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Inter-organisational relationships. Marketing Channels Value Chains Value-delivery networks. Marketing Channels. Sets of interdependent organisations involved in making a product available to the end-user customer ( Stern and El Ansary 1996). Supplier. Manufacturer. Distributor. Retailer.

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inter organisational relationships

Inter-organisational relationships

Marketing Channels

Value Chains

Value-delivery networks

marketing channels
Marketing Channels
  • Sets of interdependent organisations involved in making a product available to the end-user customer (Stern and El Ansary 1996)

Supplier

Manufacturer

Distributor

Retailer

channels
Channels
  • Carry not only flows of product but information, promotion, payment and ownership
  • Offer the suppliers ‘contactual efficiency’ in reaching the end customer (Rosenbloom1995)
slide4
Make the product available in the ‘utilities’ of form, time and place required by the customer (Bucklin)
  • require members to subordinate their own needs to the success of the channel (Stern)
    • issues of control and leadership, power and dependency
channel leadership
Channel Leadership
  • Control = the ability to influence the way the end product is marketed
    • price, image, form, availability etc
slide6
Power can be based on
    • ability to reward/coerce (economic power)
    • expertness (technological expertise)
    • referent power (ownership of brand)
    • legitimacy (official or accepted status)

(Hunt and Nevin 1974, Johnson et al 1993)

dependency
Dependency
  • Availability of alternative channels
  • switching costs
  • contractual obligations
channel conflict
Channel Conflict
  • Goal incompatibility
  • differences in expectations/perceptions
  • roles and responsibilities
  • domains and decision making
slide9
allocation of resources
  • poor communication

- importance of relationships and regular contact between decision makers

the value chain
The value chain
  • All channel members add to the costs and so must also add value to justify their use
  • The VC devised by Porter (1980) to analyse what happens inside companies - where the value is added to the end product
  • Applied by Kogut (1985) to the whole external supply chain (made up of each member’s internal value chain)
  • Marketing is designing and managing a superior value-delivery system to reach target segments (Kotler)
the value added chain terpstra and sarathy 2000
The Value Added ChainTerpstra and Sarathy (2000)

Manufacture

Assembly

Distribution

Marketing

Retailing

Design

Components

  • Specialisation
    • Where does your expertise lie?
    • Where can you add most value to the product?
  • Which activities should be contracted out?
  • Who can best perform them for you?
formalising the relationship
Formalising the relationship

Distribution is too important to be left to ad-hoc transactions

  • Vertical marketing systems
    • administrative co-ordination
    • contractual - franchises, co-operatives
    • corporate - vertically-integrated companies

VMS formalise leadership

control and manage conflict

Commitment

strategic alliances
Strategic alliances
  • Co-operation between competitors to share
    • markets/technology/marketing/logistics

A wider term than VMS

horizontal cooperation and integration

a partnership of equals

Consortia

Joint ventures

see Johnson and Scholes Ch 7

network theory
Network theory
  • Looks at markets in terms of relationships, networks and interactions (Gummesson1988)
  • not just suppliers and buyers in a straight-line channel
  • a complex web of influences on the quality of the product (Holmund and Kock 1995)
  • these influences can conflict with each other
slide15

Network relationships within the sports channel

Broadcasters

Sponsors

Local media

Sponsors

Investors

Major clubs

NGB

Season

ticket

holders

Other NGBs

Players

Minor clubs

WGB

elements of a network analysis hakansson and johanson 1992
Elements of a network analysisHakansson and Johanson 1992
  • Resources needed to create the product
  • Actors - firms, organisations involved
  • Interactions - between actors to create..
  • Activities that produce the product
  • Relationships that develop to ensure long-term commitments

Draw a network map of a company’s relationships and identify conflicting interests

systems theory see laws 2001
Systems theory (see Laws 2001)
  • Based on biological, ecological systems
  • each component is affected by and in turn affects the behaviour of the others
  • inputs, processes and outputs

Includes interaction between the industry

and the host society and environment

slide18
organic growth

optimum size and efficiency

decline and decay

inter organisational relationships what each model reveals
Inter-organisational relationshipsWhat each model reveals
  • Inter-dependent channel members
    • efficiency
  • Value-adding chains - value, profit
  • Complex and conflicting networks
    • understanding, trust
  • Organic and evolving systems
    • flexibility, responsiveness
slide20
Understanding the dynamics of the industry as a whole will help you understand the needs and perceptions of your client
slide21
Competition is between ‘networks of value-delivery systems’ (Kotler 1998) rather than individual firms
  • co-operation and alliances can be more effective than competition
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