Place (mainly Including Distribution Channels)

Question 1

Place

Answer 1

Refers to where products and services are sold and how the business gets products and services to the consumer. How products and services get to consumers are known as distribution channels

Question 2

Distribution channel

Answer 2

All the organisations through which a product must pass between its point of production and purchase by the consumer

Question 3

How many types of physical distribution channels are there and what do they all start and end with

Answer 3

3

They all start with producer and end with the customer

Question 4

Distribution channel type 1

Answer 4

Producer ——> customer

Buying a product directly from the producer

Question 5

Advantage of type 1

Answer 5

More profitable than if you went through other stores/retailers

Producer keeps all of the profit (after paying staff wages and other fees)

Question 6

Type 2

Answer 6

Producer —-> retailer ——> customer

Retailer buys the product from the producer and then sells to customer

Question 7

Type 2 advantages/disadvantages

Answer 7

Even though the retailer takes some of the profit, a business will sell more as using a retailer reaches more people and accesses new customers which increases sales

Question 8

Type 3

Answer 8

Producer —> wholesaler/RDC —> retailer —> customer

Question 9

Wholesaler

Answer 9

A large storage centre able to take in deliveries direct from producers. The role of a wholesaler is to ‘break bulk’
This means buying in large quantities from a producer and then selling smaller amounts to retailers

Question 10

Main disadvantages of involving 3rd parties in the distribution channel

Answer 10

The profit margin for the manufacturer gets squeezed

Question 11

What are intermediaries in terms of distribution channels

Answer 11

They are third parties between producers and customers and can include retailers and wholesalers

Question 12

Regional distribution centre (RDC)

Answer 12

Are owned by the retailer and are used to store products they will later sell in their stores

Question 13

Advantages of RDC’s

Answer 13

Means they can buy directly from producers which is cheaper than buying from wholesalers

Shops do not have to increase storage space which would decrease swilling space

Normally located near the motorways so that products can reach shops quickly

Question 14

Digital distribution

Answer 14

This refers to the distribution of good digitally by downloading from a website or app

Question 15

Advantages of digital distribution

Answer 15

Good are downloaded so available instantly

Cost saving to either business or customer as there is no postage and packaging cost involved

More environmentally friendly

Question 16

Disadvantages of digital distribution

Answer 16

Not suitable for all products

Not all customers have access to an internet connection or cannot download large files

Made easier due t illegally downloading content for free

Costly to set up a website or app