Value through the channel mfr whlslr rtlr custmr

Types of technology channels Direct sales OEM (Original Equipment Manufacturers) VARs (Value Added Resellers) Systems integrators Distributors Retailers

Other channels Selling partners –ISVs (Independent Software Vendors) –Partners –Others? Web / Internet

Two Related Issues Channel Conflict –Competing objectives Power in the Channel –Imbalance in resources –Imbalance in value provided

Switch-over Problem in Tech Channels # New Users Time VARs Distributors Service emphasis switches to volume

Solution to switch-over problem Clearly define the roles and target segments for VARs – write into contracts Provide criteria for accepting VAR as distributor; criteria must be met to move to contract for distribution

Selection problem early in TALC # New Users Time VARs No VARs that do exactly what you need

Solution to selection problem Direct sales and service – this way you don’t give up control; Grow your own service org so that you obtain margin for this added value If you must outsource, be careful who you contract with; perform considerable training

Channel Management Choose Channels for stage in TALC that –Reach customers –Provide required value –Have OK power position Choose partners that are managed well Support Channels

Channel Support Help them provide value Provide desired incentives Provide expected allowances Use expected relationship practices Negotiate with their interests in mind Build relationship, but keep in perspective

Manage the Relationship Written contracts so they know what to expect, both positive and negative Communicate intentions; follow through on promises Keep perspective: temporary, limited partnerships; not life-long marriages Communicate extensively

Mohr’s Issues Evolution and indirect channels – what is appropriate in the early market? What if it is a low-price-point product? Do you believe the description of evolution on p. 261? Gray markets – consistent policies and performance measures Black markets – are there any good solutions? Internet & cannibalization – segmentation; clear task assignments

More on Mohr, supply chain mgt Integrated from raw materials to end user Is there a contradiction (p.277-9): –Sikkink, Intel, on Centrino LAN MiniPCI Adapter: shorter life cycles, unpredictable demand –Physical functions (incremental innovation) vs. market mediation functions (breakthrough innovations) Flexibility as a goal?