Theme 1.3.4 - Distribution

Question 1

What is distribution?

Answer 1

Distribution is the process of getting the right product or service to the consumer in the right place

Question 2

What is a distribution channel?

Answer 2

A distribution channel moves a product through the stages from production to final consumption

Question 3

What is each party in a distribution channel called?

Answer 3

Intermediary

Question 4

What are the three main distribution channels?

Answer 4

1. Producer-Wholesaler-Retailer-Consumer
2. Producer-Retailer-Consumer
3. Producer-Consumer

Question 5

What purposes do distribution channels serve?

Answer 5

• Provide links between production and consumption
• Help gather market information
• Communicate promotional ideas
• Find and communicate with prospective cutters
• Physical distribution ~ transporting and storing
• Financing ~ other parties finance the stock
• Risk taking ~ other parties take some risk

Question 6

What determines the distribution channel a business may want to use?

Answer 6

• Channel length ~ direct or indirect
• Choice of intermediary
• Use just one or several channels?
• How to move the goods through the channel?
• Control over the channel, e.g. who decides price, promotion or packaging?

Question 7

What is a direct distribution channel?

Answer 7

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

Question 8

What is an indirect distribution channel?

Answer 8

Involves the use of intermediaries between the producer and consumer

Question 9

What factors should a business consider when choosing what type of distribution channel to use?

Answer 9

• Nature of the product ~ e.g. is it customised, type of product, complex, fragile
• The market ~ e.g. is it geographically spread?, extent and nature of competition
• The business ~ e.g. its size, its nature, does it have an established distribution network

Question 10

What changes in distribution have taken place due to social trends?

Answer 10

• Online (e-commerce)
• Product industry to service industry (e.g. hairdressing)
• Growth of small firms in geographical area (online)