The place mix is an ingredient of the marketing mix that ensures an effective distribution of goods and services. It involves all the activities taking place from production to delivery.
WHAT IS THE PLACE MIX?
We know that place or physical distribution is an important element of the marketing mix.
Place mix refers to the important decisions that a firm has to take in regards to the physical distribution of the goods.
This includes primarily two decisions –
- Channels of distribution
- The physical movement of goods and services, i.e., transportation.
WHAT ARE THE CHANNELS OF DISTRIBUTION?
Channels of distribution refer to the people who help in distributing goods. These people are often referred to as the middlemen.
Distribution of goods from the place of production to the place of consumption, which could be anywhere throughout the country, is not an easy job. Hence the producer needs the help of middlemen.
Wholesalers and retailers are the most common type of channels of distribution through which goods are distributed.
Channels make things easy not only for the producer but for the consumers as well, as they can find goods and services near them only.
There are mainly two types of Channels Levels –
ZERO LEVEL CHANNEL/ DIRECT CHANNEL
When a firm sells its product directly to the customers without the help of any middlemen, it is called direct channel of distribution.
Types of direct channels may include –
Orders by mail
To understand indirect channels of distribution we need to understand its following three levels –
One level channel
The only middlemen or intermediary that firms adopt at this level is- retailer. The flow of goods here is –
Two level channels
This is the most common channel of distribution. In this, there are two middlemen- wholesalers and retailers.
The flow of goods here is-
Firm➜ Wholesaler➜ Retailer
Three level channels
In this, there are three intermediaries or middlemen involved. These middlemen are distributors, wholesalers, and retailers.
Distributors are solo agents that distribute goods of a firm in deep corners of the country.
The flow of goods here is-
Frim➜ Distributor➜ Wholesaler➜ Retailer➜ Customer
WHAT ARE THE COMPONENTS OF PLACE MIX?
There are 4 main components of place mix. Firms need to make decisions on these components to have a smooth movement of goods.
Order processing refers to the steps involved between an order from a customer and the delivery of goods according to it. This generally involves multiple steps like order placement to salesman, order transmission to company, credit chart, inventory, production schedule situation, delivery, etc.
Time management is the key factor to keep in mind in order processing.
Companies are now opting for IT-based systems of order processing to make it fast and attain customer satisfaction.
Transportation refers to the physical movement of goods from the place of production to the place of consumption.
There are various means of transportation for goods like Trains, Roadways, Airplanes, Water transports, etc. According to the need, firms can adopt the different modes of transportation. These modes are evaluated based on speed, frequency, availability, and cost.
There are a variety of goods that are manufactured by a company. Some goods have seasonal demands, some just don’t get sold off quickly, some are manufactured in bulk and sold out gradually. For such goods firms need to have a place to store them.
Warehousing is a way of storing different goods until it’s time to sell them. Warehouses are houses that are designed for the sole purpose of storing these goods.
Whether a firm has its own warehouse or uses a hired one, both cases involve cost. So a firm must create a balance between the cost involved in warehouses and the benefits it offers.
Inventory refers to the maintenance and accounting of stocks of goods. A proper inventory tracks ad maintains the components of goods and ensures product availability.
Inventory also involves cost. This includes the cost of capital blacked in and the risk of price fluctuation.
The place mix deals with decisions taken to make the product available to the customers.
To maintain a firm’s reputation and constant customer base, customers must get the desired products and services at the right and place at the right time.