Case Study Cisco Distribution Program

In 2002, Cisco introduced two new initiatives to make business easier for its distributors and its corporate customers.

Before that time, Cisco provided education and information to channel partners but left them alone in the deployment at the customer's location. The Partner Consultative Support program setup in 2002 included:

* A new Web portal for partners;

* A leasing program for demonstration lab equipment;

* A process to call on Cisco engineers to help out with deployments of new technologies at customer sites;

* A more efficient system for setting up and renewing equipment service contracts.

A second program, labeled Services Management System (SMS), aimed at the simplification and the automation of the process of getting a support contract. Up to that time, customers received a packet of papers with a new product; they had to fill them out and return them in order to register the product before getting the service contract. With the SMS programs, customers but also resellers and product distributors can sign on and renew service contracts on-line. In addition they can trail the life cycle of a service contract on-line from purchase date through contract renewal.

Question 1: What are the benefits of those programs for Cisco vis-à-vis its distributors?

Question 2: What are the opportunities and risks of those programs for Cisco distributors?

promotional activities that are established by both parties, taking into account each other's needs.

It is the responsibility of the marketing and sales departments [12] to monitor and manage distributors, organize training sessions for new products, present previews of new technologies, plan sales promotions, and verify that distributors' technical questions are answered by the company. This entire operation is usually secured by a contract in the form of a joint marketing plan (JMP) or common marketing plan (CMP), and it means that creating and maintaining a successful partnership requires resources.

The final step is to monitor distributor performance, and clearly sales quotas as the only criteria do not suffice in the high-technology industry. A marketing manager must monitor the level of inventory and its rotation, the quality of customer service operations, and the training level of salespeople and must follow up on sales promotion campaigns. A marketing manager must also ensure that the distributor has correctly reported information on the customer, price, and product according to a previously determined format. This useful data could be needed to prepare new product launches. The best distributors can only be rewarded if they fulfill all criteria with an exceptional effort.

Figure 7.4 illustrates the ideal ranking of skills that the marketing managers of successful high-tech firms expect from their distributors. Market knowledge is clearly considered as the most important skill, which comes before good image, active selling or maintenance capability.

One last word about organization. Due to the dramatic impact of the distribution channels on the revenues, the profitability, the customer satisfaction or the manufacturing activity, the smartest high-tech firms always make sure that the responsibilities for channel management belong to upper level sales managers [13].

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