Distribution Flashcards
Define DISTRIBUTION
Distribution is the process of getting a firm’s products to the market.
Define DISTIBUTION CHANNELS
A distribution channel is the route that a product takes in order to get from the producer to the final customer..
What types of distribution channels are there?
4 stage channels - selling through wholesalers:
producer - wholesaler - retailer - consumer
3 stage channels - selling through retailers:
producer - retailer - consumer
2 stage channels - selling directly to the customer
producer - consumer
Define CHANNEL INTERMEDIARIES
Channel intermediaries are the organisations a product travels through from producer to end customer.
What are the advantages of having multiple channels of distribution?
- Allows more than one target market segment to be reached
- Customers increasingly expect products to be available via more than one channel.
- Enables high levels of revenue.
What are the disadvantages of having multiple channels of distribution?
- Potential for channel ‘conflict’
- Can be complex to manage
- Danger that pricing strategy becomes confused in consumer’s eyes.
What factors must be considered when deciding on a distribution channel?
- Nature of the product
- The market
- The business
Define ONLINE DISTRIBUTION
Online distribution is the process of operating in a virtual marketplace so goods ordered online are delivered directly to the customer.
What are the benefits to online distribution?
- Access to the global market
- Business location is not important
- 24/7 trading is possible
- Cuts overhead costs
- Easier for consumers to compare prices
What are the drawbacks to online distribution?
- Security issues over identity fraud and secure methods of payment
- Hackers may steal business ideas
- Increase competition
- Easier for consumers to compare prices
- Shipping costs and delivery times may become an issue.
