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					IGCSE BUSINESS STUDIES


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After deciding on the product and right price, the business has to get the product to the
consumer. The product or service has to be available where and when customers want to buy.
Where consumers can buy the product will affect how well it will sell. If the product is not
available where customers want to buy it, and they have to go searching in different shops,
then they may give up and buy a competitors product. It is very easy for a business to get the
place wrong and therefore lose sales.

CHANNELS OF DISTRIBUTION

Not only do businesses have to decide where to sell their
products, but they must also decide how to get their products
to the consumer. That is, what CHANNEL OF
DISTRIBUTION to use. Large expensive products like a
house or a yacht will usually be sold by the producer directly
to the consumer. If the product is low cost and a regular
purchase (for example a can of coke) it would be difficult for
both the manufacturer and the consumer to deal with each
other directly. Therefore these types of products are sold via retailers and wholesalers. Fill in
the missing words from the diagram below using the example on page 286 of your textbook.




Created by Gail Sharratt                        1                          Kuwait English School
IGCSE BUSINESS STUDIES


Now you have seen how goods can get from the producer to the consumer via various ‘middle-
men’, complete the table below with some additional notes on the subject.


Channel of distribution                                   Explanation




 Producer - consumer




  Producer – retailer -
      consumer




Producer – wholesaler
 – retailer - consumer




  Producer – agent –
 wholesaler – retailer -
      consumer




TASK

On lined A4 paper, make notes on the role of wholesalers and selecting the channel of
distribution to use from page 288 – 290 in your textbook and add these to your workbook.

TASK

Complete Activity 21.3 on page 291 of your textbook on lined paper and add to your workbook.




Created by Gail Sharratt                      2                         Kuwait English School
IGCSE BUSINESS STUDIES


METHODS OF DISTRIBUTION

The method of distribution, that is, the type of transport that the manufacturer uses to deliver the
products to the market, varies depending on the product being delivered and the value of the product.
Distribution needs to be efficient and to make sure that shops do not lose sales because the product is
not available and the shelves are empty. Therefore the method of transport used must be carefully
selected to ensure the product arrives at the shop on time and in good condition.

Road haulage

Lorries and vans are the most versatile form of transport to use as they can go anywhere at any time
(road use is not affected by train timetables etc). It is relatively
cheap and fast. Some businesses have their own lorries, whilst
others use specialist businesses who transport the products for
them (called haulage firms).

If a business uses its own lorry it can put the name of the firm
on the side – which is free advertising. To buy the lorries a
business can take out a loan or it could lease them. If the
business has its own lorries then it will have to pay for
maintenance, running costs and repairs. When the lorries are
not being used these costs still have to be paid. Therefore, if they are not going to be in use all of the
time then it might be cheaper to hire them when they are needed.

Railways

                                           These are suitable for long distance transport and are often
                                           cheaper than road transport over long distances. It is faster
                                           than by road over a direct route. However, once the freight
                                           has reached its final destination, it often still has to be
                                           transported by road to its final destination, the factory of the
                                           shop may not be near a station!

Canal and river

This is quite a slow way to transport products but it is cheap. It is particularly
cheap for large, heavy products, which would be expensive to transport by road
or rail. A suitable canal or river has to be available and going where the
business needs to deliver its products. This is not always the possible. Also, it is
no use if the delivery is urgent.

Sea freight

                                          This is used mainly for international trade and carries a lot of
                                          different types of products around the world. Today many of
                                          these products are carried in containers. These are large
                                          metal boxes into which products are packed and then
                                          loaded onto ships (or trains or lorries) ready for transport.
                                          The containers make it quick and easy, and therefore
                                          cheap, to load and unload the ships as large cranes can
                                          pick up a container and move it precisely into position.




Created by Gail Sharratt                             3                             Kuwait English School
IGCSE BUSINESS STUDIES



Airfreight

This is used for small expensive goods, or products that are
perishable and will deteriorate quickly. This is a very expensive
form of transport but is also a very quick way of transporting
products.

Pipelines


                                These are used to transport liquids or gas over a long distance.
                                For example, they are used for pumping oil over long distances
                                from the oil fields to the oil refinery or the docks. This is much
                                cheaper than pumping crude oil into tankers and then
                                transporting it by road to the coast. Roads are not always
                                available and a pipeline can take the most direct route.


TASK

For each of the following products state the type of transport that would be most appropriate
and explain your choice.

             Product                    Method                          Explanation


  Cocoa beans from the
plantation to the chocolate
factory in another country


Fresh cut flowers from the
   farm to the retailer in
      another country



 Crude oil from the oil field
      to the refinery




Logs from the forests to the
        saw mills




Created by Gail Sharratt                         4                          Kuwait English School

				
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