Distribution (Place)

What Does "Place" Mean in the Marketing Mix?

In the marketing mix, place refers to how a product is distributed from the business to the end consumer - the route it takes through the supply chain. This is also called the distribution channel. Getting the place element right is about making the product available where and when the target customer wants to buy it. Even an excellent product at the right price with outstanding promotion will fail to sell if customers cannot easily access it.

The Edexcel specification focuses on two main distribution methods: retailers and e-tailers (e-commerce).

Methods of Distribution

A retailer is a business that sells products directly to consumers through physical stores - supermarkets, specialist shops, department stores, independent retailers. Selling through retailers means the manufacturer does not deal directly with the end consumer; instead, it supplies the retailer, who then sells to the public.

Advantages of using retailers: Products are placed in front of large numbers of customers who are already in a buying environment. Physical retail allows customers to see, touch, and try products before purchasing - important for items like clothing, food, or high-value goods. Well-placed products in a major supermarket or chain store can generate enormous sales volume very quickly.

Disadvantages: The retailer takes a margin, reducing the profit the manufacturer receives per unit. The manufacturer loses direct contact with the end consumer. Retailers have considerable bargaining power and can demand promotional support, shelf fees, or unfavourable payment terms. The manufacturer is dependent on the retailer's decisions about stocking, placement, and pricing.

An e-tailer sells products to consumers online, either through a business's own website or through a third-party marketplace such as Amazon, eBay, or Etsy. E-commerce has been one of the most transformative forces in retail over the past two decades.

Advantages of e-commerce: Removes geographic constraints - a business can sell to customers nationally or internationally without physical premises in each location. Operating costs are lower (no retail rent; lower staffing needs). The website operates 24/7. Direct-to-consumer selling removes the retailer margin, increasing revenue per sale. Rich data about customer behaviour and preferences is collected to improve marketing.

Disadvantages: Customers cannot physically inspect products before buying, which can lead to higher return rates - particularly for clothing, footwear, and furniture. Building a trustworthy, well-designed e-commerce platform requires upfront investment. Competition is intense - the same product is often just a click away at a lower price from a rival. Delivery logistics must be reliable to meet customer expectations.

Many businesses now use a hybrid model - combining physical retail with an online presence to reach customers through both channels. This "omnichannel" approach maximises reach while accommodating different customer preferences.

Choosing the Right Distribution Channel

The optimal distribution method depends on the nature of the product, the target customer, and the business's size and resources. Key questions include:

  • Does the customer need to see or try the product before buying?
  • How quickly does the product need to reach the customer?
  • What are the costs and margins associated with each channel?
  • What channel does the target market segment prefer or primarily use?
  • Does using retailers or third-party marketplaces align with the product's brand positioning?

A luxury perfume brand, for example, would be very selective about the retailers it uses to protect brand image - selling through a discount retailer might damage its premium positioning. Conversely, a commodity household product benefits from the widest possible distribution through every available retailer and online platform.

 Key Takeaways

  • Place refers to how and where a product is made available to the consumer - the distribution channel.
  • Retailers provide physical access to large customer volumes but take a margin and reduce the manufacturer's direct control.
  • E-tailers remove geographic limits, reduce costs, and enable direct customer relationships, but face return rate challenges and intense online competition.
  • Many businesses adopt a hybrid model, combining physical and online channels to maximise reach.
  • The right channel depends on: the product type, the target segment's preferences, the brand's positioning, and the cost-revenue trade-off of each option.