Place Flashcards
What is meant by place
Place refers to where consumers buy your product, or where they discover it. Today’s consumers may learn about products and buy them online.
What is a distribution channel
A distribution channel is the route/chain/path taken by a product as it passes from producer to the ultimate/ final consumer.
The more distribution channels a business has means they have the ability to reach a wider potential market and less control
What is break bulk
Dividing a large quantity of goods ordered from a supplier and selling them in smaller quantities to customers. A function of retailers and wholesalers is to break bulk
What are the components of a distribution channel
Producer: Producers combine labour and capital to create goods and services for consumers.
Agent: agents do not take ownership of the goods. They are not employed by a firm but represent it and try to gain sales.
Wholesaler: A person or company that sells large quantities of goods, often at low prices, to retailers.
Retailer: A person or business that sells goods to the public in small quantities for immediate use or consumption.
End Consumer: A person who buys a product or service.
What are the types of distribution channels
Indirect – An indirect channel is a channel which has one or more components between the manufacturer and the final consumer, this adds value to the product making it more expensive for the consumer.
Direct - A direct channel allows the consumer to make purchases from the manufacturer. This direct, or short channel, may mean lower costs for consumers
A multi-channel distribution involves a business using more than one type of distribution channel.
What is meant by multi-channel distribution
A multi-channel distribution involves a business using more than one type of distribution channels.
An example being apple devices (retail store, online shop and multiple retail partners)
What is the importance/impact of choosing the right distribution channel
Enables costs to be low in distribution for producer
To make sure it reaches a lot of the customers
Can create lower costs for customers
Using agents which have better market knowledge than the producer
The more effective the distribution, higher profits benefit shareholders, employees.
The longer the channel
The less control the firm has and the more expensive the good will be
What factors should be taken into account in choosing the best distribution channel?
Nature of the product - Customised? A direct distribution approach often works best for a product that the end consumer wants providing to a distinct specification.
The market - Is it geographically spread? Does it involve selling overseas?
The business - Marketing objectives – revenue or profit maximisation? Control of sale?
Legal issues - What are the risks if an intermediary sells the product to an inappropriate customer
