1.3.4 Distribution

Question 1

what is distribution?

Answer 1

the ways in which a product reaches the end consumer

Question 2

what is the aim of effective distribution?

Answer 2

making products available in the right place, at the right time, in the right quantities

Question 3

what should businesses consider with distribution?

Answer 3

-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

Question 4

what do distribution channels do?

Answer 4

they move a product through stages from production to final consumption

Question 5

what are stages between production and consumption called?

Answer 5

INTERMEDIARIES

Question 6

give some examples of intermediaries

Answer 6

retailers
wholesalers
distributors
agents

Question 7

give some purposes of distribution channels

Answer 7

-provides link between production and consumption
-helps gather market information
-communicate promotional offers
-financing
-physical distribution

Question 8

retailers

Answer 8

retailers deal directly with the customer and focus on consumer markets

Question 9

examples of retailers

Answer 9

specialist chains (fast fashion)
multiples (next)
department stores (John Lewis)
convenience stores (spar)

Question 10

advantages of retailers

Answer 10

-convenient for customers
-they hold stock, choose final price and handle financial transactions
-handle returns
-has broad geographical coverage

Question 11

disadvantages of retailers

Answer 11

-they add their own ‘mark up’ to the original/ charged price

Question 12

wholesalers

Answer 12

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

Question 13

advantages of wholesalers

Answer 13

-fewer journeys are needed so lower transportation costs
-retailers can buy smaller quantities from wholesalers

Question 14

disadvantages of wholesalers

Answer 14

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.

Question 15

distributors

Answer 15

they sell on products and serve as a local sale point
-usually specialist in a certain industry
-they HOLD STOCK

Question 16

examples of distribution industries

Answer 16

building supplies, electrical components, industrial clothing

Question 17

agents

Answer 17

this is a specialist type of distributor that DOES NOT HOLD STOCK
- instead, they usually earn a commission based on sales achieved

Question 18

example of agent sectors

Answer 18

travel, insurance and publishing sectors

Question 19

what is direct distribution?

Answer 19

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

Question 20

what is indirect distribution?

Answer 20

this involves the use of intermediaries between production and consumption

Question 21

why is the use of intermediaries sometimes useful?

Answer 21

-some customers may live far away
-consolidation of smaller orders into larger ones
-businesses may not have expertise is retailing

Question 22

what have caused changes in distribution?

Answer 22

SOCIAL TRENDS

Question 23

how are markets changing?
(due to social trends)

Answer 23

they are becoming more dynamic and e-commerce, mobile-commerce is becoming more widespread

Question 24

what is multi-channel distribution

Answer 24

involves a business using more than one type of distribution channel

Question 25

example of a multi-channel distributor

Answer 25

apple
sells products in retails stores, online stores, and has many retail partners e.g. currys pc world

Question 26

benefits of multi-channel distribution

Answer 26

-allows more target market segments to be reached
-customers expect products to be available in many places
-higher revenue

Question 27

drawbacks of multi-channel distribution

Answer 27

-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