Page 201 - DMGT551_RETAIL_BUSINESS_ENVIRONMENT

Retail Business Environment

Notes Self Assessment

Fill in the blanks:
6. A channel of …………………… is defined as the path or route along which goods move
from producers or manufacturers to ultimate consumers or industrial users.

7. …………………….. is fast and economical channel of distribution. Under it, the producer
or entrepreneur performs all the marketing activities himself and has full control over
distribution.
8. ………………………….. is the longest channel of distribution in which three middlemen
are involved.
9. If the customers place order for the product in big lots, ……………… selling is preferred.
10. Effective ……………………… can result in enhanced supplier relations and greater
customer satisfaction through timely deliveries and accurate responses to customer
inquiries.
11. ………………………… between channel members can be influenced by how the channels
are structured.
12. Improved performance of the overall distribution system is achieved through managing
variables as channel structure and channel ……………………..

10.5 Trend towards Consolidation of Distribution Channels

In some industries there has been a noticeable trend toward consolidation of distribution channels.
Through mergers and acquisitions some companies have achieved ownership of two or more
channels of distribution, as when a distributor or wholesaler acquires a retailer. As a result of
this type of consolidation, channel members who are closest to the consumer, such as retailers,
have acquired more control. Historically, it was the manufacturer who invented and controlled
the channels of distribution. Now, end-user dominated channels are replacing those invented
and controlled by the manufacturer. One example has been the explosion of discount outlet
malls, which obtain high-image products directly from manufacturers and sell them at a discount.

Manufacturers have countered that trend by opening historically closed channels of distribution.
That has made the lines of distinction between manufacturers, retailers, and direct-to-consumer
sellers less clear. Manufacturers such as Apple Computer and Nike have opened their own retail
outlets, thus blurring the line that once separated manufacturers from retailers. The distinction
between retailers and direct-to-consumer sellers, or catalogers, has also become blurred as
companies such as Eddie Bauer, Spiegel, and Victoria’s Secret build one brand across both
channels. In addition, some catalog companies such as J. Crew and Lands’ End have opened
retail outlets. The overall result is that there are new channel options for marketers to consider.

10.6 Trends in Supply Chain Management

There are six key trends causing significant impact and change to supply chain design and
performance:
Trend 1 – Demand Planning Sets the Tone: As sources and capacities for manufacturing have
increased, more companies have moved away from focusing efforts on plant-level production
planning and are adopting more of a demand-driven focus of trying to influence and manage
demand more efficiently. Rationalizing what you are best at selling, making and delivering,
and aligning the sales force with that mindset, is critical to adopting a demand-driven model.

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