-distribution- Flashcards

1
Q

What is distribution?

A

One of the four elements of the marketing mix. Involves the ways in which a product reaches the end consumer.

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2
Q

What is a distribution channel?

A

Moves a product through the stages from production to final consumption. A line with more than one stage will involve intermediaries.

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3
Q

What are the four intermediaries?

A

Retailers
Wholesalers
Distributors
Agents

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4
Q

Key points about retailers:

A

Final step in the chain
Focused on consumer markets
Involves significant loss of margin, as retailer adds a mark up to the price charged.
Convenient for customers
Broad geographical coverage
Retailer chooses final price, handles financial transactions holds stock and handles after-sales support

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5
Q

Key points about wholesalers:

A

Break bulk, e.g buy in large quantities from producers and break into smaller quantities to sell to retailers.
Reduces producers transport costs
Retailers can order in smaller amounts
Buys at a low price from producer and adds a profit margin onto price paid by retailer

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6
Q

Key points about distributors:

A

Distributes products, e.g building supplies, electrical components etc.
Offers products from many producers
Holds stock

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7
Q

Key points about agents:

A

Specialist type of distributor who doesn’t hold stock.
Operates in tertiary sector, e.g travel, insurance, publishing.
Earn commission based on sales achieved.

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8
Q

What is direct distribution?

A

Where a producer and consumer deal directly with each other without the involvement of an intermediary.
Popular, due to e-commerce/direct marketing methods

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9
Q

What is indirect distribution?

A

Involves the use of intermediaries between the producer and consumer
Useful if consumer live too far away to be reached directly
Enables consolidation of small orders to large
Allows a business to make better use of resources elsewhere
Different segments of market can be reached

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10
Q

What is multichannel distribution?

A

Involves a business using more than one type of distribution channel, e.g selling in retail stores, swell as online

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11
Q

Adv of multichannel distribution:

A

Allows more target market segments to be reached
Customers expect products to be available via multiple channels
Enables higher revenues, e.g if retailers out of stock, but in stock online

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12
Q

Disadv of multichannel distribution:

A

Potential for channel ‘conflict’ e.g competing with retailers.
Can be complex to manage.
Danger that pricing strategy becomes confused int he eye of customers

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