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DISTRIBUTION CHANNELS: IN HIGH TECH INDUSTRIES: RELEVANT GUIDELINES

DISTRIBUTION CHANNELS: IN HIGH TECH INDUSTRIES: RELEVANT GUIDELINES. Suppliers. Agent/Broker/Distributor. Manufacturers/OEMs. Distributor/Broker. Resellers. MOST TYPICAL DISTRIBUTION CHANNEL STRUCTURE. Resellers. End Customers. CHANNEL STRUCTURE. CONTEXT (delegate to channel). CORE

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DISTRIBUTION CHANNELS: IN HIGH TECH INDUSTRIES: RELEVANT GUIDELINES

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  1. DISTRIBUTION CHANNELS:IN HIGH TECH INDUSTRIES:RELEVANT GUIDELINES

  2. Suppliers Agent/Broker/Distributor Manufacturers/OEMs Distributor/Broker Resellers MOST TYPICAL DISTRIBUTION CHANNEL STRUCTURE Resellers End Customers

  3. CHANNEL STRUCTURE CONTEXT (delegate to channel) CORE (do it yourself) NOT-NEEDED ACTIVITY • 1. PRODUCT-RELATED ACTIVITIES • Consulting/Pre-installation assessment • Physical configuration of hardware/software/components • Integration of my product into existing systems • Installation of the final solution • Testing • Pieces/component replacement • Repairs • Other product-service related activities • Activity A • Activity B • …

  4. CHANNEL STRUCTURE CONTEXT (delegate to channel) CORE (do it yourself) • 2. MARKETING-RELATED ACTIVITIES: • Target Market Marketing Research • Lead Generation • Prospect Management • Pre-sales activities • Order Management/Closing the sale • Post-sales service and support • After-sales customer management (upgrades, increasing consumption levels from customer…) • Other activities not mentioned here • Activity A • Activity B • …

  5. CHANNEL MGMT PROCESS • Identify customer segments according to the criteria: customer size, geographic region, products purchased and service needs • Use the core/context tool to decide the tasks provided by supplier and the tasks delegated to the channels • Design the channel structure: • Intermediary Structure: number and types • Functions, exclusivity and channel roles • Combination of own channels vs outside channels (hybrid channel strategy) • Compensation issues • Channel relationship issues • Strategy design and implementation (channel scorecard with objectives, measures, actions and timetables) • Reporting and feedback mechanisms • Marketing and other costs sharing policies • Control Issues • Legal Issues • Conflict handling process • Performance evaluation

  6. CHANNEL RELATIONS Channel Value Process (generic example) Inbound log. Storage Invent. Mgmt Value-added services Delivery Coordin. Market. Sales Service & Support Strategy Planning Service Develop. Production Delivery Strategy Planning Prod/ service Design/Devel. After sales Service Marketing Sales Suppliers Value Process (generic example)

  7. IDENTIFY YOUR COMPANY PROCESS AND YOUR CHANNEL PROCESS DISTRIBUTION CHANNEL PROCESS SUPPLIER (YOUR COMPANY) PROCESS

  8. FOR EACH STAGE OF THE CHANNEL AND OUR PROCESS, WHICH ACTIVITIES COULD WE IMPLEMENT IN ORDER TO OPTIMIZE THE DISTRIBUTION CHANNEL RELATIONSHIP? RELATIONSHIP ACTIVITIES FOR EACH STAGE

  9. CREATING AN ACTIVITY SCORECARD:FOR EACH ACTIVITY CHOSEN, SELECT A METRIC, TARGET, OWNER, BUDGET AND TIMETABLE CUSTOMER STAGE Expected Result: Budget: METRIC TARGET OWNER TIMETABLE ACTIVITY

  10. CHANNEL METRICS

  11. STRATEGIC PRIORITIESOF TECHNOLOGY ADOPTION LIFE CYCLE

  12. EARLY MARKET STRATEGIC PRIORITIES Target Market Ambitious risk-taking executives/venture capitalists with decision making power Main Customer Benefit Gain revolutionary technology Strong competitive advantage Curiosity/Status Whole Product Development Only core technology ready Rest of components and functionality to be discovered and assembled through partners

  13. EARLY MARKET STRATEGIC PRIORITIES Role of Alliances Consulting Desing, development integration of elements and systems to provide an initially working application Lead and manage the project Channel Company itself or highly qualified system integrator with intense partnership Competition Old technology vs New technology

  14. BOWLING ALLEY STRATEGIC PRIORITIES Target Market Companies facing serious business process crisis threatening core aspects of their performance Main Customer Benefit Solve effectively/sustainably a core business process Whole Product Development Segment after segment, elements and functionality are permanently integrated into the product

  15. BOWLING ALLEY STRATEGIC PRIORITIES Role of Alliances Product (not project) development Integration of niche-specific product features into the final product Channel Company itself (direct sales), or intense partnership with value-added intensive retail channels Competition Parallel solution providers using same or different technologies Niche dominance and speed in whole product development are crucial

  16. TORNADO STRATEGIC PRIORITIES Target Market Corporations acquiring the new technology to stay competitive Main Customer Benefit Improve process, eliminate old systems Whole Product Development Product should be fully standardized, simple, user friendly, ready to be launched for mass markets

  17. TORNADO STRATEGIC PRIORITIES Role of Alliances Product development alliances not needed Marketing and channel alliances to gain leadership position Intense networking with influential players to become industry standard Channel High and low value-added retailers All channel-related services institutionalized and standardized Competition Company vs company. Based on price and market domination to become a standard

  18. MAIN STREET STRATEGIC PRIORITIES Target Market End users, individuals or corporations Main Customer Benefit Many (segmentation needed): low price, customer experience, status… Whole Product Development • Adding features in the customer relation process for making customer experience attractive • Add-ons, design features • Transaction ease • Customer process optimization

  19. MAIN STREET STRATEGIC PRIORITIES Role of Alliances • Very specific and well defined partnership to contribute: • Create additional features • Optimize the customer process Channel Low value-added retailing channels, based on margins and standardized service levels Competition Strong, fierce competition as in traditional mature markets Competition carried out in a segment-basis

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