Suppliers are out; collaborators are in

Alexander Chernev is a marketing professor at the Kellogg School Management at Northwestern University. His writing on the theory of marketing, and the insights he shares, in my opinion rank up there with Philip Kotler and Theodore Levitt. Chernev specializes in applied marketing, i.e. its management, and is known for developing simple yet meaningful frameworks. One of these he calls the 3-V Value

Management Principle. It is worth knowing.3-V.principle of value.managementThe simple graphic to the left does not look especially compelling. Yet, it is a simple though powerful twist on how marketing has classically been viewed – as an interaction between a company and its customers in which the company seeks to maximize its own return (profit, growth, equity) by maximizing the value it delivers to its customers.

Chernev argues (he is not alone) that the practice of going to market today is so complex, and involves so many parties in its planning and execution, that the astute firm views the problem is must solve along three vectors: company, customer, and “collaborator”.

Chernev defines collaborators as: entities that work with the company to create value for target customers. Common forms of collaboration involve suppliers, manufacturers, distributors (dealers, wholesalers and retailers), research and development companies, service providers, external sales force, advertising agencies, and marketing research companies. The term itself implies joint activity and cooperation for mutual benefit.

The concepts of Supply Chain and Value Chain are embraced in the bigger picture of collaborators. Every participant with the company in conceiving, making, selling, delivering, financing and servicing the company’s offerings is a collaborator. Every single one listed on the Accounts Payable roster, and every upstream and downstream entity that the firm engaged to do its business.

The concept of “value” means more than paying invoices on time, having a pithy business proposition for channel members, or providing development assistance. It is more than having a supplier scorecard and with it, the implied threat of changing suppliers if quality, service and price do not pass muster. It is the recognition that firms who seek to create a favorable win-win with their collaborators tend to do better in the marketplace. Just ask those who work with Amazon, Apple and McDonalds. They know they are partners to the mix, and not merely part of the mix.