Marketing Mix: Place and Promotion — notes

A channel of distribution is the route, with its middlemen, through which goods pass from the producer to the final buyer. Middlemen (wholesalers, retailers, agents) break bulk, store, give credit, assemble assortments and reach scattered buyers.

Levels:

• Zero-level (direct): Manufacturer → Consumer (own shops, door-to-door, own website).
• One-level: Manufacturer → Retailer → Consumer.
• Two-level: Manufacturer → Wholesaler → Retailer → Consumer.

Factors in choosing a channel:

• Product — perishability, unit value, technical nature, standard or made to order.
• Market — number and size of buyers, their location, size of orders, consumer or industrial buyers.
• Company — financial strength, desire for control, own sales staff.
• Competition — channels used by rivals.

Physical distribution covers the activities involved in moving goods physically from the producer to buyers at the right place and time.

Elements:

• Order processing — receiving, checking and preparing orders for dispatch.
• Transportation — moving goods to where buyers are.
• Warehousing — storing goods, often near markets, until needed.
• Inventory control — maintaining the right level of stock: enough to meet orders without locking up too much money.

Promotion is communication by a firm to inform, persuade and remind buyers about its products. The promotion mix is the combination of advertising, sales promotion, personal selling and publicity (public relations).

Roles: inform (new products), persuade (choose this over rivals), remind (keep a known product in mind).

Advertising — a paid, impersonal form of communication about a product by an identified sponsor. Features: paid, impersonal, one-way, wide reach, low cost per person. Objectives: inform, persuade, remind, build image, support salespeople.

Sales promotion — short-term incentives to encourage immediate buying: discounts, coupons, free samples, contests, quantity offers, gifts. It supplements advertising and personal selling.

Personal selling — face-to-face, two-way presentation to prospective buyers to make a sale. Features: personal contact, flexibility, relationship building, immediate feedback; high cost per buyer.

Publicity — unpaid, non-personal coverage of a firm or product in the media; not controlled by the firm but highly credible.

Choosing a tool: few buyers or technical, costly products → personal selling; a large, scattered market → advertising; quick sales or clearing stock → sales promotion; a newsworthy story → publicity.