3.3.4 (Promotion) Making marketing decisions: Types of Distribution Channels. Flashcards
Define a distribution channel.
Channels or routes through which a product passes in moving from the manufacturer (producer) to the consumer.
Define the job of a produce.
To make the product.
Define the job of a wholesaler.
Buy in bulk from the manufacturers and sell in smaller qualities to the retailer.
Outline how wholesalers help producers:
Help producers save on storage costs as they are storing it for them. Reduces producers risk - if it does not sell it is the wholesalers problem now.
Delivery costs are also reduces, as a range of products can be sent in one delivery.
Outline how wholesalers help retailers:
Benefit from low delivery costs, as the wholesaler stocks products from many different manufacturers and will usually deliver the order. This allows retailers to compare products and prices to get the best deal - may also gain from credit terms being offered by the wholesaler.
What has happened to the role of wholesalers?
Declined.
Explain why the role of wholesalers has declined.
Larger supermarkets are buying directly in bulk from producers and wholesalers are trying to prevent their decline by supporting the small retailers that still use them.
Define the role of a retailer:
Main role is to hold stocks (inventories) of goods for sale.
How does the role of a retailer serve the needs of the customer?
By providing:
1) Convenience.
2) Advice: knowledge to help consumers reach the right buying decision.
3) Financial assistance: retailers often provide credit terms or accept payment in a form that suits consumers’ needs.
3) After sale support: can be crucial for durable products.
Define the role of a consumer:
Individuals, or businesses, that purchase the finished product for their own use. `
What is the effect of consumers having less leisure time?
Convenience has become more important and therefore, digital communication has improved, with sellers and consumers able to make direct contact.
Define multi-channel distribution.
This exists when a firm uses more than one type of distribution channel.
Outline the advantages of multi-channel distribution.
Flexibility.
Meet consumer needs.
Outline flexibility as an advantage of multi-distribution channels.
Customers can arrange for products to be delivered directly to the customer from another store or warehouse.
Outline meeting consumer needs as an advantage of multi-distribution channels.
E.g. a consumer might respond to a promotion through visiting a website - a link on the website may lead to a customer adviser, who can discuss the product with the consumer, perhaps providing more detailed information through a text message or email sent to the customers phone. The customer can then click-and-collect, ordering online and paying directly from their credit card (who’s details may already be held by the business) and choosing a place from which the consumer can collect their purchase.
