Marketing decisions (Edexcel GCSE Business): Revision Notes
Place in marketing decisions
What is place?
Place refers to how businesses make their products and services accessible to customers at the right time and location. It's about ensuring customers can easily find and obtain what they want to buy. Businesses have several different pathways they can use to get their products from production to the customer's hands.
The "place" element of the marketing mix is sometimes called "distribution" - both terms refer to the same concept of getting products to customers efficiently.
Distribution channels
There are four main ways businesses can distribute their products to customers:
Traditional retailing (Channel 1)
This is the most common route where products flow from the manufacturer to a retail shop, and then customers visit the shop to make purchases.
Real-World Example: High Street Shopping
Think of buying clothes from high street stores like Next or purchasing groceries from Tesco. The manufacturer (clothing factory or food producer) sells to the retailer (Next or Tesco), who then sells directly to you in their physical stores.
Direct retailing (Channel 2)
Here, businesses sell directly to customers through their own retail outlets, cutting out the middleman.
Real-World Example: Apple Stores
Apple manufactures their products and sells them directly through their own shops. This gives Apple complete control over the customer experience and keeps all the retail profit margins.
Direct selling (Channel 3)
This involves manufacturers selling straight to customers without any retail shops involved. Many online businesses like those selling through social media or direct websites use this approach.
Real-World Example: Online Direct Sales
Many small businesses sell directly through Instagram, Facebook, or their own websites. A handmade jewellery maker might sell directly to customers through their website, eliminating any retail middlemen.
Third-party e-tailing (Channel 4)
Manufacturers sell their products through online platforms run by other companies.
Real-World Example: Amazon Marketplace
Amazon is the most famous example - many different manufacturers sell their products through Amazon's website, with Amazon acting as the online retailer and handling customer service, delivery, and returns.
Advantages of traditional retailing
Physical shops offer several important benefits that keep them relevant in today's digital world. Customers can physically examine products before buying, which is especially important for items like clothing or furniture where quality and fit matter. Shop staff can provide personalised help and expert advice, creating a better customer experience.
The ability to "touch and feel" products remains a significant advantage for physical stores, particularly for categories like fashion, furniture, and electronics where customers want to assess quality firsthand.
Retail stores also enable special promotional displays and point-of-sale marketing that can encourage impulse purchases. Many people genuinely enjoy the social experience of shopping in physical stores, making it both a practical and recreational activity.
Advantages of e-tailing
Online selling provides significant cost advantages since businesses don't need to pay for expensive high street rental space or employ as many staff members. This can lead to lower prices for customers and higher profit margins for businesses.
E-tailing offers incredible convenience - customers can shop 24 hours a day, seven days a week, from anywhere in the world. This global reach means businesses can access far more potential customers than they could through physical stores alone.
E-commerce has democratised retail by allowing small businesses to compete globally without the massive overhead costs traditionally associated with retail expansion.
For smaller businesses, online selling creates opportunities to compete with much larger companies without needing substantial investment in physical retail space.
Location considerations for retail stores
When businesses decide to open physical shops, location becomes absolutely critical to success. Several key factors must be carefully evaluated:
Poor location choice is one of the most common reasons for retail business failure. Unlike online businesses, physical stores cannot easily change their location once established, making this decision crucial.
Cost considerations include not just rent or purchase prices, but also business rates, utilities, and maintenance expenses. Prime locations cost more but may generate higher sales volumes.
Proximity to competitors can work both ways - being near similar businesses might increase overall customer traffic to the area, but it also means direct competition for the same customers.
Access to workers matters because retail businesses need staff, so being near residential areas or transport links helps with recruitment and reduces staff travel difficulties.
Resources and transport connections affect how easily businesses can receive stock deliveries and how conveniently customers can reach the store, whether by car, public transport, or on foot.
The importance of each factor varies depending on the specific business type and target market.
Why place matters in marketing
Getting place decisions right significantly impacts business success. When products are easily accessible to customers, this increases customer awareness and makes purchasing more convenient. Better accessibility typically leads to increased sales over time, as customers are more likely to buy when products are readily available where and when they want them.
Place works alongside the other marketing mix elements - even excellent products at competitive prices with great promotion will struggle if customers can't easily access them.
Key Points to Remember:
- Place is about making products accessible to customers when and where they want them
- There are four main distribution channels: traditional retailing, direct retailing, direct selling, and third-party e-tailing
- Physical stores offer customer experience benefits like browsing, personal service, and immediate possession
- Online selling provides cost savings, 24/7 availability, and global market access
- Location factors for physical stores include cost, competitor proximity, labour access, and transport links