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- [Instructor] Welcome to part two

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of the video lecture on place.

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Now I'm going to talk
about what are the drivers,

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which determine what is the
right marketing channel for you.

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And you'll see

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that they have to do
with these four things.

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Customers, products, the
environment in which they operate

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and the nature of the business.

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So thinking back a few weeks

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when we thought about customers,

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and we wanna think about where
and when do they want to buy?

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So how much is convenience

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and being able to buy it at the place

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where they want

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important?

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So if they want to be able to
access it right nearby 24/7,

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it may be that you wanna
sell it through a store

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that is open at that time.

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So they could just go get it.

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Whereas if it's something

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that they're willing to wait for,

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to meet you when you're open

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or when your farmers market stand is open

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or if they can order it online

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and have you deliver it,

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then the direct market might work better.

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In the same way, and I want
you to think about this,

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usually if you have a relatively
fewer number of customers,

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direct might work.

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But if you have many, many, many of them,

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you may need to change to indirect markets

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and use an intermediary.

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And I'll let you think
about why that is so

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and we'll discuss it in
our class discussion.

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The nature of the product also determines

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what kind of market that you will use.

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So this is a general rule of thumb.

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It doesn't always apply.

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But if you have a highly
differentiated product,

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odds are you're more likely
to use a direct market.

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So if it is like highly
nuanced, sophisticated,

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high value, sort of very
unusual, alternative, craft,

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artisanal, at least direct
market may be an option.

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Whereas if you have a
very commoditized item,

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like corn, number two corn

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or milk in a gallon
plastic jug with a red lid,

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usually you will sell those indirectly,

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and again we'll think about why that is.

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A few weeks ago, we talked
about the external environment,

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and that is also a driver for what kind

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of market channel that
you will use, what place.

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So certainly that we have seen

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with the advent of technology,

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and the internet

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that direct ordering,

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and both buying from the manufacturer,

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maybe things like Etsy

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where you're buying a craft,

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or buying some sort of commodity

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like through Amazon say

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certainly has an impact.

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What are you able to do?

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And if you are doing,

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and do you have the right infrastructure?

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So you can think about what do you need

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to have in place if
you are selling direct?

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And what do you need to have in place

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if you are selling indirect?

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So a few examples, if
you're selling direct,

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so farmers market,

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you're gonna need tables
and boxes and signs,

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and shelter and things like that.

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If you sell indirect,

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you're gonna need pallets

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and the ability, you know, large boxes,

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large case size boxes to put things on.

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Et cetera.

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If you sell like a craft,

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if you sell it direct,

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then you need to be
able to have a website,

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have someone that can do all that work.

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If you sell it indirect,

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again through somebody like Etsy,

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they can do the brokering.

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So think about do you
have the infrastructure

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and the equipment that you need,

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which is a better fit for you?

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And speaking of what's
a better fit for you,

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what resources do you have?

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What are the human, technological,

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the equipment infrastructure,

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as well as the entrepreneur's time?

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Because pretty much
throughout the lifecycle

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of any business,

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the entrepreneur's time
is the scarcest resources.

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So to what extent does it make sense

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for you to, in the beginning,

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you may sell direct for
all those reasons I said.

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But it may be that eventually

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that your time is better spent working

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through a distributor

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where instead of sort
of waiting on the orders

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or waiting at the farmers market

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where you can just make one call,

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sell a whole load to a distributor

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and save a lot of time.

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So where is your time best spent?

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What use of your time
brings the greatest return

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to your business?

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That's a decision and a question

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that you should be asking
yourself all throughout.

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So you wanna think about,

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as you're choosing a strategy,

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what is effective?

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What will meet the customers' needs.

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Where do they wanna buy and why

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and how long will they wait?

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How hands on do you wanna be?

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Can the customer find you?

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What's the most efficient way?

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And so you really wanna think

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about do I wanna do this all by myself?

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Or do I wanna work with
some kind of a partner?

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And note that there a lot of costs here.

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There are many tasks.

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Distribution, advertising,

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the actual sales, customer service.

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Who should do this?

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Who will pay?

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Who do you wanna pay?

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Do you wanna pay yourself

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or not pay anybody else

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but spend the time?

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Or do you want to save the time

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and pay somebody else to do this?

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So think about who can
provide these services

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at the greatest value,

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at the most efficient cost to you,

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and what use of your time
brings the greatest return

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to your business or organization?

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So we'll talk in class

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about when is it time to change.

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Many businesses, again start direct

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for all the reasons I said

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but then just find that
the volume of business

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and just the use of the
entrepreneur's time sometimes calls

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for changing and beginning to
work through an intermediary.

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One thing I hear a lot

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in my research with food businesses

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is that they self-deliver
or self-distribute at first.

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So you begin sort of
selling to individual stores

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or maybe if you're a craft brewer,

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selling kegs or cans to local stores,

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local bars but eventually, then again,

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you have enough volume that you're ready

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to not do all that work yourself,

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and work with somebody
who does that very well

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who already has relationships to lots

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of other restaurants, bars or stores.

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And there's that point
where where you change

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from they're sort of doing you a favor.

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Please carry my product

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to I'm bringing you business.

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There's lots and lots of stores

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or bars or restaurants
that you already work with

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who want my product.

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I already have a customer base.

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They want to buy it.

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You already sell to 'em.

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It makes sense for you
to start to carry my

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product.

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And in that way,

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you're bringing some leverage

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to the relationship.

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Going from do me a
favor, sort of groveling,

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please sell my thing

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to this works for you too.

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This is a clear benefit.

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I could do it myself but
it's much more efficient

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if we work together.

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This is the end of part two.

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Please go to the third and final part.