1.3.4 Distribution

Question 1

Definition: Distribution

Answer 1

• Distribution is the process of getting the right product or service to the consumer in the right place.
• Distribution is one of the 4Ps of marketing: “place”

Question 2

What is 4 stage distribution?

Answer 2

1. Manufacturer
2. Wholesaler
3. Retailer
4. Consumer

Question 3

What is 3 stage distribution?

Answer 3

1. Manufacturer
2. Retailer
3. Consumer

Question 4

Why use 4 stage distribution channels?

Answer 4

• Some manufacturers prefer to deal with just a few wholesalers and sell in larger quantities or they may sell to a wholesaler as well as many retailers.
• Wholesalers “break bulk” orders into smaller quantities that independent retailers (Like small local food shops) will buy
• The added benefit of a wholesaler is they can offer trade credit terms to the small retailer

Question 5

Why use a 3 stage distribution channel?

Answer 5

• Three stage e.g. electrical goods such as toasters and kettles
• Most manufacturers like to sell into a retailer. As the retailers are spread all over the country it gives the manufacturer the distribution and volume of sales they are looking for
• The manufacturer can get the product to where the consumers can buy it by using retailers
• Applies to most mass market products such as corn flakes, apple juice, tea bags etc. (FMCG – Fast Moving Consumer Goods)

Question 6

What is a 2 stage distribution?

Answer 6

1. Manufacturer
2. Consumer

Question 7

Why use a 2 stage distribution channel?

Answer 7

• Two stage e.g. holiday companies that do not use agents and factory outlets
• Direct marketing
• This means that products are sold directly from the manufacturer to the consumer
• For example Mail order catalogues like the Next Directory
• Factory shops e.g. Denby pottery shop
• Services straight to the consumer e.g. solicitor

Question 8

Changes in distribution to reflect social trends

Answer 8

• online distribution
• Changing from product to service
• Choice of distribution channel

Question 9

Why use online distribution?

Answer 9

• The main benefit of the Internet is that niche products can reach a wider audience e.g. Low barriers to entry as set up costs are small
• Can cater to a far greater geographically dispersed market than traditional local shops
• Many transactions happen solely online such as purchasing tickets and software upgrades
• Some businesses are clicks and bricks, others are just clicks – in other words just online e.g. Amazon

Question 10

What does the choice of distribution channel depend on?

Answer 10

• The choice of channel of distribution and the method of getting the products to the consumer will depend on:
A. The nature of the product e.g. medicines need to be sold in a pharmacy under the careful eye of a fully trained pharmacist
B. The market
C. The nature of the business
D. The size of the business e.g. A small fledgling business may start with just an online business

Question 11

Agent or broker

Answer 11

An intermediary that brings together buyers and sellers

Question 12

Breaking bulk

Answer 12

Dividing a large quantity of goods received from a supplier before selling them on in a small quantities of customers

Question 13

Direct selling

Answer 13

Producers selling their products directly to consumers

Question 14

Distribution

Answer 14

The delivery of goods from the producer to the consumer

Question 15

Distribution channel

Answer 15

The route taken by a product from the producer to the consumer

Question 16

E-commerce

Answer 16

The use of electronic systems to sell goods and services

Question 17

Intermediaries

Answer 17

Links between the producer and the consumer

Question 18

Retailer

Answer 18

A business that buys goods from manufacturers and wholesalers, and sells them in small quantities to consumers

Question 19

Wholesalers

Answer 19

A business that buys goods from manufacturers and sells them in small quantities to retailers