Distribution

Question 1

What is a distribution channel?

Answer 1

• route a product takes from producer to consumer

Question 2

What is the aim of distribution?

Answer 2

to make products available in the right place at the right time in the right quantities

Question 3

What will a distribution channel with more than one stage have?

Answer 3

intermediaries

Question 4

What is the purpose of distribution channels?

Answer 4

• provide a link between production and consumption
• help gather market info
• communicate promotional offers

Question 5

What are the four main types of distribution intermediary?

Answer 5

• retailers
• wholesalers
• distributors
• agents

Question 6

What is a retailer?

Answer 6

• final step in chain, deals with customer

- focused on consumer markets

Question 7

Advantages of using retailers/

Answer 7

• conveinience to customers
• have a broad geographical coverage
• retailer chooses final price
• retailer holds stock

Question 8

Describe wholesalers?

Answer 8

• buy in large quantities from producers and sell in smaller quantities to retailers
• makes money by buying at a lower price from producer and adding profit margin when selling to retailer

Question 9

Key points about distributors?

Answer 9

• distribute products and serve as a local sales point

- offer products from many producers

Question 10

key points about agents?

Answer 10

• type of distributor
• doesnt hold stock
• usually works in tertiary sector
• earn commision based on sales received

Question 11

What are the decisions when choosing which distribution channel?

Answer 11

• channel length, direct or indirect ?
• choice of intermediary
• use just one or several channels

Question 12

Two types of distribution?

Answer 12

• direct and indirect

Question 13

What is direct distribution?

Answer 13

• where a producer and consumer deal directly with each other without the involvement of an intermediary

Question 14

What is indirect distribution?

Answer 14

• involves the use of intermediaries between producer and consumer

Question 15

advantages of indirect distribution?

Answer 15

• geography, some customers may live too far away to be reached
• enables small orders to be put in large ones
• business may lack retailing experiance

Question 16

What is multi-channel distribution?

Answer 16

• involves a business using more than one type of distribution channels

Question 17

benefits of multi-channel distribtuion?

Answer 17

• allows more target market segments to be reached
• customers increasingly expect products to be available via more than one channel
• enables higher revenue

Question 18

Drawbacks of multichannel distribution?

Answer 18

• potential for channel conflict
• can be complex to manage
• danger that pricing stratergy becomes confused