Customer Driven

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For the exclusive use of J. ZHU

Customer-Driven
Distribution Systems

by Louis W. Stern and Frederick D. Sturdivant

Harvard Business Review
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This document is authorized for use only by Jia Zhu in Supply Chain Distribution Management taught by C. Fred Miao from January 2012 to May 2012.

For the exclusive use of J. ZHU

HBR

J U LY– A U G U S T 1 9 8 7

Customer-Driven Distribution Systems
by Louis W. Stern and Frederick D. Sturdivant

T

oo often, distribution is the neglected side of
marketing. Automobile companies, savvy in
many aspects of strategy, have lost huge
shares of the parts and service markets to NAPA,
Midas, and Goodyear because they resist making
changes in their dealer franchise networks. A great
many other American companies—Tupperware springs
to mind—are reaching their markets in similarly
outmoded ways. It is hardly seemly for Tupperware
to continue with its “parties” when more than half
of American women are working outside their homes.
In contrast, a number of companies have outstripped their competition with imaginative strategies for getting products to their customers—and marketing executives can learn from them. The Federal Express system is so innovative and formidable that it might be considered a model even beyond the

small-package delivery industry. American Hospital
Supply has gained the edge over its competition by
linking up to hospitals and clinics with a sophisticated system of data processing, while Steelcase has set a standard for delivering complex office furniture
installations, complete and on time.
Although American companies have been ignoring
the ways in which they deliver products and services,
their customers are increasingly inclined to demand
higher standards of performance. Customers want
companies to value their time and trouble.
And so important opportunities for gaining a competitive advantage through distribution remain, and given the new technology, some companies may, as
Federal Express has, achieve a breakthrough. Will the

management of American companies (deregulated
telecommunications companies included) make use
of these opportunities or even recognize them for
what they are? Just what process should a company
use to select or structure the best possible distribution channels for its products? We suggest eight steps to design a distribution
system that really performs. The word process is key
here because whatever the result of taking these steps,
management will gain by clarifying what its customers want and how to serve them. Managers are always saying that they want their company to be “market
driven.” In following these steps, they can give substance to what is too often merely corporate rhetoric.

Louis Stern is the John D. Gray Distinguished Professor of
Marketing at the J.L. Kellogg Graduate School of Management at Northwestern University. He is the coauthor (with Adel I. El-Ansary) of the textbook Marketing Channels
(Prentice-Hall, 1982) and has published scores of articles
on marketing management and marketing channel relationships. In 1986, he won the Paul D. Converse award for outstanding contribution to theory and science in marketing, presented by the American Marketing Association. Frederick Studivant is senior vice president of the MAC

Group, Inc. and head of its San Francisco office. He is the
author of The Corporate Social Challenge: Cases & Commentaries (3d ed., Richard D. Irwin, 1985) and of several other books on marketing and business strategy. Before
joining The MAC Group, he was on the faculty of the
Harvard Business School and held the M. Riklis Chair at
Ohio State University.

Copyright © 1987 by the President and Fellows of Harvard College. All rights reserved.

This document is authorized for use only by Jia Zhu in Supply Chain Distribution Management taught by C. Fred Miao from January 2012 to May 2012.

For the exclusive use of J. ZHU
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