Unformatted text preview: Chapter 5
Managing The Supply Chain Learning Objectives
1. Discuss the retailer's role as one of the institutions involved in the supply chain. 2. Describe the types of supply chains by length, width, and control. 3. Explain the terms dependency, power, and conflict and their impact on supply chain relations. 4. Understand the importance of a collaborative supply chain relationship. The Supply Chain Supply Chains: Is a set of institutions that moves goods from the point of production to the point of consumption. LO 1 The Supply Chain The supply chain, or channel, is affected by five external forces: Consumer behavior Competitor behavior Socioeconomic environment Technological environment Legal and ethical environment LO 1 The Supply Chain
A supply chain or channel must perform eight marketing functions: Buying Selling Storing Transporting Sorting Financing Information Gathering Risk Taking LO 1 The Supply Chain Primary Marketing Institutions: Are those channel members that take title to the goods as they move through the marketing channel. They include manufacturers, wholesalers, and retailers. LO 1 The Supply Chain Facilitating Marketing Institutions: Are those that do not actually take title but assist in the marketing process by specializing in the performance of certain marketing functions. LO 1 Institutions Participating in the Supply Chain Exhibit 5.1 LO 1 Types of Supply Chains
Supply Chain Length Supply Chain Width Control of the Supply Chain LO 2 Supply Chain Length Direct Supply Chain: Is the channel that results when a manufacturer sells its goods directly to the final consumer or end user. Examples: Hershy Chocolate, Frame Builder LO 2 Supply Chain Length Indirect Supply Chain: Is the channel that results once independent channel members are added between the manufacturer and the consumer. LO 2 Direct and Indirect Supply Chains Exhibit 5.3 LO 2 Width of Marketing Supply Chain Exhibit 5.4 LO 2 Supply Chain Width Intensive Distribution: Means that all possible retailers are used in a trade area. LO 2 Supply Chain Width Selective Distribution : Means that a moderate number of retailers are used in a trade area. LO 2 Supply Chain Width Exclusive Distribution: Means only one retailer is used to cover a trading area. LO 2 Marketing Channel Patterns Exhibit 5.5 LO 2 Control of the Supply Chain Conventional Marketing Channel: Is one in which each channel member is loosely aligned with the others and takes a shortterm orientation. LO 2 Control of the Supply Chain Vertical Marketing Channels: Are capitalintensive networks of several levels that are professionally managed and centrally programmed to realize the technological, managerial, and promotional economies of a longterm relationship orientation. LO 2 Vertical Marketing Channels Quick Response (QR) Systems: Also known as Efficient Consumer Response (ECR) Systems, are integrated information, production, and logistical systems that obtain realtime information on customer actions by capturing sale data at pointofpurchase terminals and then transmitting this information back through the entire channel to enable efficient production and distribution scheduling. LO 2 Vertical Marketing Channels StockKeeping Units: Are the lowest level of identification of merchandise. PLU price look up for product SKU product identifier for items in stock LO 2 Vertical Marketing Channels Corporate Vertical Marketing Channels: Exist where one channel institution owns multiple levels of distribution and typically consists of either a manufacturer that has integrated vertically forward to reach the consumer or retailer that has integrated vertically backward to create a selfsupply network. Vertical vs. Horizontal LO 2 Vertical Marketing Channels Contractual Vertical Marketing Channels: Use a contract to govern the working relationship between channel members and include wholesalersponsored voluntary groups, retailerowned cooperatives, and franchised retail programs. LO 2 Vertical Marketing Channels WholesalerSponsored Voluntary Groups: Involve a wholesaler that brings together a group of independently owned retailers and offers them a coordinated merchandising and buying program that will provide them with economies like those their chain store rivals are able to obtain. LO 2 Wholesale Sponsored Voluntary Group Wholesale sponsored voluntary groups, such as NAPA, have been a major force in marketing channels since the mid1960s. LO 2 Vertical Marketing Channels RetailerOwned Cooperatives: Are wholesale institutions, organized and owned by member retailers, that offer scale economies and services to member retailers, which allows them to compete with larger chain buying organizations. LO 2 Retailer-Owned Cooperatives Ace, a familiar name in hardware retailing, is an example of a retailerowned cooperative. LO 2 Vertical Marketing Channels Franchise: Is a form of licensing by which the owner of a product, service, or business method (the franchisor) obtains distribution through affiliated dealers (franchisees). LO 2 Franchisors An example of a fastfood retailer as a franchisor is Domino's Pizza. LO 2 Vertical Marketing Channels Administered Vertical Marketing Channels: Exist when one of the channel members takes the initiative to lead the channel by applying the principles of effective interorganizational management. LO 2 Category Management Category Management (CM): Is the process of managing all the SKUs within a product category and involves the simultaneous management of price, shelf space, merchandising strategy, promotional efforts, and other elements of the retail mix within the category based on the firm's goals, the changing environment, and consumer behavior. LO 4 Category Management Category Manager: Is an employee designated by a retailer for each category sold in their store. The manager leverages detailed knowledge of the consumer and trends, detailed pointofsales information, and specific analysis provided by each supplier to tailor a store's offerings to the specific needs of each market. The manager works with the suppliers to plan promotions throughout the year. LO 4 ...
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- Spring '08
- Marketing, supply chains, Vertical Marketing Channels