Outline the factors a business should consider when choosing a suitable Channel of Distribution - Leaving Cert Business - Question A - 2012
Question A
Outline the factors a business should consider when choosing a suitable Channel of Distribution.
Provide examples to illustrate your answer.
Worked Solution & Example Answer:Outline the factors a business should consider when choosing a suitable Channel of Distribution - Leaving Cert Business - Question A - 2012
Step 1
Cost
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Answer
Cost is a crucial factor when determining the channel of distribution. Higher distribution expenses can increase the retail price, making the product less appealing to consumers. For example, Ryanair modified its distribution strategy by cutting travel agents from its sales process to save costs and pass savings onto customers.
Step 2
Type of good/durability
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Answer
The nature of the product affects the distribution choice. For instance, perishable goods, like fresh produce, require quicker distribution methods to ensure freshness. On the other hand, durable goods, such as electronics, can be stored longer. High-quality items may be sold directly to consumers to maintain their value.
Step 3
Market size
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The scale of the target market is important. A larger market may necessitate using wholesalers. For example, major companies like Cadbury use wholesalers like Musgrave Group to distribute products efficiently, while niche products might be sold directly to consumers.
Step 4
E-business
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Answer
E-business allows companies to advertise and sell products online. For instance, businesses can use a company website for sales and use a courier for delivery, exemplified by companies that operate purely online, relying on digital sales channels.
Step 5
Technological developments
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Answer
Advancements in technology have transformed consumer interactions with businesses. For example, insurance companies now provide quotes online, allowing for faster service without the need for physical branches, which historically required face-to-face contact.
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