Place

Provides the product where and when the customers want to buy
Where the product is sold largely influences how will it will sell- it could lead to the product failing altogether or losing sales
It must be easy for the customers to buy the products

Channels of Distribution

The means by which a product is passed from the place of production to the customer or retailer
Each channel includes the same activities: buying, selling, promotion, storage and transportation
This could be via intermediaries or directly

Channel of Distribution 1:

Manufacturers sell their products directly to the consumer
This is a direct and personal way of selling often used when selling directly from one manufacturer to another
E.g. car parts, agricultural goods, factory outlets

Channel of Distribution 2:

Producer sells directly to the retail outlets (retailers) who then sell it to the consumer
E.g. Jewelry, furniture, supermarket

Channel of Distribution 3:

Manufacturer sells to wholesalers in large quantities and the wholesaler divides the stock into smaller portions for the retailers to buy
Retailers cannot buy very large quantities due to lack of space and short shelf-life of products, so wholesalers buy it for them.
E.g. food items

Advantages of a Wholesaler	Disadvantages of a Wholesaler
Breaking bulk	May be more expensive for the small store to buy from a wholesaler
Reduces storage space needed by the manufacturer; therefore reducing storage costs	May not have full range of products to sell (less choice)
Fewer transactions, deliveries and administration required; therefore reducing cost	Takes longer for fresh produce to reach the shops; therefore quality may fall
Faster method of selling	Wholesaler may be a long way from the small shops
Gives credit to small retailers
May deliver to small retailers; reducing transportation costs
Promotion carried out by wholesaler instead of manufacturer
Wholesaler can give advice to the manufacturer and small retailers as to what is selling well

Channel of Distribution 4 [Export Goods]:

When products are exported, manufacturers may use an agent in another country who sells on behalf of the manufacturer.
Agents are independent people or businesses that are appointed to deal with the sales and distribution of a large range of products. The agent will either put an additional amount on the price to cover expenses or will receive commission on sales.
This gives the manufacturer some control over the way the product is sold
Agents are aware of local conditions and will be in the best place to select the most effective places to sell
Manufacturer to agent to wholesaler to retailer to consumer
This is usually done in international markets only when dealing with exports

Channel of Distribution 5 [Online]:

The use of the internet and electronic communications to carry out business transactions
Manufacturers can directly sell to consumers (channel 1) or retailers can sell to consumers (channel 2)
This gives room for communication between the buyer and the seller as well as an opportunity for promotion and advertisement
Agents are often involved if the sale is international
This channel was created and has succeeded due to globalization

Advantages of E-Commerce	Disadvantages of E-Commerce
Fast and effective	Lack of trust
24-hour selling	Language barrier
Convenient for the customer	Lack of access to the technology
Low cost to set up and operate	Customers may not be aware of the website
International markets easily open
Communication is direct and easy

Selecting Channel of Distribution to Use

Methods of Distribution/Selling

Independent Retailers	Sole trader organizations
Department Stores	Large store selling a variety of products and buying from a variety of producers
Chain Stores	Two or more stores with same name/characteristics
Discount Stores	Retail stores offering a wide range of products at a discount price. These are often similar products.
Superstore	Large out-of-town stores with a wide range of products
Supermarkets	Retail grocery stores
Direct Sales	Directly from the manufacturer to the consumer
Mail Order	Advert seen in a catalogue/magazine and ordered online, via post/telephone
Internet/E-Commerce	View goods on business website and order online/via telephone/via post

Method of Transportation

	Advantages	Disadvantages	Examples
Road Haulage	CheapFast No rail tracks needed Free advertising Versatile	Cost of lease/ loan repayment/ insuranceMay be cheaper to hire a specialist transport business to transport products if the lorries are not often in use More expensive than railways Traffic	Lorries Vans
Railways	Suitable for long-distanceCheaper than road transport Faster than road over a direct route	Cannot deliver to final delivery pointLimited to railway tracks	Trains Metro
Canal/ River	Suitable for national deliveriesCheap Suitable for large, heavy products which would be more expensive to transport via rail/road	River/Canal must be available and going to where the business needs to deliver its products	Boats
Sea Freight	Suitable for international tradeVery quick Cheap to unload and reload the ships	International waters must be availableInternational water laws apply	ShipsContainers
Air Freight	Suitable for small, expensive or perishable goodsVery quick	Expensive	Airplanes
Pipelines	Suitable to transport liquids or gas over a long distanceCheaper than tankers/docks Direct route	ExpensiveLaws apply Technical know-how required	Pipes

Marketing Plan

A marketing plan is a business document written for the purpose of describing the current market position of a business and its marketing strategy for the period covered by the marketing plan (usually 1-5 years)
The purpose of a marketing plan is to clearly show what steps or actions will be taken to achieve the plan goals.
It is a combination of all four P’s

What to Include
Product	DesignPerformance Logo Target audience (may include labelled drawing of product)
Price	Pricing strategy
Promotion	Advertising methodsAdvertising media
Place	Location

Business Studies IGCSE