3. CHANNEL STRATEGY ROLE
Retail markup
Distribution margin
Manufacturer's profit
Variable cost
Fixed
cost
COGS
DETERMINED BY THE MARKET
IMPACTED BY
CHANNEL
STRATEGY
retail price
Determined by the market , brand values
DEPENDS ON THE STRATEGY
DEPENDS ON THE STRATEGY
DEPENDS ON THE VOLUME
DEPENDS ON THE VOLUME
4. FACTORS DENERMINING STRATEGY
EXTERNAL
FACTORS
• Level of market
development
• Product structure of the
market / demand
structure
• Competitors actions
INTERNAL
FACTORS
• Product portfolio
structure
• Business volume,
market share
• Internal market
expertise, availability of
resources
5. KEY PRODUCT TRENDS
1. Focus on mobility
2. Areas of growth: tablets, smartphones
and accessories
3. Sales decrease: laptop computers,
netbook withdraw from the market
4. Further segmentation and internal
cannibalization in portable computer
market: the development of "hybrid"
devices undermines prospects for
ultrabooks
5. “Virtualization”: Apps vs Devices
6. MAXIMUM
ENGAGEMENT OF
MANUFACTURER
CHANNEL STRATEGY SCALE
MAXIMUM
DELEGATION TO
DISTRIBUTOR
1. Mono distribution
2. Distributor is realizing
channel & marketing
strategy on behalf of
manufacturer
3. High margins of
distributor
4. Small markets
5. Low level of
competition
1. Multi distribution
2. Many direct contracts
with partners
3. Demand generation and
channel programs by
manufacturer
4. Service model of
cooperation
7. KEY DIRECTION
1. The time of push- strategies has passed
2. End customers and channel are defining distributor
Channel
partners
End
customers
DistributorManufacturer
Channel
partners
End
customers
DistributorManufacturer
8. DISTRIBUTION TRENDS
1. Reducing space for growth
2. Product convergence
3. Consolidation of distribution companies
4. Increasing the level of attention to smaller customers
5. Displacement of the sub-distributors and "wholesalers"
6. Increasing competition on the cost of business (access to financial resources,
optimization of logistic procedures, implementation of higher level ERP-systems)
OPPORTUNITIES?
9. FUTURE OF SUBDISTRIBUTION
Distributors replacing
subdistributors
• Area for growth
• Increasing business transparency
• Development of logistics
infrastructure
10. SERVICES BUSINESS MODEL
FOR MANUFACTURER
+ -
Increase the
predictability of
business
Significant cost
increase (sales
infrastructure)
Direct contact with
the channel
FOR DISTRIBUTOR
+ -
Decreasing
requirements to
working capital
Decreasing
profitability
Decreasing risks Increasing
competition for the
business cost
Loss control over
the channel
• Switch from “margin” concept
• Manufacturer generates demand and channel deals and coordinates all
channel matters (marketing, sales support, etc.)
• Logistics by distributor
FEASIBLE IN CASE OF
SIGNIFICANT
VOLUME OF BUSINESS
11. DISTRIBUTION TRENDS
Survival and Growth Options:
Value add
distribution
Niche high-margin
distribution
Focus on
logistics
Product
diversification
Downstream/
Upstream
vertical
integration
REQUIRES SIGNIFICANT INVESTMENTS
12. RETAIL TRENDS
1. A lot of plans for store number growth, but questionable
2. Further consolidation of the channel, major federal retailers winning
share
3. Regional retail players stay only in smaller formats and in smaller
cities, unfeasible for majors
4. Growth opportunities for Telco retailers, as consumer preferences
shifts support their business
5. Further development of on-line retail: early to talk about consolidation,
but major investments and focus on multi-channeling
6. Further development of franchise projects is questionable
OPPORTUNITIES?
13. EMERGE OF MONO-BRAND RETAIL
Brand value oriented vendors focus on mono-
brand retail:
• development of Apple Monobrand Stores (big chains
like IRG + many smaller Co)
• emerge of Samsung Monobrand Stores in Russia
(IRG acquired Nosimo)
Stagnation or close down of mono-brand chains
for some respected vendors:
• Sony
• Toshiba
• Nokia
?
CONFLICTING
TRENDS
14. MONO-BRAND RETAIL
Vendor
• Wide line-up
• Focus on brand development –
Marketing investments
• Efficient marketing policy enforcement
Environment
• Market size/retail traffic in specific
location justifies investment
• Professional partner with strong retail
expertise
STRONG
COMBINATION
+
WHEN DOES IT WORKS?
15. 1. CHANNEL STRATEGY DEFINES THE
PROFITABILITY
2. POSITION ON "STRATEGIES SCALE"
DEFINES BY OBJECTIVES &
OPPORTUNITIES
3. TRACKING TRENDS & STRATEGIES
MODIFICATION
CONCLUSIONS
16. THANKS FOR YOUR
ATTENTION
FEEL FREE TO CONTACT WITH INQUIRIES:
IGOR.SNYTKO@OCEANSOLUTIONS.RU
TEL: +7-495-221-71-81
WWW.OCEANSOLUTIONS.RU
