Place

PRINCIPLES OF
MARKETING
OBJECTIVES:
At the end of the lesson, the students
will be able to:
-understand the concepts about
place and supply chain management
-determine the different types and
structures of distribution channel
and the role of marketing
intermediaries in distributing
products.
LET’S GET STARTED!!

INTRODUCTION:
IT IS IMPORTANT FOR FIRMS TO CREATE QUALITY PRODUCTS AND PRICE THEM
AFFORDABLY. HOWEVER, IT IS ALSO EQUALLY NECESSARY TO PLACE THEM IN
CONVENIENT AND STRATEGICALLY LOCATED AREAS TO PROVIDE CUSTOMERS
EASY ACCESS AND GIVE THE COMPANY A SIGNIFICANT ADVANTAGE.
COMPANIES MUST STRATEGIZE HOW TO USE DISTRIBUTION CHANNELS AND
THE MEANS THROUGH WHICH PRODUCTS WILL BE SOLD. THESE CHANNELS
MUST BE DESIGNED TO CATER TO CUSTOMER PREFERENCES. LOGISTICS AND
OTHER CONCERNS MUST ALSO BE TAKEN INTO CONSIDERATION.
PLACE
>PLACE IS THE CONSIDERATION OF WHERE THE PRODUCT SHOULD BE
AVAILABLE , IN BRICK-AND-MORTAR STORES AND ONLINE, AND
HOW IT WILL BE DISPLAYED
DISTRIBUTION CHANNELS
>A DISTRIBUTION CHANNEL OR MARKETING CHANNEL IS THE PATH
THAT A PRODUCT TAKES BEFORE IT IS SOLD TO THE CUSTOMER. THE
DISTRIBUTION CHANNEL IS AN IMPORTANT ELEMENT OF THE
MARKETING MIX, AS IT DETERMINES WHERE AND WHEN THE
PRODUCT WILL BE AVAILABLE TO CUSTOMERS.
MARKETING INTERMEDIARIES IN
DISTRIBUTION CHANNELS
DISTRIBUTION CHANNELS MAINLY INVOLVE MARKETING INTERMEDIARIES,
WHICH REFER TO THE INDIVIDUALS OR BUSINESSES THAT SELL PRODUCTS TO A
FIRM OR ANOTHER VENDOR, OR TO THE CUSTOMERS THEMSELVES
WHOLESALERS ARE INDEPENDENTLY-OWNED FIRMS THAT PURCHASE AND

SELL GOODS IN BULK QUANTITIES TO VENDORS AND BUSINESSES.THESE
GOODS ARE OFTEN OWNED BY THE WHOLESALERS THEMSELVES, AND ARE SOLD
UNDER THEIR NAME. SUPPLIERS OF GOODS ARE AN EXAMPLE OF
WHOLESALERS.
RETAILERS ARE INDIVIDUALS OR GROUPS OF PEOPLE WHO SELL GOODS

DIRECTLY TO CONSUMERS. THEY PURCHASE THEIR GOODS FROM
WHOLESALERS OR FROM OTHER MARKETING INTERMEDIARIES. EXAMPLES OF
RETAIL BUSINESSES ARE THE SARI-SARI STORES FOUND ALL OVER THE
COUNTRY, AND STORES THAT FORM LARGE BUSINESS CHAINS SUCH AS
MERCURY DRUG.
LIKE WHOLESALERS, DISTRIBUTORS ALSO SELL BULK PRODUCTS TO OTHER

BUSINESSES AND VENDORS. HOWEVER, UNLIKE WHOLESALERS,
DISTRIBUTORS ONLY SELL NON- COMPETING PRODUCTS AND PRODUCT
LINES.FOR EXAMPLES, MCKENZIE DISTRIBUTION INCORPORATED SELL DOLE
AND GATORADE PRODUCTS. THESE PRODUCTS DO NOT NECESSARILY COMPETE
WITH ONE ANOTHER, AS GATORADE IS A BRAND OF ENERGY DRINKS,WHILE
DOLE IS A BRAND OF PRESERVED FRUIT PRODUCTS.
AGENTS ARE INDIVIDUALS WHO REPRESENT A MANUFACTURER OR A
COMPANY TO CONVINCE BUYERS TO PURCHASE THEIR PRODUCTS.
AGENTS,HOWEVER, DO NOT OWN THESE PRODUCTS. AGENTS USUALLY EARN
COMMISSIONS OR OTHER FEES, BUT ARE ALSO EXPECTED TO MEET A QUOTA IN
SELLING A CERTAIN PRODUCT.
TYPES OF DISTRIBUTION CHANNELS

THERSE ARE TWO MAIN TYPES OF DISTRIBUTION CHANNELS: THE DIRECT
MARKETING CHANNEL AND THE INDIRECT MARKETING CHANNEL. THESE
CHANNELS MAY BE IMPLEMENTED THROUGH VARIOUS STRUCTURES
THE STRUCTURE OF A DIRECT MARKETING CHANNEL IS COMPOSED OF TWO

LEVELS: THE MANUFACTURER AND THE END CONSUMER.
MANUFACTURER --------------- CONSUMERS
In this structure, the manufacturer sells directly to the consumers.
The indirect marketing channel, on the other hand, is the traditional

distribution channel structure implemented by most firms. In this structure,
the manufacturer sells to the wholesaler, who in turn sells to retailers. The
retailers finally sell the product to the consumers.
The first type of indirect channel is composed of four levels: the manufacturer,
wholesaler, retailer, and end consumers. This can be considered the traditional
distribution channel structure.
MANUFACTURER ---WHOLESALER ---RETAILER --- CONSUMERS
In this structure, the manufacturer creates goods which are bought by the
wholesalers. The wholesaler then sells the products to retailers. Finally, small
retailers such as sari-sari stores sell the products to the end consumers.
In the second indirect marketing channel structure, wholesalers no longer

participate in the distribution of products. This role is taken by big retailers
such as shopping malls.
MANUFACTURER ------------ BIG RETAILER --- CONSUMERS
In some cases, big retailers can prevent a manufacturer from interacting with
them. One example is the conflict between SM City Malls and Colgate, which
resulted in SM malls refusing to sell Colgate products in its branches.
The last structure of the indirect channel is also composed of three levels. This
structure, however, replaces big retailers with online stores.
MANUFACTURER --------- ONLINE RETAILER --- CONSUMERS

Online stores order or purchase products from manufacturers. These stores
then sell these products directly to customers through social media sites such
as Facebook, Twitter, and Instagram. Other Internet platforms that serve as
online stores include Lazada, OLX Philippines, and DavaoSale.com
OTHER EXAMPLES OF DISTRIBUTION CHANNELS
Over time, distribution channels have evolved into other different types and variables. Through
these extended variations of direct and indirect marketing channels, customers are able to
access products and services at their convenience. In some cases, these extended variables also
allow customers to purchase products and services at a cheaper price.
Vending machines have automated mechanisms which dispense products to customers upon
inserting the correct amount of money into the machines.
Sidewalk kiosks and stores allow customers to purchase products on the streets. Vegetables,
fruits , meat and fish products, and street food are often sold in sidewalk kiosks and stores at
cheaper prices than in malls and other high-end retail stores.
Home services involve personal visits from company personnel to provide services at the
customer's home
Gray marketing channels, meanwhile, refer to the unauthorized distribution of genuine
products. Gray marketing offers products at cheaper prices but customers have less
assurance that the manufacturing company will address problems with the product or
service.
INTENSITY OF DISTRIBUTION
The intensity of distribution refers to the degree with which marketing intermediaries
are involved in the distribution and selling of products. Based on intensity, distribution
may be classified as exclusive, selective, and intensive.
Exclusive Distribution employs only one intermediary in a specific area. Companies use this
type of distribution when they want to maintain control over the production and the selling
of their products.
Selective Distribution utilizes several intermediaries in specific areas. Products sold through
selective Distribution are often sold in high-end malls and retail stores.
Intensive Distribution involves selling of products in as many as outlets as possible. Food,
toiletries, and other consumer products are often sold through intensive distribution.
VERTICAL AND HORIZONTAL MARKETING

SYSTEMS
Vertical and horizontal marketing systems help companies manage their distribution
channels, ensure efficiency in the distribution of products, and avoid conflict amping
the people involved.
Vertical Marketing System (VMS) involves all the intermediaries in selling a product or
delivering services under the same manufacturer. A vertical marketing system gives the
manufacturer greater control over the costs and logistical aspects of the product sales and
distributions.
Horizontal Marketing System (HMS) two or more seperate companies work together to
improve their sales performances. Even though these companies are seperate, they all
belong to the same channel level.
MEANS OF SUPPORT FOR DISTRIBUTION
CHANNELS
Customers experience and satisfaction can be further ensured through various means of
support for distribution channels. These means of support help customers purchase
products and services at their own convenience while giving companies another means
of selling their offerings and learn about the concerns of their customers.
Online Banking can be used to pay for products and services of customers convenience.
Debit and credit cards when making purchases. Debit cards allow transactions wherein in a
certain amount is deducted from customer's balance. Credit cards, on the other hand, can
serve as a temporary replacement for cash.
Telemarkering, involves the direct contact with potential customers through telephone or the
internet.
CONCERNS IN UTILIZING DISTRIBUTION
CHANNELS
Several concerns in the use of distribution channels involve the delivery of products and
the relationship between businesses.
Logistical Concerns involve the movement and storage of the products or services being sold
and the management of the people taking part in selling the product.

Failure to meet the demand arises when stores have insufficient supply of the product being
sold, or when there is an insufficient number of employees to deliver a service.

Presure from the Channel Leaders, channel leaders are large-scale organizations or
companies that have greater control over the marketing actions of small businesses. The
smaller the businesses are referred to as a channel mbers. A channel leader may demand
channel mbers to contribute to its financial growth.
The Presence of Franchised Chain Stores pertains to the proliferation of well-known
franchised stores in certain areas which can greatly affect similar local stores.
SUPPLY CHAIN MANAGEMENT

The supply chain organizes the parties and activities involved in the production and delivery
of goods and services in an orderly and logical sequence. These parties include suppliers;
intermediaries such as the wholedsaler, retailer, and the distributor; and the customers as
the end point.
The activities in supply chain are classified into two categories: upstream and downstream.
• Upstream activities such as managing raw materials, inbound logistics, and storage
facilities are performed by suppliers.
• Downstream activities are performed by the intermediaries such as the wholesalers and
retailers.
UPSTREAM DOWNSTREAM
SUPPLIER > MANUFACTURER > WHOLESALER > RETAILER > CONSUMER
✓ Businesses are expected to effectively manange their activities at every stage of the
supply chain to distribute their products and deliver services successfully. In turn,
customers will have easier access to product, and the image of the store or the company
is improved.
THANK YOU!!!

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PRINCIPLES OF

LET’S GET STARTED!!

WHOLESALERS ARE INDEPENDENTLY-OWNED FIRMS THAT PURCHASE AND

RETAILERS ARE INDIVIDUALS OR GROUPS OF PEOPLE WHO SELL GOODS

LIKE WHOLESALERS, DISTRIBUTORS ALSO SELL BULK PRODUCTS TO OTHER

TYPES OF DISTRIBUTION CHANNELS

THE STRUCTURE OF A DIRECT MARKETING CHANNEL IS COMPOSED OF TWO

The indirect marketing channel, on the other hand, is the traditional

In the second indirect marketing channel structure, wholesalers no longer

MANUFACTURER --------- ONLINE RETAILER --- CONSUMERS

VERTICAL AND HORIZONTAL MARKETING

SUPPLY CHAIN MANAGEMENT

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