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Value Chain
“Ecosystem”
“Product Positioning, Pricing & Costing”

1
Two Critical Channel Questions
1
2

How do you want to sell your product?

is subtle, but more important than the
first: How does your customer want to
buy your product?

2
How Do You Want Your Product to
Get to Your Customer?







Yourself
Through someone else
Retail

Wholesale
Bundled with other goods or services

3
How Does Your Customer Want to
Buy Your Product from your
Channel?








• Same day
• Delivered and installed
• Downloaded

• Bundled with other
products
• As a service
• …
4
For You?
What Does This Mean?

5
Questio
ns

Wino’s

• Do you sell your product direct?
• Is your product bundled with other products?
• Is your product a component of a bigger
product?
• Is your product licensed?
• How do customers/prospects want to buy it?
6
Questio
ns

Easygene

• Do you sell your product direct?
• Is your product bundled with other products?
• Is your product a component of a bigger
product?
• Is your product licensed?
• How do customers/prospects want to buy it?
7
Questio
ns

Lignin

• Do you sell your product direct?
• Is your product bundled with other products?
• Is your product a component of a bigger
product?
• Is your product licensed?
• How do customers/prospects want to buy it?
8
Questio
ns

Ecoli?

• Do you sell your product direct to a user?
• Is your product bundled with other products?
• Is your product a component of a bigger
product?
• Is your product licensed?
• How do customers/prospects want to buy it?
9
Questio
ns

•
•
•
•

Tait

Direct to “end user”?
Via naturopath store?
Via “name brand”?
Via “expert testimonial”?
– For what specific segment?

• How do customers/prospects want to buy it?
10
Examples
• http://www.slideshare.net/sblank/presentati
on-examples-for-class-5-distribution-channels

11
Value Chain

12
Value Chain

Direct to End User
List Price

Discounts

Revenue - Actual Price

Profit
+ SG&A
+ R&D

Cost of Goods
(Supply Chain)
13
Value Chain

Resellers
List Price

Discounts
Reseller
Profit

Revenue - Actual Price
Profit
+ SG&A
+ R&D
Cost of Goods
(Supply Chain)
14
Value Chain

Distributors/Resellers
List Price

Discounts
Reseller
Profit
Distributor

Revenue - Actual Price

Profit
+ SG&A
+ R&D
Cost of Goods
(Supply Chain)
15
Value Chain

International Distributors
List Price

Discounts
Reseller
Profit
Distributor
Master Disti
Profit
+ SG&A
+ R&D
Cost of Goods
(Supply Chain)

Revenue - Actual Price

16
Value Chain

OEM or IP Licensing
List Price

Discounts
Reseller
Profit
Distributor
Master Disti
Profit
+ SG&A
+ R&D
Cost of Goods
(Supply Chain)

OEM/IP Product is part of
your customers COGs

Reseller
Discounts
Profit
Profit
Distributor
Master Disti
+ of Goods
CostSG&A
+ R&D
(Supply Chain)

Revenue - Actual Price
17
Value Chain

OEM or IP Licensing
List Price

Discounts
Reseller
Profit
Distributor
Master Disti
Profit
+ SG&A
+ R&D
Cost of Goods
(Supply Chain)

This stack replicates
(like a fractal
… looks the same at each level)

Revenue - Actual Price
Reseller
Discounts
Profit
Profit
Distributor
Master Disti
+ of Goods
CostSG&A
+ R&D
(Supply Chain)

Reseller
Discounts
Profit
Distributor
MasterGoods
CostProfit
of Disti
+ SG&A
(Supply Chain)
+ R&D

18
Value Chain

Excerpt from Reading: “Who Captures Value in a Global Innovation System? The case of Apple's iPod”

19
Value Chain

Excerpt from Reading: “Who Captures Value in a Global Innovation System? The case of Apple's iPod”

20
Distribution Complexity
Global Systems

Systems Integrators

Evangelists
Marketing Complexity

WANs
Mainframes

Direct Sales
Minis
LANs

VARs
PC Servers
Desktop PCs

Retail
Printers
Keyboards

Service
Technicians

Web, Telesales
Toner

Solution Complexity

21

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2b value chain (team specific).2013.q2

  • 2. Two Critical Channel Questions 1 2 How do you want to sell your product? is subtle, but more important than the first: How does your customer want to buy your product? 2
  • 3. How Do You Want Your Product to Get to Your Customer?      Yourself Through someone else Retail Wholesale Bundled with other goods or services 3
  • 4. How Does Your Customer Want to Buy Your Product from your Channel?       • Same day • Delivered and installed • Downloaded • Bundled with other products • As a service • … 4
  • 5. For You? What Does This Mean? 5
  • 6. Questio ns Wino’s • Do you sell your product direct? • Is your product bundled with other products? • Is your product a component of a bigger product? • Is your product licensed? • How do customers/prospects want to buy it? 6
  • 7. Questio ns Easygene • Do you sell your product direct? • Is your product bundled with other products? • Is your product a component of a bigger product? • Is your product licensed? • How do customers/prospects want to buy it? 7
  • 8. Questio ns Lignin • Do you sell your product direct? • Is your product bundled with other products? • Is your product a component of a bigger product? • Is your product licensed? • How do customers/prospects want to buy it? 8
  • 9. Questio ns Ecoli? • Do you sell your product direct to a user? • Is your product bundled with other products? • Is your product a component of a bigger product? • Is your product licensed? • How do customers/prospects want to buy it? 9
  • 10. Questio ns • • • • Tait Direct to “end user”? Via naturopath store? Via “name brand”? Via “expert testimonial”? – For what specific segment? • How do customers/prospects want to buy it? 10
  • 13. Value Chain Direct to End User List Price Discounts Revenue - Actual Price Profit + SG&A + R&D Cost of Goods (Supply Chain) 13
  • 14. Value Chain Resellers List Price Discounts Reseller Profit Revenue - Actual Price Profit + SG&A + R&D Cost of Goods (Supply Chain) 14
  • 15. Value Chain Distributors/Resellers List Price Discounts Reseller Profit Distributor Revenue - Actual Price Profit + SG&A + R&D Cost of Goods (Supply Chain) 15
  • 16. Value Chain International Distributors List Price Discounts Reseller Profit Distributor Master Disti Profit + SG&A + R&D Cost of Goods (Supply Chain) Revenue - Actual Price 16
  • 17. Value Chain OEM or IP Licensing List Price Discounts Reseller Profit Distributor Master Disti Profit + SG&A + R&D Cost of Goods (Supply Chain) OEM/IP Product is part of your customers COGs Reseller Discounts Profit Profit Distributor Master Disti + of Goods CostSG&A + R&D (Supply Chain) Revenue - Actual Price 17
  • 18. Value Chain OEM or IP Licensing List Price Discounts Reseller Profit Distributor Master Disti Profit + SG&A + R&D Cost of Goods (Supply Chain) This stack replicates (like a fractal … looks the same at each level) Revenue - Actual Price Reseller Discounts Profit Profit Distributor Master Disti + of Goods CostSG&A + R&D (Supply Chain) Reseller Discounts Profit Distributor MasterGoods CostProfit of Disti + SG&A (Supply Chain) + R&D 18
  • 19. Value Chain Excerpt from Reading: “Who Captures Value in a Global Innovation System? The case of Apple's iPod” 19
  • 20. Value Chain Excerpt from Reading: “Who Captures Value in a Global Innovation System? The case of Apple's iPod” 20
  • 21. Distribution Complexity Global Systems Systems Integrators Evangelists Marketing Complexity WANs Mainframes Direct Sales Minis LANs VARs PC Servers Desktop PCs Retail Printers Keyboards Service Technicians Web, Telesales Toner Solution Complexity 21