Nsf online lecture 4 distribution channels


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Nsf online lecture 4 distribution channels

  1. NSF I- CorpsThe Lean LaunchPad Lecture 4:Distribution ChannelsHow does your Product Get to Customers? Version 6/22/12
  2. ChannelsHow does your Product Get to Customers?
  3. © 2012 Steve Blank
  4. Who Are OurCustomers and HowDo We Reach Them
  5. Physical versus Virtual Channels
  6. How Do You Want Your Product to Get to Your Customer?  Yourself  Through someone else  Retail  Wholesale  Bundled with other goods or services 6
  7. Web Channels 7
  8. Physical Channels 8
  9. How Does Your Customer Want toBuy Your Product from your Channel?  • Same day  • Delivered and installed  • Downloaded  • Bundled with other  products • As a service  • … 9
  10. Types of ChannelsDirect Indirect Licensing – OEM – VAR – Reseller – Distributor 10
  11. Distribution Complexity Global Systems Evangelists Systems Integrators WANs MainframesMarketing Complexity Direct Sales Minis LANs VARs PC Servers Desktop PCs Retail Printers Keyboards Web, Telesales Service Technicians Toner Solution Complexity 11
  12. How Do the Economics Work in Different Sales Channel?
  13. How Are Channels Compensated? – Commission – Percentage of sales price – Discounted pre-purchase 13
  14. Channel Economics: “Direct” Sales List Your Revenue Price End Consumer Discounts Cost of Goods EU Profit + SG&A + R&D (Supply Chain)Source: Mark Leslie, Stanford GSB 14
  15. Channel Economics: Resellers List Your Revenue Price End Consumer Discounts Cost of Goods EU Profit + SG&A + R&D Reseller (Supply Chain)Source: Mark Leslie, Stanford GSB 15
  16. Channel Economics: Distributors/Resellers List Your Revenue Price End Consumer Distributor Discounts Cost of Goods Profit + SG&A + EU Reseller (Supply Chain) R&DSource: Mark Leslie, Stanford GSB 16
  17. 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? 17
  18. Channel Economics: OEM or IP Licensing ListYour Revenue Price End Consumer Cost of Distributor Distributor Discounts Master Goods Profit + SG&A + EU Reseller (Supply R&D Chain) Cost of Goods Profit + SG&A Reseller (Supply + R&D Chain)Your Product Becomes Your Customer’s Cost of Goods Source: Mark Leslie, Stanford GSB 18
  19. How Are Channels Motivated or Incented?– Money! – what makes them the most?– Training– Marketing to the channel– SPIF 19
  20. Book PublishingChannel Example
  21. Example: Book Publishing NationalPublisher Printer Wholesaler Retailer Customer Distributor 21
  22. Book Publishing National Publisher Distributor Retailer Customer Wholesaler•Percent of 35% 15% 10% 40% Retail $7.00 $3.00 $2.00 $8.00 $20.00 • You get -35% of retail - the distributor gets 10% - the wholesaler gets 15% - the retailer gets 40% -less any discount they offer the customer 22
  23. Book Publishing Economics NationalPublisher Wholesaler Retailer Customer Distributor Allowances Wholesale costs Bills Markup Credit guarantees Payment guarantees Payment guarantees Return rights Credits Payments 23
  24. Book Publishing Delivery NationalPublisher Printer Wholesaler Retailer Distributor Prepare film Receive (content)  Schedules  Print orders Determine Merchandise  Bundle allocations titles counts  Film Sell Deliver orders magazines Establish Prepare galleys Print and ship identity magazines Create demand Dispose of Acknowledge returns returns 24
  25. Medical DeviceChannel Example
  26. Product flow/ChannelElectronic Partners/ Health Fluid Synchrony OEMS Records Electronic Support Pump + Bundled Records Services Controller Kits Hospitals (AnesthesiologistsPatients Neurosurgeons) Pain Clinic (Anesthesiologists Neurosurgeons)
  27. HospitalsPain Clinics Channels (Direct) • Direct to institutions • Some formularies involved in purchase decisions • Some doctors make purchase decision directly • Device company/Doctor relationship is key • Heavily influenced by : • Clinical study results • Regulatory approval • Reimbursement
  28. Farm Sensor Industry Channel Example
  29. Channel Model: Service Provider Product Money OEM Nutrient Data Large farmUs Small farm USDA/EPA Licensing/sales
  30. Channel Model: Service Provider Product Money OEM Nutrient Data Large farm ProductUs Small farm Service USDA/EPA Licensing/sales
  31. Dental ProductChannel Example
  32. COST / PROFIT ANALYSIS Licensing Revenue ModelPer unit cost and profit estimation Our revenue 4-8% revenues List price End user Univ. Manufacturing Maintaining Raw LicenseR&D License & Distribution IP fee materials fee Packaging 32
  33. Licensing of Technology Ecosystem University Insurance Agencies 2-4% license fee $$$ DMX R&D Products Procedures Health-Care IPs Providers: $$ End4-8% royalty Hospitals User ~$40 Practitioners Customer Clinics segment: Large corporations J&J, GSK, 3M 33
  34. Medical DeviceChannel Example 2
  35. ••••••
  36. Dental Product 2Channel Example
  37. Channels Direct Sales Big DistributorsPrivate Practice Institutional Purchasing Dentist Dentist Department
  38. Channels Direct Sales Big Distributors 80% Market Share 30% MarginPrivate Practice Institutional Purchasing Dentist Dentist Department
  39. Channels Continuing Education Magazines Trade Courses & Email Shows Direct Sales Big Distributors 80% Market Share 30% MarginPrivate Practice Institutional Purchasing Dentist Dentist Department
  40. Online RentalChannel Example
  41. PM Tools Rentpost.com Listings Rentjuice.com Provider Buildium.com Craigslist Rentingsmart.co Potential Padmapper.com Propertyware.com Landlords Rent.com Apartment.com propertymanagemnt360 Show, Advise, Valuate Forrent.com Rentjuice.com Realtors Propertyware.co Trulia.com Sell, Advise Credit Checks Landlords Safetenantcheck.c Erenter.com Buildium.com Property Listings, Managers Checks Payment Facilitator Maintenance Rent Payment Listings, Rentpayment.com Ratings Checks Clearnow.com Rent Payment Yelp.com Tenants Online Cheque Angie’s List Rentingsmart.coMaintenanceFurnishing Moving Find information Maintenance Finding Service Zoospi.com Providers Redbeacon.com Taskrabbit.com Servicemagic.com Schedule Tools Setster.com Web Info Zoospi.com 42
  42. Dental Product 3Channel Example
  43. COST / PROFIT ANALYSIS Direct Sales Revenue Model Our revenue $27 List price $40 * Per unit cost and profit estimation %32 cut End user Raw active Manufacturing & Profit + R&D + License Distributor ingredient Packaging fee $6 ? ($5) ~$11 ~$13* Competition• NuProprophy paste (Novamin$50)• NuPro desensitizer (Novamin$93)• MI varnish (Recaldent$100)• Gluma desensitizer (Glutaraldehyde$130)• Health-Dent desensitizer (Fluoride $49) 44
  44. Direct Sales Ecosystem R&D & University Insurance Regulation Agencies $? $$?? Raw Materials Manufacturing $6/pk DMX R&D Products Customer $5/pk Procedures Segments; Formulations IPs Health-Care $$?? End &Packaging -32%($27) Providers: User - Hospitals Product - Practitioners Sales & $40/pk - Clinics Distribution 45
  45. Channel Example
  46. • F-dopa iodonium intermediate • F-dopamine iodonium intermediate Precursor SynthesisReagents • ABX • Siemens Explora GMP • Eckert & Ziegler Precursor in Cassette Cassette • GE MX module for TracerLabComponents • Eckert & Ziegler • Synthra GMP • Siemens Explora Cassette (device) Compliant • Neoprobe • TracerLab/ GESynthesizer • Siemens PETNet • GE Amersham PET Drug • Cardinal Health Finished productDistributor • AAA • Iason 47 I-Corps Final Presentation 12/14/11
  47. Channel Example
  48. Travel IndustryChannel Example
  49. Travel Services:Impact of Changing Technology
  50. The Advent of GDS Systems (1980 -1995)
  51. Turning the Screen Around Online Travel (1995-2010)