managing value chain relationships

7/30/2019 Managing Value Chain Relationships

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STRATEGIC MARKETING & PLANNING


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Directly concerned with the creation ordelivery of a product or service.

Activitiesthatfacilitatetheprimaryactivities.


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Margin or profit results from:

Managing the linkages betweenactivities &

Delivery of products & services at aprice above the cost of all activities.

Linkages are flows of information,goods & services, as well as systems &processes involved.


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Interrelated, interdependent institutions

& agencies.functioning as a system ornetwork.cooperating in their efforts.

to produce (for) & distribute goods to

the end user.


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1. Developingchannels of distribution,based on strategic considerations ofefficiency & effectiveness &

2. Managing channels of distribution, foroptimal impact, whilst fully aligning

them with the changing needs ofcustomers & markets.


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Buying & selling becomes easy: fewerintermediaries to sell to;

Transportation: less time to market;

Financing: more regular cash-flow;

Processing & storage: holdinginventory, breaking down into order

quantities; Advertising & sales promotion: better

communication & execution ofpromotions;


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Pricing: Better management of marketprice;

Reduction of risk: lower cost ofinsurance, return-of-goods policy;

Personal selling: efficient sales,information & support role;

Communications: quick information

flows/ feedback; Servicing & repairs network: facilitates

network for durable/ technology

products.


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An American multinational information

technology corporation headquartered

in Palo Alto, California, United States

that provides products, technologies,software, solutions & services toconsumers, small & medium-sized

businesses (SMBs) & largeorganizations, including the public &private sectors.


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The strategy was a big success! SO what was the learning?

1. In the technology business in particular

partnering with competition is NOT aNO-NO!

2. A good distribution network creates

strongcompetitive advantage.3. Customer value requirements must

prevail over all considerations inbusiness.


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1. What Buyers expect:

Amount & frequency of purchase, Assistance needed, Access to technology/Internet: Move

from selling A product in a box to

selling superior brand experience.


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Selecting channel type:

a) Conventionaltypical grocery.b) Vertical Marketing System:

1. Ownership VMS: more control, lessadaptability - Sony Sweets.

2. Contractual VMS: formal arrangementssuch as franchising - KFC.

3. Administered VMS: no ownership, butadministrative control e.g. DeBeersdiamonds.

4. Relationship VMS: Collaboration betweencompanies - IBM, Intel & Dell promotingLinux.


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Today the Virgin empire spans some 360

companies. Branson instinctively knewhow to differentiate his brand. Bransonwas able to adapt, change, and takeadvantage of new opportunities

because he sold an experience.


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When I asked Hsieh what Zappos stands for,

he never mentioned the physical productsthat Zappos sells - shoes and clothes.Instead, he answered "happiness." Withouta hint of hesitation, Hsieh suggested that

Zappos could be running an airline in 20years. I can't forecast whether Zappos will turn into

a Virgin type of enterprise, but by promotingan experience - in this case, the joycustomers feel when they deal with thecompany - Hsieh is setting up the brandfor success should new opportunitiesbecome available.

managing value chain relationships

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