Topic 12 Flashcards
What does a successful distribution ensure
. Convenience for customers -> products available where they shop
. Efficiency -> businesses can maximise sales by being present in high-traffic locations
Key types of distribution channels
. Direct-to-consumer: manufacturer -> consumer
. Retail channel: manufacturer -> retailer -> consumer
. Wholesaler channel: manufacturer -> wholesaler -> retailer -> consumer
. Agent channel: manufacturer-> angel/broker -> retailer/consumer
Advantages of using a wide distribution channel
. Access to a wider market
. Efficient logistics
. Retailers and wholesalers provide added services like delivery and promotions
Methods of distribution -> direct selling
Producers sell directly to consumers without intermediates
Examples:
. Online sales
. Door-to-door selling
. Direct mail/catalogues
Advantages:
-> keep profits higher by avoiding intermediates
-> direct relationships with customer = tailored marketing
Disadvantages:
-> limited reach
-> high operational costs
Methods of distribution -> retailing
Retailers purchase goods in bulk and sell smaller quantities to consumers
Types of retailers:
. Independent stores
. Supermarkets
. Online retailers
. Department stores
Advantages:
-> convenient locations
-> retailers offer additional services
Disadvantages:
-> retailers demand discounts
-> dependence on retailer marketing
Methods of distribution -> wholesaling
Wholesalers buy in bulk and resell to retailers or smaller wholesalers
Advantages:
-> reduce logistics costs for producers as they provide storage and transport
-> provide credit or flexible payments to retailers
Disadvantages:
-> add an intermediary, increasing end price for consumers
-> retailers may rely heavily on wholesalers, reducing producer control
Methods of distribution -> agents/brokers
Agents act as intermediaries, especially in international markets
Advantages:
-> knowledge of local markets
-> faster access to customers
Disadvantages:
-> loss of control over branding and customer relationships
-> additional fees for their services
Factors influencing choice of distribution channel
. Nature of product
. Cost
. Target market
. Control over branding
Changes in distribution to reflect social trends -> online distribution
The rapid growth of online shopping has shifted traditional retail practices
Advantages for businesses:
. Lower overheads
. Automated processes reduce human error and costs
. Access to global markets 24/7
Advantages for consumers:
. Greater choice and convenience
. Ability to compare prices easily
. Shop at any time from any location
Challenges:
. Lack of direct inspection of goods before purchase
. Cybersecurity risks
. Dependence of reliable internet connections
Changes in distribution to reflect social trends -> changing from product to service
Examples:
. DVDs replaced by Netflix
. CDs replaces by Spotify
. Newspapers replaced by digital subscriptions
Benefits of online distributions
For businesses:
. Reduced costs
. Faster transaction process
. Expand global reach
For consumers:
. 24/7 availability
. Easier price comparison
. Time-saving delivery options
