Marketing and the Customer Value Chain

Integrating Marketing and Supply Chain Management

Thomas Fotiadis, Dimitris Folinas, Konstantinos Vasileiou, Aggeliki Konstantoglou

• Publisher: Routledge
• Year: 2022
• ISBN:
  9780429684876
• Edition: 1
• Topic: Business
• Subtopic: Business generale
• Index: Business

Marketing and supply chain management have a symbiotic relationship within any enterprise, and together they are vital for a company's viability and success. This book offers a systemic approach to the integration of marketing and supply chain management. It examines the strategic connections and disconnections between supply chain and operations management and marketing by focusing on the factors that constitute the extended marketing mix, including product, price, promotion, people, and processes.

Key aspects of supply chain management are discussed in detail, including material handling, unit load, handling systems, and equipment, as well as warehousing and transportation, design, and packaging. The book then goes on to explore the marketing functions of intangible products (services), followed by a focus on B2B markets. Throughout, there is a strong emphasis on the optimization and maximization of the value chain through the development of a systems approach with a market-orientation. Pedagogy that translates theory to practice is embedded throughout, including theoretical mini-cases, chapter-by-chapter objectives, and summaries.

Marketing and the Customer Value Chain will help advanced undergraduate and postgraduate students appreciate how front-end marketing can interface with the back-end operations of supply chain management.

1 Marketing mix elements: (P)roduct: Delimitation and integrative approach with SCM

DOI: 10.4324/9780429684883-1

Introduction

This chapter presents how product-based decisions must be the result of creative synthesis and good cooperation between the marketing and supply chain executives of a business, as well as among work groups made up of staff from the main partners of a supply chain. In practice, the decisions made and their execution in relation to the product essentially have priority and decisively influence decisions in relation to the 3Ps of the marketing mix; without making a particularly detailed definition of the product, there is no need to make important decisions in terms of the pricing, distribution and promotion/communication of the product.

Learning goals

After reading this chapter, you will be able to answer the following questions:

• Why is cooperation important between the strategic partners of the supply chain in the efficient offer of product solutions to the final customers?
• What is the development process of the new product?
• What are the stages in the life cycle of a product, and the decisions that must be taken by the business in collaboration with the others involved in the supply chain?

Structure

1. 1.1 Product design and operations planning within the supply chain context
2. 1.2 Definition and classification of products
3. 1.3 Decisions concerning the product mix, brand, packaging and labeling of a product
4. 1.4 The new product development process
5. 1.5 Product life cycle
6. 1.6 Inventory management
7. 1.7 Demand forecasting

1.1 Product design and operations planning within the supply chain context

The modern world is an extremely competitive environment. If there is a lack of feasible coordination in the optimal improvement of the entire supply chain to make it effective and efficient, the supply chain will not manage to create and maintain or increase its competitive edge in relation to the “product” packet that it will offer to its final customers.

As a result, even if one or some of the businesses that participate in a supply chain regulate their internal activities in an exemplary fashion, they still won’t manage to satisfy the multiple and often conflicting demands of the stakeholders; these may include customers (end and intermediate), investors, workers, partners in the supply chain (suppliers and intermediates with the final customers), public and other institutions, as well as, of course, the wider public.

For example, a customer who visits a car sales outlet with the purpose of buying a new car is not at all interested in which businesses comprise the specific supply chain, or how they share and regulate their activities among themselves, or how they assign profits and expenses among each other. The customer will evaluate whether it is really worth paying the asking price for the whole product offer that she or he is presented with, against the corresponding offers of the competition.

If she or he proceeds to make the purchase of a new car from the car manufacturer, then the efforts of all the partner businesses in the supply chain will be rewarded, based on the supply chain's conditions within the cooperation agreement. Otherwise, even for the partner businesses that are characterized by an integrative approach in their effective and efficient internal operations, in this case at least, the expected outcomes will not be achieved.

It is argued that the scheduling of business operations starts with the design of the product and the supply chain, followed by the remaining planning levels. Thus, a rather myopic, one-sided view is being emphasized, and the contribution of the marketing executives (or whichever other part of the business) is being overpraised in the decisions made and their execution in relation to the product (Figure 1.1).

Figure 1.1 Product design and business operations planning (Adapted from Taylor, 2003).

Businesses that wish to create and maintain or increase some strategic competitive advantage are duty-bound to take decisions in relation to product design; they must manage their product portfolios in the spirit of good cooperation, making a thorough investigation of the mutually beneficial tradeoffs with their other main partners in the supply chain.

This means that it is now virtually a one-way road for all businesses involved in a supply chain to aim toward the maximization of the provided added value of the activities of the whole supply chain instead of the autonomous self-serving pursuit of the business goals of each separate partner. The rapid development and groundbreaking technological revolutions of the last three decades – especially in the IT sectors, for example, electronic data organization, the internet, etc. – signal an historic turn from the Cartesian approach, where each business aimed to achieve its own goals, often at the expense of its other partners in the supply chain. Now, the survival of each business is highly connected with the success of the supply chain it participates in as a whole.

It is much easier now than in the past to collect, circulate and process vast amounts of data and information from all the business processes using unified technologically compatible methods in very little (often real) time and very little cost; simulation modeling is now possible, in the form of the simplest representation with mathematical and simulation models of particularly complicated systems.

Thus, possibly for the first time in human history, the opportunity has finally appeared to thoroughly investigate and assess the positive and negative consequences of complex tradeoffs in business operations, and, by extension, the supply chain. Initially, large industrial businesses managed to optimize and completely integrate their whole operation as opposed to each operational part (e.g. marketing, production, supply chain, etc.), maximizing the added value of the whole supply chain instead of each separate partner that comprises it.

For businesses to survive in an extremely competitive and rapidly developing business environment (at the micro- and macro-level), they have no other choice than to adopt and apply the strategic approach of a unified operation all the more efficiently within their supply chain, starting from the design of their product.

1.2 Definition and classification of products

A particularly thorough introduction of the product as part of the marketing mix of a business and, more generally, an organization (for or non-profit) takes place in the corresponding chapter of this book. A product can be whatever has the ability to eliminate, reduce and/or conceal the sad feeling that something is missing: more specifically, a need and/or desire. Within a wider approach, the product must be perceived as a set/packet of properties and advantages through which it is possible to offer usefulness either directly or even because of the perceived expectation of the satisfaction of needs and desires.

In the wider sense of the meaning of the word “product”, we don’t mean just tangible products, but also services and ideas, which are characterized by their intangible elements. But, in their majority, “material” goods are offered with a set of accompanying services. Take, for example, the purchase of a car: beyond the “material” good, the purchase of a car includes the various services that start before the potential transaction (its acquisition by the final user), for example, the provision of information, the possibility to choose its final configuration; this process continues through to the completion of the transaction with the provision of financial assistance, warranties, free road help, etc., and the provision of services for future maintenance and repairs.

Thus, the final decision of a potential buyer will depend not only on the set/packet of properties of the “material” good, but also – and possibly mainly – on the accompanying services, which are all estimated together. Therefore, for reasons of convenience, the term “product” is used in this chapter to describe a material good, a service, an idea, a place, an event, or whatever combination of the aforementioned, which tries to offer usefulness to its final user.

It should be noted that due also to the very acrid competition that exists worldwide in all markets/sectors, a customer-centric approach has absolutely definitely dominated in the determination of products’ quality characteristics. In other words, the design of both the product and its production processes starts and ends with covering the needs and desires of the prod...