DISTRIBUTION CHANNELS: IN HIGH TECH INDUSTRIES: RELEVANT GUIDELINES

MOST TYPICAL DISTRIBUTION CHANNEL STRUCTURE Resellers End Customers

CHANNEL STRUCTURE 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 –… CORE (do it yourself) CONTEXT (delegate to channel) NOT-NEEDED ACTIVITY

CHANNEL STRUCTURE 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 -… CORE (do it yourself) CONTEXT (delegate to channel)

CHANNEL MGMT PROCESS 1.Identify customer segments according to the criteria: customer size, geographic region, products purchased and service needs 2.Use the core/context tool to decide the tasks provided by supplier and the tasks delegated to the channels 3.Design the channel structure: 1.Intermediary Structure: number and types 2.Functions, exclusivity and channel roles 3.Combination of own channels vs outside channels (hybrid channel strategy) 4.Compensation issues 5.Channel relationship issues a)Strategy design and implementation (channel scorecard with objectives, measures, actions and timetables) b)Reporting and feedback mechanisms c)Marketing and other costs sharing policies d)Control Issues e)Legal Issues f)Conflict handling process g)Performance evaluation

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

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

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

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

CHANNEL METRICS

STRATEGIC PRIORITIES OF TECHNOLOGY ADOPTION LIFE CYCLE

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

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

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

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

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

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

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

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