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Unlock This CoursePlace (or Distribution) is one of the 4Ps in the Marketing Mix, alongside Product, Price and Promotion. It refers to how and where products are delivered to customers. Getting the 'Place' element right means ensuring your product is available in the right location, at the right time and in the right quantities.
Key Definitions:
In the early 1900s, Cadbury revolutionised chocolate distribution in the UK by developing a network of small shops and vending machines. This made their chocolate accessible to millions of new customers who previously couldn't easily buy confectionery. This distribution innovation was just as important to their success as the quality of their chocolate!
Distribution channels can be categorised based on their length (how many intermediaries exist between producer and consumer) and the type of product being distributed.
Products move directly from producer to consumer with no middlemen. Examples include farm shops, manufacturer's own retail stores and many online businesses.
Advantages: Higher profit margins, direct customer relationships, control over the customer experience.
Disadvantages: Limited reach, higher costs for the producer, requires expertise in retail/distribution.
Products move through one or more intermediaries before reaching the consumer.
Advantages: Wider market reach, specialised expertise at each stage, shared distribution costs.
Disadvantages: Lower profit margins, less control over the final customer experience, potential communication issues.
Distribution channels can have different numbers of intermediaries:
Producer → Consumer
Example: A farmer selling vegetables at a market stall
Producer → Retailer → Consumer
Example: A clothing manufacturer selling through Next
Producer → Wholesaler → Retailer → Consumer
Example: Food products sold through cash-and-carry then corner shops
Businesses must decide how widely they want their products to be available. There are three main approaches:
Products are sold in as many outlets as possible.
Best for: Convenience goods, low-cost items, products with high purchase frequency.
Example: Coca-Cola, available in almost every shop, restaurant and vending machine.
Products are sold through a limited number of carefully chosen outlets.
Best for: Shopping goods, mid-range products where consumers will make some effort to find them.
Example: Levi's jeans, available in selected clothing retailers but not everywhere.
Products are sold through very few outlets, often with exclusive rights for a geographic area.
Best for: Luxury goods, specialist products, high-value items.
Example: Ferrari cars, available only through official Ferrari dealerships.
When deciding on a distribution strategy, businesses need to consider:
Innocent began by selling their smoothies at a music festival, asking customers to throw their empty bottles into 'Yes' or 'No' bins to decide if they should start a business. They initially distributed through small independent cafes and health food shops, building a premium brand image. As they grew, they expanded to supermarkets but maintained their premium positioning by using refrigerated displays rather than ambient shelving. This strategic distribution approach helped them grow from a small start-up to a brand that Coca-Cola eventually bought a stake in for £30 million.
The rise of online shopping has dramatically changed distribution strategies for many businesses:
Many traditional retailers have struggled with the shift to online shopping. Businesses like Toys R Us and Blockbuster failed partly because they didn't adapt their distribution models quickly enough to the digital age.
Online channels allow businesses to reach customers directly, gather data on purchasing habits and often reduce costs. Companies like ASOS have built successful businesses with online-only distribution models.
Many successful retailers now use an omni-channel approach, integrating multiple distribution channels to provide a seamless customer experience:
John Lewis has successfully implemented an omni-channel strategy. Customers can shop in-store, online, or via their mobile app. They offer same-day click and collect services through their Waitrose stores, extending their reach. Their distribution centres are designed to handle both store replenishment and individual online orders. This integrated approach has helped them remain competitive despite challenges in the retail sector.
Environmental concerns are increasingly influencing distribution decisions:
Companies like Lush have made sustainable distribution part of their brand identity, using minimal packaging and encouraging customers to return containers for recycling.
The 'Place' element of the marketing mix is about getting your product to customers in the most effective way. Remember:
A well-planned distribution strategy ensures your products are available to the right customers, at the right time, in the right place – making it a crucial component of business success.