This process is a crucial for any business as in marketing mix, Place is the process through which a product travels from a producer to a consumer (Cleverism, 2014).
Depending on the type of a company it can choose either to directly sell the products to the customer. Otherwise, it can select intermediaries like wholesalers, retailers to sell its product to the public (Cleverism, 2014).
HOW IMPORTANT IS DISTRIBUTION CHANNEL?
Distribution channel is essential for a company as it nearly impossible for a firm to sell products to the consumers directly. Large scale producers that produce items such as soaps, toothpaste and toilet paper it is necessary for them to stock these items at maximum number of places. On the other hand, even the companies that sell their products online without the involvement of intermediaries have to use courier service for the completion of sale (Cleverism, 2014).
In this type of channel, a company uses the mix of direct and indirect selling. This channel can lead to conflict between intermediaries and producer. However, through this a firm can reach more customers which is beneficial for business (Cleverism, 2014).
In direct distribution there is no intermediaries. the producer sells the product directly to the consumer.
Marketing Mix | Place in Four P’s
In indirect distribution a proper network of intermediaries is set up that sell the the product to the consumer.Marketing Mix | Place in Four P’s
APPLE’S SECRET TO SUCCESS
The secret behind its success is not just the products but the way it handles dual distribution channel that makes it unique from its competitors in consumer electronics space.
SHIFTING FROM DIRECT TO DUAL DISTRIBUTION CHANNEL
Apple jumped in to retail business because of the complaints and lack of inefficiency in their direct distribution. Apple decided to take this step because of the low exposure, the buyers had extremely bad experience as well as they could not recognize the value of the product (Varghese, 2013).
Apple distribution channel is mainly comprised of the five main components mentioned below:
- Apple Stores
- Online Apple Store and App Store
- Authorized retailers
- Telecom companies
- Fulfillment services (Greenspan, 2015).
A STEP THAT MARKED APPLE’S DISTRIBUTION TECHNIQUE
Apple never gives any discounts to the consumers through this channel as well as it cannot sell the product at the dealer price to its customers as it is illegal.
Whereas, apple’s sales price to its re-sellers and retail pricing remains firm. Apple’s is successful in this as it sets low margins for its dealers and stable agreement between its intermediaries as well as it doesn’t give discount on bulk purchases (Goyal, 2012).Apple websites are mainly for customers to buy the apple products directly from their site. Moreover, big online websites such as amazon.com sell its products online.
Apple has also opened Apple stores which is a physical dimension of an Apple website. Apple spends heavily on advertising which increases it demands as the public gets attracted towards the product.
The extensive distribution channel keeps up the brand values and brand visibility which makes it important in the market (Varghese, 2013). Now apple has the highest average per square feet sales in U.S based retail market. It has strong a distribution network and is dominant in its retail operations and this is one of the biggest asset to the Apple (linkedin.com, 2016).
WHY IS APPLE’S DISTRIBUTION CHANNEL SO SUCCESSFUL?
Apple has analyzed its target audience and their needs, it has also discussed the objectives of channel and distribution process is sorted out. The selection of these things is the first step in analyzing any distribution channel in which Apple has been fantastic. The 45% of apple users are middle to upper income women and men of age 18-34 and the same is the target audience of Apple (linkedin.com, 2016).
Moreover, after Tim Cook became the CEO of Apple he has made various changes in the distribution channels and its working. Tim Cook has made its suppliers compete with each other and this results in better service to Apple from less suppliers (Dudovskiy, 2016).
Apple has a selective distribution strategy and it takes full advantage of its diverse distribution channels (Greenspan, 2015). In this technique a product is sold at a selective number of outlets. Apple has chosen this strategy because its products are expensive than its competitors. Moreover, this type of distribution strategy is most suitable for selling computers or expensive phones as these items are costly but should be widely available (The Marketing Mix, 2015).
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The Marketing Mix. (2015). Place – Marketing Mix Distribution Strategy. [online] Available at: http://marketingmix.co.uk/place-distribution-strategy/ [Accessed 16 Sep. 2016].
Greenspan, R. (2015). Apple Inc’s Marketing Mix (4P’s) – Panmore Institute. [online] Panmore Institute. Available at: http://panmore.com/apple-inc-marketing-mix-4ps [Accessed 16 Sep. 2016].
Varghese, (2013). Distribution strategy of APPLE products. [online] Slideshare.net. Available at: http://www.slideshare.net/jinupvarghese5/distribution-strategy-of-apple-products [Accessed 16 Sep. 2016].
Dudovskiy, J. (2016). Apple Value Chain Analysis – Research Methodology. [online] Research Methodology. Available at: http://research-methodology.net/apple-value-chain-analysis/ [Accessed 16 Sep. 2016].
linkedin.com. (2016). How the Apple Sales to You: Taking a Look Inside Apple’s Marketing Strategies. [online] Available at: https://www.linkedin.com/pulse/how-apple-sales-you-taking-look-inside-apples-marketing-wilfred-brown [Accessed 16 Sep. 2016].
Goyal, P. (2012). Apple Inc.’s product distribution system in US and UK. [online] Knowledge Tank. Available at: https://www.projectguru.in/publications/apple-inc-s-product-distribution-system-in-us-and-uk/ [Accessed 16 Sep. 2016].
NAME: ARJIT BHALLA
STUDENT ID: 216178845