There are several distribution channels that businesses can use to connect producers and customers. Wholesalers purchase large quantities from producers and sell smaller amounts to retailers. Retailers then display and sell to the end customer. Using both wholesalers and retailers allows for wider distribution but reduces producer control and margins. Direct marketing sells directly from producer to customer, avoiding intermediaries but increasing distribution costs.

1. Y10 BS QEGS Horncastle The Four Ps - Place tutor2u ™ GCSE Business Studies

2. Things to Think About How do businesses ensure that their product or services reach customers? What are the routes to the customer? What are the main advantages and disadvantages of the distribution options? Relevant may include: costs of distribution; potential sales volume; impact on brand image of product

3. Distribution Channels Products reach customers via a “distribution channel” The channel is the link between seller and buyer Producer Producer Producer Wholesaler Retailer Retailer Customer Customer Customer

4. Wholesalers Buy in large quantities from producers They sell to retailers who can order in smaller amounts – (break bulk) Wholesaler buy direct from the producer and add a profit margin onto the price they charge the retailer

5. Wholesalers - Example Producer Wholesaler Retailer Customer Sale of Daily Newspapers Newspaper Publisher – e.g. The Sun, The Times – who send bulk print runs of newspapers to large depots run by wholesalers Wholesaler (e.g. John Menzies) packs newspapers into bundles for retailers (e.g. newsagents) Retailer (e.g. newsagent; petrol station) displays newspaper in store and delivers to homes The customer is the final buyer

6. Retailers / Agents / Distributors Distributors Distributors sell products as a local sales point Usually offer products from several / many producers – customers enjoy greater choice and convenience Can buy from wholesalers or direct from producers Producer Retailers / distributers Customer

8. Why use both wholesales and retailers? Advantages Disadvantages

9. Why use both wholesales and retailers? Advantages Wider distribution – great where expected production levels are high Distribution costs can be minimised as retailers and wholesalers can collect or accept bulk deliveries. Disadvantages Profit margins on high volume production is usually lower Less control over the way your product is distributed Less control over the way that your product is presented to the customer

10. Direct Marketing Involves a producer selling directly to the end customer – i.e. there are no other parts to the distribution channel Various Methods: E-commerce Door to door selling Farmers Markets Producer Customer

11. Why Use Direct Marketing? Advantages Disadvantages

12. Why Use Direct Marketing? Advantages No intermediaries (e.g. retailers) to take part of profits Producer can control own marketing Reach customers directly Don’t use “mass marketing” techniques such as advertising – which can save money Disadvantages Higher costs of distribution of promotional material Costs of making and buying distributional material (e.g. catalogues for Next) and capital (vans/stalls etc.)