2.6 Place and Channels

Place means where and how customers can get a product: in other companies' stores, in the company's own stores, through a membership club or online.

Place is set by the business's marketing channels (also called distribution channels). A marketing channel is everyone needed to get the finished product to the final customer. It's the last stage of the supply chain you met in 1.8.

Some products must use specific channels by law. Prescription medicine, for example, has to go through a licensed pharmacy, and other products that pose health or safety risks have legal rules too.

• Business-to-consumer (B2C) channels sell consumer products to individuals, through websites and retail stores. Example: a sneaker brand selling on its app.
• Business-to-business (B2B) channels sell business products to other businesses, often through industrial distributors. Example: a company selling commercial ovens to restaurants.

A direct channel connects the business straight to its customers with no one in between, like its own website or its own stores. An indirect channel uses intermediaries (middlemen): wholesalers, which buy in bulk from producers and resell to stores, and retailers, which sell to the final customer.

Channels can have zero, one or several intermediaries. Each one adds reach and know-how, and each one takes a share of the final price, so the producer keeps less per unit.

• Producer → customer (direct): a farm stand, or a brand selling through its own app.
• Producer → retailer → customer: a toy company selling through a big-box store.
• Producer → wholesaler → retailer → customer: a candy maker selling to a distributor that supplies thousands of convenience stores it could never reach alone.

Businesses compare channels on four things: cost, likely profit, the customer's experience and whether the channel actually reaches the target customers. A new luxury candle brand might start with its own website to control its image and price, then add a few high-end boutiques. A snack company that needs to be in every gas station needs distributors and retailers.