Place/Channels of Distribution

Question 1

What is the channel of distribution?

Answer 1

The way in which the product gets from the producer to the consumer.

Question 2

What are the different types of channel of distribution?

Answer 2

Producer –>consumer (direct selling)
Producer–> Retailer–> Consumer (Retail Channel)
Producer–>Wholesaler–>Consumer (Wholesaler)
Producer–>Wholesalers–>Retailer–>Consumer

Question 3

What are some e.g. Of direct selling?

Answer 3

Internet selling (e-commerce: selling through a website, s-commerce: selling by social media).
Mail order
Personal selling
TV shopping channel

Question 4

What are some e.g. Of retail channel?

Answer 4

Convenience store
Warehouse
Distant store
Department store 
Supermarket 
Online retailer 
speciality store

Question 5

What are the different types of retailers?

Answer 5

Supermarket: a medium to large grocery and household store aiming for low-margin/high-volume sales.

Speciality store: a store which concentrates on narrow product areas e.g. Clothing, electrical goods, entertainment.

Department store: a large store with a range of goods and services, divided into departments which can be individually managed by buyers, merchandisers or a separate private business.

Convenience store: a small to medium grocery and convenience shop usually operating near residential areas.

Discount store: a small, medium or large shop which sources end-of-run stock or branded goods to sell at heavily discounted prices.

Online store: selling directly to customers through an e-commerce website.

Warehouse/direct retailer: a medium to large store, usually off the high street, stocking goods directly from manufacturer or with costs of another step in supply chain removed. I

Question 6

What are the benefits of e-commerce (selling through a website)?

Answer 6

Online shopping is the growth area of the retailing market.
Business can show its entire range to customers.
Customers can access the site 24/7.
Avoids the high fixed costs of running a physical shop(rent, wages).
Customers’ browsing habits can be monitored on the site.

Question 7

Discuss the ads and disads of using a retailer?

Answer 7

Ads-
Consumer can see and try the product.
Store location is convenient.
Consumer can get the product straight away.
Retail staff can persuade customers to buy.

Disads-
Some consumers will find it more difficult to get to shop.
Involves travelling time for the consumer.
Retailer may not have space to stock a huge range.
High running costs can push up prices.

Question 8

What are the benefits of using a wholesaler?

Answer 8

Buy in large bulk from producer so get product cheaply, retailers then benefit from low prices from the wholesaler.
Sell in smaller bulk to retailers who could not access producers directly.
Provide access to market for producers.
Wholesalers can influence retailers to stock a product- cheaper for producer than individual marketing.

Question 9

What factors influencing the choice of channel?

Answer 9

Nature of the product e.g. If perishable then cannot be stored in a wholesaler
Specialist knowledge needed e.g. Double glazing is sold direct by the producers.
Logistics available to the producers e.g.large supermarkets have their own warehouses and fleet of vehicles.
The exclusivity/image the producers want.
Legal issues e.g.restriction on sale of product.