Distribution with Mark Zimmerman - Entrepreneurship 101

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This lecture offers a strategic perspective of the distribution channel options available to start-ups. It emphasizes the development of the right criteria for choosing and managing channels. Learn about the pros and cons of different channels such as inside sales, direct sales, distribution, e-commerce, franchises and integrators. Integrating sales across multiple channels is often a challenge for technology companies. A case study illustrates these points. Part of Entrepreneurship 101 http://www.marsdd.com/events/details.html?uuid=cadf3216-9614-44b1-a73e-2b7dff582447

Business

E101: Distribution
Mark Zimmerman
MaRS
email: mzimmerman@marsdd.com
twitter: @markzim

Product
Price
Place
Promotion
3

The Four “P”s

The Four
“P”s
Product
Price
Distributio
n
Promotion

4

It’s OK and often optimal to mix &
match.
6

2 Flavours: Direct, Indirect

8

Market type;  
Existing, Re-segmented, New

“Default” Choices
13

Channel
Type
Direct
Indirect
Market
Type
New
Re-
Existing
segmented

Market
Stage
Early
Midstage
Mature

Product
Complexity
Complex
Simple

Price
Expensive
Cheap

Other
Factors
Size of market
Diversity/complexity
of market
“Proximity” of market
Completeness of
offering
Cost of channel
Speed to market

14

16
Amazon
Dell

...for some a Strategy
Zappos
Apple

1970 - Invented
1976 - Patented
1986 - Launched
Sold as a complete solution,
machines & coffee for a per
cup price to restaurants and
offices.
19

Background

1970 - Invented
1976 - Patented
1986 - Launched
Sold as a complete solution,
machines & coffee for a per
cup price to restaurants and
offices.

1988 - Acknowledged dud,
Nestle considers shutdown.
20

Background

1989 - Jean Paul Gaillard named
Commercial Director.

“Pivots”
21

Background

22

Separate machine & coffee. 
Sell to consumers.

Made and serviced by 3rd
parties.
Sold through independent
retail stores.
Manufacturers handle
delivery and stocking.
Nespresso handles sales
training.
23

Machines

Sold online and over the phone
direct to members of the
Nespresso Club.
Delivered direct to consumers in
24 hours or less.
24

Coffee

~$3
billion in
annual
revenue
30%
CAGR
over 10
years

50
countries

20 billion
capsules

12
million 26
machines

Results

Questions?
Comments?
Suggestions?
27

Thanks! 
Mark Zimmerman, mzimmerman@marsdd.com @markzim

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Distribution with Mark Zimmerman - Entrepreneurship 101

2. E101: Distribution Mark Zimmerman MaRS email: mzimmerman@marsdd.com twitter: @markzim

3. Product Price Place Promotion 3 The Four “P”s

4. The Four “P”s Product Price Distributio n Promotion 4

5. 5 3 Parts: Delivery, Sales, Service

6. It’s OK and often optimal to mix & match. 6 2 Flavours: Direct, Indirect

7. 7 How to Choose?

8. 8 Market type;   Existing, Re-segmented, New

9. 9 Market Stage

10. 10 Complexity

11. 11 Price

12. 12 Customer Preference

13. “Default” Choices 13 Channel Type Direct Indirect Market Type New Re- Existing segmented Market Stage Early Midstage Mature Product Complexity Complex Simple Price Expensive Cheap

14. Other Factors Size of market Diversity/complexity of market “Proximity” of market Completeness of offering Cost of channel Speed to market 14

15. 15 Not just a tactic...

16. 16 Amazon Dell ...for some a Strategy Zappos Apple

17. 17

18. 18

19. 1970 - Invented 1976 - Patented 1986 - Launched Sold as a complete solution, machines & coffee for a per cup price to restaurants and offices. 19 Background

20. 1970 - Invented 1976 - Patented 1986 - Launched Sold as a complete solution, machines & coffee for a per cup price to restaurants and offices. 1988 - Acknowledged dud, Nestle considers shutdown. 20 Background

21. 1989 - Jean Paul Gaillard named Commercial Director. “Pivots” 21 Background

22. 22 Separate machine & coffee.  Sell to consumers.

23. Made and serviced by 3rd parties. Sold through independent retail stores. Manufacturers handle delivery and stocking. Nespresso handles sales training. 23 Machines

24. Sold online and over the phone direct to members of the Nespresso Club. Delivered direct to consumers in 24 hours or less. 24 Coffee

25. As market matured Nespresso added their own brand machines made by an OEM. Added it’s own retail boutiques to further control the sales message. Created Nespresso Pro channel to serve the office market. 25 Later

26. ~$3 billion in annual revenue 30% CAGR over 10 years 50 countries 20 billion capsules 12 million 26 machines Results

27. Questions? Comments? Suggestions? 27 Thanks!  Mark Zimmerman, mzimmerman@marsdd.com @markzim

Distribution with Mark Zimmerman - Entrepreneurship 101

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