place - channels of distrubution + direct selling

Question 1

what are channels of distrubution?

Answer 1

the possible routes taken by a product to reach the consumer from the manufacturer

Question 2

what are the four different channels of distrubution?

Answer 2

• manufacturer –> customer
• manufacturer –> retailer –> customer
• manufacturer –> wholesalers –> retailer –> customer
• manufacturer –> wholesaler –> customer

Question 3

what are the six factors that impact channels of distrubution?

Answer 3

• finance available
• desired image for the product
• shelf life of the product
• legal restrictions
• stage of the product life cycle
• technical qualities of the product

Question 4

finance available

Answer 4

a manufacturer may not have the finance available to set up e-commerce or print catalogues to sell direct, so using wholesalers or retailers are the only options

Question 5

desired image for the product

Answer 5

certain products have images that dictate where they can be sold e.g. hugo boss only sell in retailers that have built up a good reputation over the past five years

Question 6

shelf life of the product

Answer 6

some products need to be shipped to retailers fast as they will go out of date quickly e.g. fresh fruit

Question 7

legal restrictions

Answer 7

some products can’t be sold through certain channels e.g. prescription medicines can only be sold through pharmacists

Question 8

stage of the product life cycle

Answer 8

products may only be sold in exclusive outlets at the beginning of a products life cycle, but may be sold in discount stores during their decline stage to encourage sales

Question 9

technical qualities of the product

Answer 9

highly technical products may need to be demonstrated, which means personal selling is the best channel

Question 10

what is direct selling?

Answer 10

selling directly from manufacturer to consumer

Question 11

what are the advantages of direct selling?

Answer 11

• products can be tailored to the customers specific requirements
• cuts out the ‘middle men’ which increases profits for the manufacturer
• manufacturer has more control over how the product is marketed

Question 12

what are the disadvantages of direct selling?

Answer 12

• increased costs due to advertising, storing stock and administration
• time and cost incurred in organising product delivery

Question 13

what are the five methods of direct selling?

Answer 13

• e-commerce
• mail order
• direct mail
• personal selling
• online shopping channels

Question 14

what is e-commerce?

Answer 14

the buying and selling of products over the internet

Question 15

what are the advantages of e-commerce?

Answer 15

• customers can access goods 24/7
• allows companies to access customers in different countries
• money is saved on shop rental and overheads
• customers can shop from home
• a wide range of goods can be shown on the company website

Question 16

what is mail order?

Answer 16

when goods are ordered through a catalogue

Question 17

what are the advantages of mail order?

Answer 17

• customers can use credit facilities
• money is saved on shop rental
• customers can shop from home

Question 18

what are the disadvantages of mail order?

Answer 18

• catalogues and advertising can be expensive
• can incur high levels of bad debt
• high level of returns

Question 19

what is direct mail?

Answer 19

a business posts letters, leaflets,a business posts letters, leaflets and brochures directly to the customer

Question 20

what are the advantages of direct mail?

Answer 20

• specific market segments can be targeted
• a wide geographical area can be reached

Question 21

what are the disadvantages of direct mail?

Answer 21

• customers can percieve this as junk mail and throw it away
• customer mailing lists can quickly become out of date, meaning a business may target the wrong person, wasting money

Question 22

what is personal selling?

Answer 22

a sales person sells products directly to the customer, often ‘door to door’ or over the phone

Question 23

what are the advantages of personal selling?

Answer 23

• allows a demonstration or explanation of the product to be given
• feedback of the products can be gathered from customers

Question 24

what are the disadvantages of personal selling?

Answer 24

• customers can find this type of selling a nuisance and may not be keen to listen
• staffing costs and commission make this method expensive and increasingly unpopular with businesses

Question 25

what are online shopping channels?

Answer 25

a business sells products on the TV using dedicated shopping channels

Question 26

what are the advantages of online shopping channels?

Answer 26

• customers can see products being modelled and demonstrated
• customers can be encouraged to buy on impulse due to short-term bargain prices

Question 27

what are the disadvantages of online shopping channels?

Answer 27

• customers need to switch onto the channel before they can be targeted
• customers need to wait for products to arrive and may have to pay delivery costs