Place/distribution

By Jemima , Michael , Claus and Jeremy

Distribution

Place/distribution

The process of distributing the product from where it is made to the consumer.

Distribution channels - the channels by which a product is moved from the place of manufacture to the consumer.

Intermediary- a business that purchases the final product and then takes on the responsibility of selling this product to the consumer.

There are three channels of distribution: Producer to consumer- where the good or service is produced by an

individual/organisation and is then passed directly onto the consumer. There are no intermediaries.

Advantages: It allows the producer to maintain control over all areas of the product and provides the producer with a direct point of contact with consumers,.

 

Produce to retailer to consumer- where the good is produced and then passed on to the retailer who passes it onto consumers.

Advantages: Allows the producer to concentrate on manufacturing. There is greater distribution and access to the good.

 

Producer to wholesaler to retailer to consumer- where the good is produced and then passed on a wholesaler who sells part of the stock to the retailer who passes it onto consumers.

Advantages: allows the produce to hold lesser amounts of idle stock. Marketing and sales tend to be the responsibility of the retailer so less costs.

Distribution channels

CHANNEL CHOICE

1. Intensive distribution: This occurs when the business wishes to saturate the market with its product. Consumers can shop at local outlets and be able to purchase the product. e.g. Convenience goods, such as milk

2. Selective distribution: This involves using only a moderate proportion of all possible outlets. Clothing, furniture and electrical appliances are often distributed using this method.

3. Exclusive distribution: This is the use of only on retail outlet for a product in a large geographic area. This method is commonly used for exclusive, expensive products. E.g. Roll Royce

Intensive distribution

Selective Distribution

Exclusive Distribution

Physical distribution

Physical distribution is all those activites concerned with the efficient movement of the product from the producer to the customer. Physical distribution is therefore the movement of the products themselves through their channels of distribution. It is a combination of several interrelated functions, including transportation, warehousing and inventory control

Warehousing is a set of activities involved in receiving, storing and dispatching goods.

Inventory control is a system that maintains quantities and varieties of products appropriate for the target market

Glossary

Place or Distribution: Are activities that make the products available to customers when and where they want to purchase them

Channels of distribution or marketing channel: The routes taken to get the product from the factory to the customer

Market coverage: Refers to the number of outlets a firm chooses for its product

Physical Distribution: All those activities concerned with the efficient movement of the products from the producer to the customer

QUESTIONS

1.       Outline the four most commonly used distribution channels

2.       Describe ONE of the three channel choices that a business has to cover the market