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Power
Industry Specialists
Generation
Desktop Systems
Activity Specialists
Activity Specialists
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Servers
Switches
Printers
Scanners
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Power Products Company
Lead
Technical Post
Products Generatio Sales
Solutions Sales
n
Alternators
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Product Specialists
Activity Specialists
Activity Specialists
Turbines
Transformers
Switchgear
Control
Systems
Go To Market Activities
Agents/
Direct Value
Represent Tele Independe
Sales Added Retailers
atives Channels nt Partners
Force Partners
Geo-
graphicall Large, Mid
Retail
Large New Geo- y Small Size, Small
Customer
Accounts graphies Dispersed Accounts and Retail
s
Mid Size Customers
Accounts
Channels by Association Levels
Company
Company Owned
Connected
Permanent Representatives
Direct Sales Force
Authorised Agents
Company Tele Sales
Exclusive Distributors
Web Site
Franchisees
Company Retail Outlets
Dealerships
Company Catalog
Joint Ventures
Channels by Association Levels
Independent
Independent
Partners
Whole Salers
Distributors
Dealers
Co-Sellers Independent Agents
Collaborators Value Added Partners
System Integrators Independent Retailers
Direct Mail Companies
Catalog Based Retailers
Internet Intermediaries
Customer Needs and Preferences
Value Complex
Convenience Products, Occasional,
Business Facility
of Ordering High Low Value
Customer Manager
at Own Time Support Purchases
and Pace Needs
Company
Sales Force Few Retailers
Web
Represen Distributor Distributor
Channel Company
tative s, Wide s
Incoming Sales Force
Agent Range of Web
Tele Sales
Distribut Products Channel
or
Effectiveness in
Performing Functions
Need Assessment
E-Channels
Direct Mail
Tele Sales
Retail
Resellers
Direct Mail
Tele Sales
Retail
Resellers
Direct Mail
Tele Sales
Retail
Resellers
Direct Mail
Tele Sales
Retail
Resellers
Direct Mail
Tele Sales
Retail
Resellers
Direct Mail
Tele Sales
Retail
Resellers
Direct Mail
Tele Sales
Retail
Resellers
Direct Mail
Tele Sales
Retail
Resellers
Direct Mail
Tele Sales
Retail
Resellers
Value
Effectivenes Addition
s Closure
Post Sales
Average Cost Per Contact for Lead Generation (Rs.)
Representative
Trade Fair
Direct Mail
Advertising
Telemarketing
Digital Marketing
Web Site
Internet
Efficiency
Telesales
Sales
Force
Specialis
edSales
Force
Effectiveness
Combining High Touch and Low Touch
Channels- Ancillary Products
Independe
nt Repair Industrial Distributors
Shop
Value Networks
Level I Level II
Level II Level I
Intermediar Intermediar
Suppliers Suppliers
y y
Level I Level II
Level II Level I
Company Intermediar Intermediar
Suppliers Suppliers
y y
Level I Level II
Level II Level I
Intermediar Intermediar
Suppliers Suppliers
y y
CROSSDOCK
Vendor
Vendor
Retailer
Vendor
Vendor
Develop Channel Value Creation
Potential Add or Shift to
A Better
Channel
Option
Add Value To
End Customer
Directly
CISCO Systems
Cisco Systems
Leonard LenBosack and
Sandra SandyLerner
CISCO Financials 2001
2003
2001 $ Bn Loss on $ 20 Bn Sales
2003 : $ 3.6 Bn Profit on $ 18 Bn Sales
The Turnaround Story
The Turnaround
Halted Acquisitions
Reduced models from 33,000 to 24,000
Cut 8,500 jobs
Reduced vendors from 1400 to 400
Reduced VARs from 6000 to 3000 worldwide
and 2200 to 1000 in USA
Go To Market Strategy
Home Networking
Voice Over Internet Protocol (VOIP) Telephony
Storage Networking
Wireless
Optical
Security
Unified Communications
CISCOs Explosive
Growth
Ciscos explosive growth was powered by the
growth of the internet
Dot Coms spurred brick and Mortar companies
to go online
A flood of ISPs came into existence
Heightened demand of technology companies
took the NASDAQ Index from 1835 in March 98
to 5132 in March 2000
When the Dot Com crash happened the
NASDAQ Index plummeted to 1619 in April 2001
ISPs that hosted the dotcoms went out of
business
Routes to Market
1.Direct
2.System
Houses:
IBM,HP
CISCO 3.Telecom Business
Services: SBC Customers
4.Value Added
Resellers
5.Direct
2 Tier Resellers:
Distributo CDW
rs
Linksys 6.Retailers: Retail
CompUSA Customers
Routes to Market
Authorised Reseller
The VAR Channel
Juggernauts
Big Solution Juggernauts
Houses like Big Solution
IBM, HP Houses like
IBM, HP
Large Resellers
who Pushed
Death Valley
Boxes with
little Value
Addition Specialised
Specialised Resellers
Resellers Delivering High
Delivering High Value Addition
Value Addition
Problem with Volume
Based System
Business concentrated among large Partners
10 Partners out of 6000 accounted for 30% of Partner Sales
Higher discounts to big Partners helped big Partners grow bigger
Small VARs capable of adding more Value could not compete on
Price
Small VARs started exciting ever when they had higher solutions
capabilities
Need for Value Based
System
Value Add
Sales Force Coordination
Focus on better coordination between Sales Force and
Direct Sales Force
CISCO moved from Neutral Engagement to Value
Engagement
Bringing in Partners at an early stage of the Sales Cycle
Earlier the Partner came in post price negotiation only
at the fulfilment stage
After price negotiation there was little scope for value
addition
CISCO partner support took the initiative to understand
Partner Objectives, Business Models and Strengths
Sales Force Coordination
Created Playbooks, a ready reckoner which
defined staffing requirements for various CISCO
offerings
CISCO developed a Channel MBA Course for its
enterprise sales teams
We need to help partners build their service
practice not just say You need a service practice
VAR Response: We understand the intent But if all
depends on how well they drive this program down
to the feet on the street.
Service Provider
Initiatives
Post the 2001 meltdown CISCO insisted on
Hardware and Service Bundling by Solution
Providers
Solution Providers now had to combine Carrier
Contract, Network Management, e-commerce
storefront, Solutions Design Services and Hardware
into one point of contact for SMB and Enterprise
customers
Customer could now outsource responsibility for
Internet Services and communication to a single
solution provider.
Wall Street Intervention
Master
Depth of Technology Expertise
Express
Express 2 CCIEs 4 CCIEs
Foundation
SMB Spezn. Spezn.
Solution
Incentive Business Solutions
Program
Opportunity
Identification
Program
Partner Profitability
Technology
Migration
Integrated Technologies
Program
Value
Incentive Technology Specialised
Program
Individual Products
End User
Telecom Service Providers Networking Service
Behemoths who Owned the Wires Providers-
Value Added
Resellers
End User
Networking
Telecom Service Providers
Service
Behemoths who Owned the Wires
Providers-
Letting the Wolves into the Hen House
Value Added
Resellers
Channel Discounts
End User
Telecom Service Providers Networking Service
Behemoths who Owned the Wires Providers-
Value Added
Resellers
End User
Networking
Telecom Service Providers CISCO Service
Behemoths who Owned the Wires Interface Providers-
Value Added
Resellers
New Competitors:
Large Systems Houses
CISCO got products specified by Network
Storage Makers IBM, HP, Hitachi and EMC
This created another channel for CISCO
Products in competition with VARs
Online Sales A new
threat
CISCO was a Pioneer in web enabled support
tools
Resellers could access the CISCO website,
configure products based on requirements and
obtain prices online
As this tool become well developed, CISCO
opened up a direct online sales channel
Online Retailers
2.System
Houses:
IBM,HP
CISCO 3.Telecom Business
Services: SBC Customers
4.Value Added
Resellers
5.Direct
2 Tier Resellers:
Distributo CDW
rs
Linksys 6.Retailers: Retail
CompUSA Customers
What Should
be CISCOs
Next Move?