Channels of Distribution
Getting a product to the customer: selling through retailers, wholesalers, telesales and direct, and the rise of e-commerce and m-commerce, with the benefits and drawbacks of each.
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Getting the product to the customer
Place is one of the four parts of the marketing mix, alongside price, product and promotion. It means how a product reaches the customer, through a channel of distribution. A retailer is a shop that sells directly to the public. A wholesaler buys goods in bulk and sells them on to retailers. Telesales means selling to customers by phone, and some firms sell direct to the customer with no shop in between. More and more selling now happens through e-commerce, buying and selling online, and m-commerce, doing the same on a mobile phone. These have grown fast because they are open all day and reach customers far away, though the customer cannot touch the product and it must be delivered. This module covers the channels and how to choose between them.
Distribution words
Learn these before you match any channel, and notice which ones sell online and which in person.
Selling in a shop against online
Two common channels reach the customer in very different ways, so the choice depends on the business.
How to choose a channel
Do not just name the channels. Fit one to the firm in front of you. Ask what the product is, who the customers are and how much a channel costs. A product people want to try in person suits a shop. A firm chasing customers across the country cheaply leans online. A maker selling to many small shops may use a wholesaler. Name the channel you would use and say why it reaches this firm customers better than the others.
Match the channel to what it is
- a retailer
- a wholesaler
- telesales
- e-commerce
- a shop that sells directly to the public
- a business that buys in bulk and sells on to shops
- selling to customers by phone
- selling to customers online
Which channel is this?
A customer opens a shop app on a mobile phone and buys a pair of trainers, which are then delivered. Which channel is this?
- M-commerce, selling on a mobile device.
- A high-street retailer.
- A wholesaler.
- Telesales.
Benefits of e-commerce
Select the TWO genuine benefits of selling online.
- The shop is open all day, every day
- It can reach customers far away
- Customers can always touch the product first
- It never needs any delivery
Total sales
A firm makes 300 sales in its shop and 700 sales through its website. Add these to find its total number of sales.
Order goods reaching a shopper
Put the stages of goods passing along a channel to a shopper in order, earliest first.
- A factory makes the product
- It is sold in bulk to a wholesaler
- The wholesaler sells it on to a retailer
- The shopper buys it from the retailer
Complete the facts
The route a product takes to reach the customer is a channel of _____. A business that buys in bulk and sells on to shops is a _____. Buying and selling goods online is _____. Buying and selling on a mobile phone is _____.
Match the business to the best channel
- a small maker wanting to reach the whole country cheaply
- a firm whose customers want to try before they buy
- a maker selling to many small corner shops
- a firm selling insurance to people at home
- e-commerce through its own website
- a retail shop on the high street
- a wholesaler who supplies the shops
- telesales by phone
Spot the true distribution facts
Tap the TWO statements that are true about channels of distribution.
- A wholesaler buys in bulk and sells on to retailers
- E-commerce means selling goods online
- Online selling lets customers touch the product first
- A firm can only ever use one channel
Pick the channel
Read each case and choose the best channel, with a reason.
- A small craft maker wants to sell to customers all over the country without paying shop rent. Which channel fits best?
- A furniture firm finds customers want to sit on a sofa before buying it. Which channel suits this best?
- A student names a channel but never says why it suits the business. How could the answer be improved?
Recommend a channel of distribution
A small firm makes handmade candles and wants to sell them to customers across the country while keeping costs low. Recommend how it should distribute them.
- Explain what a channel of distribution is
- Describe two channels the firm could use
- Recommend the channel that best suits this firm
- Justify your choice using the product, the customers and the cost
- Finish with a judgement on why the growth of online selling supports your choice