A LevelBusinessEdexcelRevision Notes1. Marketing & People1.3 Marketing Mix & StrategyDistribution

Distribution (Edexcel A Level Business)

Revision Note

Test yourselfFlashcards
Steve Vorster

Types of Distribution Channels

  • Distribution channels refer to the various intermediaries through which goods/services move from the manufacturer to the end customer 

Flowchart of distribution channels: four-stage (producer, wholesaler, retailer, consumer), three-stage (producer, retailer, consumer), two-stage (producer, consumer).

The three different types of distribution channels businesses can use to move products from the manufacturer to the end consumer

Four Stage Distribution Channel

  • A traditional channel consists of four stages: producer, wholesaler, retailer, and consumer

  • This channel is commonly used for products such as groceries, clothing, and electronics

    • E.g. The Coca-Cola Company produces the soft drink and then sells it to a wholesaler, who in turn sells it to a retailer

    • The retailer then sells the soft drink to the end customer

Three Stage Distribution Channel

  • The three stage distribution channel eliminates the wholesaler stage, with the producer selling directly to the retailer

  • This channel is often used for products with high demand or where the cost of distribution is high

  • This channel is often used for products with high profit margins, where the manufacturer can afford to sell directly to the retailer and still make a profit

    • Eg Toshiba produces laptops and sells them directly to retailers like Currys, who then sell them to the end customer 

Two Stage Distribution Channel

  • The two stage distribution channel eliminates both the wholesaler and retailer stages, with the manufacturer selling directly to the end consumer

  • This channel is commonly used for products that are sold online or through direct sales channels

    • E.g. RyanAir sells its service (passenger tickets) directly to the end customer on their website 

  • Changes in distribution have been impacted by social trends such as the growth of e-commerce and the shift from product-based businesses to service-based businesses

  • By understanding these trends, businesses can adjust their distribution strategies to better meet the needs of their customers and stay competitive in the marketplace

 The Growth of E-commerce

Explanation

Example

  • Online distribution has become increasingly popular due to the convenience and accessibility it offers to consumers
     

  • Many businesses now use drop-shipping, which allows them to sell products without holding stock

    • Once the business has sold the products, they are shipped directly from the producer to the customer

    • This reduces the cost and complexity of distribution, making it easier for businesses to sell online

  • Amazon is known as a third-party logistics provider (3PLs)

  • They provide businesses with the infrastructure and online marketplace which allows them to reach a wider audience and increase sales without having to invest in their distribution infrastructure

  • Many businesses now generate the bulk of their sales selling on Amazon

 The Shift from Product-based Businesses to Service-based Businesses

Explanation

Example

  • Consumers increasingly value experiences over material possessions and this shift has impacted distribution, as the delivery of services is often quite different from the delivery of physical products

  • Distribution for service-based businesses may involve delivering services to customers directly, such as through a mobile app or website

    • This requires a different set of distribution capabilities than traditional product-based distribution

  • Uber delivers a taxi service through a mobile app

    • The distribution involves matching drivers with customers in real-time

    • The service is distributed directly to the end consumer without the need for wholesalers or retailers

    • With no need for wholesalers or retailers, business costs reduce and profitability may increase

Last updated:

You've read 0 of your 10 free revision notes

Unlock more, it's free!

Join the 100,000+ Students that ❤️ Save My Exams

the (exam) results speak for themselves:

    Test yourselfFlashcardsNext topic

    Did this page help you?

    Steve Vorster

    Author: Steve Vorster

    Expertise: Economics & Business Subject Lead

    Steve has taught A Level, GCSE, IGCSE Business and Economics - as well as IBDP Economics and Business Management. He is an IBDP Examiner and IGCSE textbook author. His students regularly achieve 90-100% in their final exams. Steve has been the Assistant Head of Sixth Form for a school in Devon, and Head of Economics at the world's largest International school in Singapore. He loves to create resources which speed up student learning and are easily accessible by all.

    Jenna Quinn

    Author: Jenna Quinn

    Expertise: Head of New Subjects

    Jenna studied at Cardiff University before training to become a science teacher at the University of Bath specialising in Biology (although she loves teaching all three sciences at GCSE level!). Teaching is her passion, and with 10 years experience teaching across a wide range of specifications – from GCSE and A Level Biology in the UK to IGCSE and IB Biology internationally – she knows what is required to pass those Biology exams.