1.3.4 Distribution Flashcards
distribution
products -> right place for customers = purchase
include physical/online
availability and visibility
distribution channel
route taken by product as it moves from producer to customer/consumer
wholesaler
large quantities
sell smaller quantities (intermediary manufacturers and retailers and consumers)
customer
end user of product/service at end of distribution channel
retailer
organisation that sells goods and services to the general public/end user
producer
take raw materials or components
process them into finished or semi processed goods
distribution channels
- direct
- modern
- traditional
- use of agent
(5. be own retailer e.g. apple)
agent
facilitates sale between a business and a wholesaler, foreign markets,
commission based upon successful sales,
specialist mkt knowledge
direct distribution
3positives and 3negatives
manufacturer > consumer (straight to)
- direct marketing
e. g. amazon/solicitor
positives:
1-quicker, 2max rev, 3cheaper for customer
negatives:
1-options, 2no outlets, 3internal work
modern distribution
2 positive 1 negative
manufacturer > retailer > consumer
-electronic goods & mass market
all round country = sales vol = higher
positives:
- convenient, control supply/mkting
negatives:
- time consuming (manage relationships)
traditional distribution
2 positives 1 negative
manufacturer>wholesaler>retailer>consumer
- manufacturers = few wholesalers & sell larger quantities or wholesaler and many retailers
- wholesaler = offer trade credit terms
positives:
- focus on production & save costs (storage)
negatives:
- wholesaler = marketing different & % profits
agent distribution
1 positive 1 negative
manufacturer>agent>wholesaler>retailer>consumer
sell in another country
language/ regulations/ importing and tax
positives:
- selling in another country simple mkt knowledge
negatives:
- supply chain longer = increase final price
intermediaries
people in middle e.g wholesaler (middle man)
-cutting them out reduces costs, complexity, stages of distribution
short distribution channels
producer sells
directly -> customer or though a retailer
long distribution channels
where there are more than 1 intermediary (middle person) between producer and customer
9 factors influencing choice of channel
1-channel length 2-intermediary? 3-control over 4-product (luxury wholesalers ) 5-TM 6-size of business (through wholesalers = sales) 7-personalisation 8-infrastructure(set up/run e-commerce) 9-growth (demand =more channels)
methods of distribution
- traditional physical channel
- direct to retailer
- owning your distribution
- online selling
- multi channel distribution
traditional physical channel
small producers…
- small producer = hard to achieve big chain distribution sell to wholesalers
- distribution = sale to independent shops
- cant afford distribute to lots of small shops
direct to retailer distribution
- large producers & cost effective (wholesaler)
- tough negotiations & credit terms
owning your distribution
-apple,
closer to market=control factors e.g. price&location
online selling distribution
- direct online -> customer, producer = 100% profit
- online retail = small firms often struggle to build won successful e-commerce sales platform = piggy back of established e.g eBay business runs of their website
multi channel distribution
3positives 3negatives
-more than 1 type of distribution channel
positives:
- more TM
- meet cust expectations (more than 1 channel)
- higher rev e.g if retailer outlets = no stock - buy online
negatives:
- conflict = compete with retailers
- complex to manage
- pricing strategy = confused to customer
changes in distribution to reflect social trends
- online distribution
- changing from product -> service
- mobile device
- ageing pop = disposable income
- mass customisation = reduce stock holding
- e-commerce = reduce high street retailers
online distribution change
4 benefits
-distribution of almost any product is internet,
-benefit of internet:
1-niche = wider audience
2-low BTE, set up costs small
3-greater geographically dispersed market
4-transactions happen solely online e.g. tickets
changing from product to service distribution change
- changing from physical tangible products a service
- dont have to own something to be able to use it e.g. music/song (CD)
barrier to entry
factors making it hard for new firms to break into an existing market
e-commerce
electronic commerce-carried out online
m-commerce
selling via mobile phones and tablets
impulse purchasing
buying in an unplanned way
long tail
huge number of tiny businesses appealing to minority tastes
find a profitable existence online
target whole planet not just local area
pure play
only sell online
