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What’s Important (interesting?) from
   Part 6, Chapters 15 and 16


  Delivering Value s

       Managerial Marketing
            Fall 2010
Successful Value Delivery
                                Suppliers
 • Look up the supply chain   Manufacturers


                                  Firm


 • Look down the
   distribution chain          Customers
Increased market segmentation can
 help firms reach more customers.

  In Marketing-Speak, how goods and services
  get to the final consumer or user is through a
            MARKETING CHANNEL

  • Merchants - take title and resell goods
  • Agents - act on firms’ behalf, don’t take title
  • Facilitators - airline tickets
Channel Strategies
• Push Strategy: induce intemediaries to
  carry and sell products.
• Pull Strategy: use marketing and advertising
  to induce consumer demand.
Channel Development
• Some firms develop strategies
  for local or regional markets
• Some firms use the same
  strategy everywhere, which can
  be successful but can also cause
  problems.
• Walmart - success and failure
Hybrid Channels
Customer Needs

• Habitual Shoppers - regulars
• High Value Deal Seekers - bargain hunters
• Variety Loving Shoppers - adventurers
• High Involvement Shoppers - high maintenance
Value Networks
-Look through the channels to find
ways to increase value.
-Consider the end user / customer
and work back from there.

-Discover where profit
margins are highest.

-The interface with the customer
is the face of your firm.
Channel Functions and Flows
                         Title, goods
                          Forward Flow

  Suppliers,
                             Firm                   Customers
 Manufacturers
                         Backward Flow

           Orders, returns, end of life take backs


A Firm may require any number of channels
                                     •   Sales Channel

      Manufacturing Firm             •   Delivery Channel

                                     •   Service Channel
One-Level Channel

Manufacturers          Retailer        Customers


        Consider also reverse flow channels
                            “That’s not my job.”

                • Use USPS as one of their channels
                • Use the internet as another
                • User content informs
Channel Design Decisions
•   Lot size; Hertz purchasing
    vs. individual                                Intermediaries:
                                 Objectives and   Exclusive Distribution
•   Waiting / delivery time                       Selective Distribution
                                  Constraints     Intensive Distribution
•   Spatial convenience /
    proximity to goods

•   Product variety found
    through channel

•   Service backup; other                                     $0.01
    services provided by
    channel
Economic Analysis of
               Channel Choices
•   Sales Agent vs. Company Sales Team

•   Principal / Agent Questions


     The Channel is
      the Company
     Channel Power:
    Coercive Power
    Reward Power
    Legitimate Power
    Expert Power
    Referent Power                       $4,032 / sf
Channel Evaluation
Vertical Marketing system:       Horizontal Marketing system:
Firm seeks to have more          Firm seeks to saturate market with
control over interface with      sometimes overlapping channels.
customer.
                                 Disney with their own retail
Southwest                        outlets, plus video sales at
                                 Walmart, other retailers.


          Pitfalls: Dilution and cannibalization
          Channel conflict and competition
Harley Davidson
• Online customers choose a retail store.
  Helps to align goals, and to allow channels
  to supplement each other.
E-commerce supplement
•   Firms increasingly using the internet to
    channels, or to have more control over customer
    interface.

•   Seeking more direct interface, chats with online
    customers, targeted ads, etc.

•   M-commerce
Managing, Retailing,
Wholesaling, Logistics
     Broad Categories of Retailing

• Bloomingdale’s
• Tiffany’s
• Sunglasses Hut
• Walmart
The Retail Environment

• Challenges - differentiation and shelf space
• RFID’s and technology
• Decline of the middle market retailers
• Interesting niches, Trader Joe’s, Whole Foods
• Private Labels, Threat and Opportunity
Wholesaling and Logistics
 • Where do firms add value: wholesalers
   and access to customer information,
   distribution, marketing channels;
   financing and risk; transportation
 • Trend towards vertical integration
 • Logistics and supply chain management
 • Balance of conflicting forces such as
   time vs. cost
Delivering Value s
When is it enough?
Are we just conduits for money to flow through?
What is the price we pay for a constant barrage of
marketing?
Marketing, like Markets, is values-neutral, materially
rewarding those who deliver value

How can we not only deliver value, but also values?
Delivering value

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Delivering value

  • 1. What’s Important (interesting?) from Part 6, Chapters 15 and 16 Delivering Value s Managerial Marketing Fall 2010
  • 2. Successful Value Delivery Suppliers • Look up the supply chain Manufacturers Firm • Look down the distribution chain Customers
  • 3. Increased market segmentation can help firms reach more customers. In Marketing-Speak, how goods and services get to the final consumer or user is through a MARKETING CHANNEL • Merchants - take title and resell goods • Agents - act on firms’ behalf, don’t take title • Facilitators - airline tickets
  • 4. Channel Strategies • Push Strategy: induce intemediaries to carry and sell products. • Pull Strategy: use marketing and advertising to induce consumer demand.
  • 5. Channel Development • Some firms develop strategies for local or regional markets • Some firms use the same strategy everywhere, which can be successful but can also cause problems. • Walmart - success and failure
  • 7. Customer Needs • Habitual Shoppers - regulars • High Value Deal Seekers - bargain hunters • Variety Loving Shoppers - adventurers • High Involvement Shoppers - high maintenance
  • 8. Value Networks -Look through the channels to find ways to increase value. -Consider the end user / customer and work back from there. -Discover where profit margins are highest. -The interface with the customer is the face of your firm.
  • 9. Channel Functions and Flows Title, goods Forward Flow Suppliers, Firm Customers Manufacturers Backward Flow Orders, returns, end of life take backs A Firm may require any number of channels • Sales Channel Manufacturing Firm • Delivery Channel • Service Channel
  • 10. One-Level Channel Manufacturers Retailer Customers Consider also reverse flow channels “That’s not my job.” • Use USPS as one of their channels • Use the internet as another • User content informs
  • 11. Channel Design Decisions • Lot size; Hertz purchasing vs. individual Intermediaries: Objectives and Exclusive Distribution • Waiting / delivery time Selective Distribution Constraints Intensive Distribution • Spatial convenience / proximity to goods • Product variety found through channel • Service backup; other $0.01 services provided by channel
  • 12. Economic Analysis of Channel Choices • Sales Agent vs. Company Sales Team • Principal / Agent Questions The Channel is the Company Channel Power: Coercive Power Reward Power Legitimate Power Expert Power Referent Power $4,032 / sf
  • 13. Channel Evaluation Vertical Marketing system: Horizontal Marketing system: Firm seeks to have more Firm seeks to saturate market with control over interface with sometimes overlapping channels. customer. Disney with their own retail Southwest outlets, plus video sales at Walmart, other retailers. Pitfalls: Dilution and cannibalization Channel conflict and competition
  • 14. Harley Davidson • Online customers choose a retail store. Helps to align goals, and to allow channels to supplement each other.
  • 15. E-commerce supplement • Firms increasingly using the internet to channels, or to have more control over customer interface. • Seeking more direct interface, chats with online customers, targeted ads, etc. • M-commerce
  • 16. Managing, Retailing, Wholesaling, Logistics Broad Categories of Retailing • Bloomingdale’s • Tiffany’s • Sunglasses Hut • Walmart
  • 17. The Retail Environment • Challenges - differentiation and shelf space • RFID’s and technology • Decline of the middle market retailers • Interesting niches, Trader Joe’s, Whole Foods • Private Labels, Threat and Opportunity
  • 18. Wholesaling and Logistics • Where do firms add value: wholesalers and access to customer information, distribution, marketing channels; financing and risk; transportation • Trend towards vertical integration • Logistics and supply chain management • Balance of conflicting forces such as time vs. cost
  • 19. Delivering Value s When is it enough? Are we just conduits for money to flow through? What is the price we pay for a constant barrage of marketing? Marketing, like Markets, is values-neutral, materially rewarding those who deliver value How can we not only deliver value, but also values?