Price, product, promotion and place (4Ps): retailers

The idea

A retailer is an intermediary that buys goods from a producer or wholesaler and sells them to final customers, usually in small quantities from a shop or website. Retailers provide place utility: they hold stock in convenient locations, offer choice across many brands and let customers buy single items rather than bulk packs. For a producer, selling through retailers gives access to potential customers who already shop there, but the retailer takes a margin, so the producer receives less per unit and has less control over how the product is displayed or priced. Retailers range from small independents to national chains and online sellers. Their scale affects the producer's reach: a national chain can place a product in front of many customers, while an independent serves a local market.

What earns the marks

• Defines a retailer as a business that buys goods and sells them to final customers, typically in small quantities.
• Explains the retailer's role in breaking bulk, holding stock and offering customers a convenient range of products in one place.
• Explains that selling through retailers gives a producer access to the retailer's existing customers and locations.
• Analyses the cost of using retailers, since the retailer's margin reduces the producer's revenue per unit sold.
• Applies the role of retailers to a context, for example a small food producer gaining shelf space in a supermarket chain.
• Evaluates whether using a particular retailer is worthwhile by comparing extra customer access with lost margin and reduced control.

Common mistakes and how to put them right

• Describing a retailer as a manufacturer.

  Put it right: A retailer buys finished goods and resells them to final customers without making them.

• Saying retailers always sell in bulk.

  Put it right: Retailers typically break bulk and sell small quantities to consumers, while wholesalers sell larger quantities to retailers.

• Ignoring the retailer's margin.

  Put it right: The margin is a cost to the producer and should be weighed against the extra customers the retailer reaches.

Exam tips

• Use the word retailer precisely in answers, and distinguish it from wholesaler and producer where the case allows.
• Support points with the named retailer or type of shop in the case rather than writing about shops in general.
• When evaluating, state what the producer gains in customer access and what it gives up in margin or control.