disrubiton channels Flashcards
distribution channel
is the means by which a product is passed from the place of production to the customer or retailer
distribution channel 1
producer to consumer
examples- car parts sold directly to the car producer
advantages
it involves manufactures selling their products directly to their consumer
it is suitable for products like agricultural products which are sold straight from the farm
there is a lower price if its sold directly to the customer it cuts out wholesaler and retailer
disadvantages
this is impractical for most products because the consumers probably do not live near the factories
it may be expensive to send the products by post and it wont be cost effective
it may not be suitable for products which cannot easily be sent by post
distribution channel 2
producer to retailer to consumer
common where the retailer is large like a supermarket or when products are expensive like jewelry
advantages
producer sells large quantities to wholesaler
reduced distribution costs compared to channel 1
disadvantages
no direct contact with customers
distribution channel 3
producer-wholesaler-retailer-consumer
using a wholesaler who performs the function of breaking bulk
breaking bulk
this is where wholesalers buy products from manufactures in large quantities and then divide the stock to much smaller quantities for retailers to buy
advantages
wholesaler saves storage space for small retailer and reduces storage costs
small retailers can purchase products in small quantities from wholesaler because they have a short shelf life
wholesaler may deliver to small retailer this saves on transport costs
disadvantages
may be expensive for the small shop to buy from the wholesaler than if they bought straight from the manufacturer
wholesaler may not have the full range of products to sell
wholesaler may be a long way from the shops
channel 4
producer to agent to wholesaler to retailer to consumer
agent
is an independent person or business that is appointed to deal with the sales and distribution of a product or range of products they sell the products that are exported on behalf of the manufacturer
advantages
manufacturer may not know the best way to sell their products in other markets
agents will be aware of local conditions and will be able to decide the best places in which to sell
disadvantages
less control over the way the product is sold to consumers
e-commerce
is the buying of goods and services using computer systems linked to the internet
threats of e-commerce to a business
competition is very high if the business is selling products at a high price consumers can find an alternative
transports costs for delivery and packaging will be expensive
there is no face to face contact with consumers which can provide useful market research feedback
threats to consumers
consumers need access to the internet to buy products some countries don’t have good internet
products cannot be see touched before being purchased and this can lead to returns of products
there is no face to face contact with sales staff so its difficult to find out more about a product
opportunities to business
global coverage
low cost on promotion
access to many consumers
businesses can also easily make online purchases of supplies and materials from other businesses (b2b)