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"The Value Chain and Value Network" - Value Chain

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portrays a synthesis of primary and support activities utilized by an organization to design, produce, market, deliver, and support its products.

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"The Value Chain and Value Network" - Supply Chain

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represents all organizations involved in supplying a firm, the members of its channels of distribution, and its end-user consumers and business users. Supplier ->Producer->Wholesaler->Retailer->Consumer

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"The Value Chain and Value Network" - Supply Chain Management

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Coordination of the value-adding flows among the Supply chain entities in a way that maximizes overall value delivered and profit realized. (management of the different entities and their processes)

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"The Value Chain and Value Network" - Value network

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overarching system of formal and informal relationships within which the firm participates to procure, transform and enhance, and ultimately supply its offerings in final form to a market space (in essence the supply chain)

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"The Value Chain and Value Network" - Value Co-creation

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Members of the network combine capabilities according to their expertise and the competencies required for the situation. The aim of the Value network is to co-create value.

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"The Value Chain and Value Network" - Virtual Network

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Companies that manage the processes and brand but farm out the production.

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Channel of distribution

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Interdependent entities that are aligned for the purpose of transferring possession of a product from producer to consumer. A channel is a system of interdependent relationships among a set of organizations that facilitates the exchange process

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Intermediariers

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"middlemen" play a role in the exchange process between producer and consumer.

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Major Types of Intermediaries

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1) Middleman - intermediaries 2)Merchant Middleman 3)Agent 4)manufacturer's Agent 5) Wholesaler 6)Retailer

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"Major Types of Intermediaries" - Middleman

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independent business entity that links producers and end-user consumers

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"Major Types of Intermediaries" - Merchant Middleman

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takes Title, Middleman that buys good outright

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"Major Types of Intermediaries" - Agent

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negotiates purchases, sales, or both but does not take title, commissioned

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"Major Types of Intermediaries" - Wholesaler

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Buys from producer in large quantities and sells to retailers in smaller quantities.

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"Major Types of Intermediaries" - Retailer

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Entity primarily engaged in selling to end user consumers.

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"End User consumer Channels" - Direct Channel

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No intermediaries and operates strictly from producer to end-user consumer Manufacturer -> Consumer

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"End User consumer Channels" - Indirect Channel

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contains one or more intermediary levels. examples: manufacturer ->Retailer->Consumer Manufacture->Wholesaler->Retailer->Consumer (Coke) Manufacture->Agent->Retailer->Consumer Manufacture->Agent->Wholesaler->Retailer->Consumer

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"Functions of Channel Intermediaries" - Physical distribution functions

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1) Supply Chain 2) Supply chain management or 1) Breaking Bulk 2) Accumulating bulk and sorting 3) Creating assortments 4) Reducing transactions 5) Transporting and Storage

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"Functions of Channel Intermediaries" - Physical distribution

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"Logistics" - integrated process of moving input materials to the producer, in-process inventory through the firm, and finished goods through the channel of distribution

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"Functions of Channel Intermediaries" - Breaking Bulk

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Occurs within a channel to better match quantities needed to space constraints and inventory turnover requirements.

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"Functions of Channel Intermediaries" - Accumulating bulk and sorting

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process of taking in product from multiple sources and transforming it, often through sorting it into different classifications for sales through the channel. (eggs)

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"Functions of Channel Intermediaries" - Creating assortments

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when intermediaries accumulate products from several sources and then make those products available down the channel as a convenient assortment (HDTVs)

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"Functions of Channel Intermediaries" - Reducing transactions

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intermediaries remove the need for manufacturers to have to conduct individual transactions with each consumer.

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"Functions of Channel Intermediaries" - Transporting and Storage

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Getting the product for point a to point b

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"Functions of Channel Intermediaries" - Types of Transaction and Communication functions

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1) Selling 2) Buying 3) Marketing Communication

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"Functions of Channel Intermediaries" - Communication function: Selling

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sales force to represent a manufactures's product line

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"Functions of Channel Intermediaries" - Communication function: Buying

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wholesaler and retailers perform evaluate products and ultimately simplify purchase decisions by "creating assortments"

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"Functions of Channel Intermediaries" - Communication function: Marketing Communication

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intermediaries receive incentives (allowances and discounts) from manufactures to participate in helping promote products

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Facilitating Function

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Activites performed by Intermediaries that help fullfill completed transactions and also maintain the viability of the channel relationship

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"Functions of Channel Intermediaries" - Types of Facilitating functions

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1) Financing 2) Market research 3) Risk-taking 4) other services

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"Functions of Channel Intermediaries" - Facilitating functions: Financing

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One channel member will extend credit to another channel member when credit is necessary

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"Functions of Channel Intermediaries" - Facilitating functions: Market research

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Intermediaries are closer to the end-consumer than manufacturers so they are in an ideal position to gather information about the market and consumer trends

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"Functions of Channel Intermediaries" - Facilitating functions: Risk-taking

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intermediaries add value by reducing the risk of others in the channel. spoilage, lawsuits

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"Functions of Channel Intermediaries" - Facilitating functions: other services

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Training others in the channel, repair and maintenance of products after a sale, and customized software.

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"Disintermediation and E-Channels" - Disintermediation

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Collapsing of 1 or more of the value channels due to the elimination of intermediaries. Common in the electronic Channel

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"Disintermediation and E-Channels" - Outsourcing or third party logistics (3PL)

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the handing over of one or more of a firms core internal functions such as most or all of the supply chain activities. Allowing the firm to better focus on its core business. (ie Apple, Dell - producer farms out manufacturing)

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Vertical Marketing system (VMS)

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Vertically aligned networks behaving and performing as a unified system. Forward- towards consumer and backwards towards buying producer

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"Vertical Marketing System" - Types of VMS

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1) Corporate 2) Contractual 3) Administered

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"Vertical Marketing System" - Corporate VMS

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owns everything, Backward integration to suppliers and forward integration to retail stores

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"Vertical Marketing System" - Contractual VMS

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Independent entities that are bound together through contractual agreement - (ie: wholesaler: "Got milk guys", franchises)

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"Vertical Marketing System" - Administered VMS

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Loosely organized - the sheer size and power of one of the channel members place it in a position of channel control. A powerful entity will become channel captain (Wal-Mart)

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"Channel Behavior Conflict and Power" - Channel Power

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The degree to which any member of a marketing channel can exercise influence over the other members of the channel

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"Channel Behavior Conflict and Power" - Channel Conflict

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when channel members experience disagreements and relationships can be strained or fall apart. Unresolved conflict results uncooperative and inefficient channels, ultimately impacting end-user consumers through inferior products, spotty inventory and higher prices

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"Channel Behavior Conflict and Power" - Sources of power revelvant to channels

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Coercive power; Reward; expert; referent; legitimate

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"Channel Behavior Conflict and Power" - Coercive power

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Involves explicit or implicit threat that a channel captain will invoke negative consequences on the channel member if it does not comply with the leader's request or expectations

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"Channel Behavior Conflict and Power" - Reward power

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Gaining something through incentives

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"Channel Behavior Conflict and Power" - Expert power

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adopt approach of utilizing their unique competencies to influence others in the channel - Expertise

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"Channel Behavior Conflict and Power" - Referent power

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when a channel member is respected, admired, or revered based on one of more attributes

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"Channel Behavior Conflict and Power" - Legitimate power

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Contract or other formal agreements give the power

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Selecting channel approaches

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Distribution intensity sought within channel; control and adaptability; Channel priority functions that require investment

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"Selecting Channel Approaches: Distribution Intensity" Distribution Intensity

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Number of intermediaries involved in distributing the product. Three types: 1) Intensive 2) Selective 3) Exclusive

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"Selecting Channel Approaches: Distribution Intensity" Intenstive Distribution

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maximum product exposure throughout multiple channel; as many retailers as possible, typically low cost convenience goods and impulse goods : Beer

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"Selecting Channel Approaches: Distribution Intensity" Selective Distribution

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when consumers may engage in limited search such as home furnishings

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"Selecting Channel Approaches: Distribution Intensity" Exclusive Distribution

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channel often part of an overall positioning strategy built on prestige and premium pricing - 1 or a few retailers

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"Selecting Channel Approaches" - Prioritization of Channel Functions

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Selecting what channel functions are most important to the success for the particular product two way to accomplish 1) Push Strategy - Push incentives down the channel; ie buying shelf space or bonuses to sales reps. 2) Pull Strategy - provide incentive to the consumer, they pull item down the channel; ie coupons and discounts

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"Logistics Aspects of Supply Chain Management" - Physical Distribution or Logistics

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the integrated process of moving input materials to the producer, in process inventory through the firm and finished goods out of the firm 1) Outbound Logistics - Finished goods moving out 2) Inbound logistics - Raw material coming in to begin production 3) Reverse logistics - Getting goods back to the manufactor

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"Logistics Aspects of Supply Chain Management" - Five Rights

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Activities to 1) Get the right product 2) At the right amount 3) At the right Place 4) At the right Price 5) At the right Time

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"Legal issues in Supply Chain Management" - Types

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1) Exclusive dealings 2) Exclusive territories - 3) Tying contracts - You can sell the iPhone but need to also sell the iPad, iWatch etc.

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"Legal issues in Supply Chain Management" - Exclusive Dealings

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when a supplier creates a restrictive agreement that prohibits intermediaries that handle it product from selling competing firms' product. (A producer cannot tell a retailer that they can only sell their product, but a producer can sell to only 1 retailer)

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"Legal issues in Supply Chain Management" - Exclusive territories

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Protects an intermediary from having to compete with others selling a producers goods.

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"Legal issues in Supply Chain Management" - Tying contracts

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when a seller requires an intermediary to purchase a supplementary product to qualify to purchase the primary product the intermediary wishes to buy (You can sell the iPhone but need to also sell the iPad, iWatch etc. )

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"Retailing Functions" - Retailing

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any business activity that creates value in the delivery of goods and services to consumers; and essential component of the supply chain; Point of contact in the supply chain with the consumer

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"Retailing Functions" - Critical Retailing Functions

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1) Offer variety for consumer 2) Separate large product vol. into consumer purchase quantities 3) Maintain inventory levels 4) Make additional services available to consumers

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"Characteristics of Store Retailers"

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1) Type of merchandise 2) assortment - Variety, breadth, depht of merchandise 3) Services imparted to consumers - displays, hours open 4) differences in value equation - Suppliers->Producers->Wholesalers->Retailer->Consumer

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"Types of Store Retailers" - Food

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1) General merchandisers vie with traditional supermarkets 2) Thin Margins 3) Focus on freshness, organics, nicer atmosphere

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"Types of Store Retailers" - General Merchandising

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1) Personal contact with the product 2) Personal services 3) Payment options 4) Social Experience 5) Immediate need fulfillment 6) Reduce risk for consumers

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Electronic commerce

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any action using electronic media to communicate with customers Inventory, payments, communication, systems, etc Everything online - Amazon;

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Electronic Retailing

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communication and sale of products or services to consumers over the internet.

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Electronic Retailing Advantages

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1) Extensive Selection 2) Info available for product research and evaluation 3) Build product communities 4) Individual customer experience

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Electronic Retailing Disadvantages

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1) customers walk away easily 2) Reduced Ability to Sell Features and Benefits 3) Security of Personal Data

The Value Chain and Value Network: A Comprehensive Overview

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