Question

Pinkor is a retail chain selling children´s clothes on the market stalls and small shop that it owns. It buys most of its products from wholesalers. Mr. Rakesh, the owner, says: “I think we should start to sell by mail order on the internet and close some of our shops to save money”.

a. Define “distribution channel”

b. Identify two disadvantages to Pinkor of buying supplies from wholesalers

c. Outline two benefits to Rakesh of selling through several small shops rather than by mail order and online

d. Explain two factors which affect Pinkor´s choice of distribution channel

e. Do you think Rakesh is right to want to change the channel of distribution the business uses? Justify your answer.

Answer 1

a) Distribution channel refers to a network used to get a product from the producer or manufacturerto the end user or consumer.

b)1.Quantity -lf pinkor wants to buy only one or two items it won't be possible.whole salers won't allow small purchase.

2 competitive pricing: since the products have been bought from wholesalers , setting prices will be difficulty.pinkor will have to compare its prices with its competitors in the market first.

c)1.Less competition: Retail selling will have Less competition.ln the case of online selling,there will be high instant competition

2.More customer contact :it's said that the more you communicate,the more you sell.Retail selling will enable the seller to personally interact with the customers.

d) consumer preferences:with the advancement of technology, consumer attitude towards buying is constantly evolving.They now prefer to shop using their mobile phone rather than going to a store.

Costs: cost is a major factor in Distribution.A seller will always try to minimise his cost of setting up a distribution channel .

e) Rakesh has decided to choose selling via online .lt will have the following benefits

*Cost of setting up an online distribution channels is low

*There store is opened for 24 hours a day

*There is greater sales reach and customer accessibility.

*Risk is less than selling through retail shops

So the decision can be justified to a great extent.