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DELL 117.44-1.6%3:59 PM EST
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To: Chuzzlewit who wrote (66657)9/22/1998 1:26:00 PM
From: The Phoenix  Read Replies (1) of 176387
 
Chuzz,

I agree 100% that indirect channels will feel "slighted" should a manufacturer take thier products direct. I stated this and suggested ways to move around this issue.

1 Exclusivity
2 Incentives
3 Rebates
4 Co-marketing
5 Unique Product Lines (Direct vs. Indirect)

Number 5 comletely gets around the issue. 1-4 make the channel partner more money and bring in more business. Remember, channels are in this for the $$$, the partnership is important but takes second seat. Also, if you're CPQ, or HWP you have industry clout which an indirect channel would love to leverage. So, assume CPQ goes to Circuit City and provides the following:

1 - Exlusivity - Circuit City is the ONLY authorized CPQ channel
2 - Increases their discounts to CC such that they are higher than competitors
3 - CPQ funds a large marketing campaign identifying CC as the channel
4 - CPQ increases rebates to consumers for buying at CC
5 - CPQ agress to not see the low end consumer models direct.

So, you're telling me CC turns down the free marketing and exclusive rights to the CPQ machines? Well then the Good Guys or Comp USA or another competitor will gladly accept exclusivity. Sales channels LOVE nothing better than to have exclusive rights - especially to a product known as well as CPQ or perhaps HWP.

In the meantime CPQ builds their domestic direct model - again this could be done via a discrete subsidiary and gets this perfected - selling only to businesses...or mainly to businesses.

What do you think?

OG
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