CHAPTER 16
SUPPLY CHAIN
AND CHANNEL
MANAGEMENT
16-1
Supply Chain and Channel Management
LEARNING OBJECTIVES
LO1
LO2
LO3
LO4
Understand the importance of marketing
channels and supply chain management.
Understand the difference between direct
and indirect marketing channels.
Describe how marketing channels are
managed.
Describe the flow of information and
merchandise in the marketing channel.
16-2
Supply Chain Management
16-3
Marketing Channels Add Value
Reduce number of
transactions
Increase value for
consumers
More efficient and
effective
http://www.youtube.com/watch?v=NeK5ZjtpO-M
16-4
Marketing Channel Management Affects
Other Aspects of Marketing
Fulfilling delivery promises
Meeting customer expectations
Reliant on an efficient supply chain
Courtesy Zara International, Inc.
Courtesy Zara International, Inc.
16-5
Designing Marketing Channels
Direct Channel
Direct Channel
One Intermediary
Direct Channel
Two Intermediaries
Manufacturer
Manufacturer
Manufacturer
Wholesaler
Customer
Retailer
Retailer
Customer
Customer
16-6
Types of Vertical Marketing Systems
Administered
vertical
marketing
system
Contractual
vertical
marketing
system
Corporate
vertical
marketing
system
16-7
Power
Power
Reward
Coercive
Referent
Expertise
Information
Legitimate
16-8
Managing Marketing Channels and Supply
Chains Through Strategic Relationships
Common Goals
Open
Communications
Mutual Trust
Interdependence
Strategic
Relationships
Credible
Commitments
16-9
CHECK YOURSELF
1. What is the difference between an indirect and
a direct marketing channel?
2. What are the differences among the three
types of vertical marketing systems?
3. How do firms develop strong strategic
partnerships with their marketing channel
partners?
16-10
Making Information Flow
through Marketing Channels
16-11
Data Warehouse
Electronic Data Interchange
Photo by Cabela’s
Cycle time
Easily analyzed
and used
Quality of
communications
16-12
Vendor-Managed Inventory
DH Kong/Plush Studios/Getty Images
16-13
CHECK YOURSELF
1. What are the marketing channel links
associated with each information flow?
2. How do marketing channel members use data
warehouses to make decisions?
3. What is EDI and how is it used?
4. Why do some marketing channels use VMI,
while others do not?
16-14
Making Merchandise Flow
Through Marketing Channels
16-15
The Distribution Center
Management of inbound transportation
Receiving and checking using UPC and RFID
Storing and Cross-Docking
Getting Merchandise Floor Ready
Preparing to ship
Shipping to store
ABC News Segment
on a Walgreens Warehouse
16-16
Courtesy Tubular Steel, Inc.
Inventory Management
Through Just-In-Time Systems
Just-in-time (JIT)
Quick response (QR)
Zappos
16-17
CHECK YOURSELF
1. How does merchandise flow through a typical
marketing channel?
2. Why have just-in-time supply chain systems
become so popular?
16-18