Question: Explaining the role of ‘suppliers’ in an organization’s microenvironment. Discuss the impact the supplier environment might have on the marketing of soft drinks.
Definition of suppliers: Firms and individuals that provide the resources needed by the company to produce its goods and services (lecture 3, p10). This includes materials and parts, capital items, supplies and service. (Diagram 1.4)
The Role of suppliers
Suppliers play a vital role in an organization’s microenvironment. The relationship between suppliers and organizations are built on a solid foundation of value. (Diagram 1.3) The growth and the vision of the organization depend heavily on the values that the suppliers can offer. The extent to which organizations and suppliers work together toward their respective or common goals is defined as Joint action. In this Joint, the supplier contribute significantly in provides sources of competitive advantages towards the organizations against other competitors as well as save cost and achieve efficiency for the organization. (Diagram 1.1)
Supplier and organization are interdependent on each other. This relationship develops and nurture strong business ties and make both needed each other to achieve desired goals. The ties can become stronger when both an organization and a supplier are highly dependent on each other. The most important thing is that an organization cannot offer customers superior service if the suppliers are not giving the organization the same.
It is important that the organization has a high communication frequency and information sharing with its suppliers. A good frequent contact and information sharing helps routine issues such as product availability, order handling and delivery issues and reduce uncertainty. When the organization has frequent communication with it’s suppliers, it can give the supplier the chance for operational improvements and product development. This can indirectly help the organization because when the advice is accepted, the efficiency and effectiveness of the supplies can be improved. If the role of the supplier is underestimated by the organization, the organization could prevent itself from improving and developing.
Customer accommodation(Diagram 1.2)
This reflects to what extent the suppliers are prepared to accommodate customer’s changing needs and want, which is always changing rapidly and abruptly.
Can suppliers be flexible? Are they prepared to relax rules for customers? Can they respond to the unexpected? And so on. Here, the role of supplier is vital. If the organization cannot accommodate what customer need and want because of the supplier, the organization could incur a decrease in sale in short term and damage customer satisfaction in the long term.
A high level of product quality usually leads to customer confidence. An organization cannot build that confidence if their supplier cannot produce a high quality supplies.
The role of supplier here is to make sure they can produce quality product that an organization is expected as well as it’s costumers.
Transaction cost is also another important element in supplier’s offering. Transaction cost emphasizes the efficiency of inter-firm ex-change and the magnitude of transaction cost is what determines the degree of relational behavior between firms (K. Kim, 1999, p 218).
Transaction cost includes frequency of transaction, uncertainty and asset specificity, such as location of firms and the delivery.
Organization seeks suppliers that give the best price, such as cost of the products, materials of components purchased and other costs involved process. The supplier also needs to position their price that will bring cost benefits to the company so that their relationship is maintained steadily.
Brand and country of production
Brand and country of production provides value both to the Customer and organization. The quality of the product is always associated with the brand and Country of production when costumers are making quality judgment. The supplier therefore has an important role when the organization is setting out its marketing strategies.
Impact of supplier environment on the marketing of soft drinks
Soft drink company researched- coca-cola, PepsiCo, Quakers, Frito-Lay and Tropicana.
The use of societal marketing philosophy
In the five soft drinks company researched, all of them were involved in helping Minority owned business and Woman/Women Owned Business by making them their secondary suppliers to show that they are concerned about the need and the want of the society as a whole. Their diversity of suppliers made them welcomed in all cultures and different country as well as creates an environment for the organization that attracts better public reputation and favorable publicity.
Impact of supplier environment on the marketing of soft drinks
According to the marketing philosophy, the organization always has to try to satisfy the needs and the wants of its customer. But without the contribution of suppliers to improve and supply what’s required by the organization to provide its good and services, it would be certain that the organization will not be able to satisfy the needs and wants of costumers.
A good supplier environment can help the business to perform better and achieve more. There are few factors that need to be considered for a good supplier environment. In a soft drinks company, the company need to make sure that product, pricing and costumer service of supplier are high in standard. These factors are very important for a soft drink company as that their costumers have rapid and abrupt changes in preferences as well as their dissimilar needs. For example, if a company identifies that a new soft drink needs to be introduced into the market. They must first make sure that there supplier is able to make a new commitment and flexibility towards the new product. Company need to know that if the new soft drink is high in demand; the supplier is able to meet that demand and still maintain the same quality of that particular soft drink.
·International journal of research in Marketing, ‘Joint Action’ (1999)
·Principles of marketing (2001). Kotler, Adam, Brown and Armstrong
·Inside Business Success, May 1998.
·Manager Update Volume 13 number 1 Autumn 2001
·Coca-Cola Soft Drink Company official website, www.coca-cola.com
·PepsiCo Soft Drink Company official website, www.pepsico.com
·Fritolay Soft Drink Company official website, http://www.fritolay.com/biz/minority/index.html
·Quaker Soft Drink Company official website,
·Tropicana Soft Drink Company official website, http://www.tropicana.com/biz/about/supplier.htm
·Queensland Government, Department of public works, Managing and monitoring supplier performance. Web site: unknown.