Costs and benefits of distribution methods
Direct selling
This is when the product goes directly from the manufacturer to the consumer. There are different methods of Where sellers contact potential buyers directly without having middlemen buying their goods and then selling them on to consumers. including:
- mail order
- e-commerce
- direct mail
- personal selling
| Costs | Benefits |
| Increased costs due to advertising, storing stock and administration | Products can be tailored to the consumers specific requirements |
| Time and cost incurred in organising product delivery | Cuts out the 鈥榤iddle men鈥 which increases profits for the manufacturer |
| Manufacturer has more control over how the product is marketed |
| Costs | Increased costs due to advertising, storing stock and administration |
|---|---|
| Benefits | Products can be tailored to the consumers specific requirements |
| Costs | Time and cost incurred in organising product delivery |
|---|---|
| Benefits | Cuts out the 鈥榤iddle men鈥 which increases profits for the manufacturer |
| Costs | |
|---|---|
| Benefits | Manufacturer has more control over how the product is marketed |
Mail order. This is when goods are ordered though a catalogue.
| Costs | Benefits |
| Catalogues and advertising can be expensive | Customers can use credit facilities |
| Can incur high levels of bad debt | Money is saved on shop rental |
| High level of returns | Customers can shop from home |
| Costs | Catalogues and advertising can be expensive |
|---|---|
| Benefits | Customers can use credit facilities |
| Costs | Can incur high levels of bad debt |
|---|---|
| Benefits | Money is saved on shop rental |
| Costs | High level of returns |
|---|---|
| Benefits | Customers can shop from home |
E-commerce. This involves the buying and selling of products over the internet.
| Costs | Benefits |
| Time delay between order and delivery | Customers can access goods 24/7 |
| Customers unable to try/see goods before purchase | Allows companies to access customers in different countries |
| Can be time consuming and expensive to create an attractive web site | Money is saved on shop rental and overheads |
| Costs incurred on delivery and return | Customers can shop from home |
| Credit card security issues | A wide range of goods can be shown on the company website |
| Costs | Time delay between order and delivery |
|---|---|
| Benefits | Customers can access goods 24/7 |
| Costs | Customers unable to try/see goods before purchase |
|---|---|
| Benefits | Allows companies to access customers in different countries |
| Costs | Can be time consuming and expensive to create an attractive web site |
|---|---|
| Benefits | Money is saved on shop rental and overheads |
| Costs | Costs incurred on delivery and return |
|---|---|
| Benefits | Customers can shop from home |
| Costs | Credit card security issues |
|---|---|
| Benefits | A wide range of goods can be shown on the company website |
Direct mail. This is when a company posts letters or advertising leaflets to consumers with details of their products.
| Costs | Benefits |
| Very low response rate as many customers will perceive leaflets as junk mail | Specific market segments can be targeted directly |
| Costs | Very low response rate as many customers will perceive leaflets as junk mail |
|---|---|
| Benefits | Specific market segments can be targeted directly |
Personal selling. This is when a sales person will come to your door or sell to you over the phone.
| Costs | Benefits |
| High staffing and administration costs | Allows for the product to be demonstrated to the customer |
| Costs | High staffing and administration costs |
|---|---|
| Benefits | Allows for the product to be demonstrated to the customer |