Distribution

Question 1

Define DISTRIBUTION

Answer 1

Distribution is the process of getting a firm’s products to the market.

Question 2

Define DISTIBUTION CHANNELS

Answer 2

A distribution channel is the route that a product takes in order to get from the producer to the final customer..

Question 3

What types of distribution channels are there?

Answer 3

4 stage channels - selling through wholesalers:
producer - wholesaler - retailer - consumer
3 stage channels - selling through retailers:
producer - retailer - consumer
2 stage channels - selling directly to the customer
producer - consumer

Question 4

Define CHANNEL INTERMEDIARIES

Answer 4

Channel intermediaries are the organisations a product travels through from producer to end customer.

Question 5

What are the advantages of having multiple channels of distribution?

Answer 5

• Allows more than one target market segment to be reached
• Customers increasingly expect products to be available via more than one channel.
• Enables high levels of revenue.

Question 6

What are the disadvantages of having multiple channels of distribution?

Answer 6

• Potential for channel ‘conflict’
• Can be complex to manage
• Danger that pricing strategy becomes confused in consumer’s eyes.

Question 7

What factors must be considered when deciding on a distribution channel?

Answer 7

• Nature of the product
• The market
• The business

Question 8

Define ONLINE DISTRIBUTION

Answer 8

Online distribution is the process of operating in a virtual marketplace so goods ordered online are delivered directly to the customer.

Question 9

What are the benefits to online distribution?

Answer 9

• Access to the global market
• Business location is not important
• 24/7 trading is possible
• Cuts overhead costs
• Easier for consumers to compare prices

Question 10

What are the drawbacks to online distribution?

Answer 10

• Security issues over identity fraud and secure methods of payment
• Hackers may steal business ideas
• Increase competition
• Easier for consumers to compare prices
• Shipping costs and delivery times may become an issue.