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Business Studies IGCSEPDF 115
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Inelastic
(<1)
Type
Elastic (>1)
Manufacturer →
Consumer
Manufacturer →
Retailer → Consumer
Distribution Channel
Explanation
Description
Retailer buys from
producer and sells
to customers.
Direct sale through
company outlets or
online stores.
Demand changes greatly with small
price changes.
Demand changes slightly despite price
changes.
Example:
Luxury watches (inelastic) → Price increase = higher profit.
Snack foods (elastic) → Price cut = higher sales volume.
Advantages
Retailers handle
promotion and
inventory;
convenient for
buyers.
Full profit retained;
full control; quick
delivery.
Business Implication
Raising price increases total
revenue.
Disadvantages
Retailer takes part
of profit; less
control for
producer.
Place refers to how products are distributed from producer to final consumer — i.e., the
distribution channels used.
High delivery and
storage costs; full
promotion burden.
Lowering price increases total
revenue.
3. Place