1. 10-1 Topic: 8 Value Chain Strategy Dr. Ehsanul Huda Chowdhury Course: Strategic Marketing Batch: 17 th BBA Program IBA Dhaka University

2. 10-2 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 manufacturers

3. 10-3 Illustrative Example: Internet Impact on Distribution The Impact of Technology on Value Chains In India  E-Government  Computer Kiosks  Agricultural e-commerce  Tele-medicine

4. 10-4 The Marketing System Manufacturers and producers Marketing intermediaries Retailers Agents-brokers Wholesalers-distributors End users Consumer Industrial-institutional Facilitating organizations Financial Transportation Advertising Other Agriculture and raw materials suppliers

5. 10-5 Marketing Channels Manufacturers/producers Consumers and organizational end users Agents/brokers Wholesalers/ distributors Retailers

6. 10-6 Distribution by Manufacturers  Manufacturers have three distribution alternatives: –Direct distribution is necessary –Use of intermediaries is necessary –Both direct and intermediary contact are feasible

7. 10-7 Distribution by the manufacturer Opportunity for competitive advantage Supporting services are required Rapidly changing market environment Extensive purchasing process Early stages of product life cycle Complex product application Profit margins adequate to support distribution organization Complete line of products Purchases are large and infrequent Small number of geographically concentrated buyers Factors Favoring Distribution by Manufacturer

8. 10-8 Channel of Distribution Strategy Types of distribution channel Distribution intensity Selecting the channel strategy Strategies at different channel levels

9. 10-9 Steps in Channel Strategy Selection (1) Type of channel arrangement (3) Selection of a channel configuration Administ ered IntensiveExclusive Selective (2) Desired intensity of distribution Contractual Ownership ConventionalVertically coordinated

10. 10-10 Distribution Intensity Illustrations Trading Area A B C + + + + + + + + + + + + + + + + + + + + + + + + + Exclusive distribution Selective distribution Intensive distribution Illustrations Cadillac automobiles Ethan Allen furniture Revlon cosmetics Caterpillar equipment Estée Lauder cosmetics Timex watches

11. 10-11 Design stages Decision criteria Intensity of distribution Access to end users Prevailing distribution practices Necessary activities and functions Revenue-cost analysis Time horizon for development Control considerations Legal constraints Channel availability Select the channel Market coverage Capabilities Intermediary’s needs Functions provided Availability Identification of channel alternatives Evaluation and selection of channel(s) to be used Selection of channel participants Selecting the Channel Strategy

12. 10-12 Managing the Channel Channel leadership Management structure and systems Physical distribution management Channel relationships Conflict resolution Channel performance Legal and ethical considerations

13. 10-13 Strategic Value Chain Management  Supply chain management –Lean supply chains  Impact of supply chain strategy on marketing  E-business models  Retailer and distributor power  Strategic flexibility and change

14. 10-14 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