CHAPTER 5: RETAIL CHANNEL BEHAVIOR

Question 1

*What are the external forces that need to be considered when managing the supply chain?

Answer 1

(1) Socio-cultural environment
This refers to the behaviour of the target market involved; whether the demand for such a product and /or services are really sought after by this group of consumers.

(2) Competitive environment
This refers to the level of competition observed within the identified industry as well as the target market sector.

(3) Economic environment
This refers to an environment in which the infrastructure is fully developed and supported by advanced technology that triggers a positive and robust supply chain process within the industry concerned.

(4) Technological environment
This refers to the fact that whether the market is financially ready to embrace the new technology, product and or services that are in the marketplace.

5) Political-legal environment
These external forces cannot be completely controlled by the retailer or any other institution in the supply chain, but they need to be taken into account when retailers make decisions.

Question 2

Define a supply chain or retail channel.

Answer 2

A supply chain process or channel involves moving goods from one point of production to another point of consumption. This institution is very important because it is interdependent with the various channel members involved along this chain.

Question 3

*Explain the marketing functions in a supply chain.

Answer 3

• Buying
• Selling
• Transporting
• Storing
• Standardizing and Grading
• Financing
• Risk-taking
• Information

Question 4

Describe the different types of supply chain/ channel members.

Answer 4

Channel members refer to the various groups of people or organizations involved in bringing goods or services from one point or another.

For example :
- Raw materials
- Suppliers
- Manufacturers
- Distributors or wholesalers
- Retailers

Question 5

What are the 2 categories of marketing institutions?

Answer 5

(1) Primary marketing institutions :
Supply chain members that take title to the goods. These include manufacturers, wholesalers, and retailers.

(2) Secondary (Facilitating) marketing institutions:
Those that indirectly assist in the marketing process by specializing in the performance of certain functions. These include agents/ brokers, financial institutions, market researchers, transporters, advertising agencies, warehouses, and insurers.

Question 6

Explain the management of retail information flow via technology

Answer 6

Information technology refers to the technical side of an information system that includes hardware, software, networks, and other devices.

An information system (IS) collects, processes, stores, analyzes, and disseminates information for a specific purpose.

An application program are designs to support specific task or business process and other application program.

It has been shown that IT does support the supply chain, including the internal supply chain, the upstream and downstream flows. This is further discussed as follows:

• Supporting the internal supply chain involves transaction processing systems and other corporate-wide (enterprise-wide) information systems, covering all of the functional information systems .
• The major IT support of the upstream supply chain (between a company and its suppliers) is to improve procurement activities and relationships with vendors.
• IT supports customer relationship management (CRM) activities, such as providing a customer call centre, and supports order taking and shipments to customers.
• Radio frequency identification (RFID) is an example of technology that uses electronic tags (chips) instead of barcodes to identify objects/items.

Question 7

What are the behaviors and attitudes that help to facillitate channel collaboration.

Answer 7

The retailer must understand the principal concepts of inter-organizational management; the management of relationships between organizational entities (which involves the concepts of dependency, power, conflict); and managing cooperative relations.

Three major sources of conflict between retailers and their suppliers:
- Differing perception
- Incompatible goals
- Potential disagreements

Channel collaboration can be facilitated by three important types of behaviors and attitudes:
- Mutual trust
- Two way communication
- Solidarity

Question 8

Explain the implication of channel members to retailers.

Answer 8

It will benefit the retailers in terms of loyalty, long-term relationship, reduced operational costs, credit terms duration and also purchasing in small quantities at a cheaper rate.