Marketing Channels and Supply Chain Management
Chapter Objectives
• Explain why companies use distribution channels and discuss the functions these channels perform.
• Discuss how channel members interact and how they organize to perform the work of the channel.
• Identify the major channel alternatives open to a company.
• Explain how companies select, motivate, and evaluate channel members.
• Discuss the nature and importance of marketing logistics and integrated supply chain management.
Chapter Overview
This chapter covers the important topics of supply chain management. Supply chains consist of both upstream and downstream partners, including suppliers, intermediaries, and even intermediary customers. The term value delivery network expands on the limited nature of "supply chain." It consists of the company, suppliers, distributors, and ultimately customers who "partner" with each other to improve the performance of the entire system.
The chapter focuses on marketing channels--the downstream side of the value delivery network. A company's channel decisions directly affect every other marketing decision. And because distribution channel decisions often involve long-term commitments to other firms, management must define its channels carefully, with an eye on tomorrow's likely selling environment as well as today's.
Channel members add value by bridging the major time, place, and possession gaps that separate goods and services from those who would use them. Members of the marketing channel perform many key functions, such as gathering and distributing marketing information; promoting products; contacting prospective buyers; matching supply with demand; negotiating final prices; and performing the physical distribution of the goods, financing large purchases, and taking the risk of selling the product.
For channels to work properly, each