4.3.16

Place 3

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Manufacturer-Wholesalers-Retailers-Customers

A business can distribute their product via wholesalers. Wholesalers sell products in bulk to a network of retailers and then retailers sell the products to customers.

Large network of buyers

Large network of buyers

  • Wholesalers already have a large network of buyers.
    • This lets a business reach a lot of customers quickly.
Less interaction with customers

Less interaction with customers

  • A downside of using wholesalers is that the business will not have much personal interaction with customers.
    • This can lead to worse customer service.
Profit sharing

Profit sharing

  • Another downside is that both wholesalers and retailers take a cut of the profit. This means that customers are likely to pay higher prices.
    • This may make the business less competitive on price.

Manufacturer-Retailers-Customers

A business can choose to skip wholesalers and sell directly to retailers. A retailer is any shop that sells directly to the customer in small quantities. Tesco and the corner shop at the end of the road are both examples of retailers.

Higher margins or lower prices

Higher margins or lower prices

  • Bypassing wholesalers makes it likely that customers will pay lower prices because the business is “cutting out a middle man”.
Hard to contact retailers

Hard to contact retailers

  • It can be hard for a business, especially new start-ups, to get retailers to stock their products.
  • This means that it can be harder for a firm to reach as many people and it could take longer to sell a company’s products.
Control over shops (retailers)

Control over shops (retailers)

  • Going directly to retailers means that a producer or manufacturer can have complete control over which shops customers can buy their products from.
  • A luxury brand may not want their products stocked in Tesco or TK Maxx as it may lead consumers to perceive their brand as lower quality.
Higher logistics costs

Higher logistics costs

  • Selling to retailers directly may increase a business’ delivery and logistics costs if they have to deliver all the products to a retailer themselves.
Jump to other topics
1

Business Activity & Influences on Business

1.1

Business Objectives

1.1.1Business Aims1.1.2Business Objectives1.1.3Business Objectives Change Over Time1.1.4End of Topic Test - Business Aims1.1.5Diagnostic Misconceptions - Profit
1.2

Types of Organisations

1.2.1Sole Traders & Partnerships1.2.2Limited Companies1.2.3Limited Liability1.2.4Unlimited vs Limited Liability1.2.5Not For Profit & Franchises1.2.6Multinational Companies1.2.7End of Topic Test - Business Ownership1.2.8Application Questions - Business Ownership1.2.9Diagnostic Misconceptions - Company vs Business1.2.10Diagnostic Misconceptions - Owners vs Shareholders
1.3

Classification of Businesses

1.3.1Sectors
1.4

Decisions on Location

1.4.1Location
1.5

Business & the International Economy

1.5.1Globalisation1.5.2Exchange Rates
1.6

Government Objectives & Policy

1.6.1Government Objectives1.6.2The Government & Business Activity1.6.3Interest Rates1.6.4Interest Rates - Calculations1.6.5Diagnostic Misconceptions - Recessions
1.7

External Factors

1.7.1External Factors
1.8

What Makes a Business Successful?

1.8.1Measuring Success1.8.2Reasons for Failure
2

People in Business

2.1

Internal & External Communication

2.1.1Communication
2.2

Recruitment & Selection Process

2.2.1Types of Employment2.2.2Recruitment Stages2.2.3Effective Recruitment2.2.4Legal Controls Over Employment2.2.5Diagnostic Misconceptions - Internal Recruitment
2.3

Training

2.3.1Training
2.4

Motivation & Rewards

2.4.1Motivation in the Workplace2.4.2Financial & Non-Financial Methods2.4.3End of Topic Test - The Workforce2.4.4Application Questions - The Workforce2.4.5Diagnostic Misconceptions - Money
2.5

Organisation Structures

2.5.1Organisational Structures2.5.2Centralised vs. Decentralised Structures2.5.3Tall & Flat Organisations2.5.4Functional Areas Within a Business2.5.5End of Topic Test - Org Structure
3

Business Finance

3.1

Sources of Finance

3.1.1Internal & External Sources of Finance3.1.2Factors Affecting Sources of Finance
3.2

Cash Flow Forecasting

3.2.1Cash Flow3.2.2Consequences of Cash Flow Problems3.2.3Cash Flow - Calculations3.2.4Solutions to Cash Flow Problems3.2.5Diagnostic Misconceptions - Cash Flow
3.3

Cost & Break-Even Analysis

3.3.1Costs, Revenue & Profit3.3.2Profit, Average Unit Cost & Interest3.3.3Costs - Calculations3.3.4Revenue - Calculations3.3.5Break-Even Analysis3.3.6Profit & Losses - Calculations3.3.7End of Topic Test - Finance3.3.8Grade 9 - Finance3.3.9Diagnostic Misconceptions - Fixed Costs3.3.10Diagnostic Misconceptions - Break-even
3.4

Financial Documents

3.4.1Financial Statements3.4.2Income Statement3.4.3Understanding Business Performance
3.5

Account Analysis

3.5.1Business Calculations3.5.2Gross Profit - Calculations3.5.3Net Profit - Calculations3.5.4Business Calculations 23.5.5Business Calculations 33.5.6Liquidity
4

Marketing

4.1

Market Research

4.1.1Market Research4.1.2Forms of Market Research
4.2

The Market

4.2.1Customer Needs4.2.2Satisfying Customer Needs4.2.3Market4.2.4The Competitive Environment4.2.5Market Segmentation4.2.6Market Mapping - Price vs Quality4.2.7End of Topic Test - Marketing4.2.8Application Questions - Marketing4.2.9Diagnostic Misconceptions - Competition
4.3

The Marketing Mix

4.3.1Price4.3.2Price Penetration4.3.3Other Forms of Pricing4.3.4Product Design4.3.5The Product Life Cycle4.3.6Extending Existing Products4.3.7New Products4.3.8Benefits and Risks of New Products4.3.9Promotion4.3.10Public Relations and Sales Promotion4.3.11Sponsorship & Social Media4.3.12Product Placements4.3.13Promotional Mix4.3.14Place4.3.15Place 24.3.16Place 34.3.17M-Commerce4.3.18Benefits & Drawbacks of M-Commerce4.3.19End of Topic Test - Marketing Mix4.3.20Grade 9 - Marketing Mix4.3.21Diagnostic Misconceptions - Decreasing Price4.3.22Diagnostic Misconceptions - Advertise vs Promote4.3.23Diagnostic Misconceptions - Social Media
5

Business Operations

5.1

Economies & Diseconomies of Scale

5.1.1Economies of Scale5.1.2Diagnostic Misconceptions - Economies of Scale
5.2

Production

5.2.1Production Processes5.2.2Flow and Batch Production5.2.3Production Efficiency5.2.4Technology & Production5.2.5Diagnostic Misconceptions - JIT vs JIC
5.3

Factors of Production

5.3.1Factors of Production
5.4

Quality

5.4.1Importance of Quality5.4.2Identifying Quality5.4.3Total Quality Management5.4.4End of Topic Test - Operational Decisions

Practice questions on Place 3

Can you answer these? Test yourself with free interactive practice on Seneca — used by over 10 million students.

  1. 1
    Which of the following is not a disadvantage of wholesalers?Multiple choice
  2. 2
    Features of wholesalers:True / false
  3. 3
    Why can wholesalers lead a business to have worse customer service?Multiple choice
  4. 4
    Which of the following is not an example of a retailer?Multiple choice
  5. 5
    Why do businesses bypass wholesalers?True / false
Answer all questions on Place 3

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Place 2

M-Commerce