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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.