Chapter 5, Retailing

Managing The Supply Chain

Apple Lifts Veil on Far-Flung Supply Chain, Exposes Flaws

Polka Dots Are In? Polka Dots It Is! How Zara gets fresh styles to stores insanely fast—within weeks

Supply Chain, Channel of Distribution, interchangable terms.

Five external forces:

1. Consumer behavior

2. Competitor behavior

3. Socioeconomic environment

4. Technological environment

5. Legal and Ethical environment

The eight marketing functions that always must be performed:

• Buying
• Selling
• Storing
• Transporting
• Sorting
• Financing
• Information gathering
• Risk taking

Primary marketing institutions (take title), manufacturers, wholesalers, retailers

Facilitating marketing institutions (specialists)

Types of Supply Chains, length versus width.

Book example:

Publisher > consumer

Publisher > retailer (local tack shops and independent bookstores)

Publisher > wholesaler (Pathway Book Services) > wholesaler (Ingram Not Your Father's Ingram, Baker & Taylor, Indigo) > book retailers & libraries

Publisher > specialty wholsesaler (Western International) > tack stores

WSJ: Fakes Infiltrate Injectable Drugs

• Exclusive distribution (Rolex, Rolls Royce)
• selective distribution (shopping product, smartphone)
• intensive distribution (convenience product, toothpaste)

• Conventional Marketing Channels versus
• Vertical Marketing Channel System
  • Corporate (Apple, while also participating in administered VMS)
  • Contractual (Franchise: International Franchise Association)
  • Administered (Walmart)

Franchise is an example of a contractual Vertical Marketing System.

Managing Retailer and Supplier Relationships.

• Dependency: when one channel member relies on another to perform marketing functions.
• Interdependent, when two channel members depend on each other
• Power, can be Reward, Expertise, Referent, Coercive, Legitimate, Informational

Conflict stems from variety of reasons.

• Perceptual incongruity
• Goal incompatibility (Channel Conflict, Dual Distribution for example)
• Domain disagreement (diverter, gray market, free riding, showrooming)

Apple, Dual Distribution, but has legitimate power (brand) and VMS.

Integration of channels is key if adopting multiple channels, but this is challenged by ownership of channel members.

WSJ: Pharmacies Swept Into Drug Wars

Category Management