Week Eleven

This week's class focused on supply chain and distribution. I found this discussion interesting because it had been hard for me to tell the difference between the two.

On Tuesday, we talked about what a supply chain does. In general, a supply chain is responsible for:

• assembly of raw materials
• customer relationships
• order fulfillment
• production
• sourcing
• logistics

One thing we talked about in great detail was logistics and the inability to have complete disintermediation. This is because a company will always struggle to do everything better than they could have someone else do it for. For example, Fresh Patch may have been really good at marketing their product to their target market, but not as good at growing the grass. For this reason, they have someone else grow the grass so that they don't have to spend as much time on it in order to get the high quality product.

Additionally, companies like UPS, FedEx, and Amazon are examples of successful logistics organizations. These companies have made logistics the only thing that they do, and have made a great deal of money in doing so. Take Amazon for example. The reason that Amazon has become so popular is that they are able to store and distribute products for relatively cheap. As their name has caught on, people have begun to build trust in that brand making Amazon successful at selling products from companies we might not otherwise buy from.

We also talked about pickles and toilet paper. Basically, we were discussing how big box stores like Sam's Club can afford to sell their products at a lower price. The reason is that their target market is not actually regular people. Ordinary people don't NEED to buy a 50 oz jar of pickles. However, their target market is small businesses such as restaurants who need larger quantities of items but not enough to buy directly from the producer. Therefore, Sam's Club can sell 50oz jars of pickles to these companies and make money purely due to the fact that they will have to buy more than one, and will most likely keep coming back. Additionally, places like Walmart can then sell those products in smaller packages, such as 8 rolls of toilet paper. This is what is called "breaking bulk." This creates derived demand because the restaurant has a demand for the pickles in order to make sandwiches, hamburgers, etc for their customers.

On Thursday we discussed specific products and how they are marketed. The products and their product type are listed below

• specialty: Jaguar, Rolex
• convenience: Twinkies
• shopping: Suit, TV
• unsought: septic tank cleaning

We also talked about the different types of distribution intensities. The three different types of distribution intensities, along with their descriptions can be seen to the left. We then categorized each product type into the distribution intensities as follows:

• intensive: convenience
• selective: shopping
• exclusive: specialty

We also talked about how unsought products are seen as selective intensity because of how often we see their advertisements, etc, but behave as exclusive intensity because when it comes to buying unsought products, there are often no other acceptable alternatives within a reasonable time frame. 

In terms of our smart project, our product would probably be classified as a shopping product which would mean we would want to focus on marketing it in a few different places, not too many or too few. Additionally this week we worked on putting our target market surveys into one document. Our group is looking forward to talking with our professor this week about the final steps in the customer discovery process! We are also very excited that we have less than a month left until we get to present our product at the Engineering Expo.

That's all for this week!

-Kristen