Chapter 2 Putting the end-customer first

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Chapter 2Putting the end-customer first
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Content
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The marketing perspective

• Key issue

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The marketing perspective

• 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)

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The Challenge
The marketing perspective
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The marketing perspective
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The marketing perspective

• Two pairs of concepts

B2C
B2B
B2B
B2B
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The marketing perspective

• Rising customers expectation

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The marketing perspective

• The information revolution

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Content
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Segmentation

• Key issue

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Segmentation

• 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

A powerful way to bridge marketing and logistics
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Segmentation
Beer market consumer
Miller case
Consumption 18
Light drinker
Heavy drinker

• Blue-collar
• Over 30 years of age
• Spend long time on watching TV per day
• Sporting.

• female
• High level income

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Segmentation

• 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.

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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?

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Segmentation
functional
innovative
efficient
Lenovo
responsive
Dell
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Content
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Quality of service

• Key issues

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Quality of service
Case Service of a seafood restaurant
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Quality of service
Service is the combination of outcomes and
experiences delivered to and received by the
end-customer (Johnston and Clark, 2001).
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Quality of service

• Customer loyaltyCustomer satisfaction
• Value disciplines
• Operational excellence
• Product leadership
• Customer intimacy
• Customer relationship management
• Bow tie
• Diamond

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supplier
customer
supplier
customer
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Content
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Setting logistics priorities

• Key issues

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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
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Zara case
Flag brand of a Spanish apparel manufacturer and
retailer group---Inditex
The first shop of Zara was built in 1975.
Produce and sell the most fashioned apparel,
target core is female of 18-35 years.
Own loyal customers, regular buyers visit 17
times per year.
Rivals of Zara Gap(USA), Mango(Eupope),
Benetton(Italy)
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ZARA China clothing firm
Lead time 1014? 90?
Percentage of preseason production 1015 100
Number of new fashions per year 12000 4000
Stock turnover 11/year 3/year
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• 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.
• Zaras 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.

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• 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.