What’s Important (interesting?) from
Part 6, Chapters 15 and 16
Delivering Value s
Successful Value Delivery
• Look up the supply chain Manufacturers
• Look down the
distribution chain Customers
Increased market segmentation can
help ﬁrms reach more customers.
In Marketing-Speak, how goods and services
get to the ﬁnal consumer or user is through a
• Merchants - take title and resell goods
• Agents - act on ﬁrms’ behalf, don’t take title
• Facilitators - airline tickets
• Push Strategy: induce intemediaries to
carry and sell products.
• Pull Strategy: use marketing and advertising
to induce consumer demand.
• Some ﬁrms develop strategies
for local or regional markets
• Some ﬁrms use the same
strategy everywhere, which can
be successful but can also cause
• Walmart - success and failure
• Habitual Shoppers - regulars
• High Value Deal Seekers - bargain hunters
• Variety Loving Shoppers - adventurers
• High Involvement Shoppers - high maintenance
-Look through the channels to ﬁnd
ways to increase value.
-Consider the end user / customer
and work back from there.
-Discover where proﬁt
margins are highest.
-The interface with the customer
is the face of your ﬁrm.
Channel Functions and Flows
Orders, returns, end of life take backs
A Firm may require any number of channels
• Sales Channel
Manufacturing Firm • Delivery Channel
• Service Channel
Manufacturers Retailer Customers
Consider also reverse ﬂow channels
“That’s not my job.”
• Use USPS as one of their channels
• Use the internet as another
• User content informs
Channel Design Decisions
• Lot size; Hertz purchasing
vs. individual Intermediaries:
Objectives and Exclusive Distribution
• Waiting / delivery time Selective Distribution
Constraints Intensive Distribution
• Spatial convenience /
proximity to goods
• Product variety found
• Service backup; other $0.01
services provided by
Economic Analysis of
• Sales Agent vs. Company Sales Team
• Principal / Agent Questions
The Channel is
Referent Power $4,032 / sf
Vertical Marketing system: Horizontal Marketing system:
Firm seeks to have more Firm seeks to saturate market with
control over interface with sometimes overlapping channels.
Disney with their own retail
Southwest outlets, plus video sales at
Walmart, other retailers.
Pitfalls: Dilution and cannibalization
Channel conﬂict and competition
• Online customers choose a retail store.
Helps to align goals, and to allow channels
to supplement each other.
• Firms increasingly using the internet to
channels, or to have more control over customer
• Seeking more direct interface, chats with online
customers, targeted ads, etc.
Broad Categories of Retailing
• Sunglasses Hut
The Retail Environment
• Challenges - differentiation and shelf space
• RFID’s and technology
• Decline of the middle market retailers
• Interesting niches, Trader Joe’s, Whole Foods
• Private Labels, Threat and Opportunity
Wholesaling and Logistics
• Where do ﬁrms add value: wholesalers
and access to customer information,
distribution, marketing channels;
ﬁnancing and risk; transportation
• Trend towards vertical integration
• Logistics and supply chain management
• Balance of conﬂicting forces such as
time vs. cost
Delivering Value s
When is it enough?
Are we just conduits for money to ﬂow through?
What is the price we pay for a constant barrage of
Marketing, like Markets, is values-neutral, materially
rewarding those who deliver value
How can we not only deliver value, but also values?