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Definition of Place: The activities necessary to make the product available to customers when and where they want it.

 

Place relates to decisions about the storing and transporting of products, and also about selecting the products' channel of distribution. These decisions are critical to the success of an organization. Effective inventory management drives down costs and enhances product quality. Choosing the right distribution channel (i.e., should we sell through middleman firms or should we sell directly to the end-user?) is also important -- in part because firms have great difficulty altering the structure and make-up of their channel once it is in place.

The Internet will have a huge impact on how products are distributed to customers -- especially on the distribution of those products that can be digitized. This is because when online shoppers enter their credit card number and purchase a digital product, that product can be sent to them directly and immediately over the Internet.

One example of this is a software product called RealPlayer Plus G2, which is made and sold by RealNetworks. RealNetworks is the market leader in streaming media technology on the Internet. RealPlayer Plus G2 is software that enables people to listen to audio and to watch video on the Internet. Online shoppers can purchase this software for $29.99 (with their credit card), and then immediately download it directly to their computer hard-drive.

Of course, all computer software is in a digital format, and thus could be sold and distributed to people directly on the Internet. At the present time, however, most software is copied onto a CD-ROM, packaged in a cardboard box, and then shipped to and sold to consumers through some traditional intermediary retailer, such as Best Buy, America's largest consumer electronics and appliance specialty store. Finally, consumers bring home the software, open it up and load it onto their computers (and then throw away most of the packaging!).

Many argue that this is an extremely wasteful and inefficient distribution system -- compared to the previously described distribution of RealPlayer Plus G2. It is predicted that more and more digital products will be sold and distributed via the Internet.

Finally, computer software is not the only type of product that can be distributed via the Internet. Of course, words and pictures lend themselves to digitization; and most major newspapers and magazines already are distributed to online customers every day. Most of these are free (such as USA Today), although the online version of The Wall Street Journal is accessible only to paid subscribers.

Music can be digitized, too. In fact, music is stored as digital information on audio CDs, which is perhaps the most common format for music purchasers. However, there already are organizations that at least are experimenting in the online distribution of music to consumers. For example, Radio.SonicNet provides audio programming for SonicNet, an online music service which allows listeners to decide what kinds of music they hear, and how often they hear them.