1. IGCSE Business Studies Unit 3.3.1 – Placement (Distribution) i-study.co.uk

2. Distribution i-study.co.uk Distribution is the process of getting the correct goods to the right place on time, with the least cost. It involves the science of logistics

3. Distribution Channels i-study.co.uk

4. Distribution Channels i-study.co.uk

5. Channel 1: Direct This involves selling directly to the final consumers Internet sites use this most as do services e.g. teaching i-study.co.uk

6. Channel 2: Indirect This is where the product is sold via an intermediary ; a firm in between producer and consumer. Sometimes the firm producing the good will sell it on to a retailer (shop) who then sell it to the consumers. e.g. a carpenter sells to Ikea who sell to the consumer i-study.co.uk

7. Channel 2: Indirect + Agents Another way this method may occur is through an agent ; an agent is a service with a skilled knowledge of the market you are operate in. Alternatively, the producer may sell their product to a wholesaler - a firm that buys large amounts in bulk. The wholesaler - like PriceMart - may then have a large warehouse that sells to consumers. i-study.co.uk

8. Channel 3: Indirect + + This is where the producer sells to a wholesaler who then sells the product on to a retailer, who finally sells the product to the consumer. Each stage makes a profit. Wholesalers buy in bulk and so can therefore charge a lower price to retailers who would not have bought in bulk. i-study.co.uk

9. Logistics Logistics is the science of getting goods to where they need to go, on time, cheaply. It involves considerations of: –Methods of Transport –Route of Transport –Costs of Transport –Timings and People involved –Choosing distribution methods i-study.co.uk

10. Which Channel to Choose? This depends upon…. The nature of the product you sell - if it is an electronic product, then it is best to choose a direct method The size of your company - large companies may not need to use a wholesaler as they may own all stages of industry The location of the business - if you are far from target markets then it may be better to use an agent or wholesaler to save costs i-study.co.uk

11. Evaluating Distribution Advantages & Disadvantages of Direct Distribution + Cuts out any middle men - lower price can be charged + Means firm is in tune with what customers want and can easily reach out to customers - Must advertise to attract customers - Must organise and pay for transport/distribution Advantages & Disadvantages of Indirect Distribution + Agents and Wholesalers may buy in bulk; more sales + Agents may have specialized info on market - sell more - Agents and Wholesalers may pay lower average price - Firms cannot control price or placement of final product - Firms don’t build customer relations i-study.co.uk