Paper Example on Reselling: Profit-Oriented Business Model

Resellers are companies, institutions, or people who purchase products from manufacturers and sell them for profit. According to Wierenga and Van der Lans (2017), resellers are profit-oriented. Whatever they do, they aim at making profits. After buying products from the producer, resellers can either sell those products at a higher price than buying price for profit or add value before reselling them to the next buyer. Wholesalers can be said to be resellers because they purchase products from the producer and sell them to retailers at a profit. Similarly, retailers are also resellers since they purchase products from wholesalers and sell them to final consumers at a higher price to make a profit (Haider et al. 2019).

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Generally, resellers need four basic things to run business and remain relevant in business. First, resellers need to have good financial performance. According to Zimmerman and Blythe (2017), the financial performance of resellers is gauged by their cash flow and the net profits they accrue from trading. The cash inflow should exceed the cash outflow for the firm to attain good profits. In this case, the amount of money spent on buying products for resale should be lower than the amount of money accrued from the sale of products. In other words, when the firm gets more income than expenses, then the firm makes profits. Therefore, it will be able to sustain its operations in the market (Wierenga & Van der Lans 2017).

Second, resellers need good marketing strategies to help them sell their products to consumers as fast as possible. There are numerous resellers in every market segment. Some resellers deal with similar products in the same market. Since they both need to sell their products to consumers, each reseller ought to design a very special marketing strategy to capture a wider market share and be able to sell their products as fast as possible. A large number of resellers in a given market causes competition for customers. Therefore, each reseller must adopt suitable strategies to make their products be likable by their customers and even to win customers of other resellers over to their products (Chernev 2018).

Third, resellers need harmony in their operations, starting from the producer all the way to final consumers. Harmony in prices is likely to enhance the work of resellers. The resellers should have consistency in the supply and sale of their products to their customers at consistent prices. The products sold by resellers to customers should be consistent with the value for money that the final consumers are willing and able to offer such products (Wierenga & Van der Lans 2017). Otherwise, resellers may risk losing their customers to other better alternative resellers.

Fourth, resellers need long-time survival in the market. According to Homburg, Jozic, and Kuehnl (2017), resellers can achieve long term survival in the market through managing their customers effectively to achieve customer loyalty to the firm and encourage more purchases by their customers. Exceeding customers' expectations is the right way to start it. This entails offering the products at the right price, quality, and quantity, and providing satisfactory services to customers at the right time. When a reseller sells products that exceed customer expectations, it will win the loyalty of those customers and even be able to increase the number of customers loyal to the firm. As a result, the firm will definitely make high profits and be able to achieve long term survival in the market (Chernev 2018).

What's the channel relationship between structure and function? (Based on functional spin-off theory)

In marketing, the channel structure determines its function. The way in which the organizational marketing and distribution channels are arranged enables it to conduct its operations effectively, and achieve its distributional goals and objectives. Structure-function relationship of the marketing channels arises from various factors such as the target market for firm products, resources available for the firm, competition in the marketplace, the marketing mix used by the firm including product, product, physical distribution, promotion, among others. It also depends on both the current and future distribution structures in the industry (Wierenga & Van der Lans 2017). The structure of a distribution channel determines the suitable functions it can perform and how effective such structures can handle the functions for which they have been designed such as transaction, support, logistics, and facilitating functions. All these play a role in making the organization successful in achieving its distribution goals and objectives. For that reason, it is very crucial to come up with the right design and arrangement of channels to facilitate proper delivery of operations of the firm (Haider et al. 2019).

Every logistic organization has a suitably designed channel structure that enhances efficient and effective distribution of products to achieve the anticipated goals and objectives. The channel structure is the way in which an organization's network of intermediaries participating in its activities is constructed to suit its delivery chain for effective achievement of distribution goals and objectives of the organization. The marketing channels including wholesalers, distributors, and retailers provide the firm with various functions such as the purchase of products and reselling them to customers, distributing those products from the producer to the customers, and providing sales support through financing and other extra services that enhance marketing success. Channel functions always supplement the firm's direct sale activities and increase market coverage to a larger number of customers in the market (Chernev 2018).

According to functional spin-off theory, a company can enhance its productivity and profitability by breaking a portion of its operations into a separate entity from the mother company. A company might have a very profitable division which might not be related to its core competencies. To enhance profitability and productivity, it might decide to the spin-off that division and put it under different management so that both the parent firm and the subsidiary firm may concentrate on specialized functions. Specialization of functions as suggested by functional spin-off theory might lead to very high performance and result in higher profitability of organizational operations than could be achieved by the parent firm.

What is authority based governance? Partner-based? Hybrid?

Authority is the power to control what others do through influencing them to operate in a certain way. Authority gives the privilege to make decisions, give orders, and even the ability to enforce obedience. On the other hand, governance refers to coming up with policies and continuously monitoring the implementation of the developed policies by members of an organizational governing body. Governance includes balancing powers endowed on individual members of an organization through transparency and accountability to promote the viability and continuous prosperity of an organization (Kerin & Hartley 2015).

Authority-based governance is a form of governance where the policies, procedures, or roles of members of the organization are carefully planned and monitored by the organization's governing body. This form of governance focuses on role specification where all members in the organization are assigned roles that they should play to ensure the organizational goals and objectives are achieved. The authority-based governance is based on planning for the generation operations of the organization, including incentives for members, monetary policies procedures, and their respective reinforcement strategies. Authority-based governance requires a high level of transparency and accountability by leaders of the organization to enhance prosperity and viability of operations for which the organization is expected to achieve (Kotler et al. 2015).

Partner-based governance involves the collaboration of different business partners in running the organizational, administrative activities. This form of governance involves extensive information sharing among the partners to keep everyone abreast with the organizational performance status. Thorough communication strategy is essential among the partners to allow the smooth running of organizational activities. As partners work together, everyone has a role to play. Mutual work performance is necessary to enhance congruence in organizational operations. Partner-based governance is flexible and encourages solidarity of partners. The mutuality of this form of governance makes it easy to achieve role integrity since every partner knows the role they play in the organization and that they do it with a high level of integrity (Wierenga & Van der Lans 2017).

Hybrid governance is a form of governance that borrows strategies from both authority-based governance and partner-based governance. Hybrid governance focuses on the shared goals promoted by the organization and agreed upon by members of the organization. It encourages the mutual focus of both leaders of the organization and the members therein. Apart from that, hybrid governance is focused on the establishment of policies that will enhance the long-term viability and prosperity of the organization. This is achieved through collaborative involvement of all stakeholders in coming up with the necessary procedures, policies, and decisions that will not only affect their operations but also determine how far the organization will operate (Kotler et al. 2015). It is goal-oriented and embraces results-based monitoring of organizational policies, practices, and procedures to ensure sustainable operations and accountability of various organizational stakeholders.

References

Chernev, A., 2018. Strategic marketing management. Cerebellum Press.

Haider, A.A., Zafar, A., Khalid, A., Majid, A., Abdullah, M.A. and Sarwar, M.B., 2019. Marketing Management.

Homburg, C., Jozic, D. and Kuehnl, C., 2017. Customer experience management: toward implementing an evolving marketing concept. Journal of the Academy of Marketing Science, 45(3), pp.377-401.

Kerin, R. and Hartley, S., 2015. Marketing: the core.

McGraw-Hill.Kotler, P., Burton, S., Deans, K., Brown, L. and Armstrong, G., 2015. Marketing. Pearson Higher Education AU.

Wierenga, B. and Van der Lans, R. eds., 2017. Handbook of marketing decision models (Vol. 254). Springer.

Zimmerman, A. and Blythe, J., 2017. Business to business marketing management: A global perspective. Routledge.