1.3.4 distribution

Question 1

what is the aim of distribution?

Answer 1

Distribution is to make products available in the right place at the right time in the right quantities

Question 2

What are the purposes of a distribution?

Answer 2

• help gather market information.

• provides a link between production and consumption.

• physical distribution - transporting and storing.

•communicate promotional offers.

•find and communicate with prospective buyers.

• financing - other parties finance the inventory

Question 3

define distribution channels

Answer 3

they move a product through stages from production/manufacturer to final consumption

Question 4

A distribution channel with more than one stage will involve….

Answer 4

intermediaries

Question 5

fill in the blanks

1. manufacturer
4. customer

Answer 5

2) wholesaler

3) retailer

Question 6

fill in the blanks

1. manufacturer
3. customer

Answer 6

2) distributor/agent/retailer

Question 7

what is a retailer?

Answer 7

• final step in the chain - deals directly with customer

Question 8

Advantages for retailers

Answer 8

•convenience with customers - retailers are widespread.

• retailer holds the stock.

• retailer chooses the final price.

Question 9

What are wholesalers?

Answer 9

They buy in large quantities from producers and then break it into smaller quantities to sell to retailers.

Question 10

Advantages of wholesalers

Answer 10

•reduce producers transport costs.

• retailer can order in smaller amounts from wholesaler.

Question 11

What are distributors?

Answer 11

•They sell on products and serve as local sales point.

•They normally specialise in a particular industry.

• They offer products from many producers = greater choice.

Question 12

What are agents?

Answer 12

•They are a special type of distributor.

•They do not hold stock.

•They usually work in tertiary sections eg travel, insurance, publishing.

Question 13

What is direct distribution?

Answer 13

where a producer and consumer deal directly with each other without the involvement of an intermediary.

Question 14

what is indirect distribution?

Answer 14

involves the use of intermediaries between the producer and the consumer.

Question 15

what are some good reasons for indirect distribution?

Answer 15

• customers may live too far away to be reached directly.

• allows a business to make better use of resources elsewhere.

• enables consolidation of small orders into large ones.

• a business may lack retailing expertise

• difficult segments of the market can be best reached by different distribution channels.

Question 16

what is a multichannel distribution?

Answer 16

it involves a business using more than one type of distribution channel

Question 17

advantages of multichannel distribution?

Answer 17

• allows more target market segments to be reached.

• customers increasingly expect products to be available

• enables higher revenues

Question 18

disadvantages for multi channel distribution?

Answer 18

• potential for channel “conflict”. eh competing with retailers by also selling direct.

• complex to manage.

• pricing strategy becomes confused in the eyes of the customer.