"Place" in the 4Ps of Marketing Mix
Customer needs, along with the nature of the product, significantly impact product distribution
Published by Rina Villaruel. .Planning Bestpractice Internationalisation Export International marketing International marketing
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To be successful, a marketing mix strategy must necessarily be based on a number of specific levers, of which the most important are Product, Price, Place (or distribution) and Promotion. As pointed out in previous articles, the companies' interpretation of these variables affects, on the one hand, the development of the company's offer and, on the other, the quality of the product for a given market and target customers.
Among the four variables mentioned above, the distribution of a product/service deserves special attention. By distribution, we mean the activities set up by several operators, all having the purpose of making the product or service accessible to the greatest number of potential consumers, in the moments and places where they wish to purchase it. Thus, in this phase, in addition to the company, some commercial intermediaries (wholesalers and retailers) could also intervene. They are the set of all the subjects that actively participate in the distribution phase.
In order to adopt an effective distribution policy, a company should therefore consider all the elements that inevitably affect the sales process of its product, planning every choice attentively.
These considerations become even more important if you decide to sell abroad. A full understanding of the customer target and the nature of the product is of utmost importance for distribution channel's decisions to succeed over the long run.
Customer base and sales location
First and foremost, the distribution policy in the marketing mix depends on the customers: where will they be able to buy the product? One of the main tasks of distribution channels is, indeed, to make products available at the times, in the places and in the manner desired by consumers. The environment influences customer's perception, as much as the quality of the product: a store's design shaped on the consumer's needs can increase the pleasure, together with the propensity to buy.
Despite the widespread diffusion of e-commerce, physical distribution channels are still largely exploited by companies, as store design becomes an innovative way to shape the customer experience. It is here, in fact, that the customer experience comes to fruition, declined both on a sensory and emotional level, as well as from a cognitive and physical point of view.
The nature of the product and the choice of intermediaries
In addition to the customer's preferred sales location, it is necessary to adopt the distribution methods that best suit one's offering. In a nutshell, an exporting firm must be able to answer the following question: "Which distribution channel is best suited to the essential characteristics of my product?". Distribution strategies can basically be grouped into three models, which differ according to the number of intermediaries included in the sales process:
- The intensive distribution involves the choice of a large number of intermediaries, in order to cover as much of the market as possible.
- Selective distribution makes use of a small number of outlets, with the main aim of displaying products in highly selected retailers.
- Exclusive distribution involves very few intermediaries, each of whom is the only one to sell the product in a given geographical area: it is the opposite of intensive distribution.
Thus, it can be affirmed that the very nature of a product has a significant effect on the type of distribution. For this reason, while companies specializing in consumer goods or products subject to so-called "impulse purchases" (chewing gum, candy, etc.) will tend to adopt choices aimed at intensive distribution, selective distribution is preferable for tech products (such as computers). The latter, in fact, will have to be sold by specialist stores, so that customers can buy after having properly compared different offers. If particular products or services require strong synergies between manufacturer and retailer, exclusive distribution will be adopted. The most common examples of sectors that use a network of dealers are automobiles and, in general, all those sectors that require continuous user assistance for adjustments, repairs, training, etc.
To sum up, it is possible to observe that consumer preferences and the nature of the product must be properly considered when choosing a sales channel. Modern business operators can not afford to improvise, as the market becomes more difficult every day and the "selling machine" more and more expensive and complex to manage. It will be up to the companies to make the best choices in order to play key roles in global markets.