Theme 1.3.4: Distribution

Question 1

What is a Distribution Channel?

Answer 1

The route taken by the product as it moves from producer to consumer

Question 2

What does the four-stage distribution channel consist of?

Answer 2

Producer > Wholesaler > Retailer > Consumer

Question 3

Evaluation of the four-stage distribution channel

Answer 3

Good because:
. Smaller businesses are able to benefit from economies of scale via the wholesaler
. Less entities need to be dealt with

Bad because:
. Loss of profits throughout the channel, every part wants a bit, higher costs for consumers

Question 4

What does the three-stage distribution channel consist of?

Answer 4

Producer > Retailer > Customer

Question 5

Evaluation of the three-stage distribution channel

Answer 5

Good because:
. Lack of wholesaler means more profits / higher margins for retailers or possibly means that producers are able to charge more.

Bad because:
. Only really available for larger businesses, smaller retailers who cannot buy in bulk will find it difficult to compete, hence why in recent years we have seen the decline of the independent retailer in the UK

Question 6

What does the two-stage distribution channel consist of?

Answer 6

Producer > Consumer

Question 7

Impact of online distribution

Answer 7

. Reduced costs associated with the likes of brick and mortar stores so higher profit margins.Largest examples of this can be seen from the collapse of blockbusters and rise of Netflix, or the partial collapse of HMV and rise of Spotify

Question 8

What has online distribution caused?

Answer 8

A shift from the use of products to services, Spotify, Netflix, Prime and Deezer for example and even the likes of Audible and Stadia, all these services replace the need of a product.