Place, The Third P Of The Marketing Mix

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After the introduction of the first 2 Ps of the Marketing Mix, Product and Price, it is time to go a bit further by discussing the 3rd one, Place. When the 4Cs were introduced, Place became known as Convenience (Convenience to buy). Place is where you want to sell your product. It is often referred to as the distribution channel.

I view the place as where do you want to sell your product. As discussed in earlier articles, your product may be an idea that you want others to buy into, and not only a physical product. Place is in my opinion a more complete description than convenience, It may be a physical place or a virtual one such as the internet. Even physical places can be different. You can be selling from a retail shop or doing business from home by reselling from a warehouse.

Although Convenience may seem to be a better approach as part of the 4Cs, I don't see it replacing the Place definition of the 4Ps. Place as I understand it is an answer to the question where. Where can I find the product? A well known answer (principle) in sales would state: Location, Location, Location. However, let's take an example of one US village I lived in. The only grocery shop is found about 2 miles away. In winter, it is a hassle to start the car and head there to buy some drinks for example due to the extreme cold, snow, and ice on the roads. It is definitely not convenient to me, yet it is the only place around when I am not planning to spend hours on a 15 Miles stretch of icy roads to reach the nearest City. Maybe the cost of setting up the business made more sense to the owner because he knew he was the only option for grocery around. He surely did not think of the convenience to the customers knowing that over 95% of the village population lives further than 2 miles away from his shop.

Although a convenient location may attract me, I think of convenience more as facilitation. Convenience to me includes accepting credit cards, checks, facility of payment, delivery, etc… Those do not replace the definition of Place in the Marketing Mix. If you do not have a place to offer your products then you do not have the opportunity to sell, you're simply not there to be found!

So let's assume you have a place, whether physical or virtual. It is only then when you can think of offering the convenience to buy for your potential customers. You can mail catalogues, print and post flyers, offer credit facilities, etc… If you are an on line business, you can offer free shipping along with the credit card purchases, have email lists, etc…

As I mentioned in a previous article, to me, 4Ps, 4Cs, and any addition or modification to the 4 Ps, is more of an explanation to the Marketing Mix to be used as a reference rather than being a fixed definition. When the 4Ps was introduced, no one was thinking that the internet would be such a success. Yet, the internet did not cancel those principles.

Place is not only about a physical or virtual address. It is also referred to as distribution channel. You may opt to sell directly via your own shop, or having a series of shops, having a franchise, selling via distributors, etc…  I will not be discussing Sales strategies in this article, but it is important to know that defining your Place in the market needs to take into consideration your product, its price, and the next P of the Marketing Mix, Promotion.

Working in Telecoms, in developing markets, Place was an issue I have to tackle in every project. In earlier days, when we operated as almost a monopoly, in a small city, I didn't focus much on the place. Mobile telephony was needed to cover the inefficiency and lack of presence of regular phones. People who needed to communicate locally and overseas did not have many options, and there weren't any alternatives. My only place of operation was a Point of Sale, POS (Became later defined as Point of Service), found in the first floor of our HQ. If someone wanted to have mobile service, they had to include the cost of transportation in their costs. We were practically the only feasible option. In those days, the focus was mainly technical rather than commercial.

Things started to change slowly. Mobile phones didn't need to be programmed anymore. A new generation that included small chips known as SIM cards (Subscriber Identification Module) were introduced. Prepaid services were starting versus the billed usage (Post-paid), and above all competition was starting as new comers were licensed to operate.

There was a need to find a solution. We were threatened by the presence of competition. Our competitors had their POS in another part of the city offering the same services to our potential customers there, who could now save the trip cost to our HQ. It wasn't an innovation, it was a simple review of the principles, Place was the solution, back to the Marketing Mix basics. We opened 4 POS around the city and 1 in every major city we had coverage in. The competitor's response was slow, and we were able to guarantee the major market share.

Things did not stop there, instead of keeping all the revenues we had to concede into offering a share of the pie to a 3rd party, the distributors. We needed to ensure maximum presence in the market and we resorted to spreading our products and services via distributors and their channels. As competition increased adapting our strategy (sometimes with better efficiency) the war of prices started. This policy reduced the revenues for all the operators. The focus was then turned into the reduction of costs to guarantee the positive revenue margin. We started by cancelling the less performing POS, while pushing our dealers towards exclusive sales of our products. It worked in some markets and failed in others where dealers refused to be forced into dealing with one operator.

We had to be more innovative and started applying strategies as franchising while keeping distributorships, among other tactics to guarantee our place in the market while working on reducing costs. We had a simple understanding during all this time, if we did not have a place in the market we would not have a chance to sell. Markets are surely different, as different as the people and their cultures hence the need for market studies (An issue that I will discuss in a future article). However once you have your reference points you can always go back to the basics. You have your product, you determined its price, and you have the place to offer it, now let's think of promoting it. My next article will cover this point.

Your comments and questions are always welcome!
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