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DISTRIBUTION

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DISTRIBUTION Powered By Docstoc
					DISTRIBUTION

The next P in the marketing mix is Place. This refers to where the product is sold, and
how is it distributed.

Channel of distribution – the route taken by product as it passes from producer to
consumer.

Wholesaler – they buy large quantities of product from suppliers and sell them on in
smaller volumes to retailers or business users. The wholesaler provides a link between
the producer and the retailer, saving the producer time and money in delivering direct
to the retailer.

Retailer – the shop which sells goods to the general public. Retailers offer a variety of
goods and services from a variety of producers. Goods are stored on their premises and
are prepared for sale and display them for sale.

Types of retailer

   o   Independent retailers – most common type and can be best illustrated as your
       local corner shop.
   o   Multiple chain stores – a number of outlets across the country with a well-
       known name. E.g. Marks and Spencers
   o   Supermarkets – offer a wide range of groceries, clothing and electrical goods.
       E.g. Tesco, Sainsbury’s
   o   Department Stores – offer a range of goods within different departments.
       Normally specialise in premium brands. E.g. House of Fraser, Debenhams
   o   Franchises – offer a new business a chance to trade using a successful formula,
       e.g. McDonald’s.
   o   Mail Order – rather than having expensive shops to run they issue catalogues to
       consumers who can select products in the comfort of their own home.
       Successful due to the credit facilities offerd. E.g. Freeman’s
   o   Door-to-door – companies like Avon take orders from people’s doorstep.

Agent – an independent person or company appointed to handle sales and distribution
within a specified area. Agent’s income comes from commission they make on each sale.

Agents carry out promotional activities to attract customers and sell them the product.
Car manufacturer’s use agents to sell to local markets because they should have better
knowledge of the market. One drawback is that if an agent sells many different
products, yours might not be given the attention needed.

Importer/Exporter – they play a similar role to the agent but on an international scale.
They will have superior knowledge of the world markets, and can create sales through
their own promotional campaigns. Sometimes act as retailers too.
Direct Selling – This is when the manufacturer sells straight to the consumer. More
common in small, local businesses like a baker. It also occurs in the industrial market,
especially with highly technical machinery.

Choice of distribution channel – how the product gets to the consumer depends on a
number of factors.

The Product – Perishable products which have a limited shelf-life should select a
direct channel. However, some perishables like fish, fruit and vegetables sometimes go
through specialist wholesalers who buy from small producers in order to make up the
bulk needed fro retailers. Premium brands are selective where they are sold, and both
Calvin Klein and Levi’s have prevented Tesco selling them in their stores.

The Market – if the market is nationwide, then to save in distribution costs, then using
wholesalers and retailers are more efficient. If the market is small and local, direct
selling is more apt.

Legal requirements – some goods can only be sold through licensed premises such as
chemists, pubs and off-licenses.

Buying habits – consumers influence where products are distributed. The emergence
of out-of town retail parks have seen identikit sites open up nationwide. Each one
contains supermarkets, carpet stores, furniture stores, DIY stores, Garden centres
etc. People now expect these type of stores to be located in such places.

The business – some firms have their own distribution process with their own
wholesalers and retailers. Once common among large organisations, most of these
functions have been outsourced.

QUESTIONS

   1.   Why is distribution important to the marketing mix?
   2.   What is a channel of distribution?
   3.   Compare and contrast wholesalers and retailers.
   4.   Explain what an agent does.
   5.   Give one advantage and disadvantage of using an agent.
   6.   Explain why the choice of distribution channel is important in terms of:
   a)   the product
   b)   the market

   7) Give two advantages of selling online

				
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posted:9/29/2010
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