1. Successful value delivery requires understanding the entire supply chain and distribution channels that connect suppliers, manufacturers, firms, and customers. 2. Goods and services reach the final consumer through marketing channels, which can include merchants, agents, facilitators, and various sales, delivery, and service channels. 3. Firms must make strategic decisions around channel design, including lot size, delivery time, product variety, and services provided to best meet customer needs and objectives while managing constraints.

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

6. Hybrid Channels

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?