place

Question 1

direct distribution

Answer 1

Channels describes a situation in which the producer sells a product directly to a consumer without the help of intermediaries

Question 2

pros of direct distribution

Answer 2

• Greater control over the selling environment
  
  • Customer interaction is possible, which allows a relationship to form
  • Higher profit margin as the company sells their product at the end-user price rather than wholesale price
  • May lower costs if the business can operate from the owners home (only suitable for small operations)
  • Selling directly has a degree of exclusivity, which may align with the business’s positioning strategy.
  • It may take setting up an e-commerce facility easier as fewer parties manage

Question 3

cons of direct distrbution

Answer 3

• More work for the company, which might be inefficient at distribution
  
  • Might limit reach compared to fully established indirect channels
  • May be expensive

Question 4

indirect distribution

Answer 4

Channels involves a product passing through additional steps before being sold to the end consumer. Intermediaries such as retail stores are used to on-sell products from producers to end consumers

Question 5

pros of indirect distribution

Answer 5

• Provides businesses with greater cost efficacy
  
  • Allows rapid distribution, as retailers may have specialist knowledge of the area, which increases the effectiveness

Question 6

cons of indirect distribution

Answer 6

• May completely remove the ability to interact with the end consumer
  
  • The distribution channel might be inflexible
  • Intermediaries may have different goals for the brand
  • Loss of control over the selling environment. No control over the quality of customer service, how the product is merchandised, what brands are recommended by staff, etc
  • Retailers must be chosen carefully to ensure they promote rather than hinder the brands positioning
  • Reduced profit margin as the business must sell the product at wholesale rather than retail prices
  • It may be difficult to find retailers to sell the business’s products. Retailers have limited floor space and there may be competing products

Question 7

location

Answer 7

this element refers to where a business is situated to enable customers to access its products.

Question 8

loction includes

Answer 8

online
physical locations (bricks and mortar stores)
wealthier areas
globally

Question 9

online in location is:

Answer 9

cheaper overhead costs as no physical stores, intense competition and need to deal with delivery and returns. Some customers may have concerns about buying online, particularly if the product comes in various sizes (e.g. clothing)

Question 10

physical locations in location

Answer 10

this can enhance the brands image if the store is well-designed (e.g. apple store), some products are better sold through physical stores where customers can try them before buying.

Question 11

wealthier areas in location

Answer 11

a business can improve its brands image if only selling in wealthier areas. Customers have higher incomes so they can afford more. This does however limit market size

Question 12

globally in location

Answer 12

increases market size. Businesses need to take into account local differences for

Question 13

example of globally in location

Answer 13

example:
- Shorts wont sell well in antarctica
- Pork wont sell well in countries where Islam is the dominant religion