Managing Marketing Processes_Seminar 6


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Sixth seminar for my Managing Marketing Processes course in the MGM program at the Stockholm School of Economics,

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  • Alara delivers cherries to high-end customers in EU, US, Canada, South Africa, Far East, Turkey (home market) Alara Agri business Alara Agri Business is located in Bursa, Turkey and was established in 1986. The company is the largest fresh fig exporter in the world and the largest cherry exporter in Europe. Alara's products are distributed to major retailers in 22 countries across 5 continents. Strong brand recognition coupled with highly sophisticated cherry and fig line processes has enabled the company to continue the growth experienced over the last 10 years. Growing, packing and exporting sweet cherries, brined cherries, cherries in alcohol and fresh black figs 225 Ha of cherry plantations in 3 different regions of Turkey In Alara orchards, early and late patented varieties are planted to prolong the harvest season Daily cherry processing capacity of 450 tons Daily fig processing capacity of 100 tons Import and distribution of fresh products to retailers in Turkey Grower base of more than 10,000 growers; more than 2,500 workers during the season Products distributed to Europe, the UK, Canada, the Far East, South Africa and the US
  • Has become the global leader by revolutionizing agricultural practices and using advanced fruit processing technology. Vision from webpage Alara Agri's vision is to be the "global leader" in the fresh cherry and fig sector. Alara accomplishes it's goal by professionally and efficiently supplying top quality products in compliance with the food safety standarts in the most competitive cost structure. The objective is to establish a 365-day supply from different sources around the world. At Alara the customer needs come first. Our commitment is to fulfill all of their needs and future expectations by innovations.
  • Michael Porter argues that an organization can enhance its competitive positioning by performing key internal activities in the value chain at a lower cost and better than its competitors (Bartol et al, 1993: 211). The value chain approach identifies two major activities- primary and secondary. Primary actives include production, marketing, logistics and after-sale functions. Secondary activities, on the other hand, are identified as support processes to primary activities. begin with the firm ’s value chain and identify the capabilities at each major activity and the resources that each capability requires. Is an analysis tool for defining core competencies of a company Cost advantage: helps organizations understand costs Differentiation: focus on activities that are associated with core competencies The value chain is another tool or framework. It helps us develop a structured analysis of a messy world. It provides a check list to identify which resources and capabilities create value. Inbound Logistics Activities, such as materials handling, warehousing, and inventory control, used to receive, store, and disseminate inputs to a product. Operations Activities necessary to convert the inputs provided by inbound logistics into final product form. Machining, packaging, assembly, and equipment maintenance are examples of operations activities. Outbound Logistics Activities involved with collecting, storing, and physically distributing the final product to customers. Examples of these activities include finished goods warehousing, materials handling, and order processing. Marketing and Sales Activities completed to provide means through which customers can purchase products and to induce them to do so. To effectively market and sell products, firms develop advertising and promotional campaigns, select appropriate distribution channels, and select, develop, and support their sales force. Service Activities designed to enhance or maintain a product ’s value. Firms engage in a range of service-related activities, including installation, repair, training, and adjustment. Procurement Activities completed to purchase the inputs needed to produce a firm ’s products. Purchased inputs include items fully consumed during the manufacture of products (e.g., raw materials and supplies, as well as fixed assets—machinery, laboratory equipment, office equipment, and buildings). Technological Development Activities completed to improve a firm ’s product and the processes used to manufacture it. Technological development takes many forms, such as process equipment, basic research and product design, and servicing procedures. Human Resource Management Activities involved with recruiting, hiring, training, developing, and compensating all personnel. Firm Infrastructure Firm infrastructure includes activities such as general management, planning, finance, accounting, legal support, and governmental relations that are required to support the work of the entire value chain. Through its infrastructure, the firm strives to effectively and consistently identify external opportunities and threats, identify resources and capabilities, and support core competencies. Each activity should be examined relative to competitors ’ abilities. Accordingly, firms rate each activity as superior, equivalent, or inferior.
  • • Attempt to move out of the cherry commodity business into a branded cherry business – in which Alara Agri will realize greater volumes and margins for its production. • The Key: prepackaging of the cherries in grab bags and punnets. Taner is trying to determine whether changes in two elements of the marketing mix – product packaging and the price (a 10 to 20 per cent increase) – will influence overall volumes at store levels. He is hoping to prove that by repositioning cherries at a higher quality and price level, he will be able to increase volumes, decrease waste and thereby retailer profitability
  • How are cherries positioned relative to other fruits?
  • Some possible explanations: Alara Agri essentially did the ’picking’ for the customer In ’pre-picking’ the cherries, Alara Agri selected the bigger cherries, which perhaps increased the visual stimulus of the product By offering larger cherries in smaller bundles, Alara Agri increased the sensation of exclusivity. Packs were standardized and protective, leading to less waste and damage.
  • 1. Production Changes 2. Developing the Alara Agri Brand 3. Environmental Pressure 4. Competitive Pressure Pressure on Alara Agri’s production process, which translates directly into cost increases. Difficulty in branding cherries with the Alara Agri name. Consumers are not trained to think of fruit as a brand (the fruit usually acts like the brand itself!) Retailers might not see the benefit of developing brand in the fruit category. An emerging trend that promotes local produce for environmental reasons, i.e. the carbon footprint on foreign-bought fruit. • Competitots which provide cherries in the ’value’ line probably at lower quality and prices, putting downward pressure on Alara Agri’s prices, and, at worst, commoditizing the cherry category
  • John Kay (an influential economist and writer on business strategy) identifies three main classes of organisational capability that meet the above criteria: innovation, architecture and reputation. Innovation is an obvious source of distinctive capability, but it is much less often a sustainable or appropriable source because successful innovation quickly attracts imitation. Maintaining an advantage is most easily possible for those few innovations for which patent protection is effective. There are others where process secrecy or other characteristics make it difficult for other firms to follow. More often, turning an innovation into a competitive advantage requires the development of a whole range of supporting strategies. What appears to be competitive advantage derived from innovation is frequently the return to a system of organisation capable of producing a series of innovations. This is an example of a second distinctive capability which I call architecture. Architecture is a system of relationships within the firm, or between the firm and its suppliers or customers, or both. Generally the system is a complex one and the content of the relationships implicit rather than explicit. The structure relies on continued mutual commitment to monitor and enforce its terms. A firm with distinctive architecture gains strength from the ability to transfer information which is specific to the firm, product or market within the organisation and to its customers and suppliers. It can also respond quickly and flexibly to changing circumstances. It has often been through their greater ability to develop such architecture that Japanese firms have established competitive advantage over their American rivals. A third distinctive capability is reputation . Reputation is, in a sense, a type of architecture but it is so widespread, and so important, that it is best to treat it as a distinct source of competitive advantage. Easier to maintain than create, reputation meets the essential conditions for sustainability. Indeed an important element of the strategy of many successful firms has been the transformation of an initial distinctive capability based on innovation or architecture to a more enduring one derived from reputation. (Kay, 1993, p. 14)
  • Managing Marketing Processes_Seminar 6

    1. 1. Seminar 6 Managing Marketing Processes ---- Value Creation and Delivery - Creating a marketing strategy to deliver value through the integrated production and distribution of goods and services Robin Teigland Master of General Management Stockholm School of Economics September 17, 2013
    2. 2. Seminar 6 Overview  Cherries with Charm  Guest Speaker, Walter Karens  Managing Director (Sweden and Denmark)  Christeyns AB 2
    3. 3. Alari Agra – Orchard in Turkey 3 Alara Agri Case
    4. 4. Describe Alari Agra to date  Describe the Alari Agra business to date.  What do you think the company’s mission and vision are?  What is the company’s strategy?  How do you know? 4 Alara Agri Case
    5. 5. The Strategy Hierarchy 5 Where should we compete? How should we compete?
    6. 6. 6 Identifying opportunities to create value through the value chain InboundLogistics Operations OutboundLogistics MarketingandSales Service Firm Infrastructure Human Resource Management Technological Development Procurement Primary Activities Porter 1985
    7. 7. Mobile hydro cooler – to achieve longer shelf-life 7 Alara Agri Case
    8. 8. Central packaging facility 8 Alara Agri Case
    9. 9. 9 What does Taner want to achieve? •January 2004 •On way to Fruit Logistica in Berlin Alara Agri Case
    10. 10. Cherries – are they just another fruit? 10 Alara Agri Case
    11. 11. Alara Agri grag bags and punnets 11 Alara Agri Case
    12. 12. Challenge  How to convince European retailers to change the way cherries were packaged for retail sales? 12 Alara Agri Case
    13. 13. Questions  Should Taner engage in consumer research for Alara Agri’s prepackaged cherries or should he attempt to persuade German and Belgian retailers to conduct some test marketing in their stores?  If you think consumer research is appropriate, what are the specifics of your research plan?  If you think test marketing by retail customers is appropriate, what are the specifics of your research plan?  Do you have any other recommendations for Taner?  What challenges does Taner face? 13 Alara Agri Case
    14. 14. The Marketing Mix Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 1-14
    15. 15. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 10-15 What is the Fifth P? Packaging, sometimes called the 5th P, is all the activities of designing and producing the container for a product.
    16. 16. Other recommendations?  Challenges  Production changes  Developing Alara Agri brand  Environmental pressure  Competitive pressure 18 Alara Agri Case
    17. 17. Fulfilling marketing efforts 19 Alara Agri Case
    18. 18. Capabilities that enable sustainable competitive advantage 20 Innovation Architecture/ Networks of relationships Brand & Reputation B #1 Kay 1993Kay 1993
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