Channel Management: a Business Perspective

Channel Management: A Business Perspective

Dale D. Achabal, Ph.D. Co-Chair – Department of Marketing Exec. Director - Retail Management Institute Leavey School of Business Santa Clara University

First Sale & Exhaustion in IP Symposium November 2010 Marketing Channels: Interdependent Organizations

• Access to the Market Manufacturer – Consumer Segments – Geographic coverage • Used to Gain / Sustain Competitive Wholesaler Advantage • Information & Technical Expertise

• Product Availability & Customization Retailer • Financing & Negotiation

• Traditionally – Independent Ownership & Decisionmaking End User

D. Achabal – Leavey School of Business - Santa Clara University Product Inter-Dependency = Channel Complexity

App Store Accessories Software

Server Computer iPhone/iPad

D. Achabal – Leavey School of Business - Santa Clara University Channels are Dynamic … . Consumers Have Access to Tremendous Amounts of Information in a Multi-Channel World

Maturity

Decline

Growth

Sales $ Sales Introduction

0… Stage of PLC …n Introduction Growth Maturity Decline

Strategic Focus Market Creation Market Expansion Market Share Migration of Customer

Value Added Very High High/Medium Low Very Low

Channel Mix

Number Few: Exclusive Several; Selective Many; Intensive Few: Exclusive

Margins High High to Medium Low Very Low / High

D. Achabal – Leavey School of Business - Santa Clara University Channel Members May Focus More on Exerting Power vs. Developing Trust

Make Buy Degree of Channel Control

100% 0%

Corporate

Traditional

Contractual

Administered

D. Achabal – Leavey School of Business - Santa Clara University What Works Today, Won’t Work Tomorrow

Acme Networks

Distributors Direct Sales Direct VARs 60% 10% 30% VARs

Through acquisition

CUSTOMERS

• Challenge in dealing with „free riders‟ in the Channel

D. Achabal – Leavey School of Business - Santa Clara University

Channel Systems for Most (B-to-B) Hi-Tech Products are Very Complex

ACME Hi-Tech Networks

Direct Sales Direct VARs Distributor

VARs

OEMs System Integrators

CUSTOMERS

• Access to „Used‟ or „Refurbished Product‟ by Unauthorized Firms Creates Channel Conflict D. Achabal – Leavey School of Business - Santa Clara University

Partnering is an Integral Part of a Company’s Growth Strategy

Growth paths Business effects The Categories

 Business Flexibility  Complementary strengths as Innovation Organic Growth a (full service) benefit to the partnerships customer  Technology Global presence partnerships  Partnerships Cost efficiencies & synergies  Competitive advantages Sales  Distribution of innovative partnerships technologies/solutions Service Mergers & Acquisition partnerships

Very few companies rely exclusively on “Organic Growth” in today‟s marketplace D. Achabal – Leavey School of Business - Santa Clara University But ….. Partners Come & Partners Go

Solution Distributors Technology ASN Partners and ISV

 Direct VARS  Value-Add  ISVs  Customer  Tier 2 VARS Distributors,  OEMs Service  Vertical Technical  Technology  Professional resellers  Volume partners Services – Federal Distributors,  Developers  Solution – Healthcare Broadline  System alliances Integrators

D. Achabal – Leavey School of Business - Santa Clara University EMC‟sMergers Investment & Acquisitions: in Developing Innovative Drivers or TechnologyDestroyers (Approx. of $10+B Channel) Relationships?

RSA Network Information Intelligence Tablus Verid Security Authentica Valyd

Content Documentum Captiva Document Management Ask Once Acartus ProActivity X-Hive Sciences

Virtualization/ Rainfinity Acxiom Data Mobility VMware Akimbi

1/03 1/04 1/05 1/06 1/07 1/08 1/10

Dolphin Internosis Interlink Geniant Conchango Services BusinessEdge

Resource Astrum Smarts nlayers Voyence Infra Management

Availability/ Indigo Legato Kashya Avamar Illuminator WysDM Archiving Stone

Cloud Infrastructure Pi and Services Mozy Consumer/ Dantz Iomega Small Business

D. Achabal – Leavey School of Business - Santa Clara University Key Takeaways

• Channels: – Complex & Dynamic

– Need to be Designed from a Customer‟s Perspective – Growth Through Partnerships, Alliances, Mergers & Acquisitions – Conflict Will Always Exist; Key is How it is Managed

D. Achabal – Leavey School of Business - Santa Clara University