.

Different Distribution Channels

Explanation of the Different Distribution Channels

E-Commerce

• Changes in distribution channels have been influenced by societal shifts, notably the rise of e-commerce and the transition from product-centric to service-centric enterprises.
• In response to these trends, businesses have adapted their distribution strategies to align more closely with customer demands and maintain their competitiveness.

The Growth of E-commerce

Recommending an Appropriate Distribution Channel

• A business's selection of a distribution channel is influenced by various factors.
• When deciding on a distribution channel, the following queries are crucial to contemplate:
  • Do consumers prefer interacting with a sales representative?
  • Are customers inclined to physically inspect the product before buying?
  • Would they rather make a convenient online purchase?
  • Does the product necessitate special handling, like protective packaging or swift delivery?

Factors Affecting the Choice of Distribution Channel

• Nature of the product:
  • When targeting businesses as customers, distribution tends to be direct or through specialized wholesalers.
  • For instance, JCB directly sells excavators to construction firms.
  • Similarly, specialist wholesalers like France's Bricoman cater to builders by offering consumable building supplies.
• Purchase frequency:
  • Products bought frequently, like daily necessities, are conveniently available in retail stores.
  • For example, Milka chocolate is commonly found in supermarkets across the EU.
• Product pricing:
  • Luxury items often find their best distribution through select high-end outlets.
  • Rolex watches, for instance, are exclusively sold in upscale jewelry stores.
• Product durability:
  • Perishable goods like fruits and vegetables typically flow through retailers, sometimes via wholesalers, to ensure swift sales.
• Customer proximity:
  • Widely dispersed customers often favor e-commerce as a distribution channel.
• Competition's distribution channels:
  • Effective competition often necessitates aligning distribution with competitors'.
  • Nestlé cereals, for instance, are strategically placed alongside Kellogg's cereals in various retail outlets.
• Technical specifications:
  • Products requiring detailed technical information often benefit from direct selling or retail interactions.
  • Apple Store staff, for example, provide tailored advice to customers purchasing Apple's range of devices.