1 00:00:02,150 --> 00:00:02,983 - [Instructor] Hi there. 2 00:00:02,983 --> 00:00:07,680 Welcome to the video lecture on the third P of the four P 3 00:00:09,660 --> 00:00:11,763 marketing mix, which is Place. 4 00:00:15,810 --> 00:00:18,110 So in this section, first of all, 5 00:00:18,110 --> 00:00:21,519 we're gonna talk about channels and chains. 6 00:00:21,519 --> 00:00:26,519 And basically, how do your goods get to the consumer? 7 00:00:28,230 --> 00:00:31,420 Do you use direct markets or do you use indirect? 8 00:00:31,420 --> 00:00:36,000 And it's much like what we already talked about B2B B2C. 9 00:00:37,140 --> 00:00:41,800 Next, we'll think about where do you buy inputs. 10 00:00:41,800 --> 00:00:44,575 All businesses organization buy 11 00:00:44,575 --> 00:00:48,530 or at least need certain inputs. 12 00:00:48,530 --> 00:00:53,150 And we'll talk about the drivers between the decision 13 00:00:53,150 --> 00:00:57,550 of, do you make it yourself or do you buy it 14 00:00:57,550 --> 00:00:59,810 from somebody else? 15 00:00:59,810 --> 00:01:02,950 And then finally, because I'm imagining 16 00:01:02,950 --> 00:01:06,649 that a lot of you have service-based businesses, 17 00:01:06,649 --> 00:01:11,649 we will talk about place in that context. 18 00:01:15,320 --> 00:01:18,850 So here's a look ahead at the homework around this. 19 00:01:18,850 --> 00:01:23,850 So I want you consider the place around your business idea 20 00:01:24,580 --> 00:01:29,580 and for first of all, to talk about, 21 00:01:30,430 --> 00:01:35,110 how will customers access your good or service? 22 00:01:35,110 --> 00:01:37,410 Is it direct, indirect or both? 23 00:01:37,410 --> 00:01:41,510 And why would that be the right one 24 00:01:41,510 --> 00:01:46,510 based on the differentiation of your product, 25 00:01:48,177 --> 00:01:53,177 customer numbers, your capacity and margin. 26 00:01:54,590 --> 00:01:59,373 And if it's a service, then answer these questions. 27 00:02:03,418 --> 00:02:06,927 How do you see it changing over time? 28 00:02:06,927 --> 00:02:11,820 And when will you know when and if it's time to change. 29 00:02:11,820 --> 00:02:16,280 And then I want you to think about the make or buy model, 30 00:02:16,280 --> 00:02:17,800 which we're gonna talk about 31 00:02:17,800 --> 00:02:22,800 and choose three important inputs and think about 32 00:02:23,100 --> 00:02:26,800 where do you think that you will procure them? 33 00:02:26,800 --> 00:02:28,410 Which ones will you use? 34 00:02:28,410 --> 00:02:30,916 Spot markets, vertical integration, 35 00:02:30,916 --> 00:02:35,916 or strategic partnerships, and why? 36 00:02:41,380 --> 00:02:44,310 So, the first thing that we're gonna talk about, 37 00:02:44,310 --> 00:02:49,100 is how your good or service gets to the customer. 38 00:02:49,100 --> 00:02:52,720 So we're gonna be thinking about market channels, 39 00:02:52,720 --> 00:02:56,870 which is the organizations and individuals 40 00:02:56,870 --> 00:03:01,517 that get your product or service to customers. 41 00:03:01,517 --> 00:03:04,640 And if you can think about it as the pipeline, 42 00:03:04,640 --> 00:03:07,513 how does it get there from your door to their door? 43 00:03:11,150 --> 00:03:15,490 There are two main types, direct and indirect. 44 00:03:15,490 --> 00:03:18,420 And these, we've already touched a bit 45 00:03:18,420 --> 00:03:20,980 on the B2B business to business 46 00:03:20,980 --> 00:03:24,832 and B2C business to consumer models. 47 00:03:24,832 --> 00:03:27,440 And basically, these are much the same. 48 00:03:27,440 --> 00:03:30,460 So direct, you're selling right to the consumer, 49 00:03:30,460 --> 00:03:32,858 whereas indirect, you are selling to, 50 00:03:32,858 --> 00:03:37,023 or at least working with other businesses. 51 00:03:40,270 --> 00:03:41,990 The first one that we're gonna think about, 52 00:03:41,990 --> 00:03:43,840 is direct markets. 53 00:03:43,840 --> 00:03:48,427 Which is where you sell your product or service 54 00:03:48,427 --> 00:03:52,060 directly to the end customer. 55 00:03:52,060 --> 00:03:55,027 And in food, you're probably familiar with this, 56 00:03:55,027 --> 00:03:59,590 something like a Farmers Market or farm stand, 57 00:03:59,590 --> 00:04:02,193 where you're buying it right from the farmer. 58 00:04:03,500 --> 00:04:08,350 And in many cases, you may wish to start with this. 59 00:04:08,350 --> 00:04:13,350 And the reasons being that you have a lot of control. 60 00:04:14,215 --> 00:04:19,215 So you have complete control in what is said 61 00:04:19,400 --> 00:04:24,120 about your product, how it's presented, how it's packaged, 62 00:04:24,120 --> 00:04:26,370 where it goes on the shelf, 63 00:04:26,370 --> 00:04:30,070 all those things you have complete control over. 64 00:04:30,070 --> 00:04:35,070 Next, it gives you contact with your customers. 65 00:04:35,210 --> 00:04:37,580 So you can talk to them and hear from them. 66 00:04:37,580 --> 00:04:39,180 What do you like, what do you not like, 67 00:04:39,180 --> 00:04:40,898 what's working, what's not. 68 00:04:40,898 --> 00:04:45,898 Which allows you to improve both the product 69 00:04:46,258 --> 00:04:48,003 and its delivery. 70 00:04:49,240 --> 00:04:53,570 And, again, it can be a learning experience. 71 00:04:53,570 --> 00:04:58,570 So, actually being there, interacting with the customers 72 00:05:00,460 --> 00:05:05,460 lets you learn about your product and what consumers like 73 00:05:05,850 --> 00:05:07,050 and don't like about it. 74 00:05:12,120 --> 00:05:15,030 The features of direct markets, 75 00:05:15,030 --> 00:05:19,640 is that you retain ownership all the way through. 76 00:05:19,640 --> 00:05:23,650 So until it gets into the hands, you own it. 77 00:05:23,650 --> 00:05:25,990 It's up to you to collect payment. 78 00:05:25,990 --> 00:05:29,650 It's up to you to provide any customer service, 79 00:05:29,650 --> 00:05:34,650 explain how it works, do any refunds, anything like that. 80 00:05:35,180 --> 00:05:36,310 That is all on you. 81 00:05:36,310 --> 00:05:38,970 So, in a way that may be a downside, 82 00:05:38,970 --> 00:05:42,700 that even though you have control, 83 00:05:42,700 --> 00:05:45,954 you also have all the responsibility and all the tasks 84 00:05:45,954 --> 00:05:50,400 of marketing fall on you, that you have to do it yourself. 85 00:05:50,400 --> 00:05:54,343 Your business has to do all of these tasks. 86 00:05:59,360 --> 00:06:04,360 So again, here are lots of examples being a food nag guy. 87 00:06:04,466 --> 00:06:08,770 These are the ones that most readily come to mind. 88 00:06:08,770 --> 00:06:13,770 So, farmers market, CSA shares, farm stands, you pick. 89 00:06:14,410 --> 00:06:19,410 So all of these are ways in which farmers sell food 90 00:06:19,770 --> 00:06:24,393 directly to consumers and don't use any intermediary. 91 00:06:28,620 --> 00:06:33,620 In contrast, indirect markets, do use intermediaries. 92 00:06:33,870 --> 00:06:37,520 So, here are a whole bunch of examples. 93 00:06:37,520 --> 00:06:41,400 So, the first two agents and brokers 94 00:06:41,400 --> 00:06:44,870 don't actually take possession of the good, 95 00:06:44,870 --> 00:06:49,870 they just make a deal and it's up to you to deliver it. 96 00:06:50,320 --> 00:06:52,770 But, then folks like dealers to distributors, 97 00:06:52,770 --> 00:06:54,820 wholesalers, and retailers, 98 00:06:54,820 --> 00:06:59,820 they do actually take physical custody of the good 99 00:07:00,300 --> 00:07:05,300 and they eventually either sell it to 100 00:07:08,440 --> 00:07:10,430 or sell it to somebody else 101 00:07:10,430 --> 00:07:14,680 who then sells to the end consumer. 102 00:07:14,680 --> 00:07:17,609 So in every case here, there's an intermediary 103 00:07:17,609 --> 00:07:21,730 that is playing some role to help the good 104 00:07:21,730 --> 00:07:24,733 get to the final customer. 105 00:07:28,550 --> 00:07:32,120 So we're gonna talk about this in the discussion. 106 00:07:32,120 --> 00:07:35,930 So there's sort of, again, for farm produce, 107 00:07:35,930 --> 00:07:40,930 there is a continuum here for first in direct markets 108 00:07:42,730 --> 00:07:47,660 where the consumer buys a straight from you. 109 00:07:47,660 --> 00:07:51,460 There's direct who accounts where you take it 110 00:07:51,460 --> 00:07:56,070 right to usually some sort of food service operation, 111 00:07:56,070 --> 00:07:58,647 like a restaurant or a hospital or a school, 112 00:07:58,647 --> 00:08:01,583 or maybe directly to a retailer. 113 00:08:02,810 --> 00:08:03,840 There are food hubs 114 00:08:03,840 --> 00:08:08,840 which are specialty local food distributors 115 00:08:09,345 --> 00:08:14,345 that have a specific mission of supporting local farms 116 00:08:14,927 --> 00:08:18,317 and making local food more accessible. 117 00:08:18,317 --> 00:08:23,317 So in many cases, so they'll buy from many different farmers 118 00:08:24,404 --> 00:08:29,404 and then sell to many different buyers. 119 00:08:29,680 --> 00:08:34,556 And then there is a distributor who buys and sells 120 00:08:34,556 --> 00:08:37,350 again, from many farms, 121 00:08:37,350 --> 00:08:40,365 but really don't have a specific mission 122 00:08:40,365 --> 00:08:43,500 about local food and local farms. 123 00:08:43,500 --> 00:08:47,045 And they basically sell it almost anywhere. 124 00:08:47,045 --> 00:08:51,690 So, it might end up in the region or out of the region. 125 00:08:51,690 --> 00:08:53,410 And we're gonna explore this 126 00:08:53,410 --> 00:08:58,410 in our discussion about sort of the pros and cons 127 00:08:58,847 --> 00:09:03,504 and volumes and prices and all kinds of the features 128 00:09:03,504 --> 00:09:07,940 that each of these marketing channels provide. 129 00:09:14,840 --> 00:09:16,330 This is the end of part one. 130 00:09:16,330 --> 00:09:17,543 Please go to part two.