Chapter 13 - Marketing Mix, Place and Promotion
Lesson Objective: To be introduced to the third and fourth decisions of the Marketing Mix
You have learned two of the four elements of the Marketing Mix: Product & Price. We are now going to discuss the last two elements: Place and Promotion!
Place is all about where you sell your product - your distribution channels - getting your product in the hands of the customers.
Promotion, on the other hand, is how you inform and convince customers about your offering!
Let's start by diving in to Place! How do companies get their products in the hand of their customers?
There are different ways a company can develop its distribution channels:
Direct Selling (0 intermediaries): from producer directly to consumer;
Through Retailers (1 intermediary): selling your products to retailers who will then sell to the final customer;
Through Wholesalers (2 intermediaries): selling the product to wholesalers, who sell to retailers, who sell to the final consumer.
One last method is making use of agents: commonly used for businesses entering a new geographical market (3 intermediaries):
It's obvious that every time a new intermediary is added on the distribution channel the cost of the product will increase to the final customer;
To remain competitive with an acceptable price some manufacturers will charge lower for their products to intermediaries so that the final consumer is not heavily impacted (manufacturers will have a lower profit margin).
Discussion:
If you were a business, which of the 4 distribution channels would you choose? And why?
When choosing the best distribution channel companies will oftentimes look at two main variables:
1. Costs:
Transportation Costs:
- Should the company have its own transportation methods? Or have wholesalers and retailers handle those?
- Which option is the most cost-effective and will get the product to the customer timely and safely?
2. Nature of The Product:
- Some products need to get to customers quickly from the manufacturer (veggies);
- Some products need special transport (frozen goods, fragile goods).
Activity 13.1 (p. 180)
The fourth and last element of the Marketing Mix is Promotion, which concerns with informing and persuading customers to increase sales. Promotion = communication!
- Attracting customers' attention and remind them of the product'
- Persuading customers to buy;
- Pointing out the product's advantage over competitors' products;
- Creating and developing brand image;
- Encouraging wholesalers and retailers to stock up on the product;
- Reassuring customers in case of a problem.
To-Do List:
Activities 13.1 & 13.2
Chapter 13 - Marketing Mix, Place and Promotion
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