Place Flashcards
Place
This refers to how the product is distributed (NOT LOCATION)
Channels of distribution
Provides a link between production and consumption. Can be simple, with just two layers (producer -> consumer). However, if cane be more complicated, with several layers
Producer
Manufacturers of product or created of the service
Retailer
Responsible for selling the final products to consumers. There are various kinds of retailers. Eg chains, department stores, franchises etc
Wholesaler
To act as a third party and to break down the bulk (resell in smaller quantities)
Advantages of wholesalers to producers and small shops
Producers are too big to deal directly with every shop sells its products
They help smaller shops as it means that they don’t have to store large quantities of goods
Can move goods around the country using their own logistics, reducing costs and time for other business
Manufacturer and retailer can focus their efforts on their specialist area
Agent
A third party who negotiates between the producer (seller) and buyer. Normally for sale of services
Examples include: admiral, ticketmaster
Build revenue by commission or fee, don’t hold stock, often involved in the distribution channel as they significantly reduce the cost of marketing for producers
Direct marketing (producer -> consumer)
A sale could happen face to face, such as what happen at a farm, in which the consumer buys directly from the producer.
Can buy directly from manufacturers website
Online distribution (e commerce)
A tangible product being purchased online and then delivered to the customer by means of physical distribution
Digital distribution
Electronic methods being used to deliver goods to the customer (download, intangible eg music or films)
Advantages of online distribution
Geographical reach to customer increased
Overheads lowered
Can be open at all times
Disadvantages of online distribution
Shipping and returns can be complicated and costly
Initial investment high
Opens business to security problems (hacks)
Customer may not like to buy products without seeing/ trying them
Advantages of digital distribution
Customer can buy and consumer products 24 hours a day
Cost saving to either the business or customer, as there is no delivery cost involved
Removes the need for the business to store tangible products
Disadvantages of digital distribution
Not suitable for all products
It relies on customer having access to the internet
There are high initial costs of setting up the website and systems
Ongoing costs of systems and website maintenance and costs to maintain security/ prevent fraud
Illegal streaming providers may make it difficult to operate
Physical distribution
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