- [Instructor] Welcome to part two
of the video lecture on place.
Now I'm going to talk about what are the drivers,
which determine what is the right marketing channel for you.
And you'll see
that they have to do with these four things.
Customers, products, the environment in which they operate
and the nature of the business.
So thinking back a few weeks
when we thought about customers,
and we wanna think about where and when do they want to buy?
So how much is convenience
and being able to buy it at the place
where they want
important?
So if they want to be able to access it right nearby 24/7,
it may be that you wanna sell it through a store
that is open at that time.
So they could just go get it.
Whereas if it's something
that they're willing to wait for,
to meet you when you're open
or when your farmers market stand is open
or if they can order it online
and have you deliver it,
then the direct market might work better.
In the same way, and I want you to think about this,
usually if you have a relatively fewer number of customers,
direct might work.
But if you have many, many, many of them,
you may need to change to indirect markets
and use an intermediary.
And I'll let you think about why that is so
and we'll discuss it in our class discussion.
The nature of the product also determines
what kind of market that you will use.
So this is a general rule of thumb.
It doesn't always apply.
But if you have a highly differentiated product,
odds are you're more likely to use a direct market.
So if it is like highly nuanced, sophisticated,
high value, sort of very unusual, alternative, craft,
artisanal, at least direct market may be an option.
Whereas if you have a very commoditized item,
like corn, number two corn
or milk in a gallon plastic jug with a red lid,
usually you will sell those indirectly,
and again we'll think about why that is.
A few weeks ago, we talked about the external environment,
and that is also a driver for what kind
of market channel that you will use, what place.
So certainly that we have seen
with the advent of technology,
and the internet
that direct ordering,
and both buying from the manufacturer,
maybe things like Etsy
where you're buying a craft,
or buying some sort of commodity
like through Amazon say
certainly has an impact.
What are you able to do?
And if you are doing,
and do you have the right infrastructure?
So you can think about what do you need
to have in place if you are selling direct?
And what do you need to have in place
if you are selling indirect?
So a few examples, if you're selling direct,
so farmers market,
you're gonna need tables and boxes and signs,
and shelter and things like that.
If you sell indirect,
you're gonna need pallets
and the ability, you know, large boxes,
large case size boxes to put things on.
Et cetera.
If you sell like a craft,
if you sell it direct,
then you need to be able to have a website,
have someone that can do all that work.
If you sell it indirect,
again through somebody like Etsy,
they can do the brokering.
So think about do you have the infrastructure
and the equipment that you need,
which is a better fit for you?
And speaking of what's a better fit for you,
what resources do you have?
What are the human, technological,
the equipment infrastructure,
as well as the entrepreneur's time?
Because pretty much throughout the lifecycle
of any business,
the entrepreneur's time is the scarcest resources.
So to what extent does it make sense
for you to, in the beginning,
you may sell direct for all those reasons I said.
But it may be that eventually
that your time is better spent working
through a distributor
where instead of sort of waiting on the orders
or waiting at the farmers market
where you can just make one call,
sell a whole load to a distributor
and save a lot of time.
So where is your time best spent?
What use of your time brings the greatest return
to your business?
That's a decision and a question
that you should be asking yourself all throughout.
So you wanna think about,
as you're choosing a strategy,
what is effective?
What will meet the customers' needs.
Where do they wanna buy and why
and how long will they wait?
How hands on do you wanna be?
Can the customer find you?
What's the most efficient way?
And so you really wanna think
about do I wanna do this all by myself?
Or do I wanna work with some kind of a partner?
And note that there a lot of costs here.
There are many tasks.
Distribution, advertising,
the actual sales, customer service.
Who should do this?
Who will pay?
Who do you wanna pay?
Do you wanna pay yourself
or not pay anybody else
but spend the time?
Or do you want to save the time
and pay somebody else to do this?
So think about who can provide these services
at the greatest value,
at the most efficient cost to you,
and what use of your time brings the greatest return
to your business or organization?
So we'll talk in class
about when is it time to change.
Many businesses, again start direct
for all the reasons I said
but then just find that the volume of business
and just the use of the entrepreneur's time sometimes calls
for changing and beginning to work through an intermediary.
One thing I hear a lot
in my research with food businesses
is that they self-deliver or self-distribute at first.
So you begin sort of selling to individual stores
or maybe if you're a craft brewer,
selling kegs or cans to local stores,
local bars but eventually, then again,
you have enough volume that you're ready
to not do all that work yourself,
and work with somebody who does that very well
who already has relationships to lots
of other restaurants, bars or stores.
And there's that point where where you change
from they're sort of doing you a favor.
Please carry my product
to I'm bringing you business.
There's lots and lots of stores
or bars or restaurants that you already work with
who want my product.
I already have a customer base.
They want to buy it.
You already sell to 'em.
It makes sense for you to start to carry my
product.
And in that way,
you're bringing some leverage
to the relationship.
Going from do me a favor, sort of groveling,
please sell my thing
to this works for you too.
This is a clear benefit.
I could do it myself but it's much more efficient
if we work together.
This is the end of part two.
Please go to the third and final part.