Distribution

 strategy  and  
I-­‐12 Supply  chain  in  
Telecommunication  and  
Informatics
Introduction  to  Telecommunication  &  
Informatics  Business
EBI1H3
Semester  2,  2020-­‐2021

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 Introduction  to  Telecomunication and  
Informatics  Business
EBI1H3
The  introduction  to  telecommunication  and  informatics  will  focus  on  the  basic  concepts  of  the  
telecommunications  and  information  industry  through  aspects  of  data  communication,  online  mobile  
services,  business  models  and  portfolios   with  a  comprehensive  governance  of  operations  approached
1. Introduction  to  Telecommunications  and  Informatics  system
2. Telecommunications  and    Informatics  Business,  today  and  in  the  future
3. Basic  concept  of  Network 8. Portfolio  and  business  model  of  telco/celco
4. Data  Communications Case   9. e-­‐TOM  Model
5.    Cellular  and  wireless  &  FO study   10. Core  Competency
6.    Internet  and  service   and   11. Marketing  strategy  of  Telcomm &  Informatics
Integration business   12. Distribution  strategy  and  Supply  chain  in  Telco
practice 13. ICT  Governance
7.    Data  Comm Services  
Security 14.  Integrated  Review
/   ICT
Contents:
• Introduction  to  Distribution
• Differentiate  the  Distribution  Chain
• Suppliers  and  Partners  Strategy
• Internet  as  a  New  Distribution  Strategy
• Supporting  Tools
• The  Supply  Chain  Management  /  SCM
 Introduction   to   Distribution

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Integrated  Marketing
What  are  distribution  channels?
Distribution  channels:  
— a  series  of  processes  
— undertaken   by  organizations  
— has  interdependent   ones  involved  
— in  the  process  of  making  a  product  or  service  
— ready  for  use  or  consumption

(Kotler,  1997).
Example  of  distribution   choices:
Pre-­‐paid  vs  post-­‐paid
Domestic  vs  international
Urban  vs  rural
Segmented  vs  all   market
Wholesale  vs  retail
Own  vs  agency  ( middle  man)
Basic  Concept
Distribution   is   one  of  the  aspects   of  marketing  
Marketing mix  (4P)

v A  distributor  is  the  middleman  between  the  

manufacturer  and  retailer.  
v After  a  product  is  manufactured  it  is  typically  
shipped  (and  usually  sold)  to  a  distributor.  
v The  distributor  then  sells  the  product  to  
retailers  or  customers

Objectives  of  Distribution  Channels  Concept  

• To  reconcile   the  needs  of  producers  and  consumers  
• To  improve  efficiency  by  reducing  the  number  of  transactions  and  creating  bulk  
• To  improve  accessibility  by  lowering  location  and  time   gaps  between  producers  and  consumers  
• To  improve  specialist  services  to  customers
Five  Market  Flows  in  the  Marketing  Channel

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Telco/Celco Distribution  Concept

Distribution channels comprise • Telco/Celco service providers can

• the support structure establish their market position
wherever they want along the
• function, to deliver telco services to customers. distribution chain and with
whatever breadth of product they
• Elements in the distribution chain believe will make them successful
• The new competitive environment
requires a thorough reassessment
Wholesalers • brokers,   of channel strategies.
• agents,   • Selection of the channels should
Retailers               • resellers,  and  a  host  of  
other  intermediaries.   consider (1) their strengths and (2)
focus within the distribution chain.

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 Differentiate   the   Distribution  Chain

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Differentiate  Distribution  Chains
• Telco/Celco service has began to differentiate, incl their distribution
channel.
• The wholesale channel is emerging as a source of growth in the industry.
• In Indonesia, we saw the growth in telco market thru the availability of
new entrants (providers, users, services)
• Much of the increase is cause by new technology-­‐based business models
(3G, 4G/LTE, smartphone, satellite)
• The differentiation enhanced by the rise in service providers without a
facilities investment (MVNO / Mobile Virtual Network Operator)
• Wholesalers and other differentiation strategies are important in the
competitive market.
• More market segmen to service, need focus strategy
• Telco service provider can’t do it alone
The  Emerging  of  the  Wholesale  Market

• New business models in wholesale markets –included

in ICT industry-­‐ will boost the wholesale segment.
• Benefits of wholesale services ;
• Service level guarantee
• Minimize staff needed
• Reducing equipment investment
• Target more customers
Coexisting  Strategy
• In the inter-­‐exchange market, many of the largest carriers/operators/telco
wholesale their network services, some more aggressively than others.
• Is it providing wholesale services has the potential to cannibalize their retail
base of customers?
• Wholesale recovers business that would have been lost to competitors anyway.
• The wholesale operation is such a small part of the business that channel conflict is not an
issue.
• If it were, resellers would still have an abundance of wholesale-­‐only suppliers with
considerable overcapacity.
• Several telecommunications service providers plan to offer wholesale VoIP
service
• Challenges when serving two market ;
• Creates channel conflict. Telco acting as wholesaler compete against their own retail
customers
• Channel conflict (perceived)
Is  it  serving   both  market  necessary   ?
• If facilities-­‐b ased incumbents expect the wholesale business to be successful,
they should eliminate the channel conflict of a retail operation
• Telco service provider in highly competitive markets will find better uses for
capital and expense dollars than in owning and operating a network in a
market characterized by overcapacity
• A service provider in the retail channel will be more flexible to enter and exit
markets than a facilities-­‐based competitor.
• A telco without facilities investment can purchase services based upon
newer technologies as they are launched without stranding investment.
• Telco provider concentrated in a well-­‐defined channel has a better
opportunity to be excellent than one spread across the distribution chain
• Telco provider intending to grow through mergers will command more value
for its customer base than its facilities in areas where the merger partner
already owns facilities
Case  of  Telco  Vertical  Integration
Corporate   Expansion  Actions
V I Customers
e The facilities-­‐based provider
n
r controls its own facilities and
d
t Forward  Integration service quality:
i  
i • they seek to differentiate its
r
c brand based on service
e
a quality by build its own
c
l channel network.
t Horizontal The   Horizontal
Telco in most of the 20th
Diversification Company Integration
I century, especially the largest
c
n (the Bell System) were vertically
o
t integrated, making their own:
m
e p
• telephones, telephone
Backward  Integration cables, telephone exchange
g e
r equipment and other
t
a Supplier supplies
I
t t
i o Horizontal  Integration  /  Diversification
o r
n
 Suppliers   and   Partners  Strategy

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Suppliers  &  Partner  Strategy  

• Suppliers  are  the  other  distribution  strategies  that  can  be  used  by  
telco/celco/ICT  providers

• Using  suppliers  or  other  party’s  capabiliies to  enhanced  services

To   enhance   services

Telco  
Suppliers Providers customers

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Suppliers  &  Partner  Performance  Measurement
Performance  measurement

• Vendors and suppliers are often measured on their contribution to a company’s success
On   three   simple   factors,   whether

deliver  more

deliver  more   deliver  more   deliver  more  

(quickly) (cheaply) (effectively)

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Suppliers  Partnership  is  flourished
• Yet many suppliers know that they have so much more to offer to companies who are
willing to think outside these traditional supplier definitions.
• Indeed, in the rapidly changing technological environment, coupled with a challenging
economic environment, a shift in perspective toward suppliers and their offerings may be
a welcomed change for many company executives seeking to reconcile the balance sheet
with the company’s long-­‐term needs
• A bundling marketing program –between celco, gadget supliers & application-­‐ is one
example of suppliers partnershipà TAU (Telkomsel Android United) Telkomsel Package

• Supplier partnerships will become more important as companies expand their

outsourcing of mission-­‐critical functions.
• Advances in information systems and the rise in suppliers to meet market requirements
will foster the growth in outsourced services and strategic partnerships along the
distribution channel.

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 Internet  as  New   Distribution  Strategy

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Internet  Distribution  Strategy
• Internet become new distribution strategy
• Slightly anomalous
Telco, which using more information technology than other industry, surprisingly have not
been utilizing the internet

Think   of   what   internet  can   support  the   telco

providers   in   delivering   the   product

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An  Extention of  Global  Distribution  Strategy/GDS
• The internet has become an extension of global distribution systems
(GDSs).
• It offers three particular strategic possibilities:

(1) to drive revenues by extending the company's reach to broader, more global
markets,

(2) to reduce costs by bypassing traditional distribution channels (e.g., airline

GDSs), avoiding commissions, and lowering transaction fees,

(3) to enhance customer service by providing more and better information

with multimedia

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The  Roles  of  Internet  &  WWW

• A new medium-­‐-­‐the Internet and World Wide Web (WWW)-­‐-­‐is changing distribution
channels like no other force since the Industrial Revolution.
• It is modifying many of the assumptions on which channel structure is based, and in some
cases it is transforming and even obliterating channels themselves.
• As a result, many intermediaries will die out, while new channels and intermediaries will take
their place (such as online marketplaces)

There  are  three  (3)  essential  purposes  of   However,  the  Internet  and  Web  have  
distribution  channels: brought  about:  
• to  support   economies  of  scope,   • the death of distance,
• to  routinize  transactions,  and   • the homogenization of time, and
• to  search  for  information  essential  to  both   • the irrelevance of location.
producer  and  consumer.

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 Supporting   Tools

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• Distribution channel decisions require choices between
channels,
• it need the supporting tools.
• Supporting tool available:
• Data mining
• Vertical integration
Customer  Data  that  gathered  by  providers

— A significant difference between the typical

— “Internet Service Provider” and the typical
— “Telecommunication/Cellular Service Provider” lies in the

— relationship with the customer

— à the data gathered from the customer by those providers are

different
Data  characteristics  of  customer
1. Where à data about where the main services are consumed
2. Who à personal data about the subscriber (such as name and
address)
3. When à data about the time of consumption
4. With what (means) à data about the terminals as well as the
access technology used
5. What à data about the exact contents the costumer access
6. How à data about the methodology the user apply to data
retrieval and consumption
7. Why à data about the reasons or the requirements that drive
service usage
 Why
Characteristics
Market  Analyst
How
Data  

Internet
What Players

With  What Broadcasters Telecoms  Service

Providers
When

Who
Broadband  Providers
Where

Everyone                                      Group                                Individual

Customer  
Intimacy
Cross  Industry  Collaboration
Value  System

Infra   Network   Service   Content   Content   Marketing  

structure   operation Delivery Brokering Creation &  Sales Care
constr.

Costumer  
Intelligence
Where        Who         When        With        What       How    Why
what

Cross  Industry  Collaboration Source  :  Christian  Saxtoft,Convergence

 Characteristic  of  Communication  Services
Push  Marketing
• a  promotional  strategy  where  businesses  
TV  over  the   Targeted   attempt  to  take  their  products  to  the  
air Adv customers.  
Push Mobile   • Common  sales  tactics,  trying  to  sell  
Marketing directly  to  customers  via  company  
showrooms  and  negotiating  with  retailers  
Cable  TV to  sell   their  products  for  them,  or  set  up  
Search   point-­‐of-­‐sale  displays.  
Social   Engines Pull  Marketing
Websites Pull  marketing,  on  the  other  hand,  takes  the  
Pull opposite  approach,  
Voice  
• is  to  get  the  customers  to  come  to  
Telephony
company,  hence  the  term  pull,  
• marketers  are  attempting  to  pull  
Everyone   Group   Individual customers  in.  
• Common  sales  tactics  used  for  pull  
marketing  include  mass  media  
promotions,  word-­‐of-­‐mouth  referrals  and  
advertised  sales  promotions.  
 The  Supply-­‐Chain  Management  /  SCM

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Supply-­‐Chain
• A supply chain is a network • The functions in a supply chain
between a company and its include:
suppliers to:
• produce and • product development,
• distribute • marketing,
a specific product or service. • operations,
• The entities in the supply chain • distribution,
include: • finance, and
• producers, • customer service.
• vendors,
• warehouses, • Supply chain management
• transportation companies, results in:
• distribution centers, and • lower costs and
• Retailers.
• a faster production cycle.

https://www.investopedia.com/terms/s/supplychain.asp
The  Value  Chain:  
Linking   Supply  Chain   and  Business  Strategy

Business   Strategy

New  P roduct Marketing

Strategy Strategy Supply  Chain  Strategy

New  Product   Marketing  and

Operations Distribution Service
Development Sales

Finance,  Accounting,  Information   Technology,   Human   Resources

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Flows  in  a  Supply  Chain

Figure  1-­‐2

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Competitive  and  Procurement    Strategy
–The  relationship

Competitive  strategy

New  P roduct Marketing  &

Development Operations Distribution Service
Sales

procurement    Strategy

Supplier Operations Logistics

Strategy Strategy Strategy

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The  Roles  of  Supply-­‐Chain  Management  /  SCM
Why does telecommunication / ICT business need a perfect
Supply Chain Management / SCM?

The  reason,  SCM  in  Business  Entity

1.Improve  operations
2.Increasing  levels  of  outsourcing
3.Increasing  transportation  costs
4.Competitive  pressure
5.Increasing  importance  of  e-­‐commerce
6.Complexity  of  supply  chains
7.Manage  inventories

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The  SCM  is  supported  by  Technology
CRM
Market research data
scheduling information
Supplier Engineering and design data
Order flow and cash flow Customer
Ideas and design to satisfy end
Inventory customer
Material flow
Supplier Credit flow

Manufacturer Customer

Supplier
JIT Inventory
B2C
ERP
Inventory

B2B Inventory
Distributor Customer

SCM

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The  Future  Internet-­‐Driven  Supply  Chain

The  future  
Internet-­‐driven  
supply  chain  
operates  like  a  
digital  logistics  
nervous  
system.

It   provides   multidirectional   communication:  

among  firms,  networks  of  firms,  and  e-­‐marketplaces  so  that  entire  networks  of  supply  chain  
partners  can  immediately  adjust  inventories,  orders,  and  capacities.

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Handy  Resources  &  Refference
• Strouse, Karen G(2001); Strategies for Success in the New
Telecemmunications Marketplace; Artech House
Telecommunication Library. London; Chapter 12
• Dr Christian Saxtoft (2008); Convergence: User Expectations,
Communications Enablers and Business Opportunities;
John Wiley & Sons, New York City, USA
• Kotler,  Philips;  11th  edition  (May  1,  2002);  Sales  and  Marketing  
Channel  Management;  Prentice  Hall,  USA