Distribution: The Challenge of Change Nirmalya Kumar Professor of Marketing and Retailing IMD Lausanne, Switzerland e-mail: Kumar@imd. ch This presentation has been developed by Nirmalya Kumar. Please do not reproduce any part of it without the permission of the author. Thank you. Nirmalya Kumar 1 NK-Distribution-Challenge of Change Copyright © IMD International, Lausanne, Switzerland Not to be used or reproduced without permission
Distribution is about aligning Who to serve? Valued Customer What to offer? Value Proposition How to deliver? Value Chain Having the right product is essential. Given that, the battleground in the year 2000 and beyond will be the quality of distribution systems and support in the marketplace. Louis W. Stern Nirmalya Kumar 2 NK-Distribution-Challenge of Change Copyright © IMD International, Lausanne, Switzerland Not to be used or reproduced without permission
In distribution, we confront five major forces of change Incumbency dilemma for manufacturers Integration of supply chain International expansion of retailers Information empowered consumers Internet explosion Nirmalya Kumar 3 NK-Distribution-Challenge of Change Copyright © IMD International, Lausanne, Switzerland Not to be used or reproduced without permission
Internet … is difficult to comprehend I don’t understand the valuations David Glass CEO Wal*Mart … is ubiquitous Amazon versus Barnes & Noble will happen in every industry John T. Chambers CEO Cisco … requires new thinking His (Bezos) business model boils down to ‘buy at 100 and sell at 80’ Jacques Nasser CEO Ford Motor Company … is in its infancy I don’t think we’ve seen the biggest changes at all Nirmalya Kumar 4 NK-Distribution-Challenge of Change Michael Dell CEO Dell Computers Copyright © IMD International, Lausanne, Switzerland Not to be used or reproduced without permission
… and the winners are unknown Supermarkets Automobiles www. netgrocer. com www. autobytel. com www. peapod. com www. autonation. com www. streamline. com www. carmarket. com www. walmart. com www. gmbuypower. com www. webvan. com www. toyota. com Nirmalya Kumar 5 NK-Distribution-Challenge of Change Copyright © IMD International, Lausanne, Switzerland Not to be used or reproduced without permission
Hopefully we will not face crisis driven change BUT Radical new distribution channels always change the nature of the product they are distributing Peter Drucker Change, even for the better, is not made without inconvenience Unknown AND Be the change you want to create Mahatma Gandhi Nirmalya Kumar 6 NK-Distribution-Challenge of Change Copyright © IMD International, Lausanne, Switzerland Not to be used or reproduced without permission
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