1. New Venture Planning - 2013 Class #7 – October 22, 2013

2. Housekeeping Reading update – add SOM pp. 112 – 124 Assignment for Friday – Competitive Brief Friday ‘VC meeting’

3. Feedback Many using the Leanstack; Others, not so much… 10% of overall grade & a way for me to help Excellent presentations last week – good starts! Keeping up is important – tough to play catch-up

4. Channels The path to customers and their $$$ – The ‘Net’ in Net Revenue – Can be a significant cost center Dependent on many factors – Type of product and customer – Industry norms/business practices

5. Physical Goods

6. Web/Mobile

7. Types of Channels –OEM –VAR –Reseller –Distributor 7 DirectIndirectLicensing

8. How Are Channels Compensated? Commission Percentage of sales price Discounted pre-purchase 8

9. Motivation and Incentive Money! – what makes them the most? Training – make it easier to sell Marketing to the channel – creating demand SPIF (Sales Performance Incentive Fund) 9

10. Channel Economics: “Direct” Sales 10 Cost of Goods (Supply Chain) Profit + SG&A + R&D End Consumer EU Discounts Revenue List Price Source:Mark Leslie, Stanford GSB

11. Channel Economics: Resellers 11 Cost of Goods (Supply Chain) Profit + SG&A + R&D End Consumer EU Discounts Reseller Revenue List Price Source:Mark Leslie, Stanford GSB

12. Cost of Goods (Supply Chain) Profit + SG&A + R&D Channel Economics: Distributors/Resellers 12 End Consumer EU Discounts Reseller Distributor Revenue List Price Source:Mark Leslie, Stanford GSB

13. Channel Economics: OEM or IP Licensing Your Product Becomes Your Customer’s COGs 13 Source:Mark Leslie, Stanford GSB End Consumer Reseller Profit + SG&A + R&D Cost of Goods (Supply Chain) EU Discounts ResellerDistributor Master Distributor Profit + SG&A + R&D Cost of Goods (Supply Chain) Revenue List Price

14. How to choose? Established buying habits in the category? Does it strengthen the sales process? Price and complexity issues of the product?

15. Testing your Channels Test channel assumptions as thoroughly as customer assumptions. – Will they buy? – % of sale? Other Costs? – Potential volume? Promotion? – Create demand or just fulfill it? In the end, a channel is just a grocery shelf…