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Distree Russia - 2013 St. Petersburg
25 June, 2013
NAVIGATING IN THE WORLD OF CHANNEL STRATEGIES
IGOR SNYTKO
CONTENTS
Impact of Channel Strategies
Varieties of Channel Strategies
Key Channel Trends
CHANNEL STRATEGY ROLE
Retail markup
Distribution margin
Manufacturer's profit
Variable cost
Fixed cost
COGS
DETERMINED BY THE MARKET
IMPACTED BY CHANNEL
STRATEGY
retail price Determined by the market , brand values
DEPENDS ON THE STRATEGY
DEPENDS ON THE STRATEGY
DEPENDS ON THE VOLUME
DEPENDS ON THE VOLUME
FACTORS DENERMINING STRATEGY
EXTERNAL FACTORS
• Level of market development
• Product structure of the market / demand structure
• Competitors actions INTERNAL FACTORS
• Product portfolio structure
• Business volume, market share
• Internal market expertise, availability of resources
KEY PRODUCT TRENDS
1. Focus on mobility 2. Areas of growth: tablets, smartphones
and accessories 3. Sales decrease: laptop computers,
netbook withdraw from the market 4. Further segmentation and internal
cannibalization in portable computer market: the development of "hybrid" devices undermines prospects for ultrabooks
5. “Virtualization”: Apps vs Devices
MAXIMUM ENGAGEMENT OF MANUFACTURER
CHANNEL STRATEGY SCALE
MAXIMUM DELEGATION TO
DISTRIBUTOR 1. Mono distribution 2. Distributor is realizing channel & marketing strategy on behalf of manufacturer 3. High margins of distributor 4. Small markets 5. Low level of competition
1. Multi distribution 2. Many direct contracts
with partners 3. Demand generation and
channel programs by manufacturer
4. Service model of cooperation
KEY DIRECTION
1. The time of push- strategies has passed 2. End customers and channel are defining distributor
Channel partners
End customers
Distributor
Manufacturer
Channel partners
End customers
Distributor
Manufacturer
DISTRIBUTION TRENDS
1. Reducing space for growth
2. Product convergence
3. Consolidation of distribution companies
4. Increasing the level of attention to smaller customers
5. Displacement of the sub-distributors and "wholesalers"
6. Increasing competition on the cost of business (access to financial resources, optimization of logistic procedures, implementation of higher level ERP-systems)
OPPORTUNITIES?
FUTURE OF SUBDISTRIBUTION
Distributors replacing subdistributors
• Area for growth • Increasing business transparency • Development of logistics
infrastructure
SERVICES BUSINESS MODEL
FOR MANUFACTURER + -
Increase the predictability of business
Significant cost increase (sales infrastructure)
Direct contact with the channel
FOR DISTRIBUTOR + -
Decreasing requirements to working capital
Decreasing profitability
Decreasing risks Increasing competition for the business cost Loss control over the channel
• Switch from “margin” concept • Manufacturer generates demand and channel deals and coordinates all
channel matters (marketing, sales support, etc.) • Logistics by distributor
FEASIBLE IN CASE OF SIGNIFICANT VOLUME OF BUSINESS
DISTRIBUTION TRENDS
Survival and Growth Options:
Value add distribution
Niche high-margin distribution
Focus on logistics
Product diversification
Downstream/Upstream
vertical integration
REQUIRES SIGNIFICANT INVESTMENTS
RETAIL TRENDS
1. A lot of plans for store number growth, but questionable
2. Further consolidation of the channel, major federal retailers winning share
3. Regional retail players stay only in smaller formats and in smaller cities, unfeasible for majors
4. Growth opportunities for Telco retailers, as consumer preferences shifts support their business
5. Further development of on-line retail: early to talk about consolidation, but major investments and focus on multi-channeling
6. Further development of franchise projects is questionable
OPPORTUNITIES?
EMERGE OF MONO-BRAND RETAIL Brand value oriented vendors focus on mono-brand retail: • development of Apple Monobrand Stores (big chains
like IRG + many smaller Co) • emerge of Samsung Monobrand Stores in Russia
(IRG acquired Nosimo)
Stagnation or close down of mono-brand chains for some respected vendors: • Sony • Toshiba • Nokia
?
CONFLICTING
TRENDS
MONO-BRAND RETAIL
Vendor • Wide line-up • Focus on brand development –
Marketing investments • Efficient marketing policy enforcement
Environment • Market size/retail traffic in specific
location justifies investment • Professional partner with strong retail
expertise
STRONG COMBINATION +
WHEN DOES IT WORKS?
1. CHANNEL STRATEGY DEFINES THE PROFITABILITY
2. POSITION ON "STRATEGIES SCALE" DEFINES BY OBJECTIVES & OPPORTUNITIES
3. TRACKING TRENDS & STRATEGIES MODIFICATION
CONCLUSIONS
THANKS FOR YOUR ATTENTION
FEEL FREE TO CONTACT WITH INQUIRIES: [email protected] TEL: +7-495-221-71-81 WWW.OCEANSOLUTIONS.RU