Page 395 - Foundations of Marketing

362 Part 5 | Distribution Decisions

Technology has improved supply-chain management capabilities globally. Advances in
information technology, in particular, have created an almost seamless distribution process for
matching inventory needs to manufacturer requirements in the upstream portion of the supply
chain and to customers’ requirements in the downstream portion of the chain. With integrated
information sharing among chain members, fi rms can reduce costs, improve service, and pro-
vide increased value to the end customer. Information is a crucial component in operating
supply chains effi ciently and effectively.
Demand for innovative goods and services has increased and changed over time, and
marketers have had to learn to be flexible and responsive to these demands in order to
meet the changing needs of customers through developing and distributing new products
and modifying existing ones. Suppliers provide material and service inputs to meet cus-
tomer needs in the upstream portion of the supply chain. Supply-chain managers can utilize
data available through improved information technology in order to gain knowledge of a
firm’s customers, which helps to improve products in the downstream portion of the supply
chain. Firms now understand that managing the entire supply chain is critically important
in ensuring that customers get the products when, where, and how they want them. In fact,
supply-chain management is one of the industries poised for strong future growth because
of the increasing importance of getting the right products where they need to go safely and
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on time. Amazon has set the standard for supply-chain management—offering customers
nearly anything they can imagine at low prices, through a user-friendly website that features
product reviews and ratings, perks like offering a variety of shipping options, and an easy
return policy. Many companies have struggled to compete with and adapt to such a large
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and flexible competitor.
In ensuring an efficient supply chain, upstream firms provide direct or indirect input
to make the product, and downstream firms are responsible for delivery of the prod-
uct and after-market services to the ultimate customers. To ensure quality and customer
satisfaction, firms must be involved in the management of every aspect of their supply
chain, in close partnership with all involved upstream and downstream organizations.
Supply-chain management is closely linked to a market orientation. All functional areas
of business (marketing, management, production, finance, and information systems)
overlap with and are involved in executing a customer orientation and participate in
supply-chain management. If a firm has established a marketing strategy based on con-
tinuous customer-focused leadership, then supply-chain management will be driven by
cooperation and strategic coordination to ensure customer satisfaction. Managers should
recognize that supply-chain management is critical to fulfilling customer expectations
and that it requires coordination with all areas of the business. Associating a market ori-
entation with supply-chain management should lead to increased firm performance and
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competitiveness.

LO 2 . Explore the role and THE ROLE OF MARKETING CHANNELS
significance of marketing
channels and supply chains. IN SUPPLY CHAINS

A marketing channel (also called a channel of distribution or distribution channel ) is a
group of individuals and organizations that direct the flow of products from producers to
customers within the supply chain. The major role of marketing channels is to make prod-
ucts available at the right time at the right place in the right quantities. This is achieved
through achieving synergy among operations management, logistics management, and sup-
ply management. Providing customer satisfaction should be the driving force behind mar-
marketing channel A group of
individuals and organizations keting channel decisions. Buyers’ needs and behaviors are therefore important concerns of
that direct the flow of products channel members.
from producers to customers Some marketing channels are direct, meaning that the product goes straight from the
within the supply chain producer to the customer. For instance, when you order clothing online from Abercrombie

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