the distribution channel
1
producer
wholesaler
retailer
consumer
wholesalers buy in large quantities from the producer
this reduces transportation costs
retailers can order in smaller quantities from wholesalers
2
producer
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retailer
comsumer
retailers can sell online or through a physical store
this is the most popular distribution channel as retailers sell product directly to consumer
PRODUCER
supplies the goods or services
WHOLESALER
buys in large quantities directly from the producers. they can then sell to retailers in smaller quantities
RETAILERS
they are the main seller of a product, often use shops or online. they sell the goods to the customer
intermediaries
advantage
access to large number of customers
save costs for the producer as they do not have the cost distributing to many customers
disadvantage
increased prices as the intermediary wants to make a profit
producer may lose control of how and where a product is sold
3
producer
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consumer
used in online orders from a small business
used for e-tailers and m-commerce
factors that change the choice of distribution
is the product perishable
is it technical or complex
is it customised
is it expensive
the market- the extent and nature of the competition
poor distribution could affect
sales
if the good or service is not available where consumers are wanting to buy it from. this could lead to the customer buying from a competitor. the business should reduce it possibel amount of sales
image
the marketing mix needs to be integrated and fit with the image of the producer wants to have. if the product is luxury or an expensive good that targets high earners selling it through supermarkets or online sites such as eBay
may devalue the product
price
using a distribution channel that has a number of intermediaries will increase the final price as they want to make a profit.