Placing, my friends is the last element of the marketing mix after product, pricing, promotion, which we have covered in the previous lectures.
Placing is the process of making the right product available to the right consumer at the right time and at the right place. This is very crucial to the sale of a product. Convenience to the customer is what is necessary if the brand wants him or her to buy their goods. Of course, if a firm that sells a very technical product like a minicomputer starts placing its products on a retail store’s shelf, it will be vey stupid to expect any sales from such a placing. This is because the consumer would like to buy such expensive and complicate products from the outlet of the manufacturer or from the manufacturer itself, in order to gain sufficient information regarding its operation and every other detail.
Channel of Distribution
Channel of distribution is the route that a product takes from the point it leaves the manufacturer till it reaches the consumer. There are various channels of distribution. We will start from the one with no intermediaries ( third parties interfering between the manufacturer and consumer):
Manufacturer —————— Consumer
This is when the product is very technical, unusual and is produced on order. Examples are Heavy weapons e.g Armoured Personnel carriers, or Carbines.
The direct involvement of manufacturers with consumers gives them direct control over pricing as the accurate price will be charged without any unnecessary mark-up. Also the manufacturer can easily gauge consumer trends and its sales in the market.
However, the manufacturer will have to bear the storage costs which add to its production costs, a factor which is avoided in the other two C.O.D’s (Channel of Distribution).
This is when large retailers e.g large supermarkets are involved. An apt example of this is CSD or Metro in Pakistan who are directly involved with farmers or mills and are responsible for the bulk buying of products and storing them.
This is the most common method and involves daily use products like shampoos, soaps, clothes, appliances etc. Two Intermediaries are involves and the wholesaler buys the bulk and pays in cash to the manufacturer fter which he “breaks the bulk” which means he or she sells in smaller amounts to the retailers by either check, cash or credit. The retailers finally sell it off to the consumer. This C.O.D has a disadvantage such that the manufacturer is alienated from the consumer and cannot keep direct control on pricing, also it has no idea how its products are selling.
Now that we have seen the different channels of distribution, we can move onto the transportation of goods.
There are three main ways you can transport goods: Air, land and water. Using these methods manufacturers transport goods both inland as well as overseas.
The most common inland method of transport is road haulage, this involves, the transportation of goods by road. Lorries and vans transport goods from factories to shops and from docks to factories. This is a cheap and fast method and if the lorries belong to the business whose goods are transported, then the business can post adverts on the walls of the container as well as the truck to serve as free advertising. However, this form of transportation is only possible where there are roads, which limits its use.
The second method is that of train. This is also an efficient way of transporting goods, however, unlike trucks and lorries it cannot transport goods exactly at the spot rather they will have to be transported from the railway station to the selected place.
Transporting by sea is the cheapest form of overseas transportation. No doubt it is slow but it is suitable for large goods that are not very fragile. It is also relatively cheaper.
Transporting goods by air is the most expensive form of transport and it is only employed when the goods being transported are of a very fragile nature. It is however very fast and safe from theft.
So, these were all the forms of transportation, and now the four P’s of marketing are finally over. But before we end this lecture, the term MARKETING PLAN must be studied. Marketing plan is the strategic approach based on the packaging, pricing, promotion and placing of a product in order to market it successfully.
For instance if a company, such as a multinational is developing a smart car and is about to enter a new market like Pakistan, what should be its marketing plan?
First of all we will look at the product, it’s a smart car, let’s call it minixus. So minixus has what features? It is small, economical, fuel-efficient, eco-friendly and also stylish. With all these features in mind, we will deduce its target market. The most appropriate target market are the young people. This is because they don’t have much money to buy luxurious goods, they are attracted to the style and glossy colors of the car, they are also more green-conservative people.
Ok so lets decide on the pricing, the car will be entering a new market where there are a lot of already established competitors. These competitors are causing tough competition and in order to survive, the multinational will use price penetration. Although, this will lead to initial losses but in the long-run it will help minixus to reach higher sales and if possible brand leadership. This will be more than enough to compensate for its loss.
Now lets come to promotion. Promotion is of two types; Above-the-line and below-the-line. In above the line, the company must use television as a form of advertisement. This is because, television will cater to wider audience and minixus’s target market is dispersed throughout the country. Television also helps to make the message live longer in the consumer’s mind.
In placing, the channel of distribution to be used must be having no intermediaries, and this is because, the minixus is a technical good which requires the consumer to learn some do’s and don’ts for smooth operation. And this is only possible if the company salesperson is there to guide the consumer. This requires the minixus models to be sold at the company’s own showrooms.
Q:1 Define the term ‘Channel of Distribution’.
Ans. Channel of Distribution means the route which a product takes from the point it leaves the manufacturer till the point it reaches the consumer.
Q:2 Why is marketing mix an integral part of a product.
Ans. Marketing mix is a collective term that refers to the coordination between the product, pricing, promotion and placing.
Without marketing mix we will not be able to set the right price of the product. This could mean that we would bear huge losses as the product would not sell if the competitor’s prices are lower than the business’s.
If the promotion is not done properly and the business failed to communicate to the consumers. It would again bring down sales as the right target market might not have been targeted, and even if they had been then the advertising could have been insufficient.
Finally, if the prduct is not sold near te consumers, then the consumer would not sind it convenitent to go and buy, this would no doubt lead to zero growth in sales as the product will not be bought in the first place.