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Distribution

2017-18

DISTRIBUTION

Success of business depends on its location

I Size: 125 000 m2

I Open 27/7I Every year visited by 1m cars and 165000 trucks

DISTRIBUTION CHANNELS

Distribution channel: route taken by product from producer tocustomer

I 2 approaches:1. sell directly to customers2. use intermediaries (e.g., retailers, wholesalers, . . . )

DIRECT SELLING

I The internetI Direct mailI Door-to-door sellingI Mail order cataloguesI Direct response advertsI Shopping partiesI Telephone selling

DIRECT SELLINGADVANTAGES vs. DISADVANTAGES

I Advantages:I no intermediaries

→ no additional costs→ more profit

I reach customers who do not go to shopsI Disadvantages:

I customers cannot physically see productsI people don’t like direct mail, unwanted calls, D2D sales

RETAILING

Retailing: buying goods from manufacturers and wholesalers,and selling in small quantities to consumers

I services provided by retailers (e.g., breaking bulk, convenientlocation, additional services)

I common types of retail outletI size of retail market (e.g., UK grocery market)I distribution methods/channels used in grocery market

WHOLESALING

Wholesaling: buying from manufacturers and selling to retailers

I break bulk, repack goods, store goods, . . .I wholesaler will stock goodsI retailers have choice among stock of goods

AGENTS OR BROKERS

Agents/brokers: intermediary that brings together buyers andsellers

I Example: travel agents, airlines, tour operators, . . .I Advantage of using agents:

I reduces risk of selling overseasI agents have knowledge of country and local markets

CHOOSING THE APPROPRIATE DISTRIBUTION

CHANNEL

I Nature of the product:I servicesI fast-moving goodsI high-quality productsI products requiring explanation & demonstration

I Cost: choose cheapest distributionI Market:I Control:

CHANGES IN DISTRIBUTION TO REFLECT SOCIAL

TRENDS

I Online distributionI Business to consumers (B2C)I Business to business (B2B)

I Changing from product to service

BENEFITS TO CONSUMERS OF ONLINE DISTRIBUTION

BENEFITS TO BUSINESSES OF ONLINE DISTRIBUTION

KEY TERMS

I Agent or broker: An intermediary that brings togetherbuyers and settlers

I Breaking-bulk: Dividing a large quantity of goodsreceived from a supplier before selling them on in smallerquantities to customers

I Direct selling: Producers selling their products directly toconsumers

I Distribution: The delivery of goods from the producer tothe consumer

I Distribution channel: The route taken by a product fromthe producer to the customer

KEY TERMS

I E-commerce: The use of electronic systems to sell goodsand services

I Intermediaries: Links between the producer and theconsumer

I Retailer: A business that buys goods from manufacturersand wholesalers, and sells them in small quantities toconsumers

I Wholesaler: A business that buys goods frommanufacturers and sells them in smaller quantities toretailers