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XMBA296T<br />The Lean LaunchPad<br />Session 4: Channels<br />Professors Steve Blank,JonFeiber, Jim Hornthal, Oren Jacob<...
Channels<br />How does each customer segment want to be reached?<br />Through which interaction points?<br />1<br />
Test Hypotheses: Channel<br />2<br />
Two Critical Questions about Channels<br />First one is obvious: How do you want to sell your product?<br />3<br />1<br />...
How Do You Want to Sell Your Product?<br />Yourself<br />Through someone else<br />Retail<br />Wholesale<br />Bundled with...
How Does Your Customer Want to Buy Your Product?<br />Same day<br />Delivered and installed<br />Downloaded<br />Bundled w...
Nature of Product Impacts Channel: Atoms or Bits?<br />Access to customers changes dramatically<br />Logistics related to ...
Web Channels<br />7<br />
Physical Channels<br />8<br />
Types of Channels<br />OEM<br />VAR<br />Reseller<br />Distributor<br />9<br />Direct<br />Indirect<br />Licensing<br />
The Channel as a Customer<br />Some products are embedded in others (OEM)<br />Some products are resold by others (VARs)<b...
Distribution Complexity<br />11<br />Evangelists<br />Global  Systems<br />Systems Integrators<br />WANs<br />Mainframes<b...
How Are Channels Compensated?<br />Commission<br />Percentage of sales price<br />Discounted pre-purchase<br />12<br />
How Are Channels Motivated or Incented?<br />Money! – what makes them the most?<br />Training<br />Marketing to the channe...
Channel Economics: “Direct” Sales<br />14<br />ListPrice<br />Revenue<br />Cost of Goods(Supply Chain)<br />Profit + SG&A ...
Channel Economics: Resellers<br />15<br />ListPrice<br />Revenue<br />Cost of Goods(Supply Chain)<br />Profit + SG&A + R&D...
Cost of Goods(Supply Chain)<br />Profit + SG&A + R&D<br />Channel Economics: Distributors/Resellers<br />16<br />ListPrice...
Channel Economics: OEM or IP Licensing<br />17<br />ListPrice<br />Revenue<br />EU Discounts<br />Reseller<br />Distributo...
Example: Book Publishing<br />18<br />Publisher<br />National Distributor<br />Printer<br />Wholesaler<br />Retailer<br />...
Book Publishing<br />19<br />Publisher<br />National Wholesaler<br />Distributor<br />Retailer<br />Customer<br />Percent ...
Book Publishing Economics<br />20<br />Publisher<br />National Distributor<br />Wholesaler<br />Retailer<br />Customer<br ...
Book Publishing Delivery<br />21<br />Publisher<br />National Distributor<br />Printer<br />Wholesaler<br />Retailer<br />...
Print orders
Bundle counts
Film</li></ul>Merchandise titles<br />Determine allocations<br />Sell magazines<br />Deliver orders<br /><ul><li>Establish...
Create demand</li></ul>Prepare galleys<br />Print and ship magazines<br />Acknowledge returns<br />Dispose of returns<br />
Bits vs. Atoms<br />22<br />Channel<br />Web<br />Physical<br />Bits<br />Product<br />Physical<br />
Product and Channel Are Bits<br />23<br />Channel<br />Web<br />Physical<br /><ul><li>Rapid Agile and Customer  development
Fastest to acquire early customers and scale</li></ul>Bits<br />Product<br />Physical<br />
Web 2.0 – Product and Channel Are Bits<br />24<br />Channel<br />Web<br />Physical<br /><ul><li>Google
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Class 3 Berkeley/Columbia channel

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Transcript of "Class 3 Berkeley/Columbia channel"

  1. 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. 2. Channels<br />How does each customer segment want to be reached?<br />Through which interaction points?<br />1<br />
  3. 3. Test Hypotheses: Channel<br />2<br />
  4. 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. 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. 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. 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. 8. Web Channels<br />7<br />
  9. 9. Physical Channels<br />8<br />
  10. 10. Types of Channels<br />OEM<br />VAR<br />Reseller<br />Distributor<br />9<br />Direct<br />Indirect<br />Licensing<br />
  11. 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. 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. 13. How Are Channels Compensated?<br />Commission<br />Percentage of sales price<br />Discounted pre-purchase<br />12<br />
  14. 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. 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. 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. 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. 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. 19. Example: Book Publishing<br />18<br />Publisher<br />National Distributor<br />Printer<br />Wholesaler<br />Retailer<br />Customer<br />
  20. 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. 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. 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. 23. Print orders
  24. 24. Bundle counts
  25. 25. Film</li></ul>Merchandise titles<br />Determine allocations<br />Sell magazines<br />Deliver orders<br /><ul><li>Establish identity
  26. 26. Create demand</li></ul>Prepare galleys<br />Print and ship magazines<br />Acknowledge returns<br />Dispose of returns<br />
  27. 27. Bits vs. Atoms<br />22<br />Channel<br />Web<br />Physical<br />Bits<br />Product<br />Physical<br />
  28. 28. Product and Channel Are Bits<br />23<br />Channel<br />Web<br />Physical<br /><ul><li>Rapid Agile and Customer development
  29. 29. Fastest to acquire early customers and scale</li></ul>Bits<br />Product<br />Physical<br />
  30. 30. Web 2.0 – Product and Channel Are Bits<br />24<br />Channel<br />Web<br />Physical<br /><ul><li>Google
  31. 31. Twitter
  32. 32. Facebook
  33. 33. Zynga
  34. 34. Cloud Services</li></ul>Bits<br />Product<br />Physical<br />
  35. 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. 36. Fastest to acquire early customers and scale
  37. 37. Rapid Agile and Customer development
  38. 38. Traditional sales channel
  39. 39. May require installation</li></ul>Bits<br />Product<br />Physical<br />
  40. 40. Traditional Enterprise Software<br />26<br />Channel<br />Web<br />Physical<br /><ul><li>Google
  41. 41. Twitter
  42. 42. Facebook
  43. 43. Zynga
  44. 44. Cloud Services
  45. 45. Microsoft
  46. 46. SAP
  47. 47. Oracle</li></ul>Bits<br />Product<br />Physical<br />
  48. 48. Physical Products Sold Over the Web<br />27<br />Channel<br />Web<br />Physical<br /><ul><li>Rapid Agile and Customer development
  49. 49. Fastest to acquire early customers and scale
  50. 50. Rapid Agile and Customer development
  51. 51. Traditional sales channel
  52. 52. May require installation</li></ul>Bits<br />Product<br /><ul><li>Rapid Customer development
  53. 53. Logistics, shipping and manufacturing critical
  54. 54. Customer service</li></ul>Physical<br />
  55. 55. Killing Traditional Storefronts<br />28<br />Channel<br />Web<br />Physical<br /><ul><li>Google
  56. 56. Twitter
  57. 57. Facebook
  58. 58. Zynga
  59. 59. Cloud Services
  60. 60. Microsoft
  61. 61. SAP
  62. 62. Oracle</li></ul>Bits<br />Product<br />Zappos<br />Amazon<br />Cafepress<br />Netflix<br />Consumer electronics<br />Physical<br />
  63. 63. The Factories May Be in China<br />29<br />Channel<br />Web<br />Physical<br /><ul><li>Rapid Agile and Customer development
  64. 64. Fastest to acquire early customers and scale
  65. 65. Rapid Agile and Customer development
  66. 66. Traditional sales channel
  67. 67. May require installation</li></ul>Bits<br />Product<br /><ul><li>Rapid Customer development
  68. 68. Logistics, shipping and manufacturing critical
  69. 69. Customer service
  70. 70. Longer customer feedback cycle
  71. 71. May require large capital requirements for scale</li></ul>Physical<br />
  72. 72. We Still Make Things that Need Salespeople<br />30<br />Channel<br />Web<br />Physical<br /><ul><li>Google
  73. 73. Twitter
  74. 74. Facebook
  75. 75. Zynga
  76. 76. Cloud Services
  77. 77. Microsoft
  78. 78. SAP
  79. 79. Oracle</li></ul>Bits<br />Product<br />Zappos<br />Amazon<br />Cafepress<br />Netflix<br />Consumer electronics<br /><ul><li>Cars
  80. 80. Solar panels
  81. 81. Wind turbines
  82. 82. Bookstores
  83. 83. Consumer electronics</li></ul>Physical<br />
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