1.3.4 Distribution Flashcards
what is distribution?
the ways in which a product reaches the end consumer
what is the aim of effective distribution?
making products available in the right place, at the right time, in the right quantities
what should businesses consider with distribution?
-how can they ensure the products reach customers
-most suitable location for customers to buy products
-importance of factors such as stock availability, price and speed of delivery
what do distribution channels do?
they move a product through stages from production to final consumption
what are stages between production and consumption called?
INTERMEDIARIES
give some examples of intermediaries
retailers
wholesalers
distributors
agents
give some purposes of distribution channels
-provides link between production and consumption
-helps gather market information
-communicate promotional offers
-financing
-physical distribution
retailers
retailers deal directly with the customer and focus on consumer markets
examples of retailers
specialist chains (fast fashion)
multiples (next)
department stores (John Lewis)
convenience stores (spar)
advantages of retailers
-convenient for customers
-they hold stock, choose final price and handle financial transactions
-handle returns
-has broad geographical coverage
disadvantages of retailers
-they add their own ‘mark up’ to the original/ charged price
wholesalers
they break bulk, with buying in larger quantities from producers for a lower price per unit and break into smaller quantities to sell to retailers, to make profit
advantages of wholesalers
-fewer journeys are needed so lower transportation costs
-retailers can buy smaller quantities from wholesalers
disadvantages of wholesalers
Since wholesalers are not usually a direct sales channel to consumers, they cannot have complete control over how retailers get products to customers. Whether consumers have a positive or negative view of your product depends largely on the retailer.
distributors
they sell on products and serve as a local sale point
-usually specialist in a certain industry
-they HOLD STOCK
examples of distribution industries
building supplies, electrical components, industrial clothing
agents
this is a specialist type of distributor that DOES NOT HOLD STOCK
- instead, they usually earn a commission based on sales achieved
example of agent sectors
travel, insurance and publishing sectors
what is direct distribution?
where a producer and consumer deal directly with each other without the involvement of an intermediary
what is indirect distribution?
this involves the use of intermediaries between production and consumption
why is the use of intermediaries sometimes useful?
-some customers may live far away
-consolidation of smaller orders into larger ones
-businesses may not have expertise is retailing
what have caused changes in distribution?
SOCIAL TRENDS
how are markets changing?
(due to social trends)
they are becoming more dynamic and e-commerce, mobile-commerce is becoming more widespread
what is multi-channel distribution
involves a business using more than one type of distribution channel
example of a multi-channel distributor
apple
sells products in retails stores, online stores, and has many retail partners e.g. currys pc world
benefits of multi-channel distribution
-allows more target market segments to be reached
-customers expect products to be available in many places
-higher revenue
drawbacks of multi-channel distribution
-channel conflicts can arise, more competition with other retailers selling directly to customers
-can be complex to manage
-pricing strategy can be viewed as confusing in the eyes of customers
