1.3 Distribution Flashcards
What is distribution
How the product reaches the customer
What’s a distribution channel
It moves a product from the manufacturer to the consumer
What’s an intermediary
Firms in between the manufacturer and the consumer e.g wholesalers and retailers
What is direct distribution
When there are no intermediaries involved
Who do retailers sell to
The customer, they focus on consumer markets
What are some types of retailers.
Multiples
Specialist chains
Department stores
Convenience stores
Independents
Franchises
What’s the main drawback of selling through retailers
Reduced margins as they add their own mark up
What are the advantages for using a retailer
Convenience for the customer
Wider reach
Retailer handles stock
Retailer handles after sales support
What are the key points about a wholesaler
They “break bulk”
Buy in large quantities from producers sell in small quantities to retailers
Advantages to using wholesaler
Reduces producers transport costs
Retailers can order in small amounts from them
What are the key points about distributors
Usually specialise e.g building suppliers, electronical components
Offer more choice
What are the key points about agents
A specialist type of distributor
Doesn’t hold stock
Tend to operate in the tertiary sector (services) e.g travel, insurance
What is multichannel distribution
When a firm uses more than one type of distribution
Advantages of multichannel distribution
Increase reach
Expected
High revenue can buy online if not instore
Disadvantages of multichannel distribution
Complex
Can cause conflict
Pricing strategies may become confused to the customer
