Ch 14 - place Flashcards
what are the advantages of using distribution channel 1
lower product price if sold direct to consumers (cuts out wholesaler/retailer)
Distribution channel 1 is very simple
can be suitable for some products (food products which are sold straight from the farm)
easy source of market research - direction interaction with customers
what are the disadvantages of distribution channel 1
usually impractical for most products, as consumers usually don’t live near the factory (place of production)
can be very expensive to send products to far away consumers
what are the advantages of distribution channel 2
producer sells large quantities to retailers
reduced distribution costs in comparison to distribution channel 1
what are the disadvantages of distribution channel 2
no direct contact with customers - lose out on a “free” source of market research
the price of the product is often higher than direct selling as the retailer has to cover its costs and make a profit
what are the advantages of distribution channel 3
wholesaler saves storage space for small retailers and reduces storage costs
wholesaler may deliver
what are the disadvantages of distribution channel 3
- maybe more expensive for the small shop to buy from a wholesaler than if it were bought straight -from the manufacturer
- the wholesaler may not have the full range of products to sell
- takes longer for fresh produce to reach the shops, quality might be lower
- product price might be higher as both wholesaler and retailer have to cover costs
what are the advantages of distribution channel 4
agents will be aware of local conditions and will be in the best positon to select the most effective places to sell
what are the disadvantages of distribution channel 4
the producer has less control over the way the product is sold to its customers
products have a higher price as agent, retailer and wholesaler will have to cover up costs and make a profit
how do business select their distribution channel
what type of product is it
is the product very technical
how often is the product purchased
how expensive is the product
how perishable is the product
where are the customers located
where do the competitors sell their products