2 putting the end customer first
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Transcript of 2 putting the end customer first
Chapter 2
Putting the end-customer first
The marketing perspective
Segmentation
Quality of service
Setting logistics priorities
Content
• Key issue
The marketing perspective
1111What are the marketing implications for logistics strategy?
• Marketing is a philosophy that integrates the disparate activities and functions that take place within the network. Satisfied [end] customers are seen as the only source of profit, growth and security. (Doyle,1994)
The marketing perspective
The Challenge…
The challenge
Customer
Increased productivityShort lead times
Increased sales and market sharesStrong brand
The marketing perspective
The marketing perspective
The battleground is the customer’s wallet.
The victors will be those that can order their entire organization around the challenges of getting cheaper more profitable and more loyal customers.
It’s an age of expert buyers. Customers are becoming ever more critical and demanding.
Customers know that they can play the market and are placing higher and higher demands on suppliers to give them what they want – and immediately.
• Two pairs of concepts
The marketing perspective
B2B B2B
B2B
B2C
business customer
end-customer
Vs.
consumer
customer
Vs.
• Rising customers expectation
The marketing perspective
better levels of general education
better ability to discern between
alternative products
Exposure to more lifestyle issue in the
media
1 2 3
• The information revolution
The marketing perspective
internetinternet
Industry structureIndustry structure
Buyer-supplier relationshipBuyer-supplier relationship
Purchasing, SCM and NPDPurchasing, SCM and NPD
The marketing perspective
Segmentation
Quality of service
Setting logistics priorities
Content
• Key issue
Segmentation
1111What is segmentation, and what are its implications to logistics strategy?
• Market can be segmented in many ways– Demographic: such as age, gender and
education– Geographic: such as urban vs. country, types of
house and region– Technical: the use that customers are going to
make of a product– Behavioral: such as spending pattern and
frequency of purchase
Segmentation
A powerful way to bridge marketing and logistics
Miller caseMiller case
Segmentation
Beer market consumer
Light drinker Heavy drinker
Consumption 1:8
•Blue-collar•Over 30 years of age•Spend long time on watching TV per day•Sporting.
•female•High level income
• Fragmentation of Markets and Product Variety
– Are the requirements of all market segments
served identical?
– Are the characteristics of all products identical?
– Can a single supply chain structure be used for
all products / customers? No! A single supply
chain will fail different customers on efficiency
or responsiveness or both.
Segmentation
• Activity 1– Try to compare the segmentation
strategies between Dell and Lenovo in computer market.
– What logistics strategy should Dell make to fit its market segmentation? So what about Lenovo?
Segmentation
Segmentation
functional innovative
efficient
responsive Dell
Lenovo
The marketing perspective
Segmentation
Quality of service
Setting logistics priorities
Content
• Key issues
Quality of service
1111How do customer expectations affect logistics service?
2222How does satisfaction stack up with customer loyalty?
Quality of service
CaseCase: Service of a seafood restaurant
Fourth floor
Third floor
Second floor
First floor
¥ 10
¥ 6
¥ 3
¥ 2
Quality of service
Service is the combination of outcomes and experiences delivered to and received by the end-customer (Johnston and Clark, 2001).
Service specification
Expected service
Service delivery
Perceived service
supplier customer
Gap 1
Gap 4
Gap 3Gap 2
• Customer loyalty = Customer satisfaction
• Value disciplines– Operational excellence– Product leadership– Customer intimacy
• Customer relationship management– Bow tie– Diamond
Quality of service
supplier customer supplier customer
?
The marketing perspective
Segmentation
Quality of service
Setting logistics priorities
Content
• Key issues
Setting logistics priorities
1111How can we set logistics priorities?
2222How do such priorities relate to customer segments?
Setting logistics priorities
Identify the order winners and qualifiers according to customer needs by market segment
Priority order winners for each segment
Identify gaps in existing logistics capabilities: reinforce strengths and plug weaknesses
Using market segments to set logistics priorities
Zara case
Flag brand of a Spanish apparel manufacturer and retailer group---Inditex
Produce and sell the most fashioned apparel, target core is female of 18-35 years.
The first shop of Zara was built in 1975.
Own loyal customers, regular buyers visit 17 times per year.
Rivals of Zara: Gap(USA), Mango(Eupope), Benetton(Italy)
ZARAChina clothing
firm
Lead time 10 ~ 14天 90天Percentage of
preseason production
10 ~ 15% 100%
Number of new fashions per year 12000 4000
Stock turnover 11/year 3/year
– Product style• Agile design, not pilot design
• Employ many cool hunters
– Production system• 50% production at headquarters, 20% imported from low-cost
countries (Asia), 30% in other region of Spain or Europe
• Spare production capacity: production is always lower than forecasted sales
• Global sourcing cloth materials. Half of materials are naturally colored, and then dyed and painted in a subsidiary of Inditex. This cycle only spends about one week.
• Zara’s production system only covers the elements with scale economy, such as dyeing, cutting, labeling, and packing. The processes of labor-intensive are usually operated by hundreds of sub-contractors.
– Logistics• Receiving orders with a high frequency and small
volume, shop managers keep direct contact with headquarters.
• Each delivery runs within 48 hours. Goods are transported by land-carriage (less than 24 hrs) or by air (more than 24 hrs).
• Two distribution centers are located in Spain. All items are labeled and priced at distribution center, and then delivered by third-party logistics firms.