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Principles Of Logistics And Marketing: The Marketing Mix

1345 words - 5 pages

Discuss why Place, or Distribution, can become the element of the marketing mix that causes the biggest headache to the manufacturer.A Marketing Channel is a channel of distribution, or group of interrelated intermediaries which direct products to consumers Dibb & Simkin 1994A channel of distribution comprises a set of institutions which perform all of the activities utilised to move a product and its title from production to consumptionBucklin - Theory of Distribution Channel Structure (1966)Organisations achieve marketing goals through the manipulation of the marketing mix; the seven P's* Place* Product* Pricing* Promotion* Process* Physical environment* PeopleIn this assignment I am going to look at how and why companies select different methods of distribution channels. I will be looking at Place. Place is also known as channel, distribution, or intermediary. It is the mechanism through which goods and/or services are moved from the manufacturer/ service provider to the user or consumer. Chooosing the right method is vital for the company.Typical Distribution Channels: Table 1 www.bized.co.ukIn typical distribution channels, there is a manufacturer of the product, a wholesaler who acts as an intermediary to the manufacturer who then sells to retailers, who ultimately sell to the customer.Some manufacturers may decide to go directly to the retailer or the consumer skipping a stage in the distribution channel.Channels* Direct channels* Indirect channels (intermediaries)Channels of distribution are basic to the marketing strategies of firms, and have been shown to be a key element in the marketing mix.Direct channelsLooking at Table 1 you can see a diagram of how direct channelling works. No.1 on the table shows a direct link from the producer/manufacturer to the customer. It involves no inventory whatsoever. So costs are kept to a minimum.An example of a company that uses this technique is Dell. Dell has used ultra-efficient manufacturing and a direct sales approach to dominate the PC market. www.dell.com Dell computers deal with all their customers directly and exclusively, whether it is through the internet, customer service centres or mailings. They do not own shops on the high streets and they do not let other computer retailers sell their products. By eliminating the middlemen, and emphasising on cost efficient production, Dell has provided a consistent pricing edge over its rivals.Dell seemed to be holding a monopoly with the direct selling approach and other companies struggled to compete in this particular way. Customers are impressed with the innovative service and so they stay loyal to the brand regenerating business with the company over and over.The way Dell keeps its costs at and inventory so low is by only creating a notebook or desktop computer when the order has been placed. Every order is completely unique and customised to the individuals needs. The entire process from taking the order, making the P.C, to distributing the...

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