Indirect Server Distribution Channel
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This document discusses server distribution channels and strategies. It describes various distribution channels like resellers, distributors, value-added resellers (VARs), OEMs, and ISVs. It also discusses direct distribution methods like direct marketing and retail systems. The document analyzes the strengths and weaknesses of direct and indirect distribution models. It provides ways to measure channel performance through metrics like effectiveness, efficiency, and equity. Finally, it discusses segmentation of distribution channels and products to analyze profitability.
Indirect Server Distribution Channel
- 1. Server Distribution Channel & Strategy By DilipAlavane -2009E02Dhiraj Surana -2009E12KirshnakantPandey -2009E25
- 2. AgendaServer Manufacturing ProcessDistribution StrategyChannels of Distribution.Indirect Distribution.Direct Distribution.Measuring Channel Performance
- 4. Distribution StrategySelective DistributionIt’s distribution of a product through only a limited number of channels and markets.Reduces total distribution cost so that net profits are higher and often induces company’s rule for advertising, pricing and displaying.Cooperative advertising can also be utilized for mutual benefit.Focused effort
- 6. Channel FunctionResellerPursue Volume based Business Model.Extends manufacturer’s reach in the market Provides directly to end-user with serviceStock inventoryRapid and convenient delivery.Aggressively solicit new accounts.Ex: Data Care Corp., BitScan, EletechMANUFACTURERRESELLER DISTRIBUTORVAROEM’sISV’s
- 7. MANUFACTURERRESELLER Other Distributor and / or CustomerDISTRIBUTORVAROEM’sISV’sDistributorSupply to corporate resellers and other distributors.Carry large quantities of different products, to increase their leverage when dealing with their customers.Provide specific software, peripherals, etc, as well as service.e.g. Ingram Micro, Tech Data, Computer 2000, and Santech .
- 8. VAR’s (Value Added Resellers)Focus entirely on designing ,developing , and delivering complete business problem solutions to end users.Solution may include hardware ,software and services.Completely customizing the solution to the needs of the customer.Also known as System Integrators from hardware’s perspective , specialized in selling and integrating the product for complex solutionsCompanies that combine computer components to build a complete system.Eg SI : Cisco, Symantec NetBackup SeriesEx: Infowrold,Informatica, Innovative Interfaces, Unisys.MANUFACTURERRESELLER Other Distributor and / or CustomerDISTRIBUTORVAROEM’sISV’s
- 9. MANUFACTURERRESELLER Other Distributor and / or CustomerDISTRIBUTORVAROEM’sISV’sOEM’sRefers to companies that make products of there own using manufactrer’s component in it , for others to repackage and sellImbedding manufacturer’s products into large systems.Manufacturer’s component represents a small portion of the total product Ex: Blade Server Chasis , MTS Systems, Mango DSP
- 10. MANUFACTURERRESELLER Other Distributor and / or CustomerDISTRIBUTORVAROEM’sISV’sSource of Application Solutions and does not directly sell hardware paltforms.They influence end users purchasing behaviour by recommending such platforms.Ex: Wipro, Oracle, Microsoft , Novell, Redhat etc.ISV’s
- 11. Direct DistributionDirect Marketing SystemsCustomers places the order directly by visiting the manufacturer’s website like for example Dell.
- 12. Place the order after having personal communication with a customer representative who is not a salesperson, such as through toll-free telephone ordering. Direct Retail Systems – This type of system exists when a product marketer also operates their own retail outlets.Ex: Dell, HP etc having there retail outlets
- 13. Strengths of Direct model Most efficient method of distribution
- 15. Rapid response to customer changes.
- 16. Strong relationship with customers and suppliers.
- 17. bringing new products to market quickly, enabling it to increase
- 18. High market share and achieve high returns on investment.
- 19. direct sales and build-to-orderLimited audience (not everyone has it or will use it for shopping)Lack of one-to-one interaction, impersonalCannot touch, feel, products, concerns about colors, not tangibleFear of fraud, ID theft, securityWeakness of Direct model
- 20. Strengths of indirect model Very wide distribution, size, exposure, volume, Product availabilityDelivery Performance.Ease of Doing Business.ExpertiseFocused customer base, Broad networkCan offer bundled pricingCarry our inventory, cost sharingOffers aggressive marketing, upsell opportunity.Can offer personal consumer assistance, serviceDon’t know end-userNo control of product presentationLimited product focusUnmanageable; have own agendaVery independent, difficult to controlNo direct customer contact by youIf they leave, you lose the customerThey also represent others—focus is limitedLess loyaltyWeakness of Indirect model
- 22. 15Channel performanceEffectiveness : Providing the required service “most cost effectively”.Delivery : A short term, goal oriented measure of on time delivery
- 23. Stimulation of demand: What are the efforts made by the channel member to increase customer base or increase the usage of the product.Equity : Extent to which “channel serves problem riddenmarkets and market segments”.Eg: disadvantaged or geographically isolated consumers.Efficiency:Output / InputProductivity : The efficiency with which the output is generated from the resources and inputs. Operational efficiency.
- 24. Measuring financial performanceTo determine the profitability and financial performance of channels following parameters can be used Revenue,
- 25. Cost ,
- 26. Profits arriving from different segments of Distribution ChannelDistribution channel segmentation(a)ProfitabilityChannel segmentationDirect channelIndirect channelServer Series AServer Series BServer Series CServer Series BServer Series AServer Series C(a) Segmentation analysis by channel & product category
- 27. (b)Corporate ProfitabilityChannel segmentationDirect channelIndirect channelTerritory segmentationEastWestEastWestABCABCABCABCProduct segmentation(b)Segmentation analysis by channel, territory and product category
- 28. Revenue Cost AnalysisRevenue and cost associated with each segment must be analyzed
- 31. Advertising
- 32. Sales promotion
- 33. Transportation
- 34. Storage and shipment
- 35. Order processingContribution margin approach CMA requires all cost be identified as fixed or variable according to behavior of the costIncome statement in the CMA method of analysis can be prepared that identify probability for each segment by determination of fixed, variable, direct and indirect cost