Supplement1 - Thursday October 1 2009 Guest speakers Eli...

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Unformatted text preview: Thursday, October 1, 2009 Guest speakers: Eli Lilly Spoke about Medical and Marketing research Early integration of medical and marketing research is critical to the success of the product. Medical: Data is the reality “science will lead us” push approach “if you build it, they will come” mentality Organism live, adapt, multiply, divide, evolve, decline and die Marketing: Perception is the reality “market will lead us” pull approach Sales representatives are the ones who ring the cash register Markets live, adapt, multiply, divide, evolve, decline, and die To Be successful: Do you understand the market? Desk research Field research Thought leaders Disease state labels How are you going to position the molecule? “what is the space in the customer’s mind that we want this product to occupy?” Write the plan. How to commercialize, how to succeed The Eli Lilly “Rocketship” Discover (project team) develop (program teams) maximize (product teams) Customer Value! What and How do we do it? (marketers that is) Focus is on the patients, physicians, payers In the disease state, find the current treatment and the level of satisfaction Market opportunity mapping: what is here now, what is coming? How will we position this and where can we compete? Methods: primary and secondary market research, book research, focus groups, one on ones Tuesday October 6, 2009 THE PLACE ELEMENT OF THE MARKETING MIX Marketing Channels and Supply Chain Management Chapter 12 Supply Chain Management • Seamless management of all activities through which raw materials are transformed into products and made available to final consumers • Physical supply network: in bound to manufactures • Marketing channel: out bound/downstream from manufacturers • Because the customer is the “center of the universe” the supply chain is also the value chain Marketing Channels • Marketing channel o A set of interdependent organizations involved in transfer of ownership as finished products move from producer (mfg) to consumer • What takes place for us to get to their goods? • Place: do you use resellers; who is responsible for promotion or pricing? Who are the players that will get the product into our hands? Who are the intermediaries? Channel Intermediaries • Retailer o Sells mainly to final consumers o Tends to be the middle man where we get the good from the manufacturer • Merchant Wholesaler o Buys and takes title to goods from manufacturer o Stores, ships, and sells to other businesses o Other businesses are the customer; some risk involved because they take some ownership in the good • Agent and/or broker o Facilitates sale between manufacturing and others. o Does not take the title of goods Marketing Channel Functions • When intermediaries are used, what do they bring to the table? o Lots of pushing currently to get rid of the middle man. o While it is possible to get rid of the middle man, the middle man’s functions still must be taken care of!! • Specialization and Division of Labor o They are experts at what they do. o You expect them to provide a certain level of service in their expertise • Overcoming discrepancies • o Time and space differences, etc…specifics later in notes Providing contact efficiency o Without a middle man that would be too many transactions to get all those involved on the same page. Specialization and Division of Labor • Intermediaries develop skills in selling o Know customers and build relationships It is not the job of the manufacturer to know the customer. They do not know customer behavior, shopping patterns, or what makes the customer “tick” Also, manufacturers can suggest a price for the item to be sold, but they don’t really know what customers are actually willing to pay. This is why on many price tags you may find a difference between the “manufactured suggested price” and the actual price. The above, and more, are all the jobs of the retailer o Efficient in handling large marketing mixes and financing o Understand merchandizing (how to position items to sell) Overcoming Discrepancies • Discrepancy of quantity o Difference between efficient production volumes and volume desired by end customer o Most customers purchase as you need an item. They buy one thing, not 12 of that thing. Not everyone feels the need to shop at Sams, Costco, etc. Because of this, retailers break bulk. They provide quantity as the customers desire it. Overcoming discrepancy and understanding how it is produced is not the same as how it is desired. • Discrepancy of assortment o Difference between mix of items produced by one manufacturer and mix of items desired by customer o Provide products in assortments desired o You don’t have to go the butcher, jeweler, oil change, etc just go to walmart • Temporal (time) discrepancy o Difference between time when item is produced and time when consumer wants to buy it o Christmas in july; retailers purchase things out of season so that customers can buy them when they are in season • Spatial discrepancy o Difference between place where item is produced and the place where consumers want to buy it o Automotive industry; you do not have to go far to find what you are looking for. Manufacturers ship to dealers so that consumers can find things easily without having to go all the way to japan for instance. • By overcoming discrepancies channels provide: o Time o Place o Assortment o Possession utility • Channel members perform key functions o Transactional, logistical, facilitating • Overcoming discrepancies brings value to the entire process • SEE EXHIBIT 12.2 IN THE TEXT Providing Contact Efficiency • 5 manufacturers, 5 consumers, ZERO middle men = 25 necessary transactions o Each transaction has a series of expenses tied to it making this a costly problem • Add one intermediary, same manufactures and consumers = only 10 transactions o Though there is still a series of expenses tied to each transaction, it is more feasible to choose this option. Channel Structure • Manufacturers must decide o Number of levels in the channel o Distribution intensity at each level Channel for Consumer Products Factors in deciding number of levels • Market characteristics o Size, geographic dispersion, buying patterns • Product factors o Complexity, cost, ease of movement • Company (manufacturers) factors o Size, desire for control, diversity in consumers/retailers • General Rule o Shorter, more direct channel for: Complex, expensive, customized items Many business to business products No intermediaries needed or involved o Longer, more indirect channel for: Low cost, standard items Most consumer products Middle man involved o It’s the difference between convenience goods and shopping products, specialty goods and unsought goods. Levels of DistributionIntensity Trends in Channel Design • Disintermediation o Elimination or reduction in the number of levels • Increased use of electronic channels • Regardless of the channel structure, all functions must be performed by someone THURSDAY OCTOBER 8, 2009 Supply Chain Management • Seamless management of all activities through which raw materials are transformed into products and made available to final consumers o Includes monitoring and management of information flows, product flows, sales tracking, measurement of services across organizations • Logistics o Management of physical flow of raw materials, components, and products across the supply chain o Physical flow from beginning to end Objective of logistics • To give the customer (channel member or consumers) the needed level of customer service at the lowest cost o Most of the time in terms of logistics the retailer is referred to as the customer o Should you provide the highest level of customer service possible? Or just what the customer needs? Obviously you should only provide what the customer needs or it is a waste of resources. • Usually measured in terms of: o Order cycle time o Product availability o Order accuracy o Flexibility o Information Logistical Components of the Supply Chain • Sourcing and procurement • Production scheduling • Order processing • Inventory control • Warehouse and materials handling • Transportation • Logistics information system o The above are in no particular order. Sourcing and Procurement • Objective o Obtain needed supplies in the right quality at the lowest cost o Develop long term relationships with suppliers Remember first few days of class. We discussed creating lasting relationships. The same is true here, it is critical to maintain long term relationships that make you feel confident in the suppliers, transporters, etc that you are getting the best price for your deal. Production Scheduling • Determining method and timing of the manufacturing of a mix of products o Built to stock (push) versus build to order (pull) Order processing • A system for easily receiving orders and accurately and quickly filling them o EDI‐electronic data interchange Computer to computer exchange of ordering information Inventory control • Maintaining the correct amount of inventory • Goal is to meet product availability standards while keeping costs low o MRP, DRP systems Materials Handling Functions • Moving products within a facility o Receiving, sorting, storing, finding, getting ready for shipment o What takes place within the actual distribution center Transportation Railroads Motor carriers Pipelines Water Airways Be familiar with above chart… Trends in Supply Chain Management Advanced computer technology (RFID) Outsourcing of logistics functions (3PLs) Electronic distribution 45 questions, 1 essay Majority of questions from product and research sections 2 questions from Eli Lilly 9 Questions from supply chain management/processes section. ...
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