Presentation on theme: "Selling & Distribution"— Presentation transcript:
1 Selling & Distribution GCSE Business Studiestutor2u™Revision Presentations 2004
2 Things to Think AboutHow can businesses ensure that their product or services reach existing and potential customers?What is the route that the product normally takes between the start of production and finally being “consumed” or used by the customer?What are the main advantages and disadvantages of the various options for “distribution”?
3 Distribution Channels Products reach customers via a “distribution channel”The channel is the link between seller and buyer – but it may have more than one stage in between; for example…ProducerProducerProducerWholesalerDistributors/ AgentsRetailerCustomerCustomerCustomer
4 Wholesalers Wholesalers “break bulk”: Advantages They buy in large quantities from producersThen break them into smaller quantities to sell to retailersAdvantagesReduce the producer’s transport costs (fewer journeys to the wholesaler rather than many journeys to retailers)Retailers can order in smaller amounts from wholesalersWholesaler makes his money by buying at a lower price from the producer and adding a profit margin onto the price paid by the retailer
5 Sale of Daily Newspapers Wholesalers - ExampleSale of Daily NewspapersProducerNewspaper Publisher – e.g. The Sun, The Times – who send bulk print runs of newspapers to large depots run by wholesalersWholesalerWholesaler (e.g. John Menzies) packs newspapers into bundles for retailers (e.g. newsagents)RetailerRetailer (e.g. newsagent; petrol station) displays newspaper in store and delivers to homesCustomerCustomer = newspaper buyer
6 Distributors / Agents Distributors Producer Examples of Agents Distributors distribute (sell on) products and serve as a local sales pointUsually specialise in a particular marketUsually offer products from several / many producers – so that their customers enjoy greater choiceAgents are an example of a kind of distributorExamples of AgentsEstate agentsTravel agentsExport/import agentsProducerDistributors/ AgentsCustomer
7 Direct MarketingInvolves a producer selling directly to the end customer – i.e. there are no other parts to the distribution channelVarious Methods:Direct mailingE-commerceTelemarketing (telephone selling)Door to door sellingExamplesQVC (TV Selling)Boden (clothes from catalogue)Sunday Times Wine Direct (wine through flyers in newspaper)ProducerCustomer
8 Why Use Direct Marketing? AdvantagesNo intermediaries (e.g. retailers) to take part of profitsProducer can control own marketingChance to reach customers who would not have gone to shopsDon’t use “mass marketing” techniques such as advertising – which can save moneyDisadvantagesCosts of distribution of promotional materialCosts of making distributional material (e.g. catalogues for Next)Can still be very expensive if customers do not respond to the direct marketing materials (i.e. a low “response rate”
9 Sales PromotionSales promotion is a term used to describe various methods aimed at persuading customers to buyOften used as part of other promotional activities such as an advertising campaignExamplesMoney off coupons (widely used by supermarkets)CompetitionsDiscount vouchers (e.g. three for the price of two)Free samples (e.g. washing tablets, shampoo sachets)Gifts with purchase (e.g. CDs on the front of magazines)Point of sale materialFrequent user / customer loyalty schemes (e.g. Nectar, Air Miles)
10 Why Use Sales Promotion? AdvantagesShort term boost to salesCan attract customers away from other brandsAll about “action” – encouraging customers to buy rather than encouraging them to think about it!DisadvantagesReduces profit margin on each product (depends on how much is given away in the “promotion”)Usually only effective in short term, will need a longer term tactic to boost overall salesCustomers may come to expect sales promotions – and so wait until the next one comes along!
11 Customer Loyalty Schemes A kind of sales promotion used by retailersEncourage customer to return to retailerLow cost of discounts given can be offset by profits generated by sales madeLoyalty cards also provide information about shopping habits of customers:Where do they shopWhen do they shopWhat do they buyExamplesNectarAir MilesBoots Advantage Card
12 Retailing Retailer – part of the distribution channel Retailer is the final step in the chain – deals directly with the customerFocused on consumer marketsVarious kinds of retailer:Multiples – chains of shops owned by a single company (e.g. Sainsbury’s or Body Shop)Convenience stores (e.g. Spar, Londis, Costcutter)Independents – a shop run by an owner
13 Exporting Exporting = selling overseas An important option for a business to grow:UK markets may be too small or in declineProduct or service may be attractive to customers in other countriesChallenges faced by exporters:Exchange ratesLanguage barriersDifferent culturesTrade barriers (e.g. quotas, tariffs, legislation)Successful exporters need to have a detailed understanding of overseas markets
14 E-Commerce Two kinds of business websites Marketing sitesPromotes a business and its products or services to potential and existing customersTrading sitesPromote a businessAllow customers to purchase onlineMany Advantages of Selling OnlineWebsite gives a business new ways of marketing and selling its products or serviceProvides an opportunity for its to build relationships with customersEffective and lower risk way of selling in international marketsIncreasingly an essential part of doing businessNot a replacement for traditional marketing activities - website should complement and support them