- [Instructor] Hi there.
Welcome to the video lecture on the third P of the four P
marketing mix, which is Place.
So in this section, first of all,
we're gonna talk about channels and chains.
And basically, how do your goods get to the consumer?
Do you use direct markets or do you use indirect?
And it's much like what we already talked about B2B B2C.
Next, we'll think about where do you buy inputs.
All businesses organization buy
or at least need certain inputs.
And we'll talk about the drivers between the decision
of, do you make it yourself or do you buy it
from somebody else?
And then finally, because I'm imagining
that a lot of you have service-based businesses,
we will talk about place in that context.
So here's a look ahead at the homework around this.
So I want you consider the place around your business idea
and for first of all, to talk about,
how will customers access your good or service?
Is it direct, indirect or both?
And why would that be the right one
based on the differentiation of your product,
customer numbers, your capacity and margin.
And if it's a service, then answer these questions.
How do you see it changing over time?
And when will you know when and if it's time to change.
And then I want you to think about the make or buy model,
which we're gonna talk about
and choose three important inputs and think about
where do you think that you will procure them?
Which ones will you use?
Spot markets, vertical integration,
or strategic partnerships, and why?
So, the first thing that we're gonna talk about,
is how your good or service gets to the customer.
So we're gonna be thinking about market channels,
which is the organizations and individuals
that get your product or service to customers.
And if you can think about it as the pipeline,
how does it get there from your door to their door?
There are two main types, direct and indirect.
And these, we've already touched a bit
on the B2B business to business
and B2C business to consumer models.
And basically, these are much the same.
So direct, you're selling right to the consumer,
whereas indirect, you are selling to,
or at least working with other businesses.
The first one that we're gonna think about,
is direct markets.
Which is where you sell your product or service
directly to the end customer.
And in food, you're probably familiar with this,
something like a Farmers Market or farm stand,
where you're buying it right from the farmer.
And in many cases, you may wish to start with this.
And the reasons being that you have a lot of control.
So you have complete control in what is said
about your product, how it's presented, how it's packaged,
where it goes on the shelf,
all those things you have complete control over.
Next, it gives you contact with your customers.
So you can talk to them and hear from them.
What do you like, what do you not like,
what's working, what's not.
Which allows you to improve both the product
and its delivery.
And, again, it can be a learning experience.
So, actually being there, interacting with the customers
lets you learn about your product and what consumers like
and don't like about it.
The features of direct markets,
is that you retain ownership all the way through.
So until it gets into the hands, you own it.
It's up to you to collect payment.
It's up to you to provide any customer service,
explain how it works, do any refunds, anything like that.
That is all on you.
So, in a way that may be a downside,
that even though you have control,
you also have all the responsibility and all the tasks
of marketing fall on you, that you have to do it yourself.
Your business has to do all of these tasks.
So again, here are lots of examples being a food nag guy.
These are the ones that most readily come to mind.
So, farmers market, CSA shares, farm stands, you pick.
So all of these are ways in which farmers sell food
directly to consumers and don't use any intermediary.
In contrast, indirect markets, do use intermediaries.
So, here are a whole bunch of examples.
So, the first two agents and brokers
don't actually take possession of the good,
they just make a deal and it's up to you to deliver it.
But, then folks like dealers to distributors,
wholesalers, and retailers,
they do actually take physical custody of the good
and they eventually either sell it to
or sell it to somebody else
who then sells to the end consumer.
So in every case here, there's an intermediary
that is playing some role to help the good
get to the final customer.
So we're gonna talk about this in the discussion.
So there's sort of, again, for farm produce,
there is a continuum here for first in direct markets
where the consumer buys a straight from you.
There's direct who accounts where you take it
right to usually some sort of food service operation,
like a restaurant or a hospital or a school,
or maybe directly to a retailer.
There are food hubs
which are specialty local food distributors
that have a specific mission of supporting local farms
and making local food more accessible.
So in many cases, so they'll buy from many different farmers
and then sell to many different buyers.
And then there is a distributor who buys and sells
again, from many farms,
but really don't have a specific mission
about local food and local farms.
And they basically sell it almost anywhere.
So, it might end up in the region or out of the region.
And we're gonna explore this
in our discussion about sort of the pros and cons
and volumes and prices and all kinds of the features
that each of these marketing channels provide.
This is the end of part one.
Please go to part two.