VALUE NETWORKS
Designing & managing value networks & marketing channels
The art & science of creating,
exploring and delivering VALUE
to satisfy the needs of a target
market at a price
Principles or standards of
behavior; one’s judgment of
what is important in life:
e.g. they internalize their
parents' rules and values
According to Martinez (2003)
“Value resides in the
satisfaction and fulfilment of
customers’ expectations, at the
same time, generating wealth
for organization's.”
A set of connections between
organizations and/or
individuals interacting with
each other to benefit the
entire group.
Value networks are an example
of an economic ecosystem. Each
member relies on the others to
foster growth and increase
value. Value network members
can consist of external members
and internal members.
Value Network is a system
of partnership and alliances
used by a firm to source,
augment and deliver its
offerings.
Intermediaries that help
get the product from
manufacturer to consumer
or end users from the
Marketing Channel(s)..
marketing channels are sets of
interdependent organizations
participating in the process of
making a product or service
available
for use or consumption.
They are the set of pathways a
product or service follows
after production,
culminating in purchase and
consumption by the final end
user.
19
Percent of
Retail
Publisher
National
Wholesaler
Distributor
Retailer
35%
15%
10%
40%
$7.00
$3.00
$2.00
$8.00
Customer
$20.00
• You get
- 35% of retail
- the distributor gets 10%
- the wholesaler gets 15%
- the retailer gets 40%
- less any discount they offer the customer
20
Travel Services:
Impact of Changing Technology
The Advent of GDS Systems (1980 -1995)
Turning the Screen Around
Online Travel (1995-2010)
FAST FACTS
……..In the United States, channel members collectively have
earned margins that account for 30 percent to 50 percent of the
ultimate selling price.
In contrast, advertising typically has accounted for less than 5
percent to 7 percent of the final price……
FAST FACTS
……..The Marketing Channel Chosen affects all the marketing
decisions……..
VARIES ACCORDING
TO THE NUMBER OF
INTERMEDIARIES
Service sector channels use agencies and locations to access
population to be served
Buy, take title, and resell
merchandise.
MERCHANT
Find customers, negotiate, do
not take title to merchandise.
AGENT
Aid in distribution, do not
negotiate or take title to
merchandise.
FACILITATOR
Exclusive distribution
Severely limited distribution.
Selective distribution
Some intermediaries willing to carry
good are selected.
Intensive distribution
Offering is placed in as many outlets
as possible.
Price policies
Price list and schedule of discounts
Conditions of sale
Payment terms and guarantees
Territorial rights
Define territory / terms.
Services to be performed by party
Buy, take title, and resell
merchandise.
MERCHANT
Exclusive distribution
Severely limited distribution.
Price policies
Price list and schedule of discounts
Payment terms and guarantees
Two common distribution practices are legal as long as they
don’t substantially lessen competition: