Channels of distribution

Question 1

What are the 3 types of distribution channels?

Answer 1

Direct selling
One intermediary channel
Two intermediaries channel

Question 2

Give an example for all three

Answer 2

Direct selling= farmers market
One intermediary= Travel agents
Two intermediary= Corner shops

Question 3

Pros of direct selling

Answer 3

No mark up
Producer has complete control of the marketing mix
Quicker than other channels
May lead to fresher for food products
Direct contact with consumers offers useful market research

Question 4

Cons of direct selling

Answer 4

Storage and stock costs paid by producer
No physical shops
Not convenient for consumer
Intermediaries dont take on costs for you
Can be expensive to deliver

Question 5

Pros one intermediary channel

Answer 5

Retailers hold stocks and pay for costs of this
Retailers has product displays and offers after sales service
Retailers in convenient areas for consumers
Producers can focus on production- not on selling the products to consumer s

Question 6

Cons of one intermediary channel

Answer 6

They take a mark up price
Producers lose some control over marketing mix
Retailers may sell products from competitors too
Producer has delivery costs to retailer

Question 7

Pros of two intermediaries

Answer 7

Wholesaler holds goods and buys in bulk from producer 
Reduces stock holding costs of producer 
Wholesaler pay for transport costs 
wholesaler ‘breaks bulk’ by 
buying in large quantities 
and selling to retailers in 
small quantities
may be the best way to 
enter foreign markets 
where producer has no 
direct contact with retailers

Question 8

Cons of two- intermediaries

Answer 8

Wholesaler holds goods and buys in bulk from producer 
Reduces stock holding costs of producer 
Wholesaler pay for transport costs 
wholesaler ‘breaks bulk’ by 
buying in large quantities 
and selling to retailers in 
small quantities
may be the best way to 
enter foreign markets 
where producer has no 
direct contact with retailers