Post on 24-May-2015
Server Distribution Channel & Strategy By Dilip Alavane -2009E02Dhiraj Surana -2009E12Kirshnakant Pandey -2009E25
AgendaServer Manufacturing ProcessDistribution StrategyChannels of Distribution.
◦Indirect Distribution.◦Direct Distribution.
Measuring Channel Performance
Server Manufacturing Process
Components from Vendors
Modules Manufacturing
Systemconfiguration
Consolidation
Order Shipped to Customer
Distribution StrategySelective Distribution
◦ It’s distribution of a product through only a limited number of channels and markets.
◦ Reduces total distribution cost so that net profits are higher and often induces company’s rule for advertising, pricing and displaying.
◦ Cooperative advertising can also be utilized for mutual benefit.
◦ Focused effort
RESELLERDISTRIBUTO
R
VAR
OEM’s
ISV’s
MANUFACTURER
Named Accounts
Installed Base
New Accounts
Customers
Channel FunctionReseller1. Pursue Volume based
Business Model.2. Extends manufacturer’s
reach in the market 3. Provides directly to
end-user with service4. Stock inventory5. Rapid and convenient
delivery.6. Aggressively solicit new
accounts.Ex: Data Care Corp.,
BitScan, Eletech
DISTRIBUTOR
VAR
OEM’s
ISV’s
MANUFACTURER
RESELLER
RESELLER
VAR
OEM’s
ISV’s
MANUFACTURER
Distributor1. Supply to corporate
resellers and other distributors.
2. Carry large quantities of different products, to increase their leverage when dealing with their customers.
3. Provide specific software, peripherals, etc, as well as service.
e.g. Ingram Micro, Tech Data, Computer 2000, and Santech .
DISTRIBUTOR
Other Distributor and / or Customer
RESELLERDISTRIBUTO
R
OEM’s
ISV’s
MANUFACTURER
Other Distributor and / or Customer
VAR’s (Value Added Resellers)1. Focus entirely on
designing ,developing , and delivering complete business problem solutions to end users.
2. Solution may include hardware ,software and services.
3. Completely customizing the solution to the needs of the customer.
4. Also known as System Integrators from hardware’s perspective , specialized in selling and integrating the product for complex solutions
5. Companies that combine computer components to build a complete system.
Eg SI : Cisco, Symantec NetBackup Series
Ex: Infowrold,Informatica, Innovative Interfaces, Unisys.
VAR
RESELLERDISTRIBUTO
R
VAR
ISV’s
MANUFACTURER
Other Distributor and / or Customer
OEM’s1. Refers to companies that
make products of there own using manufactrer’s component in it , for others to repackage and sell
2. Imbedding manufacturer’s products into large systems.
3. Manufacturer’s component represents a small portion of the total product
Ex: Blade Server Chasis , MTS Systems, Mango DSP
OEM’s
RESELLERDISTRIBUTO
R
VAR
OEM’s
MANUFACTURER
Other Distributor and / or Customer
ISV’s
1. Source of Application Solutions and does not directly sell hardware paltforms.
2. They influence end users purchasing behaviour by recommending such platforms.
Ex: Wipro, Oracle, Microsoft , Novell, Redhat etc.
ISV’s
Direct DistributionDirect Marketing Systems
•Customers places the order directly by visiting the manufacturer’s website like for example Dell.•Place the order after having personal communication with a customer representative who is not a salesperson, such as through toll-free telephone ordering.
Direct Retail Systems – •This type of system exists when a product marketer also operates their own retail outlets.
Ex: Dell, HP etc having there retail outlets
Strengths of Direct model
Most efficient method of distribution
Extremely low inventories. Rapid response to
customer changes. Strong relationship with
customers and suppliers. bringing new products to
market quickly, enabling it to increase
High market share and achieve high returns on investment.
direct sales and build-to-order
Limited audience (not everyone has it or will use it for shopping)
Lack of one-to-one interaction, impersonal
Cannot touch, feel, products, concerns about colors, not tangible
Fear of fraud, ID theft, security
Weakness of Direct model
Strengths of indirect model
Very wide distribution, size, exposure, volume,
Product availability Delivery Performance. Ease of Doing Business. Expertise Focused customer base,
Broad network Can offer bundled pricing Carry our inventory, cost
sharing Offers aggressive
marketing, upsell opportunity.
Can offer personal consumer assistance, service
Don’t know end-user No control of product
presentation Limited product focus Unmanageable; have
own agenda Very independent,
difficult to control No direct customer
contact by you If they leave, you lose
the customer They also represent
others—focus is limited Less loyalty
Weakness of Indirect model
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Measuring channel performance
Channel Performance measures
Effectiveness EquityEfficiency
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Channel performance
Effectiveness : Providing the required service “most cost effectively”.•Delivery : A short term, goal oriented measure of on time delivery
•Stimulation of demand: What are the efforts made by the channel member to increase customer base or increase the usage of the product.
Equity : Extent to which “channel serves problem riddenmarkets and market segments”.
Eg: disadvantaged or geographically isolated consumers.
Efficiency: Output / InputProductivity : The efficiency with which the output is generated
from the resources and inputs. Operational efficiency.
Measuring financial performanceTo determine the profitability and
financial performance of channels following parameters can be used • Revenue,• Cost ,• Profits arriving from different segments of
Distribution Channel
Distribution channel segmentation
Indirect channelDirect channelChannel segmentation
Server Series A
Server Series C
Server Series B
Profitability
(a)
(a) Segmentation analysis by channel & product category
Server Series A
Server Series C
Server Series B
Indirect channelDirect channelChannel segmentation
Corporate Profitability(b)
East EastWest West
A B CA B C A B C A B C
Territory segmentation
Product segmentation
(b)Segmentation analysis by channel, territory and product category
Revenue Cost Analysis• Revenue and cost associated with
each segment must be analyzed–Direct selling cost–Indirect selling cost–Advertising–Sales promotion–Transportation–Storage and shipment–Order processing
Contribution margin approach
CMA requires all cost be identified as fixed or variable according to behavior of the cost
Income statement in the CMA method of analysis can be prepared that identify probability for each segment by determination of fixed, variable, direct and indirect cost
Income Statement Of Channel Segment
Directchannel
Indirect channel
Total company
Revenue/Sales generated thru channelsLess: Cost of goods soldGross ProfitLess: Variable direct costGross segment contributionLess: fixed direct costNet segment contributionLess: indirect fixed costNet profitNet segment contribution
100,00042,00058,000
6,00052,00015,00037,000
37%
150,00075,00075,00015,00060,00021,00039,000
26%
250,000117,000133,000
21,000112,000
36,00076,00041,00025,00030.4%