1.3.4 - Distribution

Question 1

Distribution definition

Answer 1

Process in getting the right product or service to the consumer in the
right place

Question 2

Two Stage Distribution Channel

Answer 2

Manufacturer to Consumer
- Commonly used for online products
- Cheapest

Question 3

Three Stage Distribution Channel

Answer 3

Manufacturer to Retailer to Consumer
- Retailers spread around so higher sales and distribution
- Normally mass markets and high demand products
- Usually high profit margins

Question 4

Four Stage Distribution Channel

Answer 4

Manufacturer to Wholesaler to Retailer to Consumer
- Manufacturers prefer to sell to wholesalers so they can bulk sell
- Added benefit for wholesalers as they can offer trade credit
- Common for groceries, clothes etc

Question 5

Five Stage Distribution Channel

Answer 5

Manufacturer to Agent to Wholesaler to Retailer to Consumer
- When selling overseas
- Agents will understand regulation and taxes etc to make an easier selling process for manufacturer
- Disadvantage as makes selling chain longer so price higher for consumer

Question 6

Benefits of using online distribution

Answer 6

• Low barriers to entry
• Small startup costs
• Larger consumer market
• Can provide unique and larger quantity of items

Question 7

What is drop-shipping?

Answer 7

Allows them to sell products without holding stock

Question 7

Benefits of using drop-shipping

Answer 7

• Reduces costs
• Reduces complexity
• Easier to sell for businesses

Question 8

Why is product to service increasing in popularity?

Answer 8

Beginning to value experiences over possessions

Question 9

Advantages of switching from product to service?

Answer 9

1. Increased customer loyalty
2. Stable revenues
   - Often use subscriptions
3. Competitive Differentiation
   - Offering unique and value-added services can help a company stand out and differentiate itself from competitors.
4. Flexibility
   - Allows easy changes and adaptations in the market

Question 10

Disadvantages of switching from product to service?

Answer 10

1. Initial Investment
2. Complexity
   - Needs to employ people of knowledge and who can adapt
3. Customer resistance
   - Some consumers may be hesitant to swap and stick with other competitors

Question 11

Advantages of Online Retailing

Answer 11

1. Easy Access
2. Reduced overheads
3. Rapid growth

Question 12

Disadvantages of Online Retailing

Answer 12

1. Costs
2. Security and Fraud
3. Legal Issue
4. Advertising Costs