Cisco Systems manufactures networking hardware and focuses on layers 2 and above of the networking stack. Over time, Cisco evolved its go-to-market strategy from direct sales to utilizing multiple channel partners, including value-added resellers, system integrators, distributors, and telecommunications providers. While this strategy helped drive growth, it also led to conflicts over control, pricing, and boundaries between the different sales channels. Cisco worked to address these issues through partner certification programs, performance metrics, and clarifying roles for each type of channel partner.
Cisco Systems manufactures networking hardware and focuses on layers 2 and above of the networking stack. Over time, Cisco evolved its go-to-market strategy from direct sales to utilizing multiple channel partners, including value-added resellers, system integrators, distributors, and telecommunications providers. While this strategy helped drive growth, it also led to conflicts over control, pricing, and boundaries between the different sales channels. Cisco worked to address these issues through partner certification programs, performance metrics, and clarifying roles for each type of channel partner.
Cisco Systems manufactures networking hardware and focuses on layers 2 and above of the networking stack. Over time, Cisco evolved its go-to-market strategy from direct sales to utilizing multiple channel partners, including value-added resellers, system integrators, distributors, and telecommunications providers. While this strategy helped drive growth, it also led to conflicts over control, pricing, and boundaries between the different sales channels. Cisco worked to address these issues through partner certification programs, performance metrics, and clarifying roles for each type of channel partner.
Cisco Systems manufactures networking hardware and focuses on layers 2 and above of the networking stack. Over time, Cisco evolved its go-to-market strategy from direct sales to utilizing multiple channel partners, including value-added resellers, system integrators, distributors, and telecommunications providers. While this strategy helped drive growth, it also led to conflicts over control, pricing, and boundaries between the different sales channels. Cisco worked to address these issues through partner certification programs, performance metrics, and clarifying roles for each type of channel partner.
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Cisco Systems
M A N A G I N G T H E G O - TO - M A R K E T E VO L U T I O N Introduction – Cisco systems
• Network hardware – Switches and routers
Products Core competencies: • Classification – 1 to 7 layer continuum with Product design, custom solutions increasing complexity
• Cisco focused on layers 2 and above only,
focusing on high margin, high tech products
Channel Control
Internet Tele-channels Distributors VARs Company sales force
Low touch High touch
$ $$$$$ 90% of Cisco’s sales came from high touch channels Cisco – Routes to Market Channels Levels Markets
Direct selling Zero level, 10% sales
Enterprise accounts System houses/ One level, 25% sales aggregators
Telecommunication Teleservice providers One level, 25% sales customers
Cisco
Value-added resellers One level, 30% sales
SMB Direct marketing Two levels, <10% resellers sales
Two levels, <10%
Consumer markets Retailers sales Cisco – Channel Evolution (Volume to Value tiers) Engineering Lab equipment Support required G requirements ol 24*7, 4 hours d Minimum 16 $100k/year Volume focus – response Sales volume based (5 8*5, 24 hours Silver%(5%) Minimum 8 $40k/year response ) 8*5, 24 hours Premier (90%) Minimum 3 Demo response G ol • Need for change – Middle market commoditization d Value focus – • Points system revolving around value – Based on new technology Specialization, (1 5 specialization, customer satisfaction, engineering expertise solutions based Silver % (10%) • New technology specialization – demonstrated ability ) Premier (75%) • Customer satisfaction – survey of 30 customers focused on responsiveness, skill level, problem-solving abilities Cisco – Channel Evolution (Service Provider Initiatives)
Model 1 – VARs bundling services to provide one stop solutions:
Model 2 – Agreement with teleservice and solution providers:
• Need for change – Price/margin erosion by teleservice providers Cisco gear Solutions design Carrier services • Tactical response shifting price (hardware) services control to Cisco and its VARs Marketed under the name of teleservice providers Cisco – Channel Evolution (Salesforce co-ordination along value chain) Old structure New structure
Negotiation/sales Negotiation/sales closure closure VAR partners Fulfilment Fulfilment VAR partners Customer care Customer care and support and support
Neutral to value engagement – gives a chance to the VARs to add their inputs/value to the product specifications/pricing Positives and Negatives in Channel Evolution
Positives: Negatives: Step by step improvement, adapting to market changes. Not strategizing much on route to market strategy From direct selling to multiple channels (system (focused more on growth). Stimulus-response approach houses, telecommunication, resellers) and "box pushing" model Due to fast growth, needed value added and cost- Large number of VARs (6000 in 2000). Difficult to effective channel partners apart from direct sales force. maintain control during uncertainties. Dissatisfaction Eg: Reseller program among reseller during Telcom and dot-com crash After telecom and dot-crash, shift from volume to Less margin for resellers due to high competition value. Shift from standardized product to specialized (though cisco gave 40% discount, gross margin boiled VARs/aggregators (IBM). Focus on customer satisfaction, down to 5%-18%) certification and specialization Rationalized the channels. Reduced number of channel Easy qualification of become gold partners. Gold, silver and premier status awarded based partner. Dissatisfaction among higher tiers due on goals, specialization to intense competition Performance parameters to ensure satisfaction. Eg. Min Lesser ROI while pushing volumes number of cisco-certified eng. staffs, customer surveys Positives and Negatives in Channel Evolution
Positives: Negatives: Value engagement model: Partners brought into sales Higher control requirement over VARs (especially w.r.t cycle early in the process. Partners involved in future communication and solutions) strategies Service provider initiatives: Addressed Price erosion due Price parity among channels. Higher dissatisfaction to teleservice providers by introducing bundled carrier among VARs when Cisco collaborated with Tele service services providers Diverse markets (home networking, VoIP, storage networking). Diverse customers (enterprises, Small- Medium-businesses, telecom service providers, consumers market). Complex channels Channel Conflicts and Possible Solutions Channel Conflicts
Introducing Cisco products in their product
line offering Possible solutions Ventured into networking business to lure Telecoms customers with an added advantage of new source of revenue. • Clear product boundaries & customer segments for Telecoms, VARs and Direct sales. Router dumping • Redirect Telecomms to buy from resellers instead of direct sales. • Including channel partners in new product delivery by improving service offerings and analytics support Pre-configured low-end equipment to SMO & • Standardizing price floors, bundling options for channels SOHO Direct sales Fear among resellers about becoming irrelevant Network in a box
• Premier partners faced difficulties - lack of resources.
• Ease of CCIE requirement – fear of over-crowding. • Joining forces with SBC communication to offer all-in-one set up. How should Cisco distribute VOIP? Through Voice VARs? Through Data VARs? Or both? Utilize existing Data VARs
Advantages:
1. Existing VARs are already familiar with the company's products and rules.
2. This is a great way to bundle products and thus drive sales of Cisco's core products
3. This would strengthen the relationship between Cisco and the VARs thus ensuring long-term success
Disadvantage:
1. Intense channel competition leading to lower margins
Utilize existing Voice VARs
Challenges:
1. It is very hard to incentivize because the new product gives lower margins to the VARs and cannibalizes their sales
2. It would take time to negotiate and enter a consolidated channel where relationships are already strong
3. It might hamper the existing relationship with the data VARs which would take a hit on the core business sales as well
Advantage:
1. Consolidated and comprehensive channel with higher margins
Takeaways • VOIP is beneficial to big enterprises as well as small enterprises and individual customers
• Cisco can focus on targeting big enterprises (A, B) via the data as well as voice channel since the numbers are small. Encourage bundling the product with other options like routers so that the VARs don't feel that the product will completely cannibalize their sales
• For customers in C, D, E of the pyramid, Cisco can utilize the traditional data VARs since the reach is much wider and the data VARs have the expertise in handling different customer segments and approaches. Bundling strategy can be utilized here as well to drive sales Cisco Systems Thank You M A N A Abu G I N G TMHSE– 2111402 Shahir G O - TO - M A R K E T E VO L U T I O N Mano Vignesh M – 2111405 Aditya Kanthraj – 2111325 Jeevanth D – 2111101 N Sameeksha Rai – 2111339
Perbandingan Biaya Jaringan Dan Kelayakan Teknologi LTE Pada Frekuensi 900 MHZ, 1800 MHZ, 2100 MHZ, Dan 2300 MHZ Untuk Mendukung Rencana Pita Lebar Di Indonesia
Perbandingan Biaya Jaringan Dan Kelayakan Teknologi LTE Pada Frekuensi 900 MHZ, 1800 MHZ, 2100 MHZ, Dan 2300 MHZ Untuk Mendukung Rencana Pita Lebar Di Indonesia
