ABSTRACT
This chapter describes concepts and models that apply to products sold through retail channels. These concepts and models call attention to the fact that individual customers evaluate products differently and may place different values on one product over another. Chapter 2 introduced this concept when it described staple and fashion merchandise. Greater value for one product over another takes form in a higher profit margin somewhere in the supply chain-at the retailer, at an original equipment manufacturer (OEM), or perhaps at a supplier of a key component. Even though one partner may enjoy the premium margin, all trading partners benefit to the extent sales of the product are strong because sales represent increased demand at all levels. A key lesson is that supply chain design must be consistent with customer and end-user perceptions of product value.
