Page 97 - Marketing the Basics 2nd

product and placeMent 89
The implications of deciding which marketing channel to use are clear and once a distribution system is established, it cannot be changed easily. However, if the right channels are chosen, the distribution system becomes a source of competitive advantage because the seller has privileged access to their target markets.
For the remainder of this chapter, we inspect the ins and outs of placement. We will illustrate the need for intermediaries, their role in the exchange process and how to manage the relationship between manufacturers and intermediaries. We then show how a manufacturer creates a marketing channel, analyse the relationship between the manufacturer and its intermediaries, and how to manage the marketing channel.
THE SUPPLY CHAIN VIEWED AS A VALUE NETWORK
Before we begin our discussion, we must take a step back and address a few issues regarding the supply chain. Traditionally, the supply chain has been regarded as a linear process: raw materials are extracted and refined, then sent to a manufacturing plant where it is machined into a product, then the product is either sold to the consumer directly or through a series of intermediaries. In this ‘make and sell’ perspective, there is little to no coordination in the supply chain between members that are not adjacent to each other in the process. Coordinating structural, technological, contractual and behavioural issues in the entire system is problem- atic to say the least. Because of such difficulties, historically, product offerings were not built according to customer need, but rather on maximizing short-term profits based on the production or distribution capabilities of the upstream and downstream parties.
Marketers believe that a linear supply chain perspective should be bent into a shape more reflective of the business environment. Conceptually, regarding the supply chain as a process in which a resource undergoes a series of transformations is true, but such a perspective fails to capture the underlying dynamics driving the system. Business processes are better represented by flows of infor- mation, cash, people and physical products moving in, out and between the various members of the marketing channel. These