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Business · Making marketing decisions

Place

Place is how a product gets from the business that makes it to the customer who buys it - through retailers, e-tailers and intermediaries such as wholesalers. Many businesses now sell through several channels at once.

  • 7 key terms
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Teacher resources

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Student handouts

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Last Lesson

Answer from memory before the answers appear.

  • Name three promotional methods.

    Any three of: advertising, sponsorship, product trials, sales promotions, PR, branding.

  • What is targeted advertising?

    Online adverts shown only to people who match the target market.

  • What is public relations?

    Gaining positive media coverage without paying for it directly.

  • How should promotion match a market segment?

    Use methods and media the target customers actually see.

Learning Objectives

  1. 1Explain distribution channels and the role of intermediaries.
  2. 2Explain the role of retailers and e-tailers (e-commerce).
  3. 3Explain multi-channel distribution.
  4. 4Explain the advantages and disadvantages of each method of distribution.

What Is Place?

Place is about how and where customers can buy a product.

  • Distribution

    The process of getting products from the producer to the customer.

  • Distribution channel

    The route a product takes from producer to customer.

  • Intermediary

    A business in the middle of the channel, such as a wholesaler or retailer.

  • Why it matters

    Customers can only buy a product if it is available where and when they want it.

Distribution Channels

  • Direct

    Route: Producer to consumer. Example: A farm shop, or a brand's own website

  • One intermediary

    Route: Producer to retailer to consumer. Example: A clothing brand sold in department stores

  • Two intermediaries

    Route: Producer to wholesaler to retailer to consumer. Example: Sweets sold to a wholesaler, then to corner shops

Intermediaries

Intermediaries sit between the producer and the customer.

  • Wholesaler

    Buys large quantities from producers and sells smaller quantities to retailers. Breaks bulk, stores stock and delivers.

  • Retailer

    Sells to the final customer, in shops or online.

  • Advantages

    Producers reach many more customers and do not need their own shops.

  • Disadvantages

    Each intermediary adds its own profit, raising the final price, and the producer has less control over how its product is sold.

Retailers or E-tailers?

Retailers (physical shops)

  • Customers can see, touch and try products.
  • Face-to-face service and advice.
  • Customers take products home immediately.
  • But: high costs of rent and staff.
  • Limited to customers who can visit.

E-tailers (e-commerce)

  • Lower costs: no shop rent.
  • Reach customers anywhere, 24 hours a day.
  • Can offer a huge range.
  • But: delivery costs and returns.
  • Customers cannot try before buying.

Multi-channel Distribution

Multi-channel distribution means selling through more than one channel at once.

  • How it works

    A business sells in its own shops, on its own website, through an app, on online marketplaces and through other retailers.

  • Click-and-collect

    Customers order online and collect from a shop - combining the convenience of both.

  • Advantages

    Reaches more customers, in the way each prefers to shop, so sales rise.

  • Disadvantages

    More complex and expensive to manage; prices and stock must be consistent across every channel.

Case study

Gymshark: From Online to the High Street

Gymshark began in 2012 as a purely online business, selling gym clothing through its own website and promoting it on social media. For ten years it had no shops. In 2022 it opened its first permanent flagship store, on Regent Street in London, where customers could try on clothes, join workouts and meet the brand in person. By adding a physical store to its website, Gymshark moved to multi-channel distribution - reaching customers who want to try before they buy.

2012 Gymshark starts as an online-only business
2022 Its first flagship store opens on Regent Street

Choose the Channel

Recommend a distribution channel for each product and explain why: handmade wedding cakes; a new brand of crisps; luxury watches; a mobile phone game; fresh flowers from a local grower. Then choose one and explain how it could use multi-channel distribution.

1. Choose a channel for each product.

2. Explain why.

3. Plan multi-channel distribution for one.

A good answer shows: A suitable channel for each, linked to the product and customer, and a realistic multi-channel plan.

Can I...?

  1. 1Explain what a distribution channel is.
  2. 2Describe the three main channels.
  3. 3Explain the role of wholesalers.
  4. 4Explain the role of retailers.
  5. 5Explain e-tailers and e-commerce.
  6. 6Compare retailers and e-tailers.
  7. 7Explain multi-channel distribution.

Summary & Exam Focus

  • Place is how products get from producer to customer.
  • Channels can be direct, or use intermediaries such as wholesalers and retailers.
  • Retailers offer a physical experience; e-tailers offer low costs and wide reach.
  • Multi-channel distribution reaches more customers but is harder to manage.

Exam focus

Explain one benefit to a business of using multi-channel distribution. (3 marks) (3 marks)

Link the channel to the product and the customer - fresh food needs a short channel; a mass-market snack needs as many channels as possible.

Key terms

The vocabulary this lesson expects you to use. Each one is linked from the first place it appears above.

Place
How and where customers can buy a product.
Distribution channel
The route a product takes from producer to customer.
Intermediary
A business between the producer and the customer, such as a wholesaler or retailer.
Wholesaler
A business that buys in bulk from producers and sells smaller quantities to retailers.
Retailer
A business that sells to the final customer.
E-tailer
A retailer that sells online.
Multi-channel distribution
Selling through several channels at once.

Questions and answers

7 questions set on this lesson, with the mark schemes and model answers open.

1. Exam question Define 1 mark Foundation

Define the term 'e-tailer'.

Mark scheme — 1 mark available

  • A business selling online / online retailer — 1 mark

Model answer

A retailer that sells its products online.

2. Exam question Outline 2 marks Foundation

Outline one disadvantage to a producer of selling through a wholesaler.

Mark scheme — 2 marks available

  • A disadvantage identified, e.g. lower profit / higher price / less control — 1 mark
  • Developed — 1 mark

Model answer

The wholesaler adds its own profit (1), so either the final price is higher or the producer receives less for each product (1).

3. Exam question Explain 3 marks Foundation

Explain one benefit to a business of using multi-channel distribution.

Mark scheme — 3 marks available

  • A benefit identified — 1 mark
  • First linked point of explanation — 1 mark
  • Second linked point of explanation — 1 mark

Model answer

It can reach more customers (1). Some customers prefer to shop in stores while others prefer to buy online (1). By selling through both, the business meets each customer's preference, increasing its total sales (1).

4. Exam question Analyse 6 marks Core

Source: Tidal Beauty Ltd makes natural skincare products. It currently sells only through its own website. A national chain of chemists has offered to stock its products in 300 stores, but would take 40% of the retail price. Analyse the impact on Tidal Beauty Ltd of selling its products through the chain of chemists.

Mark scheme — 6 marks available

  • AO2 (Application, 3 marks): uses the context - skincare, website only, 300 stores, 40% of the price — Level 1-3
  • AO3a (Analysis, 3 marks): chains of reasoning about sales, profit and control — Level 1-3

Model answer

Selling through 300 chemists would make Tidal Beauty's products available to many more customers, including those who prefer to see and test skincare in a shop before buying. This would increase awareness of the brand and could greatly increase its sales volume. However, the chain would take 40% of the retail price, so Tidal Beauty would earn much less profit on each product than it does selling direct from its website. It would also lose some control over how its products are displayed and priced. This means that although sales would rise, Tidal Beauty must sell enough extra products to make up for the lower profit on each one.

5. Multiple choice 1 mark Foundation

Which intermediary buys in bulk from producers and sells smaller quantities to retailers?

  1. A An e-tailer
  2. B A wholesaler Correct
  3. C A consumer
  4. D A franchisor

Why: A wholesaler breaks bulk between producers and retailers.

6. Multiple choice 1 mark Core

A farm sells vegetables straight to customers at its farm shop. This channel is:

  1. A Direct Correct
  2. B Two intermediaries
  3. C One intermediary
  4. D Multi-channel

Why: Producer to consumer with no intermediary is a direct channel.

7. Multiple choice 1 mark Stretch

What is a main disadvantage of multi-channel distribution?

  1. A It reaches fewer customers
  2. B It removes the need for a website
  3. C It is more complex and expensive to manage Correct
  4. D It means the business cannot sell online

Why: Running shops, websites and apps together is complex and costly, and prices and stock must match across them.