1.3.4 distribution Flashcards
what is distribution
the process of making a product or service available for the consumer or business user who needs it
whats a distribution channel
chain of businesses or intermediaries which a service or good passes through until it reaches the final buyer
whats the first channel
manufacturers -> consumer
whats the second channel
manufacturer -> retailer -> consumer
whats the third channel
manufacturer -> warehouse -> retailer -> consumer
whats the fourth channel
manufacturer-> agent -> warehouse -> retailer -> consumer
advantages of using direct distribution
-businesses have greater control including branding and pricing
-by eliminating intermediaries companies can retain larger shares of the profits
- enhances stronger relationships with customers and loyalty
- companies can respond quicker to market changes and customer demand
disadvantages of using direct distribution
can lead to higher operational costs
may restrict companies ability to reach a broader audience
increased responsibility
can stretch resources thin leading to potential inefficiencies
advantages of using indirect distribution
allows access to a broader audience by leveraging relationships of intermediaries
reduced operational burden as they can offload responsibilities
intermediaries often have EOS which can lower distribution costs
enhanced customer access
disadvantages of using indirect distribution
involving intermediaries can reduce profit margins
companies have less control which can lead to inconsistency
can result in slower responses to market changes as a business may need to coordinate with multiple intermediaries
what are factors that determine distribution
lead time
cost of delivery
if the item is perishable
distance to customer
physical or digital good
price of product
