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Published byKayla Harrington Modified over 10 years ago
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PLACE
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This all about the distribution of the product to the customer. How the firm gets its product to the market.
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CHANNELS OF DISTRIBUTION PRODUCER CONSUMER E.g. Farm Shop, Selling Online 1. Direct Method
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2. Modern Method PRODUCER RETAILER CONSUMER
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3. Traditional Method WHOLESALER PRODUCER RETAILER CONSUMER
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Some products may be sold through agents. Agents provide a link between the buyer and the seller in exchange for a commission. Could be used to enter a foreign market, where a local agent would have more knowledge of the area
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Brokers may also be used in the distribution channel. They tend to be used in markets such as insurance and share dealing.
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Why use them? Buys in bulk – saves manufacturer money Bear the risk of holding stock Will break down bulk into smaller numbers Provides advice to producer on what is selling well. However, the use of a wholesaler makes it expensive on the customer. WHOLESALERS
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Perform 4 functions: breaks down bulk supplies provides information to consumers stores goods and prepares them for sale physically sells to the consumer RETAILERS
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Independent Retailers Multiple chains – Boots Supermarkets Co-operatives Department Stores – Jenners Specialist Stores – B&Q Franchises. TYPES OF RETAILERS
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SELLING DIRECT Cutting out the middle man will save money Mail Order – catalogues Direct-response adverts Telephone selling Television selling Selling online
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WHICH METHOD? Must take into consideration 4 things: 1. THE PRODUCT May be perishable Physical dimensions Depth of technology used Volume of sales
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2. THE MARKET The size of the market – larger markets need more channels Appropriateness of the outlet Time period of the market
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3. LEGAL RESTRICTIONS Tobacco Alcohol Prescription Drugs Gambling Laws in other countries
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4. THE COMPANY Use of economies of scale – the advantages of being big. May have ownership of ALL parts of place. E.g. makes, distributes and retails its own products.
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