Gurus On Marketing

Porter’s Value Chain and marketing
The value chain is the activities in which organisations engage in order
to produce goods and services. This involves organisation’s infrastructure,
human resource management, technology, procurement,
inbound logistics, operations, outbound logistics, marketing and sales
and service. The concept of the value chain was made popular by
Michael Porter in 1985 in his book ‘Competitive Advantage: Creating
and Sustaining Superior Performance’.
Organisations aim to achieve optimisation of each element of the value
chain. In analysing various elements, for example, inbound logistics
(material handling, inspection, just-in-time delivery), outbound logistics
(order processes, transport), marketing and sales (product
development, pricing, promotion, distribution), service (on-site and
off-site service, spare parts, customer care), organisations stand to gain
insight not only into their own capabilities but also of their competitors’
capabilities and competencies.
Porter distinguishes between primary activities and support activities.
Primary activities are directly concerned with the creation of a
delivery of a product or service. They can be grouped into the following
areas: inbound logistics, operations, outbound logistics, marketing
and sales and service. Support activities are there to improve effectiveness
of primary activities. They consist of infrastructure, human
resource management, technology development and procurement.
‘A firm’s value chain is embedded in a larger stream of activities
that I term the value system. Suppliers have value chains (upstream
value) that create and deliver the purchased inputs used in a firm’s
chain. Suppliers not only deliver a product but also can influence
a firm’s performance in many other ways. In addition, many products
pass through the value chains of channels (channels value)
on their way to the buyer. Channels perform additional activities
that affect the buyer, as well as influence the firm’s own activities.
A firm’s product eventually becomes part of the buyer’s value chain.
The ultimate basis for differentiation is a firm and its product’s role
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GURUS ON MARKETING