Chapter 14: Place

Question 1

Benefits/disadvantages of Distribution channel 1: Producer-Consumer

Answer 1

Benefits:
1 It is good for fresh produce
2 Lower price
3 Simple
4 Products can be sold through mail order

Disadvantages:
1 Impractical for consumers as they don’t live near factories
2 Can be very expansive
3 method not suitable for products that can’t be sent through post

Question 2

Benefits/ Disadvantages of distribution channel 2: Producer-retailer-Consumer

Answer 2

Benefits:
1 Producer sells large quantities to retailer
2 Reduced distribution costs

Disadvantages:
1 No direct contact with customer
2 Price is higher as Retailer needs to make a profit

Question 3

Benefits of Distribution channel 3: Producer-Wholesaler-Retailer-consumer

Answer 3

Benefits
1 Saves storage costs and space for small retailers
2 Can buy fresh produce from wholesalers in small quantities as it has short shelf life
3 Wholesalers can give advice on what products are selling well

Question 4

Benefits/disadvantages of distribution channel 4: Producer-Agent-Wholesaler-Retailer-consumer

Answer 4

Benefits:
1 The agents will have local knowledge of the area and know the best stores to sell
2 The manufacturer may nor know the best way to sell the product

Disadvantages:
1 Producer has less control over the way the product is sold

Question 5

What is to be considered when selecting the distribution methods?

Answer 5

1 What type of product
2 Is the product perishable
3 Is the product technical
4 How expansive is the product
5 How often is the product used
6 Where are the customers located
7 Where to the competitors sell their products