Distribution
The storing and moving of products to customers, often through intermediaries such as wholesalers and retailers, and it also includes transportation, which involves the physical movement of goods.
What is distribution?
This company/person bridges the gap between producers and retailers by buying in large quantities and selling in smaller, more convenient lots to the retailer.
What is the wholesaler?
Traders providing goods and services directly to the consumer.
What is retailers?
The holder of this card can use it to make purchases up to a set amount without paying cash.
What is credit card?
The percentage profit which is added to the cost price by a trader to establish the selling price.
The percentage of the selling price which is the seller’s profit.
What is Mark-up?
What is Profit Margin?
The route used to physically get the product from the manufacturer to the actual buyer of that product.
What is distribution channel?
Give two services offered by the wholesaler for the producer.
What is:
1.Reduces transport cost
2.Advises the producer of current market trends
3.Finishes goods by grading, packing and branding.
4.Makes mass production possible by ordering in large quantities and therefore reducing production cost.
The position of retailers in the distribution channel.
What is
They are positioned either between producers and consumers or between wholesalers and consumers.
Using the internet to purchase goods is very popular. Some of these sites are eBay. Amazon, etc.
What is E-commerce?
Formula for calculating Mark-up and Profit Margin.
What is:
(Selling Price - Cost Price) X 100
Cost Price
What is:
Selling Price- Cost Price X 100
Selling Price
Three reasons why retailers and consumers would buy direct from the manufacturer.
What is:
•Sufficient capital
•Better trade discounts
•Cash payments
•Enough resources to carry out functions normally by wholesalers
•Large turnover
Three functions of the wholesaler.
What is acting as an intermediary, breaking of the bulk, warehousing, taking on risk and offering credit?
Function: Retailers buy in large quantities and sell in single items to consumers.
Function: Retailers’ expert knowledge and experience enable them to advise and inform customers on the quality and suitability of products
Function: The retailer holds stocks which the consumer can purchase locally in small, convenient quantities
What is Breaking of bulk?
What is Information and Advice?
What is Stocks?
Describe 'below-the-line-promotion'.
What is techniques that encourage the consumer to buy, but are not a direct sale. For example, point of sale displays and in-store demonstrations make customers aware of products without actually selling to them.
Nathan, Khai and Miracle bought 500 chairs for their furniture store. They each cost $40.00. They resold them for $60.00 each. What was the markup rate on the chairs? How much profit did they make from each chair?
What is:
Mark-Up: Selling Price–Cost Price/Cost Price X 100
$60 - $40 / $40 X 100= 20/40 X 100= 50%
Profit: $60.00 - $40.00= $20.00
Company or person responsible for making the product.
The company holding large stocks and ‘breaking bulk’ into smaller packs for retailers.
The company that sells the product in convenient quantities to the final buyer.
The final purchasers of the product.
What is the manufacturer?
What is the wholesaler?
What is the retailer?
What is the consumer?
Give four services offered by the wholesaler for the retailer.
What is:
1.Offers choice of products from many producers
2.Supplies small quantities to suit retailer’s needs.
3.Locally situated providing quick access to goods, and open until late in the evening.
4.Advises on latest trend and best buy.
5.Pre-packs good ready for the retailers’ shelves (graded, labelled, priced and weighted goods)
Name and briefly describe the six functions of retailers.
What is:
•Breaking Bulk : Retailers buy in large quantities and sell in single items to consumers.
•Outlet: The retailer performs a valuable service to the producer by providing an outlet for his or her products, thus saving the producer from the need to market his or her own goods.
Stocks: The retailer holds stocks which the consumer can purchase locally in small, convenient quantities
•Information and Advice: – Retailers’ expert knowledge and experience enable them to advise and inform customers on the quality and suitability of products
•Variety of Choices – Retailers bring together many different goods from many different wholesalers and manufacturers so that consumers can choose, thus saving time.
•Feedback: The retailer provides feedback of consumer responses to wholesalers and producers. This helps the producer to become aware of what the consumer market wants, and also helps to ensure the consumer’s requirements are satisfied.
Describe what a franchise is and provide three examples.
What is an agreement that allows the entrepreneur to use the name of a well-known company and the exclusive right to market its products within a specified area. Some examples are Wendy's, McDonalds, KFC.
Werlie and Azaria run a successful beauty supply shop. They bought 25 bags of 100% Real Human Hair for $600. If they sold them at a 12% markup, what was the selling price of one bag of hair?
What is:
Cost Price of 1 bag of hair: $600/25= $24.00
Selling Price: Cost Price + Mark Up
$24.00 + 12%= $26.88
The four distribution channels.
What is
Producer to Wholesaler to Retailer to Consumer
Producer to Retailer to Consumer
Producer to Wholesaler to Consumer
Producer to Consumer
Name and describe the three types of wholesalers.
What is:
General Wholesaler: operates from large warehouses sited for convenient access from many local towns.
Cash and Carry Wholesaler: do not allow credit and do not deliver goods. Retailers come to the warehouses, select goods, pay for them, and provide their own transport.
Specialist wholesaler: allow credit, provides transport, and sells one line of item. It is also set like a warehouse and it is not self-service.
Give the names of and briefly describe five types of retailers.
What is Door to door (Pedlars, Hawkers, Mobile shops), Market Traders/Stalls, Independent Shops, Multiple Shop, Supermarkets, Department Store, Hypermarkets, Mail Order, Vending Machines, Catalogue Shops, Telephone Order Trading?
Explain the difference between trade credit, hire purchase agreement and credit sale agreement.
What is:
Trade Credit occurs where the seller allows the buyer to have goods and pay for them after an agreed period of time.
Hire purchase agreement: A contract for hiring goods for a fixed period with an option to purchase them from a nominal sum (e.g. $1) at the end of the period. The goods purchased do not become the property of the buyer until the last instalment has been paid.
Credit Sale agreement: This is a deposit, instalment and interest system similar to an HP agreement, but the buyer becomes the owner of the goods immediately once the agreement has been made.
Tyreece, Rosie and Paris bought 15 microphones from Bryan (they own a music store) for $630 dollars. They sold each one for $46.00. What is the profit on one microphone? What was the mark up rate?
What is:
Profit for one microphone: $630/15=$42 $46-$42= $4.00
Mark Up: Selling Price–Cost Price/Cost Price X 100
$46.00-$42.00/$42.00 X 100= 9.52%