Lecture Eight: Outline

1
Lecture Eight Outline

• The Evolution of the Supply Chain
• Demand Response
• Key Success Factors
• Days Environmental Transitions
• Market Orientation
• Core Competencies can be seen as a Unique
  Combination of Knowledge, Technology and
  Relationship Management
• The Spectrum of Buyer-Seller Relationships
• Components of the Value Proposition
• The Gap between Customer Expectations and
  Perceptions
• Closing the Value Delivery Gap

2
The Evolution of the Supply Chain
3
Demand and Response Key Success Factors

• Old success factors
• Size
• Role Clarity
• Specialisation
• Control

• New success factors
• Speed
• Flexibility
• Integration
• Innovation
• Coordination

Source Ashenkas et al (1995) cited in Walters
(2002)
4
Days Environmental Transitions

• Day (1999) cited in Walters identifies five
  transitions that are having (or will have)
  disruptive effects. These include

5
Days Environmental Transitions (contd)

• More supply and less differentiation (or excess
  capacity for commodity-type products) which
  results in product-service imitation.

6
Days Environmental Transitions (contd)

• Globalisation more global and less local trends
  are another important transition.

7
Days Environmental Transitions (contd)

• More competition and collaboration imply a shift
  away from self-damaging behaviour (such as that
  inflicted by price competition) towards a more
  collaborative approach to customer satisfaction.

8
Days Environmental Transitions (contd)

• The preference among most organisations for
  long-term customer relationships rather than
  expanding the new customer base is identified
  by Day as more relating and less transacting,
  reflecting the move towards customer retention,
  and points to the organisational changes
  occurring in many companies whereby they organise
  around customers rather than products or sales
  districts.

9
Days Environmental Transitions (contd)

• More sense-and-respond and less make-and-sell
  suggests an increasing application of computer
  aided design and manufacturing systems and a
  departure from traditional make-to-forecast
  manufacturing, and response systems

10
Market Orientation

• Day (1999) cited in Walters (2002) offers market
  orientation (or being market driven) as a means
  of dealing with market turbulence and proposes a
  model in which there are three elements of
  successful market driven organisations. These
  are

11
Market Orientation (contd)

• An externally oriented culture with dominant
  beliefs, values and behaviour emphasising
  superior customer value and a continual quest for
  new sources of advantage.

12
Market Orientation (contd)

• Distinctive capabilities in market sensing market
  relating and anticipatory strategic thinking

13
Market Orientation (contd)

• A configuration that enables the entire
  organisation to anticipate and respond to
  changing customer requirements and market
  conditions

14
Core Competencies can be seen as a Unique
Combination of Knowledge, Technology and
Relationship Management
Source Adapted from Walters (2002)
15
The Spectrum of Buyer-Seller Relationships
Pure transactions Reciprocated transactions Long-t
erm relationships Buyer-seller relationships Strat
egic alliances
16
The Spectrum of Buyer-Seller Relationships
(contd)

• Traditional View
• Purpose of marketing is to make a sale
• Sale is the result and measure of success
• Business is defined by its products and
  factories price is an input
• Communications are aimed at aggregates of
  customers
• Marketer is valued for its products and prices
• Objective to make the next sale, find the next
  customer

17
The Spectrum of Buyer-Seller Relationships
(contd)

• Relationship View
• Purpose of marketing is to create a customer
• Sale is beginning of relationship profit is a
  measure of success
• Business is defined by its customer relationships
• Price is determined by negotiation and joint
  decision making price is an outcome
• Communications are targeted and tailored to
  individuals
• Marketer is valued for its present and future
  problem-solving capability
• Objective to satisfy the customer you have by
  delivering superior value

18
Components of the Value Proposition
19
The Gap between Customer Expectations and
Perceptions
20
The Gap between Customer Expectations and
Perceptions (contd)

• Walters (2002) draws some conclusions based on
  the gap between customer expectations and
  customer perceptions.

21
The Gap between Customer Expectations and
Perceptions (contd)

• Perceptions greater than or equal to Expectations
  Competitive Advantage

22
The Gap between Customer Expectations and
Perceptions (contd)

• Perceptions lt Expectations Competitive
  Disadvantage

23
The Gap between Customer Expectations and
Perceptions (contd)

• Perceptions gt Expectations Sustainable
  Competitive Advantage

24
Closing the Value Delivery Gap

• Walters (2002) suggests the following process to
  close the value delivery gap.

25
Closing the Value Delivery Gap (contd)

• Exploration

26
Closing the Value Delivery Gap (contd)

• Translation

27
Closing the Value Delivery Gap (contd)

• Interpretation

28
Closing the Value Delivery Gap (contd)

• Implementation

29
Discussion Questions

• Identify five major changes in the business
  operating environment and discuss why you think
  these changes occurred, how they impacted the
  business community and where you think they are
  likely to go from here.
• How can the value-chain be used to cope with
  highly turbulent markets? Give examples.

30
Discussion Questions (contd)

• Marketing is one of the central pillars of an
  organisation. What are the current
  characteristics of marketing in todays world?
  How can they used to generate competitive
  advantage?