1.3.4 Distribution

Question 1

What is a distribution channel

Answer 1

The route a product takes from manufacturer to consumer. The product will pass through intermediaries like retailers and wholesalers

Question 2

What are retailers

Answer 2

Shops who sell directly to the consumer
Can be physical shops or online

Question 3

What are wholesalers

Answer 3

Buy good from the manufacturers in bulk and then sell them in smaller quantities to retailers
This makes distribution easier for manufacturers and retailers

Question 4

What are agents

Answer 4

People who sell products on behalf of a business, they are often paid commission

Question 5

What are the three distribution channels

Answer 5

Direct selling
Indirect selling (three stage)
Indirect selling (four stage)

Question 6

Explain a direct selling distribution channel

Answer 6

This is when the manufacturer sells directly to the consumer
E-commerce has made this easier
Examples include websites or hairdressers and electricians who sell their service directly to their customers

Question 7

What is a indirect selling (3 stage channel)

Answer 7

Manufacturer —> retailer —> consumer
Retailers are put in place for the convenience of the consumer

Question 8

What is indirect selling (4 stage distribution)

Answer 8

Manufacturer —> wholesaler —> retailer —> consumer
Traditional distribution channel for mass market products like groceries
With every intermediary wanting to make profit it can increase the cost for the consumer

Question 9

What is multi-channel distribution

Answer 9

When a business sells through more than one method e.g. online and in-store

Question 10

evalaute multi-channel distribution

Answer 10

+ allows business to reach a wider market
+ flexibility for customers
+ increased brand awareness as different types of distribution targeting different segments
- added costs
- hard to ensure good quality and CONSISTENT customer service across all channels
-

Question 11

How has online distribution allowed firms to convert from selling products to services

Answer 11

• streaming and downloading media content (gams, films, books)
  + this has reduced costs for the business and is then cheaper for the consumer
  + more environmentally friendly
  + can be accessed anywhere with internet
  + money previously spent on storing and distributing products can be invested elsewhere

Question 12

what are the benefits of online distribution

Answer 12

• reach a wider audience, open 24/7 increases convenience
• reduces costs, doesn’t need outlets or as much staff, this may reduce costs for consumers to increase demand or the business can enjoy higher profit margins
• gathers peoples personalised data, enables to business to market segment and use direct marketing

Question 13

what re the drawbacks of online distribution

Answer 13

• must create a website, could be costly, might not have the expertise
• harder to ensure god quality customer service
• some products consumers will be reluctant to buy online as they may want to try before they buy