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Group 02
Akshara Meena | Sandeep N | V Bhala Kumar | Arun Kumar V | Pala Sriram
Cisco
Systems
Established in 1984
Core competency:
Product design &
development
DOTCOM
BUBBLE
Target Markets
Enterprise accounts
1300
Channel Partners
Telecommunications
Product models
24000
Consumer Markets
420
6000
3000
33000
Agenda
Evolution of distribution channels
We will
take you
through
1990 - 2000s
Direct
channel
75%
sales
Indirect
channel
25%
sales
2001 - 2003
End
Custom
er
1990 2000s
2001 - 2003
Direct channel
10%
sales
System Houses/IT
(turnkey solutions)
25 - 30%
sales
Telecommunication
(voice, video, data)
25 - 30%
Valuesales
Added Resellers
(networking prod &
serv)
30 - 35%
sales
Business expansion: Ciscos inability to expand in house sales
force rapidly
Channel partners were cost effective solution Divide & grow
End
Custom
er
Channel Evolution
Consolidation Phase
1984-1990s
1990 2000s
2001 - 2003
Direct channel
System Houses/IT
Telecommunication
2 Tier
Distributors
Custome
rs
Value Added
Resellers
Retailers
Online channels
Consum
ers
C
C
D
D
D
D
B
B
A
A
E
E
00
Grades
E-A Best
Best
ABCDE
EfficiencyB
Cost effectiveness is low
due to high volume and
box pushing
The extent of Capacity to
handle is high
C
C
D
D
B
B
A
A
E
E
00
Grades
E-A Best
Best
ABCDE
Effectiveness
A
Coverage, geographically
is high
Control is low due to
pressure of sales
Competence to handle
various issues are low
B
B
A
A
E
E
00
Grades
E-A Best
Best
ABCDE
Adaptabil D
ity
Flexibility to adopt to
new changes are low
and rigid
Vitality to any
problem will be very
low.
Volume based to
Value Based
RESELLER DISTRIBUTIONVOLUME BASED
TOTAL 6000 Resellers
RESELLER PYRAMID
GOLD
5%
-42%
15
%
DISC
OUNT
5%
90
%
SILVER- 40%
DISCOUNT
10
%
75
%
C
C
D
D
D
D
B
B
A
A
E
E
00
Grades
E-A Best
Best
ABCDE
Efficienc B
y
Cost effectiveness is
higher comparatively to
volume based.
Capacity is reduced due
to 2001 dot com bubble.
C
C
D
D
B
B
A
A
E
E
00
Grades
E-A Best
Best
ABCDE
Effective
ness
B
B
A
A
E
E
00
Grades
E-A Best
Best
ABCDE
Adaptabilit A
y
Flexibility and
Vitality would be at
the peak due to the
fact of value
engagement.
A
B
C
D
E
Degree of
Channel
Interface
Product
Marketin
complex
g Support
ity
Top 100
enterprise
accounts+ 25
service
providers
Intense
Very high
No
125-10k
enterprise
accounts
High degree
high
Low
Medium
degree
Medium
Medium
1 million Small
business
customers
Low level
MediumLow
High
10 million
customers
No interface
Low
Very High
Sales
Model
CustomizedDirect
(high
margin)
Indirect +
direct sales
Standardize
dRetail/online
(less
Levels of
distribution
Touch
Reach
Margins
Experience
0-level
High
Low
High
Consultative
Low
High
Low
Transactional
B
C
D
E
1-level
2-level
VOIP Market
Ciscos IP technology targeted $750 billion telecommunications and equipment market
Single network infrastructure to transmit voice, data and video communications
Advantages of IP technology
1. Cheaper than traditional phone switches
2. Lower calling costs
3. Easier to manage
Disadvantages of IP technology
4. Data networks are less reliable than traditional telephone networks
5. Issues with voice quality and reliability existed
Cisco
Competitors
Data VARs
Voice VARs
Margins -12
to20%
Margins -20%+
Low margins
Access to new
markets
Growth
Target path
High margins
High profits
Profit Target
path
Cisco
Recommendati
ons
Existing margin incentives should be kept as it is
Use the existing DATA VARs to provide a service bundle with incorporated
VOIP solution
Should also add the Certifications for Voice telephony in the value added
reseller pyramid
Thank
You
Silver
Status
Gold
Sales
Volume
Requiremen
ts
Sales
Volume
Requireme
nts
Discount
Level
Engineerin
g
requiremen
ts
Premier
38%
40%
Min 3
Min 8
Individua individua
ls
ls
Specializati
ons
Optional
Lab
Equipment
Demo
$ 40,000
Capabiliti per year
es
42%
Min 16
individu
als
$100,00
0 per
year
Discount
Level
Silver
Gold
None
38%
40%
Engineering
Min 3
Min 8
requiremen Individual individual
ts
s
s
42%
Min 16
individual
s
Specializati
ons
20 points
Lab
Equipment
Demo
Capabiliti
es
$ 40,000
per year
$100,000
per year
8*5
8*5
24*7
Support