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 ISVs Value-Add 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 © Copyright 2008 EMC Corporation. All rights reserved. 9 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 .