1.3.4 Distribution Flashcards
What is the primary objective of distribution in business?
To make products available in the right place at the right time in the right quantities
What are the four common distribution channels?
- Retailers
- Distributors / Sales Agents
- Direct (e.g. via e-commerce)
- Wholesalers
How is a distribution channel defined?
All the organisations through which a product must pass between its point of production and consumption
What are organisations involved in each stage of distribution commonly referred to as?
Intermediaries
- loss of controll how product is sold
+ Efficiency of distribution costs and greater sales potential
+Contacts, experience, and scale of operation
why importantr to choose right distribution channel
product reaches customer effectively
enahnces customer satisfaction
minimizes costs
can create a competitive advantage
Definition Wholesaler
businesses who buy large quantitites of goods from producers or agents acting on behalf of producers for resale in smaller quantities to ertailers or other businesses
e.g. Costco
job of wholesaler
storegoods until needed
deliver to retailer
pack and brand goods for producer or retailer
add a profit margin before seeling good
Advantages/ Disadvantages WHolesaler
+ easy distribution
+ producer does not need to hold stock
+ highly cost effective noe warehouse needed
-they may not out as much effort into promoting product
-price which customer pays increases (wholesaler profit margin)
Definiton retailers
business organisations who buy from wholesalers or direct from the manufactureers for resale in smaller quantities to the general publich in shops or other retail outlets
type of retail outlets
indepenants: Emmas bookshop
Multiple specialist stores: Waterstones
Multiple variety stores: Action
Department sstores: John Jewis
Supermarkets: Waitrose
Superstores: Walmart
Advantages/ Disadvantages of retailres
+ provide feedback to wholesaer and manufacturer on customer demand
+ advertise goods they sell –> alows producer to concentrate on production not marketing
+ provide storage facilities
*cost effecitve
-add on profit margin
-require signiticant marketing to encourage retailers to stock product
-have power to push down prices payed to consumer
Definition agent
independant person or business contracted to sell + negotiate sales and distribution of a product to a partiqular seeler or market
Advantages/ Disadvantages agent
+ reduce distribution costs
+ work harder as the more they sell the more money they make
-add mark up
-remay not give suffiecient attention to one product if others are more profitable
factors that influence this choice what distribution channel to use
cost
competitors
target market
market coverage
control
marketing mix
volume of sales
chnages in distribution to reflect social trends
online distribution
changing from product to service
