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Class 3 Berkeley/Columbia channel
Class 3 Berkeley/Columbia channel
Class 3 Berkeley/Columbia channel
Class 3 Berkeley/Columbia channel
Class 3 Berkeley/Columbia channel
Class 3 Berkeley/Columbia channel
Class 3 Berkeley/Columbia channel
Class 3 Berkeley/Columbia channel
Class 3 Berkeley/Columbia channel
Class 3 Berkeley/Columbia channel
Class 3 Berkeley/Columbia channel
Class 3 Berkeley/Columbia channel
Class 3 Berkeley/Columbia channel
Class 3 Berkeley/Columbia channel
Class 3 Berkeley/Columbia channel
Class 3 Berkeley/Columbia channel
Class 3 Berkeley/Columbia channel
Class 3 Berkeley/Columbia channel
Class 3 Berkeley/Columbia channel
Class 3 Berkeley/Columbia channel
Class 3 Berkeley/Columbia channel
Class 3 Berkeley/Columbia channel
Class 3 Berkeley/Columbia channel
Class 3 Berkeley/Columbia channel
Class 3 Berkeley/Columbia channel
Class 3 Berkeley/Columbia channel
Class 3 Berkeley/Columbia channel
Class 3 Berkeley/Columbia channel
Class 3 Berkeley/Columbia channel
Class 3 Berkeley/Columbia channel
Class 3 Berkeley/Columbia channel
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Class 3 Berkeley/Columbia channel

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  • 1. XMBA296T<br />The Lean LaunchPad<br />Session 4: Channels<br />Professors Steve Blank,JonFeiber, Jim Hornthal, Oren Jacob<br />https://sites.google.com/site/xmba296t/<br />
  • 2. Channels<br />How does each customer segment want to be reached?<br />Through which interaction points?<br />1<br />
  • 3. Test Hypotheses: Channel<br />2<br />
  • 4. Two Critical Questions about Channels<br />First one is obvious: How do you want to sell your product?<br />3<br />1<br />Second one is subtle, but more important than the first: How does your customer want to buy your product?<br />2<br />
  • 5. How Do You Want to Sell Your Product?<br />Yourself<br />Through someone else<br />Retail<br />Wholesale<br />Bundled with other goods or services<br />4<br />ü<br />ü<br />ü<br />ü<br />ü<br />
  • 6. How Does Your Customer Want to Buy Your Product?<br />Same day<br />Delivered and installed<br />Downloaded<br />Bundled with other products<br />As a service<br />…<br />5<br />ü<br />ü<br />ü<br />ü<br />ü<br />ü<br />
  • 7. Nature of Product Impacts Channel: Atoms or Bits?<br />Access to customers changes dramatically<br />Logistics related to product complexity<br />People as products<br />6<br />
  • 8. Web Channels<br />7<br />
  • 9. Physical Channels<br />8<br />
  • 10. Types of Channels<br />OEM<br />VAR<br />Reseller<br />Distributor<br />9<br />Direct<br />Indirect<br />Licensing<br />
  • 11. The Channel as a Customer<br />Some products are embedded in others (OEM)<br />Some products are resold by others (VARs)<br />Some products are distributed by others<br />Who’s the customer?<br />10<br />
  • 12. Distribution Complexity<br />11<br />Evangelists<br />Global Systems<br />Systems Integrators<br />WANs<br />Mainframes<br />Direct Sales<br />Higher Volume<br />Minis<br />LANs<br />VARs<br />Marketing Complexity<br />PC Servers<br />Higher Value Added<br />Desktop PCs<br />Retail<br />Printers<br />Keyboards<br />ServiceTechnicians<br />Web, Telesales<br />Toner<br />Solution Complexity<br />
  • 13. How Are Channels Compensated?<br />Commission<br />Percentage of sales price<br />Discounted pre-purchase<br />12<br />
  • 14. How Are Channels Motivated or Incented?<br />Money! – what makes them the most?<br />Training<br />Marketing to the channel<br />SPIF<br />13<br />
  • 15. Channel Economics: “Direct” Sales<br />14<br />ListPrice<br />Revenue<br />Cost of Goods(Supply Chain)<br />Profit + SG&A + R&D<br />EU Discounts<br />End Consumer<br /> Source: Mark Leslie, Stanford GSB<br />
  • 16. Channel Economics: Resellers<br />15<br />ListPrice<br />Revenue<br />Cost of Goods(Supply Chain)<br />Profit + SG&A + R&D<br />Reseller<br />EU Discounts<br />End Consumer<br /> Source: Mark Leslie, Stanford GSB<br />
  • 17. Cost of Goods(Supply Chain)<br />Profit + SG&A + R&D<br />Channel Economics: Distributors/Resellers<br />16<br />ListPrice<br />Revenue<br />Reseller<br />EU Discounts<br />Distributor<br />End Consumer<br /> Source: Mark Leslie, Stanford GSB<br />
  • 18. Channel Economics: OEM or IP Licensing<br />17<br />ListPrice<br />Revenue<br />EU Discounts<br />Reseller<br />Distributor<br />Master Distributor<br />Profit + SG&A + R&D<br />Cost of Goods(Supply Chain)<br />End Consumer<br />Reseller<br />Profit + SG&A + R&D<br />Cost of Goods(Supply Chain)<br />Your Product Becomes Your Customer’s COGs<br /> Source: Mark Leslie, Stanford GSB<br />
  • 19. Example: Book Publishing<br />18<br />Publisher<br />National Distributor<br />Printer<br />Wholesaler<br />Retailer<br />Customer<br />
  • 20. Book Publishing<br />19<br />Publisher<br />National Wholesaler<br />Distributor<br />Retailer<br />Customer<br />Percent of Retail<br />35%<br />15%<br />10%<br />40%<br />$7.00<br />$3.00<br />$2.00<br />$8.00<br />$20.00<br />For their efforts, distributors take an additional 10% of retail. That means you get 35% of retail, the distributor gets 10%, the wholesaler gets 15% and the retailer gets 40% less any discount they offer the end customer<br />
  • 21. Book Publishing Economics<br />20<br />Publisher<br />National Distributor<br />Wholesaler<br />Retailer<br />Customer<br />Allowances<br />Wholesale costs<br />Bills<br />Markup<br />Credit guarantees<br />Payment guarantees<br />Payment guarantees<br />Return rights<br />Credits<br />Payments<br />
  • 22. Book Publishing Delivery<br />21<br />Publisher<br />National Distributor<br />Printer<br />Wholesaler<br />Retailer<br />Prepare film (content)<br />Receive<br /><ul><li>Schedules
  • 23. Print orders
  • 24. Bundle counts
  • 25. Film</li></ul>Merchandise titles<br />Determine allocations<br />Sell magazines<br />Deliver orders<br /><ul><li>Establish identity
  • 26. Create demand</li></ul>Prepare galleys<br />Print and ship magazines<br />Acknowledge returns<br />Dispose of returns<br />
  • 27. Bits vs. Atoms<br />22<br />Channel<br />Web<br />Physical<br />Bits<br />Product<br />Physical<br />
  • 28. Product and Channel Are Bits<br />23<br />Channel<br />Web<br />Physical<br /><ul><li>Rapid Agile and Customer development
  • 29. Fastest to acquire early customers and scale</li></ul>Bits<br />Product<br />Physical<br />
  • 30. Web 2.0 – Product and Channel Are Bits<br />24<br />Channel<br />Web<br />Physical<br /><ul><li>Google
  • 31. Twitter
  • 32. Facebook
  • 33. Zynga
  • 34. Cloud Services</li></ul>Bits<br />Product<br />Physical<br />
  • 35. Product Is Bits, but Channel Is People<br />25<br />Channel<br />Web<br />Physical<br /><ul><li>Rapid Agile and Customer development
  • 36. Fastest to acquire early customers and scale
  • 37. Rapid Agile and Customer development
  • 38. Traditional sales channel
  • 39. May require installation</li></ul>Bits<br />Product<br />Physical<br />
  • 40. Traditional Enterprise Software<br />26<br />Channel<br />Web<br />Physical<br /><ul><li>Google
  • 41. Twitter
  • 42. Facebook
  • 43. Zynga
  • 44. Cloud Services
  • 45. Microsoft
  • 46. SAP
  • 47. Oracle</li></ul>Bits<br />Product<br />Physical<br />
  • 48. Physical Products Sold Over the Web<br />27<br />Channel<br />Web<br />Physical<br /><ul><li>Rapid Agile and Customer development
  • 49. Fastest to acquire early customers and scale
  • 50. Rapid Agile and Customer development
  • 51. Traditional sales channel
  • 52. May require installation</li></ul>Bits<br />Product<br /><ul><li>Rapid Customer development
  • 53. Logistics, shipping and manufacturing critical
  • 54. Customer service</li></ul>Physical<br />
  • 55. Killing Traditional Storefronts<br />28<br />Channel<br />Web<br />Physical<br /><ul><li>Google
  • 56. Twitter
  • 57. Facebook
  • 58. Zynga
  • 59. Cloud Services
  • 60. Microsoft
  • 61. SAP
  • 62. Oracle</li></ul>Bits<br />Product<br />Zappos<br />Amazon<br />Cafepress<br />Netflix<br />Consumer electronics<br />Physical<br />
  • 63. The Factories May Be in China<br />29<br />Channel<br />Web<br />Physical<br /><ul><li>Rapid Agile and Customer development
  • 64. Fastest to acquire early customers and scale
  • 65. Rapid Agile and Customer development
  • 66. Traditional sales channel
  • 67. May require installation</li></ul>Bits<br />Product<br /><ul><li>Rapid Customer development
  • 68. Logistics, shipping and manufacturing critical
  • 69. Customer service
  • 70. Longer customer feedback cycle
  • 71. May require large capital requirements for scale</li></ul>Physical<br />
  • 72. We Still Make Things that Need Salespeople<br />30<br />Channel<br />Web<br />Physical<br /><ul><li>Google
  • 73. Twitter
  • 74. Facebook
  • 75. Zynga
  • 76. Cloud Services
  • 77. Microsoft
  • 78. SAP
  • 79. Oracle</li></ul>Bits<br />Product<br />Zappos<br />Amazon<br />Cafepress<br />Netflix<br />Consumer electronics<br /><ul><li>Cars
  • 80. Solar panels
  • 81. Wind turbines
  • 82. Bookstores
  • 83. Consumer electronics</li></ul>Physical<br />

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