1.3.4

• distribution

  the process of getting the firms product to the market.

  to make products available in the right place at hte right time, in the right quantities
• distribution channel

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

  a channel where producer and consumer directly deal with eachother without the involvment of an intermediary
• indirect distribution channel

  involves the use of intermediaries between producer and consumer

  eg. wholesaler and agent
• retailer

  a company that buys products from a producer or wholesaler and sells them to customers
• types of retailers 


  multiples

  independents

  online retailers

  department stores

  convenience stores

  franchises

  specialist chains
• advantages of a retailer 


  affordable marketing

  no reach limitations

  handles the final transactions and returns
• risks of retailers


  bad brand image through the retailer

  significant loss of margin for the business
• wholesaler 


  sell goods in bulk quantities for retailers to stock
• advantages of a wholesaler

  efficient

  they refine the quality of the goods

  helps promote

  lowers transport costs
• risks of a wholesaler 


  wholesalers can pull out, leaving the business vulnerable

  business gets less profit
• direct channel - channel 1

  producer- consumer
• pros of channel 1 


  no middle men

  it is direct
• cons of channel 1


  consumer is buying in smaller volume threfore, higher distribution costs
• channel 2 


  producer- retailer- consumer
• pros of channel 2

  overcome marketing costs
• cons of channel 2

  won't recieve full price customer is paying
• channel 3 


  producer- wholesaler- retailer- consumer
• pros of channel 3

  wholesalers buy in bulk= less risk
• cons of channel 3

  retailer and wholesaler seek margin

  customer service may lack
• factors effecting the choice of distribution method


  nature of the product

  georraphical location

  cost

  competitors

  degree of control
• agent 


  sells products or service in return for a commission
• pros of an agent

  direct contact between supplier and customer

  good advertisment
• cons of an agent 


  risk of liability for agent actions

  does not hold stock
• multichannel distribution 


  a business using more than 1 type of distribution channel including online
• benefits of multichannel distribution 


  more target market segments reached

  risk is distributed

  higher revenues

  flexability for customers
• drawbacks of multichannel distribution 


  no longer differenciates

  harder to control

  higher control efforts

  expensive
• social trends which change from distribution of products to sale of service 


  will always be a need for tangable products

  online world is changing quickly