Price, product, promotion and place (4Ps): Students should be familiar…

The idea

Place decisions determine how a product travels from producer to customer. A channel of distribution is the route taken, and each route reaches a different set of potential customers. Direct channels sell straight to the buyer, for example a farm shop or a manufacturer's own website; the business keeps more of the selling price but must attract every customer itself. Indirect channels use intermediaries: a retailer buys from the producer and sells to the public, while a wholesaler buys in bulk and supplies many small retailers. Longer channels widen access to potential customers because existing shops already attract footfall, but each intermediary takes a margin, so the producer's share of the final price falls. Channels may also combine, such as selling online and through retailers. Choosing well means matching the channel to the target market, the product and the business's resources.

What earns the marks

• Defines a channel of distribution as the route a product takes from producer to final customer, and identifies the main options: direct selling, retailer, wholesaler plus retailer, and online or mixed channels.
• Explains that each channel gives access to a different group of potential customers, so the choice affects the size and type of market reachable.
• Analyses the trade-off between reach and control: intermediaries widen access to customers but reduce the producer's control over pricing, presentation and customer relationships.
• Explains the effect of intermediaries on the producer's revenue per unit, since each intermediary in the chain takes a margin from the final selling price.
• Applies channel choice to context, for example a small producer using a wholesaler to reach many independent shops it could not supply itself.
• Evaluates a channel decision by weighing wider access to potential customers against lower margins and less direct customer contact.

Common mistakes and how to put them right

• Treating distribution as only physical transport.

  Put it right: Distribution is about the route and the intermediaries involved in reaching customers, not just delivery.

• Assuming more intermediaries always means more profit.

  Put it right: Extra intermediaries widen access but each takes a margin, so the producer's share of the final price usually falls.

• Confusing wholesalers with retailers.

  Put it right: A wholesaler buys in bulk and supplies retailers, while a retailer sells directly to the final customer.

Exam tips

• Name the specific channel in the case, such as selling through a national retailer, rather than writing generally about advertising or delivery.
• Link each channel to potential customers: state which group of buyers it reaches and why that matters for the business in the case.
• For evaluation, compare at least two channels on reach, cost or margin, then give a justified recommendation for the business described.