chapter 15

Question 1

what is distribution channel 1

Answer 1

producer->consumer direct selling

Question 2

advantages of distribution channel 1(direct selling)

Answer 2

1.quickest method of getting the product to consumer
2.can offer lower prices->can cut out cost of middlemen
3.producer has direct contact with customers, can lead to market research opportunities->good customer relationship
4.all profit is earned by producer

Question 3

disadvantages of distribution channel 1(direct selling)

Answer 3

1.All storage costs must be paid for by the producer
2.Delivery costs may be high if there are customers over a wide area
3.consumers may not find the method convenient as it incurs a lot of travel

Question 4

what is distribution channel 2

Answer 4

producer->retailer->consumer

Question 5

advantages of distribution channel 2

Answer 5

1.retailers are more conveniently located
2.producer sells large quantities->storage costs are paid in part

Question 6

disadvantages of distribution channel 2

Answer 6

1.retailer takes some of the profit
2.producer may pay for delivery costs to retailers
3.retailer sell competitor’s product as well->producer needs to make sure they have competitive advantage
4.no direct contact with final customer

Question 7

what is distribution channel 3

Answer 7

producer->wholesaler->retailer->consumer

Question 8

advantages of distribution channel 3

Answer 8

1.transport costs to the retailer is payed by the wholesaler
2.distribution of goods through wholesalers helps product reach a larger market
3.wholesalers can provide advice to producers and small retailer

Question 9

disadvantages of distribution channel 3

Answer 9

1.another middleman, takes part of the profit from producer
2.producer loses more control over marketing mix
3.takes longer for fresh products to reach the shops, may compromise quality

Question 10

what is distribution channel 4

Answer 10

producer->agent->wholesaler->retailer->consumer
commonly used when entering a foreign market

Question 11

advantages of distribution channel 4

Answer 11

1. The agent has specialized knowledge of the market->ensures business survival in foreign market

Question 12

disadvantages of distribution channel 4

Answer 12

1.Another middleman is added so even more profit is taken away from the producer
2.less control over how the product is sold to the consumer