CAIE IGCSE Business Studies 3.3.3 Place
Practise recommending distribution channels by comparing direct selling, retailers, wholesalers and online routes in case studies.
- Syllabus
- 2027–2029
- Course
- Business 0264
Exam points
- compare retailers, wholesalers and direct selling using control, reach and cost impacts
- justify the best channel by weighing sales volume, customer access and profit margins
3.3.3—Place question 1
[Maximum number: 6]
CFG is a social enterprise. It buys cocoa beans from local farmers and then uses the beans to make chocolate. Being ethical is important to the business. CFG has developed a new chocolate bar. The Marketing Manager plans to use skimming as its pricing method, and retailers as its distribution channel for the new product. He knows there are many legal controls over marketing that might affect a business.
Explain one advantage and one disadvantage to CFG of using retailers as its distribution channel for the new product.
Advantage:
Explanation:
Disadvantage:
Explanation:
Award 1 mark for identification of each relevant advantage/disadvantage (max 2).
Award 1 mark for each relevant reference to this business (max 2).
Award 1 mark for each relevant explanation (max 2).
Points might include:
Advantages:
- Producers can sell in large quantities to retailers [k] increasing revenue [an] from its new product [app]
- Reduced costs (compared to selling direct to consumers) [k] increasing profit margin [an] in this social enterprise [app]
- Retailer shares the cost of holding inventory [k] lowering expenses [an]
- Retailers will promote the product [k] reducing the cost of promotion/increasing sales [an]
- Access wider range of customers [k]
Disadvantages:
- No direct contact with consumer [k] about its chocolate bar [app] so may not adapt to changing needs [an]
- Final price (paid by consumer) is often high [k] so may be uncompetitive [an]
- Retailer takes some of profit away from the producer [k]
- Producer loses some control of marketing mix [k]
- Retailers usually sell competitors' products as well [k]
Other appropriate responses should also be credited.
To use words from the stem as application, the reference must be appropriate (i.e. make sense) in relation to the point being made.
The following words are likely to be appropriate for this question:
- Social enterprise
- Cocoa beans
- (Make) bars of chocolate
- Ethical
- (Local) farmers
- Legal controls over marketing
Other appropriate responses can be credited.
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