Professional Documents
Culture Documents
Value Chain Strategy
Value Chain Strategy
PIERCY
8/e
McGraw-Hill/Irwin
10-2
Chapter Ten
Value Chain
Strategy
McGraw-Hill/Irwin
10-3
Value Chain
Strategy
10-4
Strategic Role of
Distribution
Distribution functions
- buying and selling activities
- product assembly
- transportation
- financing
- processing and storage
- advertising and sales promotion
- pricing
- reduction of risk
- personal selling
- communications
- servicing and repairs
Channels for Services
Direct distribution by
manufacturers
10-5
Illustrative Example:
Internet Impact on
Distribution
E-Government
Computer Kiosks
Agricultural e-commerce
Tele-medicine
10-6
The Marketing
System
Manufacturers and producers
Marketing intermediaries
Agriculture and
raw materials
suppliers
Retailers
Agents-brokers
Wholesalers-distributors
End users
Consumer
Industrial-institutional
Facilitating
organizations
Financial
Transportation
Advertising
Other
10-7
Marketing
Channels
Manufacturers/producers
Agents/brokers
Wholesalers/
distributors
Retailers
Retailers
10-8
Illustrative Example:
Samsung
Distribution by
Manufacturers
10-9
10-10
Complete line
of products
Distribution
by the
manufacturer
Purchases
are
large and
infrequent
Early stages of
product life cycle
Complex product
application
Extensive
Small number of
purchasing
geographically
Supporting process
concentrated
services are
buyers
required
10-11
Illustrative Example:
Retail Initiatives by
Manufacturers
Apple Computer
To educate consumers about computers and
music players
10-12
Channel of
Distribution Strategy
Types of distribution
channel
Distribution intensity
Selecting the
channel strategy
Strategies at
different
channel levels
10-13
Conventional
Vertically coordinated
Ownership
Contractual
Administ
ered
Intensive
Selective
Exclusiv
e
10-14
Distribution Intensity
Illustrations
Trading Area
+
+
+
+
+
Exclusive
distribution
Selective
distribution
Illustrations
Cadillac automobiles
Ethan Allen furniture
Revlon cosmetics
Caterpillar equipment
Este Lauder cosmetics
Timex watches
C
++
+++
+
++++
+
++++
++
++++
++
+++
Intensive
distribution
10-15
Design stages
Decision criteria
Identification
of channel
alternatives
Evaluation and
selection of
channel(s) to
be used
Selection
of channel
participants
Intensity of distribution
Access to end users
Prevailing distribution
practices
Necessary activities and
functions
Revenue-cost analysis
Time horizon for
development
Control considerations
Legal constraints
Channel availability
Select the channel
Market coverage
Capabilities
Intermediarys needs
Functions provided
Availability
10-16
Evaluation
Criteria
Manufacturers
Representatives
Company
Salesforce
Market access
Rapid
1 to 3 year
development
$10 million
$20 million
Forecast accuracy
High
Medium to low
Estimated costs
$1 million*
$2.4 million**
10%
12%
Flexibility
Good
Control
Limited
Fair
Good
10-17
10-18
International Channel of
Distribution Alternatives
Home country
Foreign country
The foreign marketer
or
producer sells to or
through
Domestic
producer or
marketer sells
to or through
Open
distribution
via domestic
wholesale
middlemen
Exporter
Importer
Foreign
agent or
merchant
wholesalers
Foreign
retailer
Foreign
consumer
Source: Philip R. Cateora, International Marketing, 7th ed., Homewood, Ill.: Richard D. Irwin, Inc., 1990, 572.
10-19
Efficient Consumer
Response
10-20
Category management
Value pricing replaces promotions
Continuous replenishment and cross-docking
Electronic data interchange
New performance measures
New organizational processes and structures
Internet-based network for supplier-buyer trading
10-21