distribution


  • Created by: Hetal M
  • Created on: 23-04-17 13:48
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  • distribution
    • distribution channels
      • link between production and consumption
      • gather market information
      • communicate promotional offers
      • financing the inventory
    • retailers
      • final step in the chain - deals directly to customer
      • focused on consumer markets
      • broad geographical coverage
      • retailer chooses final price
      • holds stock
      • producer - retailer - customer
    • wholesalers
      • next after production
      • bulk buy and sell smaller quantities to retailers
      • reduce producers transport cost - fewer journeys
      • make money by selling at lower prices
    • distributors
      • specialise in a particular industry
      • distributors hold stock
      • offers from many producers = greater choice
      • producer - distributor - customer
    • agents
      • producer - agent- customer
      • tertiary sector - travel, insurance, publishing
      • sales achieved by comission
      • don't hold stock
    • multichannel distribution
      • using more than one type of channel
      • reach more target market segments
      • products are more available
      • enables higher revenue
      • channel conflict
      • complex to manage
      • pricing strategy becomes confused
    • direct distribution
      • producer deals directly to consumer
      • more control over distribution, display and running of shop
      • online
        • producer keeps all of the selling price
        • high profits = finance the advertising and product devlopment
    • indirect distribution
      • involves intermediaries between producer and consumer
        • used if people live far geographically, better use of resources, different segmentations can be reached by different channels
    • marketing mix = distribution (place)
    • retailers key issues = opportunity costs and risks
      • shelf space is limited = not easy holding stock
      • manufacturers need to know if its a planned or impulse purchase
    • choosing appropriate distributors
      • companies need to choose the right distributor
        • e.g. expensive brand needs to be distributed to a certain location to a certain demographic
        • retailers have control over which products are held where
    • traditional, physical channel
      • producer - wholesaler - retailer - consumer
      • usually sell to wholesalers
        • sell onto smaller independent shops
          • smaller producers find it hard to achieve distribution in big chains
        • profit added by wholesalers = final retail price
    • direct to retailer
      • getting rid of the middle men
      • sells directly to big chains
      • more cost effective
        • tough negotiation for the right price and credit terms
      • large retailers = get discount for large orders

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