Sebagai kelengkapan pengerjaan Tugas Besar satu, mata kuliah Strategic Marketing. Universitas Mercu Buana Program Studi Magister Management. Kampus Warung Buncit

1. Value Chain Strategy
Strategic Role of Value Chain, Channel Strategy, Managing the channel
CHAPTER 10
NAMA DOSEN:
Prof. Dr. Hapzi Ali, Ir, MM, CMA, MPM
PROGRAM STUDI MAGISTER MANAGEMENT

2. Value Chain Strategy
The definition of Value Chain
Holistic Marketing Framework
The Brand Value Chain
Strategic role of distribution
Channel of distribution strategy
Managing the channel
International channels
Supply chain management issues

3. The Definition of Value Chain (1)
The series of internal departments that carry
out value-creating activities to design, produce, market,
deliver, and support a firm’s products.
Kotler, Philip and Armstrong, Gary. 2012. Principles of Marketing. 14th Edition Pearson

4. The Definition of Value Chain (2)
A company’s supply of partnerships and alliances and
how the company partners with specific suppliers, distributors,
manufacturers and so on to source, create, augment and deliver
products and services to the market. At each activity along the
chain or within the network the product or service gains either
tangible or intangible value.
Kotler Philip, Keller Kevin Lane,et.al. 2009: Marketing Management, 1st Edition. Pearson Pretice
Hall, Inc.

5. The Definition of Value Chain (3)
The value chain is a tool for identifying ways to create more customer perceived
value. According to this model, every firm is a synthesis of activities performed to
design, produce, market, deliver and support it’s final market offering. The value
chain identifies nine strategically relevant activities – five primary and four support
activities – that create value and cost in a specific business.
M. E. Porter (1985) Competitive Advantage. Creating and Sustaining Superior Performance, New York: Free Press.
Copyright © 1985 by Michael E. Porter. Reproduced with permission from The Free Press, a division of Simon & Schuster
Adult Publishing Group.

6. Holistic Marketing Framework
According to this view, holistic marketers succeed by managing a superior value chain that delivers a high level
of product quality, service and speed. Holistic marketers achieve profitable growth by expanding customer
share, building customer loyalty and capturing customer lifetime value. A holistic marketing framework, shows
how the interaction between relevant actors and value-based activities helps to create, maintain and renew
customer-perceived value. The holistic marketing framework is designed to address three key management
questions:
1. Value exploration: How can a company identify new value opportunities?
2. Value creation: How can a company efficiently create more promising new value offerings?
3. Value delivery: How can a company use its capabilities and infrastructure to deliver the new value

7. The Brand Value Chain
The brand value chain is a structured approach to assessing the sources and outcomes of brand equity and
the manner in which marketing activities create brand value.

8. Strategic Role Of Distribution
 Distribution functions: Buying and selling activities, Product assembly, Transportation,
Financing, Processing and storage, Advertising and sales promotion, Pricing,
Reduction of risk, Personal selling, Communications, Servicing and repairs
 Channels for services: Direct Distribution by manufacture

9. Illustrative Example: Internet Impact on Distribution
It would be impossible to underestimate the growing impact of
the Internet and Web-based technologies on value chains. The
eye-popping rise of players such as Amazon.com, eBay, Dell,
and Cisco, demonstrates the potential for top-line impact.
Entire supply and demand chains are being reconstructed
around Web-enabled technologies in an effort to maximize
efficiency and minimize costs. Coordination and collaboration
are replacing physical assets as the drivers of value.

10. The Marketing System

11. The Marketing Channels
Marketing channel (or distribution channel) is a set of interdependent organizations
that help make a product or service available for use or consumption by the consumer or
business customer.
Distribution strategy includes selection and management of channel relationships to
deliver value to customers

12. Types of marketing channel
 Retailing: The business of selling goods or services to consumers for their
personal use.
Retailer: A business that primarily sells products and services to consumers.
 Wholesaling: All activities involved in selling goods and services to those
buying for resale or business use.
Wholesalers: Companies whose primary business is wholesaling.
 Drop shipper: An intermediary that takes orders and payment from the
customer, then arranges to have the merchandise shipped to the customer
directly from the supplier.
 Rack jobber: A wholesaler that buys merchandise and resells it on “racks”
inside a retail store, in partnership with the retailer.
 Broker: A wholesaler that does not take title to goods and whose function is
to bring buyers and sellers together and assist in negotiation. Agent A
representative, either of a buyer or a seller, who performs only a few
functions and does not take title to goods.

13. Illustrative Example: Netflix (1)
Netflix’s Channel Innovation
 Finding the future by abandoning the past time and again, Netflix has innovated its way to the top
in the distribution of video entertainment. In the early 2000s, Netflix’s revolutionary DVD-by-mail
service put all but the most powerful movie-rental stores out of business. In 2007, Netflix’s then
ground-breaking move into digital streaming once again revolutionized how people accessed
movies and other video content. Now, with Netflix leading the pack, video distribution has
become a boiling, roiling pot of emerging technologies and high-tech competitors, one that offers
both mind-bending opportunities and stomach-churning risks.
 Although Netflix didn’t pioneer digital streaming, it poured resources into improving the
technology and building the largest streaming library. It built a customer base of nearly 25 million
subscribers, and sales and profits soared. With its massive physical DVD library and a streaming
library of more than 20.000 high-definition movies accessible via 200 different Internet-ready
devices, it seemed that nothing could stop Netflix.

14. Illustrative Example: Netflix (2)
Netflix’s Channel Innovation
 But Netflix’s stunning success drew a slew of resourceful competitors. In 2010, video giants such
as Google’s, YouTube and Apple’s iTunes began renting movie downloads, and Hulu introduced
subscription-based Hulu Plus. A few years later, Canadian cable companies Rogers and Bell got
into the business, launching their video streaming services, Shomi and CraveTV. To stay ahead,
even to survive, Netflix needed to keep the innovation pedal to the metal. So in the summer of
2011, in an ambitious but risky move, CEO Hastings made an all-in bet on digital streaming. He
split off Netflix’s still-thriving DVD-by-mail service into a separate business named Qwikster and
required separate subscriptions for DVD rentals and streaming (at a startling 60 percent price
increase for customers using both). The Netflix name would now stand for nothing but digital
streaming, which would be the primary focus of the company’s future growth.
 As the Netflix story shows, marketing channel decisions such as when and how to enter a new
market take careful planning, but if done well can result in superior customer value and
competitive advantage—both for the firm and for its channel partners. Companies like Netflix—in
other words, all companies that offer a product or service to the market—cannot bring value to
customers by themselves, but must work closely with other firms in a larger value delivery
network. In this chapter, we consider marketing channels, or channels of distribution; why they
are important; and the major marketing decisions companies make in managing their channels.
We then look at the task of supply chain management, or the “back end” of the distribution
channel.

15. Distribution by Manufacturers
Manufacturers have three distribution alternatives:
Direct distribution is necessary
Use of intermediaries is necessary
Both direct and intermediary contact are feasible

16. Factors Favoring Distribution by Manufacturer

17. Illustrative Example: Retail Initiatives by Manufacturers
Apple Computer
• To educate consumers about computers and music players
Sony Electronics, Samsung
• Reinforce brands with affluent consumers and better
understand market trends
Driving forces are market access and market learning

18. Steps in Channel Strategy Selection

19. Distribution (Channel) Strategy
 Intensive distribution: is a marketing strategy in which the product is
stocked in as many outlets as possible, a strategy in which they stock
their products in as many outlets as possible
 Selective distribution: is a marketing strategy typically chosen by
makers of brand name appliances, furniture, and electronics. A
distribution strategy in which the marketer selects a set of retailers that
specialize in their product category
 Exclusive distribution: is a deliberate marketing strategy chosen by
brands that wish to associate themselves with an air of, well, exclusivity.
A distribution strategy in which the marketer gives the rights to distribute
its products to only one retailer, or to only one retailer in a particular
geographic territory

20. Illustrative Example: Channel Strategy Evaluation
WestJet Airlines, based in Calgary, began operations in 1996 with a
fleet of three 737-200s flying between five cities in western Canada.
In 2002 the company moved into the business travel market,
introducing flights to Toronto and London. A few years later it
expanded into the winter vacation market, flying to California and
Florida. Next, it added new service divisions, WestJet Vacations and
WestJet Encore. WestJet even partnered with Disney to create the
“Magic Plane,” custom painted with a Walt Disney World theme
featuring Mickey Mouse in his role as the Sorcerer’s Apprentice. You
might not think of a service like air travel as having distribution
channels—there’s no physical product to move.
But airlines do have channel partners: aircraft manufacturers,
airports, and of course suppliers of everything from jet fuel to
onboard food and beverages, all of which help WestJet deliver its
product to the market.

21. Managing The Channel
 Channel leadership
 Management structure and systems
 Physical distribution management
 Channel relationships
 Conflict resolution
 Channel performance
 Legal and ethical considerations

22. International Channel of Distribution Alternatives
 Whole-channel view: Designing international channels that take into
account the entire global supply chain and marketing channel, forging an
effective global value delivery network.
 International channel complexities: When the Chinese government
banned door-to-door selling, Avon had to abandon its traditional direct
marketing approach and sell through retail shops. International marketers
face a wide range of channel alternatives. Designing efficient and
effective channel systems between and within various country markets
poses a difficult challenge.
 Google is a truly global operation. It’s accessible just about anywhere in
the world and in hundreds of different languages. But just as international
markets provide opportunities, they sometimes present daunting
challenges. Here, we examine Google’s odyssey into mainland China—
and back out again

23. Strategic Value Chain Management
Supply chain management: Managing upstream and
downstream value added flows of materials, final goods, and
related information among suppliers, the company, resellers,
and final consumers.
 Supply chain management
• Efficient Consumer Response program
• Lean supply chains
• Agile supply chains
 Impact of supply chain strategy on marketing
 e-business models
 Retailer and distributor power
 Strategic flexibility and change

24. Efficient Consumer Response
Traditional channel problems
• Forward buying and diverting
• Excessive inventories
• Damages and unsaleable goods
• Complex deals and deductions
• Too many promotions and coupons
• Too many new products
Efficient Consumer Response
• Category management
• “Value” pricing replaces promotions
• Continuous replenishment and cross-docking
• Electronic data interchange
• New performance measures
• New organizational processes and structures
• Internet-based network for supplier-buyer trading

25. Consumer Response
Micromodels of marketing communications concentrate on
customers’ specific responses to communications.

26. Lean Supply Chain Elements
1. Definition of Value
2. Identification of Value Streams and Removal of Muda
(Waste)
3. Organizing Around Flow, Instead of “Batch and Queue”
4. Responding to Pull Through the Supply Chain
5. The Pursuit of Perfection

27. Questions for Discussion
1. How can a company identify new value opportunities?
2. How can a company efficiently create more promising new
value offerings?
3. How can a company use its capabilities and infrastructure to
deliver the new value offerings more efficiently?
4. As completely as possible, sketch the value chain for Netflix
from the production of content to viewer.
5. How does Netflix add value for customers through distribution
functions?

28. REFERENCE
• Armstrong Gary, Kotler Philip, et al. 2017. Marketing an Introduction. 6h Edition. Pearson
• Craven David W. and Piercy Nigel F. 2013. Strategic Marketing. 8th edition. McGraw hill.
• Dosen. Durdana and Skare, Vatroslav. 2004. Delivering Services vis Internet: New Dsitribution Channel for
Traditional Services. Zagreb International ReView of Economics & Busllless Conference issue, Po. 141-148.
Economics Faculty Zagreb.
• Gilligan, Colin and Wilson, Richard M.S. 2003. Strategic Marketing Planning. 1st Edition. Butterworth
Heinemann
• Kotler, Philip and Keller Kevin L. 2016. Marketing Management. 15th Edition. Pearson.
• Kotler, Philip and Armstrong, Gary. 2012. Principles of Marketing. 14th Edition Pearson
• Kotler Philip, Keller Kevin Lane,et.al. 2009: Marketing Management, 1st Edition. Pearson Pretice Hall, Inc.
• Kotler, Philip, Keller, Kevin Lane. 2012: Marketing Management, 14th Edition. Pearson
• Rhao, Bharat. 1999. The Internet and the revolution in distribution: a cross-industry examination. Technology
in Society 21 (1999) 287–306. Institute for Technology and Enterprise, Polytechnic University, New York.
• https://open.library.ubc.ca/cIRcle/collections/ubctheses/831/items/1.0091884#downloadfiles

29. THE TEAM
Evi Nurmilasari (NIM: 55120110113)
THANK YOU