Basic Marketing: A Global Managerial Approach

Perreault−McCarthy: Basic

Marketing: A

Global−Managerial

Approach, 14/e

11. Place and Development
    of Channel Systems

Text © The McGraw−Hill

Companies, 2002

304 Chapter 11

As this example shows, offering customers a good product at a reasonable price

is important to a successful marketing strategy. But it’s not the whole story. Man-

agers must also think about Place—making goods and services available in the right

quantities and locations—when customers want them. And when different target

markets have different needs, a number of Place variations may be required. Our

opening case also makes it clear that new Place arrangements can dramatically

change the competition in a product-market. This is especially important in busi-

ness today because many firms are trying to use new information technologies,

including websites and aspects of e-commerce, to reach customers directly. Of

course, not every consumer (or business customer) wants to buy products online;

electronically, and most are

assembled and shipped the

same day from its inventory of

500,000 titles. With a half-

dozen warehouses spread

across the country, Ingram

gets 95 percent of its ship-

ments to the retailer within 48

hours. You can see why

Barnes and Noble wanted to

merge with Ingram; this

vertical integration would have

made the combined firm even

more efficient and powerful.

When that merger fell

through, Barnes and Noble

expanded its own distribution

centers, inventory, and logistics

systems to become more effi-

cient on its own. Ingram, in

turn, is getting new business by

offering its retailer-customers

new services_like sending

books directly to the consumer.

But Ingram is also adding

music and entertainment prod-

ucts, like video games, to its

line. That’s because many of

the retailer-customers it serves

are scrambling their product

lines to include the best sellers

among these categories. With

video games becoming a

mature product, it is not a com-

plete surprise that distribution

intensity is expanding. But it

may mean that Bollic will need

to decide whether to join one of

these new channel systems or

stick with the specialists who

helped him get started.^1

To provide solutions to problems faced by more different types of home improvement customers, Home Depot has supplemented its
home improvement warehouse stores with Expo Design Centers and smaller Villager’s Hardware Stores.

Place Decisions Are an Important Part of Marketing Strategy