Competitive Advantage through Channel Management
A. Customer Focus
Each of these companies recognizes that it is not merely selling a product; rather, it adds value based on its understanding of the consumer experience while purchasing and using the product.
All have: (1) well-defined customer segment(s), (2) an understanding of customer purchase/ usage activities, and (3) sophisticated on-going analyses of their customers.
Dell, Inc. Segments:
• Business Market, which is further divided into: Large companies, Government, Education, Hospitals, Small Business
• Consumers, specifically computer-savvy consumers
Using a combination of demographics (e.g., company size, industry) ...view middle of the document...
As a result, consumers tend to procrastinate—delaying the decision, making multiple trips to the store to collect information and compare alternatives before purchasing. The design of stores, catalogs, and the IKEA Web site reflects this understanding.
Although not explicit in the case, it is clear that IKEA has gained an extensive knowledge of its customers through unobtrusive observation of their purchasing behavior. Company officials say that they “don’t spend much money or time on studies. We use our eyes and go out andlook, and say it will probably do quite well here
• Convenience-driven customers
• Age and Gender
• Time of purchase
Seven-Eleven’s customers are more value-conscious than cost-conscious. They are looking for convenience in solving day-to-day hassles: one-stop shopping for lunch, meals, or snacks; ATM withdrawals; package payment and delivery—everything you need to get through the work week. When you’re working long hours in a cash society (where banks are not consumer friendly in terms of hours or locations), what could be easier than picking up everything you need from one of the many Seven-Elevens that you pass on the walk home from the mass transit station?
Seven-Eleven learns about its customers through constant experimentation and tracking of sales by time of day and customer type. Ideas for new products are tried in the store, data is recorded and analyzed, and recommendations are made throughout the organization. Sales trends are examined to further fine-tune assortments, often in real-time (e.g., cold drinks for hot days).
B. Company Infrastructure
Again, there is a common theme in infrastructures of these companies: (1) organizational capabilities, and (2) investment in technology.
(1) Organizational Capabilities
One of the things that these companies have in common is their willingness to take calculated risks. New products are the lifeblood of these companies, and their leaders recognize the importance of trying new ideas and learning from the results. There will be failures, but that is acceptable as long as the organization learns from those failures.
b. Organizational Structure and Culture
Dell and Seven Eleven Japan offer good examples of how structuring the organization to support customer interactions can increase effectiveness and efficiency. One of the keys to controlling cost in a mass customization strategy like Dell’s is to reduce the cost of selling to, and servicing, customers. Dell does this by structuring its organization around customer segments. Each segment has a dedicated sales and support team, which allows Dell to attain learning advantages and monitor the cost of serving each segment.
Similarly, Seven-Eleven’s organizational structure is designed to support stores’ interaction with customers. The stores—most of which are franchised—are supported by Seven-Eleven’s sophisticated POS system, and management analysis and advice. In addition...