4.5 - The 7P's of the marketing mix - place

What are channels of distribution?

It is the chain of businesses which a product passes through when it reaches from the producer to the customer

What are the different levels of distribution to get the product to reach the customer?

Zero-level → Producer directly to consumer

One-level → Producer to an intermediary to a consumer

Two-level → Producer to one intermediary (wholesaler) and then another intermediary to a consumer

What are intermediaries?

These are firms which act as the middle person between the producer and consumer. They sell the producer’s products.

What are the types of intermediaries?

Retailers, agents, distributors and wholesalers

What is a retailer?

These are shops or stores which sell the end product to the customer

What is an agent?

Agents provide services where they act as sellers on behalf of the producer e.g., real estate agents

What is a distributor?

Businesses that sell products from only very few manufactures

What are wholesalers?

These businesses buy from producers in bulk, and break them down into smaller units for retailers to sell

Advantages of having wholesalers in supply chain?

• They pay for cost of storage, so retailers or producers don’t have to

• They deal with distribution channels and spread the product to many different placers

Disadvantages of having wholesalers in supply chain?

• The producer takes on risks when passing on the products - their quality may worsen or they may get damaged

• Wholesalers may not promote the products so retailers do not buy it from them

What is a specialty channel of distribution?

This occurs in the zero-level of distribution. It is any indirect way in which the producer sells the product to the consumer which does not involve any intermediaries. This can be done through e-commerce, vending machines, mail order (selling through catalogue)