Your poor girl! What you are describing is a beautiful, textbook description of a "hot spot." A hot spot is the common name for "acute moist pyoderma" which is a type of skin infection.
There are commonly yeast and bacteria living in small numbers on the skin surface. When a dog starts chewing or scratching at one spot, she opens up little scratches in the skin surface, and the yeast and bacteria invade there. The fur stays wet from oozing serum from the scratches, and this keeps the area moist and warm - just the kind of place that bacteria like to grow! They are particularly common on the neck under the collar as the collar keeps the skin and hair wet because it does not 'breathe.' As the bacterial numbers increase, the scratches get infected and ITCHY! The dog scratches more... and soon a large area of red, raw, weeping infection can occur.
More about hot spots:
Treatment involves shaving all the hair in the affected area - which is often quite large. This allows the skin to dry out. Antibacterial washes are used on the skin and antibiotics (usually for 2-4 weeks) are given by mouth. If it is very inflamed and itchy, a short course of corticosteroids would likely be used to give the dog relief and stop her from scratching and thus exacerbating the problem.
You may be able to treat this by washing the area with an antibacterial soap. One example would be chlorhexidine scrub (which you can get at pharmacies off the shelf in Canada and the USA). I suggest people wash small areas of pyoderma 3 times daily for 3 days. Scrub hard to get that scaly, scabby material off it. Rinse well. Pat dry. You can apply corn starch to keep it dry. Then continue to wash twice daily for 4 more days. Watch VERY closely that there are no more patches coming up.
If this is not improving, then you may need to see a vet to get a prescription for antibiotics for your girl!
Good luck with your dog!