Theme 1 - Distribution - 1.3.4

Question 1

What is distribution ?

Answer 1

Distribution is the process of getting the right product or service to the consumer in the right place

Distribution is also one off the 4P’s of marketing: “place”

Question 2

What are the 4 stages of distribution ?

Answer 2

Manufacturer —> Wholesaler —> Retailer —> Consumer

Question 3

What happens in a 4 stage distribution channel ?

Answer 3

1) In a 4 stage distribution channel, a manufacturer or producer will sell in bulk to wholesalers

2) Retailers then buy their stock from the wholesalers to put in their shops

3) Customers then visit the retailer’s shops to make a purchase

Question 4

What do wholesalers do ?

Answer 4

Wholesalers “break bulk” orders into smaller quantities that independent retailers ( like small local food shops ) will buy

The added benefit of a wholesaler is they can offer trade credit terms to the small retailer

Trade credit means that wholesalers will give the retailer stock and the retailer will have to pay them back at the end of the month

Question 5

What is a 3 stage distribution ?

Answer 5

Manufacturer —> Retailer —> Consumer

Question 6

What happens in a 3 stage distribution ?

Answer 6

• In a three stage distribution channel a manufacturer will sell their products directly to the retailer
• The consumer will then buy from the retailer

Question 7

What do some manufacturers do ?

Answer 7

Some prefer to deal with a few wholesalers but some prefer to sell to a wholesaler as well as many retailers

Question 8

Why do most manufacturers like to sell to a retailer ?

Answer 8

Because retailers are spread all over the country and this gives the manufacturer the distribution and volume of sales that they are looking for

The manufacturer can get the product to where the consumers can buy it by using retailers

Question 9

What types of products does the 3 stage distribution channel most apply to ?

Answer 9

Applies to most mass market products such as corn flakes, apple juice, tea bags etc ( FMCG - fast moving consumer goods )

Question 10

Whats the 2 stage distribution channel ?

Answer 10

Manufacturer —> Consumer

Question 11

Give an example of a 2 stage distribution channel

Answer 11

In a 2 stage distribution channel, products are bought straight from the manufacturer by the consumer

So like the Nike outlet or e-commerce - cause if you are buying from Nike.com then you are buying directly from the manufacturer

Question 12

What’s the main benefit of the internet for niche products ?

Answer 12

The main benefit for niche products is that they can reach a wider audience

Question 13

What are the pros of online distribution ?

Answer 13

Many transactions happen solely online so having products online is a no brainer

Can reach a very wide audience

Question 14

What does the choice of distribution channel depend on ?

Answer 14

• The nature of the product - e.g. medicines need to be sold in a pharmacy under the careful eye of a fully trained pharmacist
• The market
• The nature of the business
• The size of the business e.g. A small fledging business may start with just a online business