Role of Marketing• Felton (1959) defined the marketing concept as “a

corporate state of mind that insists on the integration and coordination of all the marketing functions, which, in turn, are melted with all other corporate functions, for the basic purpose of producing maximum long range corporate profits.

• Concept consists of three pillars

• Customer focus

• Coordinated Marketing

• Profitability

Marketing Concept(1) Customer focus

(2) Coordinated Marketing(3) Profitability

Philosophical Foundation of a

MarketingOrientation

PhilosophicalFoundation of RelationshipMarketing

CompatiblePhilosophy forSupply Chain Management

The Impacts of Marketing Concepts

Marketing Concept and Orientation

• It influences management of a firm• It impacts interfirm relationship and supply chain• Guides firms to look for customer satisfaction• Interfunctional coordination within and among supply

chain partners• Market orientation is the implementation of marketing

concept• Generation of market intelligence• Dissemination of market intelligence across departments• Responsiveness to market intelligence

Interfirm Relationships

• Develop commitment, trust and cooperative norms with firms and distributors

• Relationship influences organizational learning• Benchmarking, forming joint ventures,

networking, developing strategic alliances and working with lead customers

• Relationships seek to acquire products, skills,technologies and knowledge

Supply Chain Management• Market orientation plays a pivotal role in implementing SCM

• Market orientation produces and stores valuable market information that is needed for building and enhancing supply chain

• Firms have information about customers, suppliers, competitors, sociopolitical environments,technological trends useful for supply chain

• Successful SCM requires two way sharing of information among SC partners

• If supply chain partners know more about each party in the supply chain, the information helps each party understand the other’s problems

• It facilitates relationship marketing and could promote implementation of SCM

Relationship Marketing

• It is built on the foundation of trust• Mutual benefit to participating parties• Can earn financial benefit or competitive

advantage• Customers can be effectively communicated as to

what they can expect and get• Cooperation between marketing and operations

Internal marketing is needed to convince other functions

Impacts of Relationships Marketing

• International coordination should be reinforced• Relationships marketing requires redefining the

responsibilities of each function • It requires restructuring the organization system• It improves firm’s marketing effectiveness• Marketing begins a firms resources from outside

the firm to satisfy customer needs• Customers are motivated to build and maintain

relationships with the suppliers to reduce risk• Relationships marketing improves financial

benefits

RelationshipMarketing

(1)developing(2)Maintaining,and(3)enhancing close

inter-firmrelationships

Management of a Firm

Supply Chain Management

Close long term inter-firm Relationships

Inter-firm Cooperation

Inter-functional coordination

Redefining the responsibilities of each function

Marketing effectiveness

Obtaining the ResourcesOutside the firm

Reducing the market risks

Financial benefits

Restructuring theorganization

The Impacts ofMarketingOrientation

The marketing Concept A Marketing

Orientation

RelationshipMarketing

Supply Chain Management

Differential AdvantageAn Integrative Model of the Marketing

Concept, a Marketing Orientation, Relationship Marketing, and Supply Chain Management

Role of Sales Function in SCM• The supply chain sales force should be involved with any

supply chain activity that goes beyond organizational boundaries

• Sales force should have cooperative behavior ( Joint planning, evaluation,demand forecasting)

• Sales force should mutually share information• Sales force should nurture SC relationship• Sales force should have internal logistics expertise • Sales force should have external (SC partner)expertise• Sales force should have tactical logistics expertise• Sales force should have strategic logistics expertise

Changing Role of Sales Person

• Traditional role of personal selling does not fit with SCM• Traditional role of sales person is likely to be counter

productive• Connection between traditional role and SCM does not exist• Personal selling, sales management philosophies and

techniques to become better aligned with SCM• Sales people should be consultants to SC partners and not

focus solely on selling• Sales and logistics managers work together to solve supply

chain partner’s problems• Sales and logistics should effectively communicate in SC

Sales Person Logistics ExpertiseExternal (SCM Partner) Expertise Internal (company) Expertise

Tactical Expertise SC Partner needs and requirements for Company logistical processes and systems

On time delivery On time service rates

Inventory level Fill rates

Order processing Packaging design

Order cycle lead times Order processing systems

SC partner strategic goals and objectives Information Systems

Strategic Expertise Current state of logistics performance Company strategic logistical capabilities

SCM partner’s logistics goals and objectives EDI Capabilities

What do they need from a supplier to reach their logistical goals and objectives

JIT capabilities

SC strategic goals and objectives VMI programes

Logistics strategic capabilities and limitations

IntrafirmR&D

Traditional R&DNew Product Development

Cycle timeParallel development

Cross- functionalIntegration

Integrated Product Development

InterfirmR&D

Customer Involvement

SupplierInvolvement

Supply Chain R&D

GlobalizationPostponement

Speed to MarketFlexible New Product

Development

R&D Supply Chain Model

Intrafirm R & D

• Traditional R&D- Managing at science level serves two strategic purposes (a) Developing and controlling intellectual property (b) Interfacing with government R&D support programs

• R&D in Revenue-dependency context-R&D Activities are integrated into the operations of the firm. Internal clients buy research services from R&D

• R&D for total quality management from life cycle perspective (all stages of PLC)

• R&D used for exploring new markets and maintain constant flow of new products

• R&D to analyse allocation of resources in (a) basic research (b) applied research © development

• Firms which are highly innovative go for basic research- pharma. (38% for basic research)

New Product Development• Break- through product

• The “it’s new for us” product

• The new improved, next generation product

• The line extension product, and

• The three Rs ( repackaged, repositioned, recycled)

• Innovation

• Radical innovation- the market is unfamiliar with the product class and technology

• Routine innovation- The market is familiar with the product class but the technology is new

• Market modification-The technology is well known but users are unfamiliar with the product or,

• Product modification- Neither the market nor the technology is new

Cycle Time

• Product development cycle time for a new product is the elapsed time from idea generation to product launch

• Increased competition requires less cycle time• Rapid rate of technological change• Consumer demand for new product requires less

cycle time • Shortened length of product life requires less cycle

time • Reducing cycle time or speed to market are critical

to increase chances of success of new products

New product Development

• Parallel development-concurrent engineering can be used for NPD to reduce cycle time

• Cross Functional NPD-By working closely with R&D by other functions, product can be better produced

• R&D and Marketing- This helps in capturing and meeting customer requirements

• R&D ,Marketing and Manufacturing- This increases speed to market , cycle time reduced

Integrated Product Development

• Reduction in product development cycle time

• Avoidance of costly future redesigns

• Reduction in duplication of efforts

• Better communication and dialogue

• More efficient operation and higher productivity

• Overall cost savings

• Avoidance of product recalls

• Lower maintenance costs

• More reliable products

• Better customer satisfaction

• Improved bottom line earnings

R&D,Marketing,Manufacturing and Logistics

• 45% of US manufacturers handle NPD without involvement of major industrial units

• R&D being expensive, interfirm R&D reduces cost

• Including suppliers and customers in R&D reduces costs

• Many products fail to produce economic returns because they fail to meet customer requirements

• Include expertise of suppliers of design, manufacturing,R&D etc.

Supply Chain R&D• Developing relationships with R&D groups from firms along the

supply chain leads to increased NPD success

• Information is shared among the partners in supply chain so that there is a benefit to all these partners

• Balance between global and local requirements should be achieved

• Globalization has dispersed R&D activities to leverage capabilities

• As companies become more supply chain and globally oriented R&D needs to be managed within a supply chain context

• Integrated global laboratories use market information , external sources of technology, company’s technical resources

• In postponement, concept of designing a product such that it is possible to delay differentiation of the product until customer demand for the specific end product is known

Supply Chain R&D contd..• New product architecture is developed such that postponement is

possible inexpensively

• R&D should design a product that can be customized

• Postponing the final product configuration increases the chances that the product closely fits the end customer needs

• Speed to market – Minimize time to market and meet customer needs

• It can overrun to slower competitors and get more market share

• Having a flexible NPD process enables the supply chain to respond quickly to changing needs of customer

• It incorporates changing customer requirements and evolving technologies for that and testing alternative designs