Our third P is placement. This aspect of the marketing mix focuses on making a product conveniently accessible to potential customers. For most products, placement involves the physical movement of a product from manufacturer through a series of marketing channel intermediaries ending with the independent retailer. This retailer then provides a number of important functions like displaying the product upon it shelves and educating its staff about it's features so they can help sell it to potential customers. Coke is a great example of a firm that has effectively employed this aspect of the marketing mix. Coke distributes is product, really it's formula, to a network of over 250 bottling partners around the world. These distributors mix the coke formula with water, bottle it, and ship these bottles or cans to a network of warehouses, which in turn distribute this product to over 16 million retailers in more than 180 countries around the world. These retailers include not only grocery stores, but also convenience stores, restaurants, movie theaters, and vending machines. It is nearly impossible to walk into a store in most parts of the world and not to be able to buy a bottle or a can of Coke. That's good placement. The placement portion of the marketing mix has a number of key concepts including inventory management, logistics, and sales force management. In this module, we will focus on two fundamental concepts, distribution and retailing. The distribution channel used by most firms is typically outsourced to a series of independent firms, like an importer, a wholesaler, and a retailer. For example, take a look at the distribution channel for imported flowers. The distribution process is often lengthy and requires substantial resources in terms of both time and money. Each member of this channel is typically independent from the other members. So each participant is trying to maximize their revenues while minimizing their cost. As a result, conflicts and misunderstandings among channel members often arise. In order to properly manage this channel, a manufacturer needs to carefully select and closely monitor each of his channel partners. This is a very difficult and costly endeavor that typically drives up the price of this products. The retailer is typically the final step in the distribution chain. Selecting the type and number of retailers is an important decision because it affects the type and number of customers that can acquire a product. For example, firms that produce luxury goods like Louis Vuitton employ an intensive placement strategy by making their products available at only a few exclusive retailers. In contrast, lower priced consumer goods like toothpaste and shampoo, typically employ an extensive placement strategy by making their products available to as many different retailers as possible. Now, retailers also vary in terms of their degree of customer service. Some retailers, like convenience stores, are largely self-service operations where customers locate and stark products with almost no assistance from the retailer. In contrast, full-service retailers, like high-end department stores, take a much more active role in assessing a customer's needs and locating the right product for them. With few exceptions such as Dell Computers, most products are sold through an extensive network of distributors and retailers. These firms play important functions by helping get this product into the hands of customers. Now, these functions are not free. Typically, a manufacturer receives about 60-70 percent the products retail price. Thus, traditional product placement is a very expensive proposition for both firms as well as customers. This traditional approach is beginning to break down due to the rise of digital tools. Today, many firms are supplementing or even bypassing physical retailers by making their products directly available at either an online retailer like Amazon.com or on their own website. Now, this trend has been going on for some time, and online sales are growing very rapidly. Even products that we traditionally want to touch or try out at a store are now being sold online. A great example of this is Casper, which is a very innovative new firm that sells mattresses online. That's right, mattresses online. So the first time that a customer gets to try out this mattress is after it's delivered in their home. Now, if a mattress can be sold online, just about any product can bypass traditional physical stores. Now, this growth of online retailing is probably not too surprising to most participants in this course. However, what maybe surprising is the fact that digital tools are now capable of not only replacing the retailer, but the entire distribution channel. Today, even large online retailers like Amazon.com have to physically ship products from the manufacturer to the customer. However, newly emerging tools such as 3D printers are now making it possible to eliminate the distributor, by allowing a firm to ship a digital design rather than a physical product. A nice example of this is, I have one right over here, bakers' cube. Now, this is all in one measuring tool for baking cookies and cakes. The digital design for this product is freely available on Thingiverse.com. So anyone in the world with access to a 3D printer can now print this out almost for free. So in this new digital marketing environment, we are moving from long channels for physical goods to short channels for digital goods. In this module, we'll discuss how new digital tools like 3D printers are starting to change how products are being distributed. I think you'll find this discussion quite fascinating, and it may alter the way you think about this aspect of the marketing mix.
