Place- factors and direct selling

Question 1

What are the factor affecting the channel of distribution?

Answer 1

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 2

Finance available

Answer 2

A manufacturer may not have the finance available to set up e-commerce or print catalogues to sell direct, o using wholesaler or retailers are the only options.

Question 3

Desired image for the product

Answer 3

Certain products have images that dictate here they can be sold e.g. Hugo Boss only sell in retailers that have built up a good reputation over at least 5 years.

Question 4

Shelf life of the product

Answer 4

Some products need to be shipped to retailers fast as they will go out of date e.g. fresh fruit.

Question 5

Legal restrictions

Answer 5

Some products can’t be sold through certain channels e.g. prescription medicines need to be sold through pharmacists.

Question 6

Stage of the product life cycle

Answer 6

Products may only be sol in exclusive outlets at the beginning of a product’s life cycle, but may be sold in discount stores during their decline stage to encourage sales.

Question 7

Technical qualities of the product

Answer 7

Highly technical products may need to be demonstrated, which means personal selling is the ideal channel.

Question 8

What are the 5 methods of direct selling?

Answer 8

E-commerce
Mail order
Direct mail
Personal selling
Shopping channels

Question 9

What is e-commerce?

Answer 9

A business sells its products using the internet e.g. ASOS.

Question 10

What are the advantages of e-commerce?

Answer 10

Customers in the global market can be reached 24/7.

An entire range can be shown online.

Online discounts can be offered to attract customers.

Product information and customer comments can sway purchasing decisions.

Question 11

What are the disadvantages of e-commerce?

Answer 11

It can take a lot of time and expense to deign attractive, high-quality websites.

Customers might be wary of providing their personal detail online.

Customers need to have access to the internet.

Customers need to wait for products to arrive and may have to pay delivery costs.

Question 12

What is mail order?

Answer 12

A business sells its products using a catalogue, which is usually sent directly to the customer e.g. MandM Direct.

Question 13

What are the advantages of mail order?

Answer 13

Credit facilities are often offered to customers.

Customers can browse for products and place orders from home, at a time that suits them.

Mail order only companies save money on staffing and store costs.

Question 14

What are the disadvantages of mail order?

Answer 14

Glossy catalogues can be expensive to produce.

Producing catalogues is not environmentally friendly and may not meet CSR aims.

A level of bad debt might be incurred.

Question 15

What is direct mail?

Answer 15

A business posts letters, leaflets and brochures directly to the customer.

Question 16

What are the advantages of direct mail?

Answer 16

Specific market segments can be targeted e.g. by inserting supermarket recipe cards inside cookery magazines.

A wide geographical area can be targeted by placing leaflets inside newspapers and magazines.

Question 17

What are the disadvantages of direct mail?

Answer 17

Customers can perceive this as ‘junk mail’ and simply throw it away.

Customers mailing lists can quickly become out of date, meaning a business may target the wrong people and waste money.

Question 18

What is personal selling?

Answer 18

A salesperson sells products directly to the customer, often by going ‘door to door’ or over the phone (telesales).

Question 19

What are the advantages of personal selling?

Answer 19

Allows a demonstration or explanation of the product to be given.

Feedback on products can be gathered from customers.

Question 20

What are the disadvantages of personal selling?

Answer 20

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 21

What are shopping channels?

Answer 21

A business sells products on the TV using dedicated shopping channels e.g. QVC.

Question 22

What are the advantages of shopping channels?

Answer 22

Customers can see products being modelled and demonstrated.

Customers can be encouraged to buy on impulse due to short-term bargain prices.

Question 23

What are the disadvantages of shopping channels?

Answer 23

Customers need to switch on to the channel before they can be targeted.

Customers need to wait for products to arrive and may have to pay delivery costs.