Indirect Server Distribution Strategy


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Indirect Server Distribution Strategy

  1. 1. Server Distribution Channel & Strategy <br />By <br />DilipAlavane -2009E02<br />Dhiraj Surana -2009E12<br />KirshnakantPandey -2009E25<br />
  2. 2. Agenda<br />Server Manufacturing Process<br />Distribution Strategy<br />Channels of Distribution.<br />Indirect Distribution.<br />Direct Distribution.<br />Measuring Channel Performance<br />
  3. 3. Server Manufacturing Process<br />
  4. 4. Distribution Strategy<br />Selective Distribution<br />It’s distribution of a product through only a limited number of channels and markets.<br />Reduces total distribution cost so that net profits are higher and often induces company’s rule for advertising, pricing and displaying.<br />Cooperative advertising can also be utilized for mutual benefit.<br />Focused effort<br />
  5. 5. Customers<br />MANUFACTURER<br />RESELLER <br />DISTRIBUTOR<br />VAR<br />OEM’s<br />ISV’s<br />
  6. 6. Channel Function<br />Reseller<br />Pursue Volume based Business Model.<br />Extends manufacturer’s reach in the market <br />Provides directly to end-user with service<br />Stock inventory<br />Rapid and convenient delivery.<br />Aggressively solicit new accounts.<br />Ex: Data Care Corp., BitScan, Eletech<br />MANUFACTURER<br />RESELLER <br />DISTRIBUTOR<br />VAR<br />OEM’s<br />ISV’s<br />
  7. 7. MANUFACTURER<br />RESELLER <br />Other Distributor and / or Customer<br />DISTRIBUTOR<br />VAR<br />OEM’s<br />ISV’s<br />Distributor<br />Supply to corporate resellers and other distributors.<br />Carry large quantities of different products, to increase their leverage when dealing with their customers.<br />Provide specific software, peripherals, etc, as well as service.<br />e.g. Ingram Micro, Tech Data, Computer 2000, and Santech .<br />
  8. 8. VAR’s (Value Added Resellers)<br />Focus entirely on designing ,developing , and delivering complete business problem solutions to end users.<br />Solution may include hardware ,software and services.<br />Completely customizing the solution to the needs of the customer.<br />Also known as System Integrators from hardware’s perspective , specialized in selling and integrating the product for complex solutions<br />Companies that combine computer components to build a complete system.<br />Eg SI : Cisco, Symantec NetBackup Series<br />Ex: Infowrold,Informatica, Innovative Interfaces, Unisys.<br />MANUFACTURER<br />RESELLER <br />Other Distributor and / or Customer<br />DISTRIBUTOR<br />VAR<br />OEM’s<br />ISV’s<br />
  9. 9. MANUFACTURER<br />RESELLER <br />Other Distributor and / or Customer<br />DISTRIBUTOR<br />VAR<br />OEM’s<br />ISV’s<br />OEM’s<br />Refers to companies that make products of there own using manufactrer’s component in it , for others to repackage and sell<br />Imbedding manufacturer’s products into large systems.<br />Manufacturer’s component represents a small portion of the total product <br />Ex: Blade Server Chasis , MTS Systems, Mango DSP<br />
  10. 10. MANUFACTURER<br />RESELLER <br />Other Distributor and / or Customer<br />DISTRIBUTOR<br />VAR<br />OEM’s<br />ISV’s<br />Source of Application Solutions and does not directly sell hardware paltforms.<br />They influence end users purchasing behaviour by recommending such platforms.<br />Ex: Wipro, Oracle, Microsoft , Novell, Redhat etc.<br />ISV’s<br />
  11. 11. Direct Distribution<br />Direct Marketing Systems<br /><ul><li>Customers places the order directly by visiting the manufacturer’s website like for example Dell.
  12. 12. Place the order after having personal communication with a customer representative who is not a salesperson, such as through toll-free telephone ordering. </li></ul>Direct Retail Systems – <br /><ul><li>This type of system exists when a product marketer also operates their own retail outlets.</li></ul>Ex: Dell, HP etc having there retail outlets<br />
  13. 13. Strengths of Direct model <br /><ul><li>Most efficient method of distribution
  14. 14. Extremely low inventories.
  15. 15. Rapid response to customer changes.
  16. 16. Strong relationship with customers and suppliers.
  17. 17. bringing new products to market quickly, enabling it to increase
  18. 18. High market share and achieve high returns on investment.
  19. 19. direct sales and build-to-order</li></ul>Limited audience (not everyone has it or will use it for shopping)<br />Lack of one-to-one interaction, impersonal<br />Cannot touch, feel, products, concerns about colors, not tangible<br />Fear of fraud, ID theft, security<br />Weakness of Direct model <br />
  20. 20. Strengths of indirect model <br />Very wide distribution, size, exposure, volume, <br />Product availability<br />Delivery Performance.<br />Ease of Doing Business.<br />Expertise<br />Focused customer base, Broad network<br />Can offer bundled pricing<br />Carry our inventory, cost sharing<br />Offers aggressive marketing, upsell opportunity.<br />Can offer personal consumer assistance, service<br />Don’t know end-user<br />No control of product presentation<br />Limited product focus<br />Unmanageable; have own agenda<br />Very independent, difficult to control<br />No direct customer contact by you<br />If they leave, you lose the customer<br />They also represent others—focus is limited<br />Less loyalty<br />Weakness of Indirect model <br />
  21. 21. 14<br />Measuringchannelperformance<br />Channel Performance measures<br />Efficiency<br />Effectiveness<br />Equity<br />
  22. 22. 15<br />Channel performance<br />Effectiveness : Providing the required service “most cost effectively”.<br /><ul><li>Delivery : A short term, goal oriented measure of on time delivery
  23. 23. Stimulation of demand: What are the efforts made by the channel member to increase customer base or increase the usage of the product.</li></ul>Equity : Extent to which “channel serves problem ridden<br />markets and market segments”.<br />Eg: disadvantaged or geographically isolated consumers.<br />Efficiency:Output / Input<br />Productivity : The efficiency with which the output is generated<br /> from the resources and inputs. Operational efficiency.<br />
  24. 24. Measuring financial performance<br />To determine the profitability and financial performance of channels following parameters can be used <br /><ul><li>Revenue,
  25. 25. Cost ,
  26. 26. Profits arriving from different segments of Distribution Channel</li></li></ul><li>Distribution channel segmentation<br />(a)<br />Profitability<br />Channel segmentation<br />Direct channel<br />Indirect channel<br />Server Series A<br />Server Series B<br />Server Series C<br />Server Series B<br />Server Series A<br />Server Series C<br />(a) Segmentation analysis by channel & product category<br />
  27. 27. (b)<br />Corporate Profitability<br />Channel segmentation<br />Direct channel<br />Indirect channel<br />Territory segmentation<br />East<br />West<br />East<br />West<br />A<br />B<br />C<br />A<br />B<br />C<br />A<br />B<br />C<br />A<br />B<br />C<br />Product segmentation<br />(b)Segmentation analysis by channel, territory and product category<br />
  28. 28. Revenue Cost Analysis<br /><ul><li>Revenue and cost associated with each segment must be analyzed
  29. 29. Direct selling cost
  30. 30. Indirect selling cost
  31. 31. Advertising
  32. 32. Sales promotion
  33. 33. Transportation
  34. 34. Storage and shipment
  35. 35. Order processing</li></li></ul><li>Contribution margin approach <br />CMA requires all cost be identified as fixed or variable according to behavior of the cost<br />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<br />