Article Overview: (30%) In this chapter, the authors focus on how technology firms manage complexities of distribution channels and supply chains to successfully deliver products in high-tech market. The authors claim that effective managing distribution helps the firms to reduce redundancies and inefficiencies in their production system. Consequently, the firms can improve their alliances’ relationships (i.e., customers, suppliers, manufacturers and distributors) that increase customer satisfaction and cost advantage. However, if firms have ineffective channel strategies, conflicts between firms and their alliances can be occurred. Because they usually have different goals, they think that they cannot solve the conflicts by common solutions. This situation will influence the firms to have failures in product delivery. In distribution channels, the authors introduce distribution channel strategy which consists of Channel Structure, Management and Performance. Channel structure describes how firms can convey products to end-users. There are two types which are direct and indirect channels. Direct channel means that firms which are manufacturers sell their products directly to customers (e.g., sale on own company stores or companies’ websites) without any intermediaries. However, indirect channel is the way that firms sell through intermediaries in order to deliver products into markets. In addition, the authors suggest that firms can apply both direct and indirect channels which are called “Hybrid or Multi channel” (e.g., franchises, cooperatives) in order to increase the success of product delivery to the markets. In channel management, the authors explain how firms manage hybrid channels to reduce conflicts and to encourage ... ... middle of paper ... ...oduct development, firms not only have to analyze customer demands to develop new products, but they also need to research customer behaviors in each market to identify segmentations. If firms do not have good distribution plans, they will not succeed in new product delivery even those products can match customer needs. In addition, firms can create channel combinations (i.e. hybrid channels) to optimize delivery costs and to meet customer demands in various segmentations. However, firms should be aware of gray markets which can make issues about price differentiation. For instance, most customers will buy products from unauthorized resellers rather than through authorized dealers because of cheaper prices. This situation will harm relationships between manufacturers and authorized dealers. As a result, firms cannot successfully deliver new products to the markets.
The company can improve its channel strategy to enhance its current performance in one way. The company’s website is too reliant in the physical stores. The website has photos of the physical store ostensibly to help customers to connect with it. This idea seems well founded. However, the target market for any company that operates an online shopping system is not local. It transcends geographical boundaries. The company needs to consider how it can make the online shopping experience authentic and complete for customers who may never visit any of its physical stores. A website makes a company a global player. In this regard, the company needs to expand its channel strategy to take into account an expanded potential market. This shift in strategy will increase the sales the company makes.
Pelton, L. E., Strutton, D. & Lumpkin, J. R. 2002, Marketing channels: a relationship management approach. McGraw-Hill Irwin: Boston, p. 387.
Rivalry among established firms is fierce. There are several factors that illustrate this: established market players (6.1). The product is highly standardized and the switching costs of the customers are low. Players are aggressive (6.2)
Because, internet today is enabling web-based suppliers an opportunity to meet a choice of different types of customers (Schoenbachler&Gordon, 2002) and has evolved as a feasible distribution channel for the firms that wish to expand their market penetration (Frazier, 1999; Frazier & Antia, 1995), reduce costs (Payne & Frow, 2004), increase revenues ( Kotler, 2000), spread risks, and strengthen customer loyalty (Kelly, 2002) through its use (Hobmeier, 2001).now most of the hotels are using the multiple channel strategy where they are in partnership more than one sales and distribution channel to serve the same target market and this has grown in the recent years. This is creating higher complexity for the hotel management as the data are coming from different partners. As customers, today are using multiple channels, it is almost certain that the future will remain to contain a mixture of even more complex channels (Balasubramanian , Raghunathan, & Mahajan, 2005). Since now, it is obvious that why hoteliers employing multiple channels including electronic ones, is no different; to maximise customer awareness and market share and reduce costs, this increasingly widespread trend to cooperate with new channels rather than stick to
In the 1960s through the 1970s, companies realized strong engineering, design, and manufacturing functions were strong market strategy keys to create and capture customer loyalty. As the demand for new products rose in the 1980s, these market requirements were to increase their flexibility and responsiveness to adapt existing products and processes or to develop new ones in order to meet customer needs. As manufacturing improved in the 1990s, managers began noticing material and service inputs involving suppliers and their major impact on an organization’s ability to meet customer needs. As a result of these changes, organizations now find that it difficult to manage their own organizations. First, they must be involved in the management of their network of all upstream firms that provide directly or indirectly, as well as the network of downstream firms, which are responsible for delivery and market service of the product to the end customer.
In such situations, the buying industry often faces a high pressure on margins from their suppliers. The relationship to powerful suppliers can potentially reduce strategic options for the organization.
In addition to the change in behavior of consumer, many companies or retailers change the sales channel combinations. The greatest impact of the Web-bases electronic revolution has occurred in companies adopting the click-and-mortar approach. Click- and-mortar is one the strategy used by the companies or retailers that they continue to conduct their business in the physical locations and have added the electronic commerce component to their business activities. According to one study, 37% of United States retailers are selling through a combination of the internet, in stores and catalogs. This represents a growing demand for the business-to-customer package delivery service.
...t in both direct and indirect ways. Direct sell will include, sell in online forums or use direct mail to reach our customers. When selling directly, we can take the time to showcase our product’s distinct attributes. Before turning sales over to a distributor, we will build a base of direct sales to prove the product will sell. Using an indirect approach, we will persuade stores to carry our products. While more time-consuming, approaching retailers in store or at trade shows gives us more control over how our product is displayed and how it’s presented to customers. For indirect sales incorporate a middleman in some way or another. A distributor’s functions include stocking, ease of ordering and quick delivery with no pioneering sales efforts. Intermediaries have expertise and contacts, but they may require minimum order quantities and an established sales record.
Consumers can purchase the goods through diverse channels and this will raise consciousness in the customers’ mind and make the loyalty. The higher the channel, the lower the price, it is going to occur all kinds of customers. Thus, enterprises have to consider their distribution channel architecture. They need to decide that channel must be applied an identical to their brand
The threat of new entrants is moderately strong. Incumbents do not strongly contest entry of newcomers, but existing industry members are consistently looking to expand their geographic reach and offer a broad product assortment. Brand awareness and customer loyalty are high and greatly important i this industry.
To achieve build-to-order model and create the efficient supply chain system, Dell and its suppliers need to invest much on information technology. Toshiba, IBM, and Samsung, which are leaders in technology industry, are some of the Dell’s partners. These companies have high IT efficiency and enough resources to support Dell’s supply chain. With expertise of those companies, Dell’s supply chain has been success. This system also provides Win-win business relationship between Dell and its partners. When Dell can implement its customer needs, the Dell computer’s orders will increase. So the revenue of Dell’s suppliers will increase as well.
Sharif, K. (2008) 'Impact of information and communication technologies on sales representative internal and external relationships — A study of the UK pharmaceutical sector', Journal of Medical Marketing, 8 (4), pp.341-55.
Distribution channel deals with the delivery of the product to the customer. How good the distribution channel is, depends how effectively the channel fulfils the customers need of time utility and place utility as well as keeping the channel structure under manageable levels.
‘Supply chain management integrates supply and demand management within and across companies. It encompasses the planning and management of all activities involved in sourcing and procurement, conversion, and all logistics management activities. Importantly, it also includes coordination and collaboration with channel partners, which can be suppliers, intermediaries, thir- party service providers, and customers’. (Web: Council for Supply Chain Management Pr...
As pointed by Parsons A.L (2002), there was increasing dependent on the relationship and customers is demanding to receive high standard of products and services for them to sustain the business in the intense manufacturing environment. Besides, Xu et al. (2008) has highlighted that supplier is developing a long-term relationship with their crucial suppliers to increase the competitiveness and to establish an effective and efficient supply chain. Trend (2005) also mentioned that work closely in partnership with suppliers is the only way to survive in today’s competitive business environment.