1.3.4 Distribution

Question 1

Distribution

Answer 1

Concerned with getting the products to the right place for consumers and at the right time.

Question 2

Distribution channel

Answer 2

The route taken by a product as it moves from the producer to the customers.

Question 3

Producer

Answer 3

Organisations that take raw materials and process them into finished goods.

Question 4

Wholesaler

Answer 4

Buy large quantities of supplies and sell them on in smaller quantities.

Question 5

Retailer

Answer 5

An organisation that sells goods and services to the general public.

Question 6

Consumer

Answer 6

End user of a product or service.

Question 7

Direct channel of distribution

Answer 7

Producer –> Consumer

Question 8

Benefits and drawbacks of a direct channel of distribution?

Answer 8

+ Maximise revenue and profit.
+ Cheaper goods for customers and fresher produce.
+ Control promotion of product.

• May not be available at outlets for customers to see.

Question 9

Modern channel of distribution

Answer 9

Producer –> Retailer –> Consumer

Question 10

Benefits and drawbacks of a modern channel of distribution?

Answer 10

+ Easier for producers to distribute their products.
+ More convenient for consumers to buy those products.

• Higher prices for consumer.
• Low profits.
• Less control over promotion of the product.

Question 11

Traditional channel of distribution

Answer 11

Producer –> Wholesaler –> Retailer –> Consumer

Question 12

Benefits and drawbacks of traditional channel of distribution?

Answer 12

+ Producer can concentrate on production and doesn’t have to worry about dealing with many different retailers.
+ Saves on storage and warehousing costs for producer.

• Reduces profit margin for business.

Question 13

Factors influencing choice of channel

Answer 13

• Choice of intermediary – are you able to negotiate with a retailer.
• Desired control over channel.
• Multi channel or one channel.
• Nature of product.
• Target market.
• Size of the business.
• Personalisation.
• Infrastructure available.
• Business growth.

Question 14

Changes to distribution to reflect social trends

Answer 14

• Online distribution
• Product to service – Businesses are changing from selling physical, tangible products to providing a service. E.g. downloadable materials.