978-1259709074 Chapter 16 Solutions Manual

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Chapter 16 – Supply Chain and Channel Management Marketing 6th

Answers to End of Chapter Learning Aids

Marketing Digitally

1 Zappos.com, an online shoe seller, has received praise for its stellar supply chain

management. Go to http://about.zappos.com/zappos-story/fulfillment-facility, read the “In the

Beginning,” “Looking Ahead,” and “Customer Testimonial” sections, and see how a shoe

ultimately reaches the customer. How does its fulfillment center enable Zappos to adhere to its

marketing communications message and provide excellent customer service?

Student answers will vary but should include how Zappos responds to customer needs in delivering the

2 The case study for this chapter examines how Zara International, a division of Inditex,

successfully manages its supply chain. Visit Inditex’s Web site (www.inditex.com) and go to

“Sustainability,” then review the company’s commitment to sustainable management, particularly

the section that pertains to its suppliers and the code of conduct for its suppliers. Considering the

discussion in this chapter about strategic relationships, how does Inditex address the factors

necessary for mutually beneficial partnerships, according to its code of conduct?

According to its code of conduct, Inditex will only work with manufacturers who are committed to the same

Marketing Applications

1 Describe marketing channel management by identifying the major activities that it involves.

Identify several ways that marketing channel management adds value to a company’s

offerings, with regard to consumers as well as business partners.

A marketing channel is the set of institutions that transfer the ownership of and move goods from the point

of production to the point of consumption. A marketing channel consists of all the institutions and

1 In what ways can the flow of information be managed in the supply chain? How can the ready

flow of information increase a firm’s operating efficiencies?

Information flows from the customer to stores, to and from distribution centers, to and from wholesalers,

to and from product manufacturers, and then on to the producers of any components and the suppliers of

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Chapter 16 – Supply Chain and Channel Management Marketing 6th

2 Describe how B2B transactions might employ EDI to process purchase information.

Considering the information discussed in Chapter 7 about B2B buying situations, determine

which buying situation (new task, modified rebuy, or straight rebuy) would most likely align

with the use of EDI technology. Justify your answer.

EDI is the computer-to-computer exchange of business documents from a retailer to a vendor and back.

In addition to sales data, purchase orders, invoices, and data about returned merchandise can be

3 What are the differences between the use of a traditional distribution center and one that

relies on cross-docking? Discuss the extent to which one is more efficient than the other,

being sure to detail your reasoning.

After the merchandise is received and checked, it is either traditionally stored or cross-docked. When

merchandise is stored, the cartons are transported by a conveyor system and forklift trucks to racks that

go from the distribution center’s floor to its ceiling. Then, when the merchandise is needed in the stores, a

forklift driver or a robot goes to the rack, picks up the carton, and places it on a conveyor system that

routes the carton to the loading dock of a truck going to the store.

system automatically by sensors that read the UPC or RFID label on the cartons. Cross-docked

merchandise is in the distribution center only for a few hours before it is shipped to the stores.

Merchandise sales rate and degree of perishability or fashionability typically determine whether cartons

are cross-docked or stored. For instance, because Sony’s HDTVs sell so quickly, it is in Best Buy’s

4 Discuss the advantages to a retailer like Macy’s of expending the time and effort to get

merchandise floor-ready at either the point of manufacture or in the distribution center rather

than having retail store staff members do it in the stores. Provide the logic behind your

answer.

Floor-ready merchandise is merchandise that is ready to be placed on the selling floor. Macy’s getting

merchandise floor-ready entails ticketing, marking, and, in the case of some apparel, placing garments on

hangers (or maybe attaching RFID chips). For Macy’s it is essential that products ship in ready-to-sell

5 A just-in-time (JIT) inventory system appears to be an important success factor for retailers

like H&M and Forever 21. Choose a local retailer and examine the advantages and

disadvantages of its use of a JIT system. Do you believe it should use JIT? Why?

A JIT system is an inventory management system designed to deliver less merchandise on a more

frequent basis than traditional inventory systems. Firms get the merchandise just-in-time for it to be used

in the manufacturing of another product, or to sell. The benefits of a JIT system include reduced lead

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Chapter 16 – Supply Chain and Channel Management Marketing 6th

6 Give an example of a retailer that participates in an independent (conventional) supply chain

and one involved in a vertical marketing system. Discuss the advantages and disadvantages

of each.

An independent supply chain is one in which several independent members—a manufacturer, a

wholesaler, and a retailer—attempt to satisfy their own objectives and maximize profits, often at the

expense of other members. A benefit is that neither party feels responsible for the other and there are

7 For each of the following consumer products, identify the type of vertical marketing system

used, and justify your answer: (a) Bertolli pasta sold through grocery stores, (b) Krispy Kreme

donuts sold through franchises, and (c) www.polo.com by Ralph Lauren.

(a) Bertolli pasta sold through a grocery store is an example of an administered vertical marketing

system.

8 Why might a big company like Lenovo want to develop strategic partnerships with locally

owned computer stores? Describe what Lenovo would have to do to maintain such

relationships.

Strategic relationships occur when supply chain members are committed to maintaining the relationship

over the long term and investing in opportunities that are mutually beneficial. Lenovo might want to

9 You are hired as an assistant brand manager for a popular consumer product. One day in an

emergency meeting, the brand manager informs the group that there is a problem with one of

the suppliers and that he has decided to send you over to the manufacturing facilities to

investigate the problem. When you arrive at the plant, you learn that a key supplier has

become increasingly unreliable in terms of quality and delivery. You ask the plant manager

why the plant doesn’t switch suppliers, because it is becoming a major problem for your

brand. He informs you that the troubled supplier is his cousin, whose wife has been very ill,

and he just can’t switch right now. What course of action should you take?

Students’ answers to this question may vary. The brand manager has an obligation to his/her company

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Quiz Yourself

1 All of the following are examples of the value provided by a supply chain in the production of kitchen

stoves except

a. the transportation company gets the stove to the retailer.

b. the retailer educates the customer about product features, and delivers and installs the stove.

c. the product design team develops initial drawings for a new product offering.

d. the stove maker turns the components into the stove.

e. the components manufacturer helps the stove manufacturer by supplying parts and materials.

10 When supply chain members that buy and sell to one another are not in agreement about their goals,

_____ channel conflict can occur.

a. vertical

b. independent

c. competitive

d. horizontal

e. administered

Case Study: Zara Delivers Fast Fashion

1 How does an individual firm like Zara manage a supply chain? How does it get new products

from design to store so quickly?

Zara has set up its supply chain so that stores can respond immediately to customer demand for

merchandise. Zara has factory locations that are close in geographic proximity to the company’s

11 What are some of the ways that Zara’s supply chain management system has helped create

value for its customers? Provide specific examples.

Zara is able to create value for customers in several ways. First, Zara is able to provide customers with a

12 What challenges did Zara’s focus on supply chain efficiency create? Are all such systems

destined to suffer such growing pains?

Zara limits the amount of inventory in stores and produces and ships in small quantities. This sometimes

creates a sense of scarcity among customers. Because Zara is in a fashion business, Zara merchandise

Additional Teaching Tips

This chapter introduces the student to supply chain management. Instructors should tie in the role of the

supply chain to value creation and how it contributes to the marketing effort. Students can understand

how a product gets from point A to the end delivery point but may not understand the role of the

intermediaries in transport and their responsibility to the marketing effort. These factors should be

addressed in teaching the chapter.

Students can find this chapter difficult to fully understand. Showing the DVD for this chapter titled “New

Balance: Managing Supply from U.S. and Overseas” may clarify the role of supply chain management in

the marketing effort.

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Instructors may want to assign students to roles in the distribution channel (manufacturer, warehouse

distributor, truck driver or transport person, wholesale, retailer) and various intermediaries with the

assignment given to them as follows: How does your role add to the marketing effort? This exercise gets

students to think about the connection to “Place,” one of the elements of the marketing mix, to the overall

marketing strategy.

Similar to the last chapter, the instructor may want to review the vocabulary of the chapter by having

students complete story problems surrounding the vocabulary words presented in this chapter.

Connect Activities

Activity Type Learning Objectives 16-

01 02 03 04

New Balance: Managing Supplies for U.S. and

Overseas Video Case X X X

Supply Chain Management Video Case X X X

New Balance: Managing Supplies for U.S. and Overseas

Activity Type: Video Case

Learning Objectives: 16-01, 16-03, 16-04

Difficulty: Medium

Activity Summary: The video case discusses the challenges of managing a global supply chain, as

conducted by New Balance. After the video ends, students are asked questions about the video and

related course concepts.

Activity

Introduction: Most consumers recognize the New Balance brand as one associated with quality

athletic shoes and apparel. What consumers don’t know is that behind the scenes, New Balance is

Concept Review: Every marketing decision is affected by the supply chain. When products are

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Video: The video is presented to the student below the introductory information. The video plays

embedded on the page, after which questions are presented.

Follow-Up Activities

For a fascinating look at a global supply chain, show “Planet Money Makes a T-Shirt” in class and then

discuss it (you could also assign it to be watched outside class and ask students to write about it).

http://apps.npr.org/tshirt/#/title

This is a five-part video, but the videos are very short, with a total length of less than 15 minutes. They

If you are interested in more details, you can listen to the original podcasts, which go beyond supply chain

basics to address questions of global outsourcing:

http://www.npr.org/series/248799434/planet-moneys-t-shirt-project

Supply Chain Management

Activity Type: Video Case

Learning Objectives: 16-01, 16-02, 16-04

Difficulty: Medium

Activity Summary: In this simulated meeting, a retailer and one of her suppliers discuss a problem

that has arisen with a large order. After the video ends, students are asked questions about the video

and related course concepts.

Activity

Introduction: Beth Armstrong owns a sporting goods store for kids in a Northeastern town. When a

500-unit order Beth places online goes awry, she meets with a senior account representative, Bill

Concept Review: Supply chain management refers to a set of approaches and techniques firms

employ to: (1) efficiently and effectively integrate their suppliers, manufacturers, warehouses, stores,

and transportation intermediaries into a seamless value chain in which merchandise is produced and

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Video: The video is presented to the student below the introductory information. The video plays

embedded on the page, after which questions are presented.

Follow-Up Activities

This video offers an opportunity to integrate current and past course material. Ask students to watch the

video again from the perspective of the three service recovery strategies: listen to the customer, find a fair

Making Information Flow and Making Merchandise Flow

Activity Type: Click & Drag

Learning Objectives: 16-04

Difficulty: Medium

Activity Summary: Students are asked to identify different types of information flows in the supply

chain.

Activity

Introduction: When a customer decides to purchase a Sony DVD player at her local Best Buy store,

it triggers action throughout the entire supply chain. It is possible that by the time she leaves the

Concept Review: Supply chain management refers to a set of approaches and techniques firms

employ to: (1) efficiently and effectively integrate their suppliers, manufacturers, warehouses, stores,

Walmart: Pioneer in Supply Chain Management

Activity Type: Case Analysis

Learning Objectives: 16-01, 16-03, 16-04

Difficulty: Hard

Activity Summary: Discusses how Walmart manages its supply chain. Students are asked questions

relating chapter concepts to the case.

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Activity

Introduction: Walmart dominates the retailing industry in terms of its sales revenues, its tremendous

customer base, and its ability to drive down costs and deliver value to customers. Walmart takes pride

Concept Review: Supply chain management refers to a set of approaches and techniques firms use

to streamline the flow of merchandise. Firms with a supply chain management focus strive to

efficiently and effectively integrate their suppliers, manufacturers, warehouses, stores, and

Follow-Up Activity

Assign the following article: http://time.com/money/4182681/walmarts-express-stores-close/

The article explains that Walmart has given up on its “Express Stores” format, which was a smaller store

along the lines of a convenience store.

Understand the Distribution Center

Activity Type: Click & Drag

Learning Objectives: 16-03

Difficulty: Medium

Activity Summary: The student is asked to match distribution center activities to the four major

distribution center functions.

Activity

Introduction: Supply chain management allows firms to recognize and solve distribution problems

that many firms face today. Many retailers use distribution centers to streamline merchandise flow.

Concept Review: Distribution centers are often more advantageous for retailers because of multiple

factors. Distribution centers enable the retailer to carry less merchandise in the individual stores. This

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Follow-Up Activity

Discuss: Distribution centers are discussed in the chapter primarily from the perspective of a center that

provides merchandise to retailers. How would the distribution center for a company like Amazon.com—

that ships products to consumers—differ from one designed to ship merchandise to retailers?

Some possible answers:

Cross-docking will occur less often, since often the cartons that arrive at the distribution center will

Fast Fashion: Efficient Supply Chain Management at Zara

Activity Type: Case Analysis

Learning Objectives: 16-03, 16-04

Difficulty: Hard

Activity Summary: This case describes Zara’s “fast fashion” supply chain. Students answer

questions relating chapter concepts to the case.

Activity

Introduction: In the fast fashion retail business strategy, supply chain management processes serve

to introduce fashionable merchandise rapidly, such that stores can respond immediately to customer

demand for merchandise. This was pioneered by Zara, a global specialty apparel chain located in La

Concept Review: Supply chain management refers to a set of approaches and techniques firms

employ to efficiently and effectively integrate their suppliers, manufacturers, warehouses, stores, and

transportation intermediaries into a seamless operation in which merchandise is produced and

Follow-Up Activity

For the “dark side” of the Zara supply chain, these articles shed some light on concerns about the impact

of “fast fashion” on garment workers and the environment. This is related to the “Planet Money T-Shirt”

video recommended as a follow-up to the New Balance video case.

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http://www.sustainablebrands.com/news_and_views/stakeholder_trends_insights/jennifer_elks/ethical_fas

t_fashion_hm_trying_prove_its_no

http://www.ethicalfashionforum.com/the-issues/fast-fashion-cheap-fashion

Supply Chain: Icebreaker

Activity Type: Video Case

Learning Objectives: 16-02, 16-03

Difficulty: Medium

Activity Summary: This case explains supply chain management for Icebreaker, a New Zealand

clothing company. After the video ends, students are asked questions about the video and related

course concepts.

Activity

Introduction: In 1994, Jeremy Moon founded Icebreaker, a New Zealand–based company that

makes high-tech clothing from merino wool and other natural sources. Icebreaker is now a global

Concept Review: Marketing channel management refers to a set of approaches and techniques

firms employ to efficiently and effectively integrate their suppliers, manufacturers, warehouses, stores,

Video: The video is presented to the student below the introductory information. The video plays

embedded on the page, after which questions are presented.

Supply Chain: How Domino’s Gets Pizza to Plate

Activity Type: Video Case

Learning Objectives: 16-02, 16-03, 16-04

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Difficulty: Medium

Activity Summary: The video explains the hub-and-spokes approach Domino’s uses to manage

delivery of ingredients to its retail outlets. After the video, students are asked questions applying

chapter concepts to the case material.

Activity

Introduction: Domino’s needs an efficient supply chain in order to profitably serve pizza to its large

Video: The video is presented to the student below the introductory information. The video plays

embedded on the page, after which questions are presented.

ISeeIt Video Case: Supply Chain

Activity Type: Video Case

Learning Objectives: 16-01, 16-02, 16-04

Difficulty: Medium

Activity Summary: This video case looks at supply chain issues for a bottled water company.

Activity

Introduction: Marketing channels involve a series of intermediary organizations or individuals who

help move products and services from the manufacturer to the end user. Supply chain management

represents the management of diverse intermediaries and channels including middlemen, brokers,

Video: The video is presented to the student below the introductory information. The video plays

embedded on the page, after which questions are presented.

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