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Selling & Distribution. GCSE Business Studies. tutor2u ™. Revision Presentations 2004. Things to Think About. How can businesses ensure that their product or services reach existing and potential customers?

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Selling distribution

Selling & Distribution

GCSE Business Studies


Revision Presentations 2004

Things to think about
Things to Think About

  • How can businesses ensure that their product or services reach existing and potential customers?

  • What is the route that the product normally takes between the start of production and finally being “consumed” or used by the customer?

  • What are the main advantages and disadvantages of the various options for “distribution”?

Distribution channels
Distribution Channels

  • Products reach customers via a “distribution channel”

  • The channel is the link between seller and buyer – but it may have more than one stage in between; for example…






/ Agents






  • Wholesalers “break bulk”:

    • They buy in large quantities from producers

    • Then break them into smaller quantities to sell to retailers

  • Advantages

    • Reduce the producer’s transport costs (fewer journeys to the wholesaler rather than many journeys to retailers)

    • Retailers can order in smaller amounts from wholesalers

  • Wholesaler makes his money by buying at a lower price from the producer and adding a profit margin onto the price paid by the retailer

Wholesalers example
Wholesalers - Example

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


Customer = newspaper buyer

Distributors agents
Distributors / Agents

  • Distributors

    • Distributors distribute (sell on) products and serve as a local sales point

    • Usually specialise in a particular market

    • Usually offer products from several / many producers – so that their customers enjoy greater choice

    • Agents are an example of a kind of distributor

  • Examples of Agents

    • Estate agents

    • Travel agents

    • Export/import agents



/ Agents


Direct marketing
Direct Marketing

  • Involves a producer selling directly to the end customer – i.e. there are no other parts to the distribution channel

  • Various Methods:

    • Direct mailing

    • E-commerce

    • Telemarketing (telephone selling)

    • Door to door selling

  • Examples

    • QVC (TV Selling)

    • Boden (clothes from catalogue)

    • Sunday Times Wine Direct (wine through flyers in newspaper)



Why use direct marketing
Why Use Direct Marketing?

  • Advantages

    • No intermediaries (e.g. retailers) to take part of profits

    • Producer can control own marketing

    • Chance to reach customers who would not have gone to shops

    • Don’t use “mass marketing” techniques such as advertising – which can save money

  • Disadvantages

    • Costs of distribution of promotional material

    • Costs of making distributional material (e.g. catalogues for Next)

    • Can still be very expensive if customers do not respond to the direct marketing materials (i.e. a low “response rate”

Sales promotion
Sales Promotion

  • Sales promotion is a term used to describe various methods aimed at persuading customers to buy

  • Often used as part of other promotional activities such as an advertising campaign

  • Examples

    • Money off coupons (widely used by supermarkets)

    • Competitions

    • Discount vouchers (e.g. three for the price of two)

    • Free samples (e.g. washing tablets, shampoo sachets)

    • Gifts with purchase (e.g. CDs on the front of magazines)

    • Point of sale material

    • Frequent user / customer loyalty schemes (e.g. Nectar, Air Miles)

Why use sales promotion
Why Use Sales Promotion?

  • Advantages

    • Short term boost to sales

    • Can attract customers away from other brands

    • All about “action” – encouraging customers to buy rather than encouraging them to think about it!

  • Disadvantages

    • Reduces profit margin on each product (depends on how much is given away in the “promotion”)

    • Usually only effective in short term, will need a longer term tactic to boost overall sales

    • Customers may come to expect sales promotions – and so wait until the next one comes along!

Customer loyalty schemes
Customer Loyalty Schemes

  • A kind of sales promotion used by retailers

  • Encourage customer to return to retailer

  • Low cost of discounts given can be offset by profits generated by sales made

  • Loyalty cards also provide information about shopping habits of customers:

    • Where do they shop

    • When do they shop

    • What do they buy

  • Examples

    • Nectar

    • Air Miles

    • Boots Advantage Card


  • Retailer – part of the distribution channel

  • Retailer is the final step in the chain – deals directly with the customer

  • Focused on consumer markets

  • Various kinds of retailer:

    • Multiples – chains of shops owned by a single company (e.g. Sainsbury’s or Body Shop)

    • Convenience stores (e.g. Spar, Londis, Costcutter)

    • Independents – a shop run by an owner


  • Exporting = selling overseas

  • An important option for a business to grow:

    • UK markets may be too small or in decline

    • Product or service may be attractive to customers in other countries

  • Challenges faced by exporters:

    • Exchange rates

    • Language barriers

    • Different cultures

    • Trade barriers (e.g. quotas, tariffs, legislation)

  • Successful exporters need to have a detailed understanding of overseas markets

E commerce

  • Two kinds of business websites

    • Marketing sites

      • Promotes a business and its products or services to potential and existing customers

    • Trading sites

      • Promote a business

      • Allow customers to purchase online

  • Many Advantages of Selling Online

    • Website gives a business new ways of marketing and selling its products or service

    • Provides an opportunity for its to build relationships with customers

    • Effective and lower risk way of selling in international markets

    • Increasingly an essential part of doing business

  • Not a replacement for traditional marketing activities - website should complement and support them