Chapter 16: Supply Chain and Channel Management
Supply Chain Management
is all about getting the product to the customer in the right place and the
right time in the most efficient way possible.
Marketing Channels Add Value:
Convincing wholesalers and retailers to carry new products is difficult.
are firms that buy products from manufacturers and resell them to retailers.
products directly to consumers. Every participant in the marketing channel adds value because it
streamlines what could take a long time in an agrarian economy.
Supply Chain Management Affects Other Marketing Decisions:
, a facility for the
receipt, storage, and redistribution of goods to company stores, may be operated by retailers,
manufacturers, or distribution specialists. Like a distribution center, instead of shipping to stores,
are used to ship directly to customers.
Just-in-time (JIT) Manufacturing
management systems that deliver less merchandise on a more frequent basis than in traditional
Designing Marketing Channels:
Although there are various constraints on marketing channel partners
regarding the design of the best channel structure, all marketing channels take the form of a direct
channel, an indirect channel, or some combination thereof.
Direct Marketing Channel:
Here, there are no intermediaries between the buyer and seller.
Indirect Marketing Channel:
Here, one or more intermediaries work with manufacturers to
provide goods and services to customers.
This is a contractual agreement between a franchisor and a franchisee that allows
the franchisee to operate a retail outlet using a name and format developed and supported by
the franchisor. This would be considered a hybrid of direct and indirect.
Managing the Marketing channel and Supply Chains
: If a marketing channel is to run efficiently, the
participating members must cooperate. Often, however, supply chain members have conflicting goals,
and this may result in channel conflict. There are two types of conflict to keep in mind.
Vertical Channel Conflict:
When supply chain members that buy and sell to one another are not
in agreement about their goals, roles, or rewards.
Horizontal Channel Conflict:
When there is disagreement or discord among members at the
same level in a marketing channel, such as two competing retailers or two competing
Power in a Marketing Channel:
This exists when one firm has the means or ability to dictate the actions
of another member at a different level of distribution. There are several bases of power:
- taking advantage of desperation
- making decisions based on their experience, shutting the other partner out.
- providing or withholding important marketing info.
- enforcing a contractual agreement between the two partners.