Place: distribution channels Cambridge IGCSE Business Studies (9–1) revision
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In plain words
A product is no use to a customer if it is not where they can buy it. Place is about the route goods take from the business that makes them to the person who uses them. That route is the distribution channel.
It may be direct, or it may pass through one or two other businesses on the way.
5 things to know
- Direct to the consumer: the producer sells straight to the customer, from its own shop, by mail or online. It keeps all the profit and stays in contact with customers, but has to store and deliver the goods itself.
- Through a retailer: shops are close to customers, display the product and give advice, but take a share of the price.
- Through a wholesaler and a retailer: the wholesaler buys in bulk, stores the goods, and sells smaller amounts to small shops ("breaking bulk"). The producer has less to store and deliver, but the final price is higher and it has less control.
- An e-tailer is a retailer that sells online.
- The right channel depends on the product (fresh, fragile, technical), where the customers are, and the cost.
Tips and tricks
- The more businesses in the channel, the higher the final price, because each adds its own mark-up.
- Fresh food needs a short channel, or it spoils. Cheap, widely bought goods like sweets suit a wholesaler.
It lands in your notebook with its questions as flashcards.
Place: distribution channels: 5 questions and answers
These are the quiz’s questions. Do the quiz first, then come back here for the ones that got you.
Which channel has no intermediaries?
The producer sells straight to the customer.
What does a wholesaler do?
It stands between the producer and the shops.
Which is a disadvantage of using a wholesaler and a retailer?
Each business in the chain adds a mark-up.
Which product most needs a short distribution channel?
It spoils quickly, so it must reach customers fast.
An e-tailer is
The "e" stands for electronic.
Quiz
5 questions
Tap an answer and you’ll see straight away whether it’s right, and why.
Worksheet
3 questions, 8 marks. Write your answers on paper, then check them.
Place: distribution channels
Cambridge IGCSE Business Studies (9–1) 0986 · 8 marks · papermunch.org
Name ______________________________ Date ______________
Define a distribution channel.[2]
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The route a product takes from the producer to the final consumer.
Explain two advantages to a producer of selling directly to consumers.[3]
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It does not share the profit with wholesalers or retailers. It also deals with its customers itself, so it gets feedback and can control how the product is sold.
Explain why a small corner shop might buy from a wholesaler and not directly from the manufacturer.[3]
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The shop needs only small quantities of many different products. A wholesaler breaks bulk, selling in the amounts the shop wants, whereas a manufacturer usually sells only in large quantities.
Answers: Place: distribution channels
- 1. The route a product takes from the producer to the final consumer.
- 2. It does not share the profit with wholesalers or retailers. It also deals with its customers itself, so it gets feedback and can control how the product is sold.
- 3. The shop needs only small quantities of many different products. A wholesaler breaks bulk, selling in the amounts the shop wants, whereas a manufacturer usually sells only in large quantities.