3.3.3 Place (3)
Resources |
Revision Questions |
Business Studies
Login to see all questions
Click on a question to view the answer
1.
A manufacturer of industrial components needs to distribute its products to a wide range of customers across the UK and Europe. The components are relatively expensive and require specialist handling. Recommend and justify an appropriate distribution channel for this manufacturer.
Recommended Distribution Channel: A combination of a direct sales force and a network of specialist distributors.
Justification:
- Direct Sales Force: A direct sales team is essential for selling to large, complex industrial customers. They can provide technical support, custom solutions, and build strong relationships. This is particularly important for high-value, specialized products.
- Specialist Distributors: Distributors with expertise in the industrial sector can provide local market knowledge, warehousing, and delivery services. They can reach a wider customer base than the direct sales force alone. Specialist distributors can also handle the specialist handling requirements of the components.
- Combined Approach: The direct sales force can focus on key accounts and strategic customers, while the distributors handle smaller orders and geographically dispersed customers. This provides a balance between control and reach.
- Logistical Expertise: Distributors often have established logistics networks and can handle the complex transportation requirements of industrial components.
- Market Knowledge: Distributors possess valuable local market knowledge and can provide insights into customer needs and competitor activity.
Alternative Channels Considered & Why Rejected:
- Retail Channels: Unsuitable for industrial components, which are typically sold to businesses, not consumers.
- Online Marketplaces: While potentially useful for some components, it's not suitable for high-value, specialized products that require technical support and custom solutions.
2.
A new clothing brand is launching online. The brand sells trendy, fashion-forward apparel targeted at young adults (16-25 years old). The brand has a limited marketing budget. Recommend and justify an appropriate distribution channel for this clothing brand.
Recommended Distribution Channel: Primarily an e-commerce website (direct-to-consumer) supplemented by partnerships with online marketplaces like ASOS or Zalando.
Justification:
- E-commerce Website (Direct-to-Consumer): This is crucial for a brand with a limited marketing budget. It allows the brand to control its brand image, pricing, and customer experience. It also eliminates the need for intermediaries, increasing profit margins. Effective online marketing (social media, SEO) can drive traffic to the website.
- Online Marketplaces (ASOS, Zalando): These marketplaces provide access to a large, existing customer base of young adults who are actively looking for fashion apparel. They handle logistics and marketing, reducing the brand's workload and costs. This provides immediate visibility and credibility.
- Target Market Alignment: Young adults are highly active online and are accustomed to shopping on e-commerce platforms.
- Scalability: E-commerce allows for relatively easy scalability as the brand grows.
Alternative Channels Considered & Why Rejected:
- Physical Retail Stores: This requires significant capital investment and is not cost-effective for a brand with a limited budget.
- Wholesale to Independent Boutiques: This could be an option, but it would limit the brand's reach and control over its image.
3.
A small, independent artisan bakery produces high-quality cakes and pastries. They currently sell directly to customers through a shop in their local town. They are considering expanding their reach. Recommend and justify an appropriate distribution channel for the bakery.
Recommended Distribution Channel: A combination of direct sales (online ordering and local delivery) and partnerships with local cafes and restaurants.
Justification:
- Direct Sales (Online & Delivery): This allows the bakery to maintain control over its brand image and customer experience. It also provides a direct link to customers, enabling valuable feedback and building loyalty. An online ordering system can reach customers beyond the immediate local area. Local delivery is crucial for maintaining freshness and quality, particularly for perishable goods like cakes.
- Partnerships with Local Cafes & Restaurants: This expands the bakery's reach to a wider customer base without requiring significant investment in infrastructure. It leverages the existing customer base of the partner businesses. It also provides a convenient option for customers who may not be able to visit the bakery directly. This is particularly beneficial for increasing sales volume and brand awareness.
- Cost-Effectiveness: Compared to establishing a large retail network, this combined approach is relatively cost-effective for a small business.
- Target Market Alignment: The high-quality nature of the bakery's products aligns well with cafes and restaurants that cater to a discerning clientele.
Alternative Channels Considered & Why Rejected:
- Large Retail Chains: These chains typically require high volumes and standardized products, which may not suit the bakery's artisan approach. They also often have high margin demands.
- Wholesale Distributors: While potentially expanding reach, this could dilute brand image and reduce control over pricing and presentation.