3.3.3 Place

Question 1

What is a ‘channel of distribution’?

Answer 1

a chain of businesses or intermediaries through which a good or service passes until it reaches the end consumer

Question 2

Name the advantages + disadvantages of ‘Producer → Consumer’

Answer 2

ads:

• All of profit is earned by producer
• Producer controls all parts of the marketing mix
• Quickest method of getting product to the consumer

disads:

• Consumers are not always able to see or try product before they buy it
• Delivery costs may be high if there are customers over a wide area
• All storage costs must be paid for by producer
• All promotional activities must be carried out and financed by producer

Question 3

Name the advantages + disadvantages of ‘Producer → Retailer → Consumer’

Answer 3

ads:
- Consumers can see and try product before buying it
- Cost of holding inventories of product Is paid by retailer
- Retailer will pay for advertising + other promotional activities
- Retailers are more conveniently located for consumers

disads:

• Retailer takes some of the profit away from the producer
• Producers lose some control of marketing mix
• Producer must pay for delivery costs to retailers
• Retailers usually sell competitors’ products as well

Question 4

Name the advantages + disadvantages of ‘Producer → Wholesaler → retailer → Consumer’

Answer 4

ads:

• Wholesaler buys in bulk from the producer
• Wholesalers will advertise and promote the product to retailers
• Wholesalers pay for transport costs + storage costs

disads:

• Another middleman so more profit is taken away from the producer
• Producer loses even more control of the marketing mix

Question 5

Name the advantages + disadvantages of ‘Producer → Agent → Wholesaler → Retailer → Consumer’

Answer 5

ads:
- The agent has specialist knowledge of the market

disads:
- Another middleman is added so even more profit is taken away from the producer