Channel Management. Dipl.-Ing. (FH) Jürgen W. Köhler

Channel Management Overview Click the style sheet to edit the title Development from direct to indirect business Sales Channel - Overview Channel Management Key Topics Typical Channel Structures in the Industry Benefits of Each Channel Go To Market Strategy Market Transparency Does Market View match Market Penetration? Seite 2

Conventional Channel-Management: Optimal Click the use style of all sheet Channels to edit to the the Customer title high High Touch Channels Sales Force Value added Partners Value-Add of the Channel Low Touch Channels Tele Marketing Retail Stores Distributors Indirect Channels Direct Channels low Web Shop Direct Marketing Channels Benefit from channel variety = optimal market penetration at minimal cost. low Cost per transaction high Seite 3

Wine from growers to consumers Click Channel the style Structures sheet to edit the title Consumers Direct sales Restaurant Wine merchant Wholesale Supermarket Wholesale Vinotheque Chateau de Vinaigre Producer = Wine growers & Co. Seite 4

7 Key Topics set the parameters for Channel Click the Management style sheet to at edit IA&DT the title What are the channels of IA&DT? How do sales split up to the channels? How does the market split up to the channels? How do the channels influence buying decision? Cost and Profitability per Channel? What are the channel demands to IA&DT? è What are the benefits of Channel Management to IA&DT and its customers? Channel 1 Market Transparency Channel 3 Channel 2 End Customer Manufacturer Channel n Channel 4 Transparency of Cost Demands Seite 5

Industry Channel View: 8 Click Channels the style connecting sheet to Manufacturer edit the title to End Customers End Customers End Customer Distributor / Distributor Wholesaler Panel builder Usually less known (POS) Panel builder Sub - contract. Sub- Contractor " Installateur " System System Integrator OEM OEM EPC / EPC gen. contract. End customer direct sales direct sales Usually more or less known Usually more or less known Decision Decision influencer Influencer 1) Manufacturer Manufacturer of Products / Systems of Products / Systems (A&D + (IA&DT Competitors) ) Seite 6

Click 3 Key the Channel style sheet Patterns to edit have the been title identified... Pattern Characteristics High-priced / high-valued products Sectors typical Sales 0rganisation Explanation required Arrow Meat Snake Salt & Pepper One major dominating channel Strong cascade structure Customer-specific applications Strong differentiation to competitors => PLC, engineered drives, Low-priced products; commodities Self explanatory & easy to use Fast-moving products (Bulk ware) Low differentiation to competitors => Circuit protection, Low voltage products, Automotive Food& Beverage Building infrastructure Channel-specific sales services Push/Pull strategy Profiles of competencies Resources Cost of sales Price policy Fence Delicacies High-value-add channels dominating X% Decision Influence y% Channel Impact Seite 7 Explanation required High product variety Complex products Customer needs support => Process sensors, Geared motors,.. Oil & Gas Metals& Mining Chemical

Development Click the style of Go sheet to to Market edit Strategy the title Endkunden Sector Strategy Aerospace Automotive Food& Beverage Pharma Airports Oil&Gas Water& Wastewater Automotive, F&B, Wie wollen wir den Markt angehen? Channel Strategy Wie tickt der Markt? Hersteller market structure buyer behaviour customer demands competitor behaviour IA&DT- Go To Market Strategie Markt wie er ist Partner Strategy Solution Partner Distribution Partner Push-/Pull-Activities Sales-Services Organisation sales costs Pricing Seite 8

Matching Market View and Market Penetration Click the style sheet to edit the title How efficiently are the Sales Channels being used? External Sales Promotion Technical support Offering Order mgmt. Invoicing Data care Others STEP 1: Assign functions shares to activities STEP 2: Assign activities shares to the channels Endkunden Customer Distributor / Wholesaler Usually Meist weniger less known bekannt System Integrator Sub - contract. "Installateur " Panel builder End customer direct sales EPC / gen. contract. OEM Usually Meist gut more bekannt or less known Decision influencer Manufacturer Hersteller von of Produkten/Systemen Products / Systems 1) (IA&DT (A&D + Competitors) Wettbewerber) STEP 3: Analyse cost and resources by use of cost charts STEP 4: comparison and interpretation of structures from Subway Map to Cost Charts 10% 7,8% 8,1% 8% 0,8% 1,1% 1,1% 1,0% 6% 1,4% 1,2% 10,5% 1,4% 1,1% 1,3% 6,7% 5,7% 0,8% 0,9% 4% 1,1% 4,6% 4,8% 2% 2,9% 0% 1 3'0 1'0 Distributor Panel Builder Sub Contractor OEM EPC End Customer 1 0'9 1'2 0 6 2'0 1'4 8'8 0% 3% 6% 9% 12% 2,3% 8,1% 0,6% 0,8% 11,7% 3,3% 4,4% 0,3% 0,8% 8,8% 9,9% 5,9% 0,5% 0,7% 16,9% 3,3% 0,3% 0,7% 4,3% 2,5% 1,1% 0,8% 4,5% 0,1% 17,7% 2,1% 0,2% 0,7% 20,7% 1'3 (26,0%) 2'2 (44,0%) 1 1'3 (8,7%) 100'0 End Customer 1 (15,0%) 3 4 1'0 (20,0%) 1'0 (20,0%) (14,3%) 6'0 (13,3%) 0'7 (14,0%) End customer 10'0 direct sales 1'0 (10,0%) 30'0 EPC 2'0 (6,7%) gen. contract 3'0 (60,0%) 10% 20'0 OEM 2'0 (10,0%) 12% System Integrator Sub Contract. / 1 "Installateur" 1'0 (6,7%) 7% 25% Decision Influencer 6% identify levers fit resources 9,9% 1,4% 1,5% 1,3% 5,7% Ø 7,5% 1'0 Direct Sales Decision 0 2 Influencer Influenced Sales 17,8% Ø 8,1% 3,5% 0,5% 22,6% 0,8% 40'0 Panel Builder 2'7 (6,8%) 10% Distributor fix/change 6 5% 10'0 1 PUSH External Sales Offering Order Mgmt. Invoicing PULL 7'5 (11,5%) 2'3 (23,0%) 0'7 (14,0%) 3'8 (25,3%) 100'0 Manufacturer of A&D Products / Systems 1 (15,0%) 0'7 (14,0%) 25% market penetration Seite 9

Click the style sheet to edit the title How do I benefit from Channel Management? Possible Relevant findings channels from for the a Channel scope/business. Analysis Roles and relevance of the channels/customers from manufacturer to end customer. Providing the right service support. Match market view with Go to Market Strategy with processes, resources and organisation. Efficient use of resources through Push&Pull. Seite 10