Distribution Flashcards
What’s channel of distribution
Route a product takes from manufacturer to consumer
A product usually passes through intermediaries on way from manufacturer to consumer
What are examples of intermediaries
E.g. retailers, wholesalers and agents
What are retailers
They’re shops who sell to consumers
Usually final stage in distribution channel
E.g. Tesco, Argos and Amazon
What do wholesalers do
They buy goods from manufacturers in bulk and sell them in smaller quantities to retailers
In other words, “breaking bulk”
How do wholesalers make distribution simpler
Without a wholesaler, the manufacturer would have to make separate deliveries to lots of retailers
There are 3 different channels of distribution
1) Direct selling (two stage channel): Manufacturer>Consumer
2) Indirect selling (three stage channel): Manufacturer—>Retailer—>Consumer
3) Indirect selling (four stage channel): Manufacturer>Wholesaler>Retailer>Consumer
What’s multi-channel distribution
When businesses sell through more than one method
E.g. online and in-store
Benefit of a multi-channel distribution
Gives flexibility for customers and a wide market coverage for manufacturers
Examples of a multi-channel distribution
Supermarkets and fashion retailers which have high street stores as well as a internet store are using multi-channel strategy
Drawback and a benefit of multi-channel distribution
Drawback: - May lead to added costs
Benefit: - Allows them to target a wider market
Benefit and drawbacks of e-commerce
Benefits: - Cheaper costs
Drawbacks: - Problems establishing brand loyalty
- Customers often like to see and feel goods before they buy them
What’s online distribution
When firms can provide services instead of products
- It’s the streaming or downloading of media content via the internet
Is online distribution a service or a good
You purchase a service
How is there cost saving involved in online distribution
No need to spend money on producing boxed products
Therefore price of downloads for consumer can be cheaper than buying a physical film or book, due to these reduced costs
How is online distribution beneficial for the environment
Online distribution is environmentally friendly than production of physical goods as they contain bio-degradable plastics
Using online distribution reduces pollution from transporting physical goods
