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Supply Chains And The Value Delivery Network

Producing a product or service and making it available to buyers requires building relationships not only with customers but also with key suppliers and resellers in the company’s supply chain.

This supply chain consists of upstream and downstream partners.

Upstream

from the company is the set of firms that supply the raw materials, components, parts, information, finances, and expertise needed to create a product or service. Marketers, however, have traditionally focused on the downstream side of the supply chain—the marketing channels (or distribution channels) that look toward the customer.

Downstream

marketing channel partners, such as wholesalers and retailers, form a vital link between the firm and its customers.

Channel Behavior And Organization

Distribution channels are more than simple collections of firms tied together by various flows. They are complex behavioral systems in which people and companies interact to accomplish individual, company, and channel goals.

Some channel systems consist of only informal interactions among loosely organized firms. Others consist of formal interactions guided by strong organizational structures. Moreover, channel systems do not stand still—new types of intermediaries emerge and whole new channel systems evolve.

Channel Design Decisions

Like everything else in marketing, good channel design begins with analyzing customer needs. Remember, marketing  channels are really customer value delivery networks .

Marketing channel design calls for:

  • 1.analyzing consumer needs,
  • 2.setting channel objectives,
  • 3.identifying major channel alternatives, and
  • 4.evaluating the alternatives.

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