Chapter 26 What Is Place?
the retail store. If the retail store buys a
truckload of orange jeans, and they do
not sell, the retail store will lose money.
n Price. You may have heard the phrase
“manufacturers suggested retail price.”
Manufacturers often suggest what price
should be charged for their goods;
however, it is the retail store that sets the
price that the customer actually pays.
n Place. Retailers play a major role in
determining the location where goods
are sold. Place issues for retailers were
discussed earlier in this chapter.
n Promotion. Next time you watch TV or
open a newspaper, notice the businesses
that sponsor the ads. A large number of
them will be retail businesses. Retailers
advertise goods from a variety of
producers. They also advertise sales
and special events designed to bring
customers into the store. Retail stores
also specialize in displaying goods in
appealing ways. You will learn more
about promotion in Part 7.
Channel Management
Once a company makes place decisions,
it must make other choices about how to
best get its products from the producer to
the ultimate consumer. Managing all aspects
of place and distribution fall under the
umbrella of channel management. Channel
management involves selecting, motivating,
and evaluating all channel members over
time to effectively control the movement of
products from producer to consumer.
n Selecting Channel Members. For most
products, the producer can choose
from a number of channel members
and methods to distribute its products.
The producer needs to evaluate the
following factors when selecting channel
members: number of years in business,
other product lines the channel member
carries, reputation, previous experience
with the company, financial stability, and
quality of the sales force. For example,
K and K Precision Products in Illinois
uses steel to make quality parts for
industries that manufacture automobiles
and major home appliances. Because of its
longevity in the steel industry, financial
stability, and quality steel and sales force,
Plymouth Steel—a Michigan company—
is a chosen channel member for K and K.
n Motivating Channel Members.
Producers want their channel members
to promote, sell, and distribute their
products to make a profit. In order to
motivate channel members, producers
may offer special deals, premiums, and
sales contests to maintain long-term
relationships. Because Plymouth Steel
provides a quality product, competitive
pricing, and prompt delivery, K and K
Precision Products chooses to maintain a
relationship with this company, 26-13. To
maintain the relationship, Plymouth uses
such strategies as regular phone contact,
meetings, and collaboration at dinner
meetings.
n Evaluating Channel Members. In order
to evaluate channel members, a producer
must set measurable performance
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26-13
Plymouth Steel has a positive reputation for
prompt delivery of its goods.