Distribution Flashcards
What is distribution
Involves the ways in which a product reaches the end consumer
Aim for distribution
Make products available in the right place at the right time in the right quantities
Types of distribution channel
Direct
Modern
Traditional
Agent
Direct channel
Producer- customer
Modern channel
Producer- retailer- customer
Traditional channel
Producer- wholesaler- retailer- customer
Agent channel
Producer- agent- wholesaler- retailer- customer
What do producers do?
Organisations take raw materials or components and process them into finished or semi processed goods
What are customers?
The end user of a product or a service. They are at the end of the channel of distribution
What do retailers do?
An organisation that sells goods and services to the general public or end user
What do wholesalers do?
Buy large quantities of supplies and sell them in smaller quantities. They act as a intermediary between manufacturers and retailers and consumers
What do agents do?
Facilitate the sale between a business and a wholesaler, especially in foreign markets. They receive commission based upon successful sales
Direct advantages/ disadvantages
A: quick and cheap, keep more of the revenue per sale
D: hard to keep up with demand, customers can’t see products, difficult to build business
Modern advantages/ disadvantages
A: skip out the wholesaler- products are cheaper
D: negotiating with retailer can be hard
Traditional advantages/ disadvantages
A: increase distribution for smaller products, saves storage
D: can’t make as big a profit- has to go through more stages
Agent advantages/ disadvantages
A: reduce risk of product not being sold
D: costly, longer process
What is a multi channel
Using more than one channel per business
E.g PC world
Multi channel advantages/ disadvantages
A: reach more people, meet all customer needs and wants, increase sales
D: employ more people, hard to manage all channels, bad reputation if one channel messes up, conflict
Factors influencing choice of channel
Market power Brand reputation Growth Type of shop (physical or online) Budget Customer expectation Channel length Multi channel or one Nature of product
Changes in distribution to reflect social trends
Online distribution
Changing from product to service
Online distribution
The distribution of almost any product is the internet. New films, music etc
Can all be accessed via the internet without the need of having a physical copy
Benefits of online distribution
- availability of niche products (can reach a wider audience)
- low barriers to entry as set up costs are small
