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Engr 245 Session 05 Channel
 

Engr 245 Session 05 Channel

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    Engr 245 Session 05 Channel Engr 245 Session 05 Channel Presentation Transcript

    • Engineering 245The Lean Launch Pad
      Session 5: Channels
      Professors Steve Blank, Ann Miura-Ko, Jon Feiber
      http://e245.stanford.edu
    • Channels
      How does each customer segment want to be reached?
      Through which interaction points?
      1
    • Test Hypotheses: Channel
      2
    • Two Critical Questions about Channels
      First one is obvious: How do you want to sell your product?
      3
      1
      Second one is subtle, but more important than the first: How does your customer want to buy your product?
      2
    • How Do You Want to Sell Your Product?
      Yourself
      Through someone else
      Retail
      Wholesale
      Bundled with other goods or services
      4
      ü
      ü
      ü
      ü
      ü
    • How Does Your Customer Want to Buy Your Product?
      Same day
      Delivered and installed
      Downloaded
      Bundled with other products
      As a service

      5
      ü
      ü
      ü
      ü
      ü
      ü
    • Nature of Product Impacts Channel: Atoms or Bits?
      Access to customers changes dramatically
      Logistics related to product complexity
      People as products
      6
    • The Sales “Channel”
      7
      Web
      System Integrators
      Your Company
      Your Customers
      Direct Sales Force
      Value-Added Resellers (VARs)
      Dealers
      Distributors
      Retail/Mass Merchants
    • Types of Channels
      OEM
      VAR
      Reseller
      Distributor
      8
      Direct
      Indirect
      Licensing
    • The Channel as a Customer
      Some products are embedded in others (OEM)
      Some products are resold by others (VARs)
      Some products are distributed by others
      Who’s the customer?
      9
    • Distribution Complexity
      10
      Evangelists
      Global Systems
      Systems Integrators
      WANs
      Mainframes
      Direct Sales
      Higher Volume
      Minis
      LANs
      VARs
      Marketing Complexity
      PC Servers
      Higher Value Added
      Desktop PCs
      Retail
      Printers
      Keyboards
      ServiceTechnicians
      Web, Telesales
      Toner
      Solution Complexity
    • How Are Channels Compensated?
      Commission
      Percentage of sales price
      Discounted pre-purchase
      11
    • How Are Channels Motivated or Incented?
      Money! – what makes them the most?
      Training
      Marketing to the channel
      SPIF
      12
    • Channel Economics: “Direct” Sales
      13
      ListPrice
      Revenue
      Cost of Goods(Supply Chain)
      Profit + SG&A + R&D
      EU Discounts
      End Consumer
      Source: Mark Leslie, Stanford GSB
    • Channel Economics: Resellers
      14
      ListPrice
      Revenue
      Cost of Goods(Supply Chain)
      Profit + SG&A + R&D
      Reseller
      EU Discounts
      End Consumer
      Source: Mark Leslie, Stanford GSB
    • Cost of Goods(Supply Chain)
      Profit + SG&A + R&D
      Channel Economics: Distributors/Resellers
      15
      ListPrice
      Revenue
      Reseller
      EU Discounts
      Distributor
      End Consumer
      Source: Mark Leslie, Stanford GSB
    • Channel Economics: OEM or IP Licensing
      16
      ListPrice
      Revenue
      EU Discounts
      Reseller
      Distributor
      Master Distributor
      Profit + SG&A + R&D
      Cost of Goods(Supply Chain)
      End Consumer
      Reseller
      Profit + SG&A + R&D
      Cost of Goods(Supply Chain)
      Your Product Becomes Your Customer’s COGs
      Source: Mark Leslie, Stanford GSB
    • Example: Book Publishing
      17
      Publisher
      National Distributor
      Printer
      Wholesaler
      Retailer
      Customer
    • Book Publishing
      18
      Publisher
      National Wholesaler
      Distributor
      Retailer
      Customer
      Percent of Retail
      35%
      15%
      10%
      40%
      $7.00
      $3.00
      $2.00
      $8.00
      $20.00
      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
    • Book Publishing Economics
      19
      Publisher
      National Distributor
      Wholesaler
      Retailer
      Customer
      Allowances
      Wholesale costs
      Bills
      Markup
      Credit guarantees
      Payment guarantees
      Payment guarantees
      Return rights
      Credits
      Payments
    • Book Publishing Delivery
      20
      Publisher
      National Distributor
      Printer
      Wholesaler
      Retailer
      Prepare film (content)
      Receive
      • Schedules
      • Print orders
      • Bundle counts
      • Film
      Merchandise titles
      Determine allocations
      Sell magazines
      Deliver orders
      • Establish identity
      • Create demand
      Prepare galleys
      Print and ship magazines
      Acknowledge returns
      Dispose of returns
    • Bits vs. Atoms
      21
      Channel
      Web
      Physical
      Bits
      Product
      Physical
    • Product and Channel Are Bits
      22
      Channel
      Web
      Physical
      • Rapid Agile and Customer development
      • Fastest to acquire early customers and scale
      Bits
      Product
      Physical
    • Web 2.0 – Product and Channel Are Bits
      23
      Channel
      Web
      Physical
      • Google
      • Twitter
      • Facebook
      • Zynga
      • Cloud Services
      Bits
      Product
      Physical
    • Product Is Bits, but Channel Is People
      24
      Channel
      Web
      Physical
      • Rapid Agile and Customer development
      • Fastest to acquire early customers and scale
      • Rapid Agile and Customer development
      • Traditional sales channel
      • May require installation
      Bits
      Product
      Physical
    • Traditional Enterprise Software
      25
      Channel
      Web
      Physical
      • Google
      • Twitter
      • Facebook
      • Zynga
      • Cloud Services
      • Microsoft
      • SAP
      • Oracle
      Bits
      Product
      Physical
    • Physical Products Sold Over the Web
      26
      Channel
      Web
      Physical
      • Rapid Agile and Customer development
      • Fastest to acquire early customers and scale
      • Rapid Agile and Customer development
      • Traditional sales channel
      • May require installation
      Bits
      Product
      • Rapid Customer development
      • Logistics, shipping and manufacturing critical
      • Customer service
      Physical
    • Killing Traditional Storefronts
      27
      Channel
      Web
      Physical
      • Google
      • Twitter
      • Facebook
      • Zynga
      • Cloud Services
      • Microsoft
      • SAP
      • Oracle
      Bits
      Product
      Zappos
      Amazon
      Cafepress
      Netflix
      Consumer electronics
      Physical
    • The Factories May Be in China
      28
      Channel
      Web
      Physical
      • Rapid Agile and Customer development
      • Fastest to acquire early customers and scale
      • Rapid Agile and Customer development
      • Traditional sales channel
      • May require installation
      Bits
      Product
      • Rapid Customer development
      • Logistics, shipping and manufacturing critical
      • Customer service
      • Longer customer feedback cycle
      • May require large capital requirements for scale
      Physical
    • We Still Make Things that Need Salespeople
      29
      Channel
      Web
      Physical
      • Google
      • Twitter
      • Facebook
      • Zynga
      • Cloud Services
      • Microsoft
      • SAP
      • Oracle
      Bits
      Product
      Zappos
      Amazon
      Cafepress
      Netflix
      Consumer electronics
      • Cars
      • Solar panels
      • Wind turbines
      • Bookstores
      • Consumer electronics
      Physical