Chapter 14 - The Marketing Mix: Place

Question 1

Distribution channel

Answer 1

Means by which a product is passed from the place of production to the customer

Question 2

Role of place decisions in the marketing mix

Answer 2

Ensures the product is in the right place at the right time, otherwise customers won’t know about it

Question 3

Distribution channels (4)

Answer 3

1: Producer —> Consumer (can also be manufacturer to manufacturer)
2: Producer —> Retailer —> Consumer
3: Producer —> Wholesaler —> Retailer —> Consumer
4: Producer —> Agent —> Wholesaler —> Retailer —> Consumer

Question 4

Distribution channel 1: straight to consumers advantages (4)

Answer 4

Very simple
Suitable for certain types of food products sold straight from the farm
Lower price for customers as it cuts out wholesalers/retailers
Products can be sold by mail order catalogues or via the internet

Question 5

Distribution channel 1: straight to consumers disadvantages (3)

Answer 5

Impractical if consumers don’t live near
Not suitable for products that can’t be easily sent by post
Not cost effective as its expensive to courier/post products

Question 6

Distribution channel 2: Using a retailer as an intermediary Advantages (2) and use

Answer 6

Used for expensive products or where the retailer is large
-producer sells large quantities to retailers
-reduced distribution costs compared to selling directly to customers

Question 7

Distribution channel 2: Using a retailer as an intermediary disadvantages (2)

Answer 7

No direct contact with customers
Price often higher for customers as retailer also has to cover costs and make a profit

Question 8

Distribution channel 3: Using a wholesaler and retailer as intermediaries use and advantages (5)

Answer 8

-breaks the bulk, so used when retailers don’t need to buy such large quantities
Wholesaler saves storage space and costs for retailer
Small retailers can purchase perishable products in small quantities and be able to sell them, before they expire
Wholesalers may give credit to retail customers (take goods and pay later)
Wholesaler may deliver to retailer, saving transport costs
Wholesaler can give advice to small retailers and manufacturers about what is selling well

Question 9

Distribution channel 3: Using a wholesaler and retailer as intermediaries disadvantages (5)

Answer 9

May be more expensive for a small shop to buy from a wholesaler than if bought straight from manufacturer
Wholesaler may not have the full product range
Takes longer for fresh goods to reach the shops (may be lower quality)
Wholesaler may be far from small shops
Consumer price is higher as both retailer and wholesaler have to cover costs and make a profit

Question 10

Agent

Answer 10

Independent person or business that is appointed to deal with sales and distribution of a product or range of products

Question 11

Distribution channel 4: using an additional intermediary such as an agent use and advantages (2)

Answer 11

-Mainly used when exporting goods
Agent will know the best way to sell the product in other markets, manufacturers won’t
Agent will be aware of local conditions and will be in the position to select the most effective places to sell

Question 12

Distribution channel 4: using an additional intermediary such as an agent disadvantages (1)

Answer 12

Producer has less control over the way the product is sold to customers

Question 13

Methods of distribution (9)

Answer 13

Department stores
Chain stores
Discount stores
Superstores
Supermarkets
Independent retailers
Direct sales
Mail order
Internet/e-commerce

Question 14

Department stores

Answer 14

Large stores usually in city centres that sell a variety of products from a range of suppliers

Question 15

Chain stores

Answer 15

2+ stores that have the same name and characteristics

Question 16

Discount stores

Answer 16

Retail stores offering a wide range of products at discount prices

Question 17

Superstores

Answer 17

Very large out of town stores which sell a wide range of food+non-food products

Question 18

Supermarkets

Answer 18

Retail grocery stores with dairy produce, fresh meat, packaged food and non food departments

Question 19

Independent retailers

Answer 19

Single, small shops that offer local, personalised service with high prices

Question 20

Direct sales

Answer 20

Products sold directly from manufacturer to customer (can be business to business)

Question 21

Mail order

Answer 21

Customers look through a catalogue/magazine and order by post using the telephone or internet

Question 22

E-commerce/internet

Answer 22

Customers order products from the businesses website or specialist websites

Question 23

What to be considered when select the best distribution channel (7)

Answer 23

Type of product
Location of customers
Technical product?
How often it’s purchased
Price
Perishability
Where competitors sell their products