Chapter 13: Distribution and Pricing

Comprehensive vocabulary flashcards covering distribution channels, wholesaling, retailing strategies, physical distribution, supply chain management, and pricing concepts from Chapter 13.

Distribution strategy

A plan for delivering the right product to the right person at the right place at the right time.

Channel of distribution

A network of organisations and processes that links producers to consumers.

Physical distribution

The actual, physical movement of products along the distribution pathway, which includes collecting, sorting, and delivery times.

Direct channel

A distribution process that links a producer and a customer with no intermediaries (for example, Apple stores and websites selling directly to customers).

Channel intermediaries

Distribution organisations that facilitate the movement of products from a producer to a consumer (for example, wholesalers selling to retailers).

Retailers

Distributors that sell products directly to the ultimate users, typically in small quantities, that are stored and merchandized on the premises.

Wholesalers

Distributors that buy products from producers and sell them to other businesses or nonfinal users such as hospitals, nonprofits, and the government.

Independent wholesaling businesses

Independent distributors that buy products from a range of different businesses and sell those products to a range of different customers.

Merchant wholesalers

Independent distributors who take legal possession, or title, of the goods they distribute.

Agents/brokers

Independent distributors who do not take title of the goods they distribute, even though they may take physical possession on a temporary basis before distribution.

Full-service merchant wholesalers

Merchant wholesalers that provide an array of services to the retailers or business users who purchase their goods.

Limited-service merchant wholesalers

Merchant wholesalers that provide fewer services to their customers; categories include drop shippers, cash-and-carry wholesalers, and truck jobbers.

Drop shipper

A limited-service merchant wholesaler that buys and owns goods but never physically handles them, arranging for the manufacturer to ship them directly to the customer.

Cash-and-carry wholesaler

A limited-service merchant wholesaler where customers travel to the wholesaler, pay for the goods, and transport the goods themselves.

Truck jobber

A distributor that operates from a truck or vehicle, delivering and often selling products directly to smaller retailers, commonly used for perishable or frequently replenished products.

Multichannel retailing

A strategy involving providing multiple distribution channels (such as online platforms and physical brick-and-mortar stores) for consumers to buy a product.

Intensive distribution

A distribution strategy focused on placing products in as many retail stores as possible.

Selective distribution

A distribution strategy focused on placing products only with preferred retailers.

Exclusive distribution

A distribution strategy focused on establishing only one retail outlet in a given geographic area.

Category killer

A retail store that dominates a particular product category by offering an extensive variety and selection within that category.

Convenience store

A retail outlet that sells a small range of everyday and impulse products at easy-to-access locations, typically featuring long trading hours and quick checkout.

Department store

A store that offers a wide variety of merchandise across different product categories, typically accompanied by a relatively high level of customer service.

Discount store

A retail store that offers a wide range of merchandise at lower prices, generally providing fewer services than traditional department stores.

Outlet store

A manufacturer- or brand-owned store that sells directly to consumers, often at reduced prices, carrying previous-season, discontinued, or excess stock.

Specialty store

A retail store that focuses on a narrow product category but offers a wide and deep selection within that category.

Supermarket

A retail store offering a wide range of food and household products, alongside a smaller selection of non-food merchandise.

Supercenter

A very large retail store that combines a full supermarket with a broad range of general merchandise in one location.

Warehouse club

A retail store that sells food and general merchandise in bulk at discounted prices from a large warehouse-style facility, traditionally to members.

Online retailing

A non-store retailing format where products are ordered via a website or application and delivered to the customer or collected.

Direct-response retailing

A non-store retailing approach where a business markets products directly to consumers through catalogues, telephone calls, or TV/social-media advertisements and asks them to place an order.

Vending

A non-store retailing format where products are sold through automated, self-service machines situated in convenient locations.

Direct selling

A format where a salesperson sells directly to the consumer, usually at home, workplace, or personal network rather than through a traditional retail outlet.

Multilevel marketing (MLM)

A form of direct selling where independent distributors sell products and recruit other distributors, earning income from personal sales and sales generated by their network.

Supply chain management (SCM)

Planning and coordinating the movement of products along the entire supply chain from raw materials to final consumers.

Logistics

A subset of supply chain management (SCM) focusing on the operational tactics involved in moving products along the supply chain.

Modes of transportation

The various shipping and transit options—such as planes, trains, and railroads—used for moving products through the supply chain.

Skimming pricing

A new product pricing strategy that aims to maximize profitability by offering new products at a premium price targeting early adopters.

Penetration pricing

A new product pricing strategy that aims to capture as much market share as possible by launching with rock-bottom prices.

Everyday-low pricing (EDLP)

A long-term discount pricing strategy designed to achieve profitability through high sales volume by offering consistently low prices rather than temporary specials.

High/low pricing

A pricing strategy designed to drive retail traffic through special promotional discounts on a limited set of products alongside higher everyday prices on other items.

Loss-leader pricing

A pricing tactic where a select handful of items are priced temporarily below cost to attract foot traffic into a store.

Breakeven analysis

The process of determining the number of units a firm must sell to cover all costs, calculated using the formula: $\text{Breakeven Point (BP)} = \frac{\text{Total fixed costs (FC)}}{\text{Price/unit (p)} - \text{Variable costs/unit (VC)}}$.

Profit margin

The gap between the cost and the selling price of an item on a per-product basis.

Price–quality relationships

A consumer perception tendency where buyers use the price of a product as an indicator of its overall quality in the absence of additional information.

Odd pricing

The practice of ending prices in numbers just below round figures (such as ending in $.99$) to establish a consumer perception of added value or a bargain.