PLACEMENT

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PLACEMENT
MARKET SEGMENTATION It is very unlikely a firm
can produce a universal product which suits
everyone. WHY? As a result firms must identify a
specific group/s of consumers, i.e. utilize
limited resources to achieve high levels of
efficiency. E.g. different clothes firms target
different groups, with regard to age,
geographical area, lifestyle, price
etc. DISTRIBUTION CHANNEL MEMBERS These include
wholesalers, agents, brokers and
retailers. Transportation is a service to channel
members and is usually provided by specialist
sub-contractors. E.g. frozen foods and fresh
foods need different vehicles, timescales etc. A
producers decisions related to place (called
channel decisions) are complex and important as,
unlike promotion and price, once it is
implemented it is very difficult to change with
any speed. WHY DO WE NEED ALL THE CHANNEL
MEMBERS? WHY CANT WE JUST HAVE PRODUCERS AND
RETAILERS? (we need middlemen to speed and
facilitate distribution)
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WHOLESALERS/ MERCHANTS Buy in bulk from producers
and then sell onto retailers. Wholesaler accepts
risk of loss/ damage/ changes in
fashion. Advantage to producers- Only needs one
lot of administration, get paid up-front, also
they can do what they do best production.
DISADVANTAGES? Advantage to retailers- Wholesaler
bears distribution costs, storage, transport,
risk etc. BUT gets products cheaper due to bulk
buying (and put mark-up on sales). AGENTS Have
specialist sales expertise in their field,
provide producers with skills they dont have. No
agents own what they sell, e.g. Estate agents-
make money via commission. BROKERS Put buyers and
sellers in touch. They offer the seller
specialist knowledge, e.g. stock broker, ship
broker etc. Usually paid by commission. Millions
of pounds are traded at a nod, e.g. in London
metal exchange, London commodity
exchange. RETAILERS These are the most visible
channel member. Buy goods from producers or
wholesalers and sell to final consumers. Their
depth of product lines and product mix depends on
their objectives, e.g.? Retailer supplying to
households A, B and C will have different stock
to one selling to C2, D and E (location, service
etc will also be affected). Types of outlet are
classified via ownership of product assortment.
The two main types are Department
stores Multiple stores