Place Distribution

The place component of the four P's can be thought of as making products available in the right quantities and locations when the customers want them. A product is not much good to a consumer if it is not available when and where it is wanted. Place requires the selection and use of marketing specialists to provide target consumers with the product. Most consumer goods in our economy are distributed through multiple institutions, or middlemen, which are commonly referred to as marketing channels, or channels of distribution. A channel of distribution is any series of firms or individuals who participate in the flow of goods and services from producer to final user or consumer.

The issue of distribution in food marketing has historically fallen into either food retail such as supermarkets or food service such as restaurants or school lunch programs. In the old model, food was either sold as components, taken home, and made into meals for supermarkets or sold as complete meals for the food service. Customers either bought meat, potatoes, and vegetables and made dinner or went to a restaurant for dinner.

Recently this model of distribution has become less clear. Time-starved American consumers want and are willing to pay for more prepared meals. Each year the percentage of the food dollar spent on traditional supermarket food has dropped and food service has increased. In 1997 the percentage of the food dollar spent on traditional supermarket products has fallen to less than 50%, while it was as high as 70% in the 1950s and 1960s.

This consumer shift in demand for prepared foods has led to two major shifts in the distribution channel. First, a new form of food service supplier has appeared. These stores specialize in providing inexpensive complete prepared meals to be consumed either at home or at the store. Unlike the fast-food restaurants, they offer more traditional meals such as meat loaf, roasted chicken, baked ham, and macaroni and cheese. These dishes are referred to as comfort food and are sold in outlets called Boston Market, Kenny Rogers Roasters, or Chili's. These outlets look more like restaurants than supermarkets and are frequently called family restaurants.

To compete against the family restaurants, many food retailers have actually changed into a new format called a "grocerant." Grocerants look more like supermarkets than restaurants but have significantly more space dedicated to prepared meals. In many cases the grocerant will have a number of chefs in the store preparing the food as it is ordered. These meals are sold in outlets called Eatzi's of Dallas, or Zagarra's of Philadelphia. The grocerant still sells various food components and groceries, but this is just a small portion of total sales. Eatzi's reported selling 38% ready-to-heat, 30% ready-to-eat, 12% raw prepared, and 20% conventional groceries.

Both the traditional supermarket and restaurant have changed to stop the loss of sales to the two new formats. Restaurants are providing more attention to takeout, and take home. Once just a nuisance, restaurants now see that they can make larger margins and increase total sales by not being limited to the number of tables available. Many restaurants are allocating space to a take-out section and have comfortable waiting areas for the take-out patrons to wait. The second defense against the new formats is to add entertainment to the traditional dining experience. Rather than compete just for the food, the new restaurants are creating themes that draw customers for fun as well as food. These theme restaurants called "eatertainment" include Rain Forest Café, Planet Hollywood, King Henry's Feast, and many others.

Supermarkets have also tried to appeal to the time-starved consumer by providing prepared food in the stores.

They are often called Meal Solutions or Home Meal Replacement and offer complete meals in the deli sections. In some cases these meals are prepared in-house, sometimes in a central commissary for the chain, and in some other cases an outside supplier is used. At the time of this writing no single format has been demonstrated to be superior.

Regardless of the end point, traditional supermarket, restaurant, grocerant, eatertainment, or new supermarket, the people who supply those companies fit into one of the following categories. Marketing intermediaries fit into one of the following categories.

1. Merchant wholesalers take title to (own) the goods they sell and sell primarily to other resellers (retailers), industrial, and commercial customers rather than to individual consumers.

2. Agent middlemen, such as manufacturer's representatives and brokers, also sell to other resellers and industrial or commercial customers, but they do not take title to the goods they sell. They usually specialize in the selling function and represent client manufacturers on a commission basis.

3. Retailers sell goods and services directly to final consumers for their personal, nonbusiness use.

4. Facilitating agencies, such as advertising agencies, marketing research firms, collection agencies, and railroads, specialize in one or more marketing functions on a fee-for-service basis to help their clients perform those functions more effectively and efficiently (8).

Choosing the correct channel of distribution is critical in getting products to the target market's place. Because in the food industry physical goods are almost always involved, place requires physical distribution (PD) decisions. Physical distribution is the transporting and storing of goods to match target customers' needs with a firm's marketing mix (9). From the customer point of view, the concern is not how the product was stored or moved, but rather what is the customer service level, how rapidly and dependably a firm can deliver what the customer wants. It is important for food marketers to understand the customer's point of view. Physical distribution is usually the invisible part of marketing and only gets the customer's attention if something goes wrong.

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