Distribution

Question 1

What is distribution

Answer 1

Involves the ways in which a product reaches the end consumer

Question 2

Aim for distribution

Answer 2

Make products available in the right place at the right time in the right quantities

Question 3

Types of distribution channel

Answer 3

Direct
Modern
Traditional
Agent

Question 4

Direct channel

Answer 4

Producer- customer

Question 5

Modern channel

Answer 5

Producer- retailer- customer

Question 6

Traditional channel

Answer 6

Producer- wholesaler- retailer- customer

Question 7

Agent channel

Answer 7

Producer- agent- wholesaler- retailer- customer

Question 8

What do producers do?

Answer 8

Organisations take raw materials or components and process them into finished or semi processed goods

Question 9

What are customers?

Answer 9

The end user of a product or a service. They are at the end of the channel of distribution

Question 10

What do retailers do?

Answer 10

An organisation that sells goods and services to the general public or end user

Question 11

What do wholesalers do?

Answer 11

Buy large quantities of supplies and sell them in smaller quantities. They act as a intermediary between manufacturers and retailers and consumers

Question 12

What do agents do?

Answer 12

Facilitate the sale between a business and a wholesaler, especially in foreign markets. They receive commission based upon successful sales

Question 13

Direct advantages/ disadvantages

Answer 13

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

Question 14

Modern advantages/ disadvantages

Answer 14

A: skip out the wholesaler- products are cheaper

D: negotiating with retailer can be hard

Question 15

Traditional advantages/ disadvantages

Answer 15

A: increase distribution for smaller products, saves storage

D: can’t make as big a profit- has to go through more stages

Question 16

Agent advantages/ disadvantages

Answer 16

A: reduce risk of product not being sold

D: costly, longer process

Question 17

What is a multi channel

Answer 17

Using more than one channel per business

E.g PC world

Question 18

Multi channel advantages/ disadvantages

Answer 18

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

Question 19

Factors influencing choice of channel

Answer 19

Market power 
Brand reputation 
Growth
Type of shop (physical or online)
Budget 
Customer expectation 
Channel length 
Multi channel or one 
Nature of product

Question 20

Changes in distribution to reflect social trends

Answer 20

Online distribution

Changing from product to service

Question 21

Online distribution

Answer 21

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

Question 22

Benefits of online distribution

Answer 22

• availability of niche products (can reach a wider audience)
• low barriers to entry as set up costs are small