THE BOOK

This chapter's opening vignette is on Cisco's reseller network. Due to substantial investments in its relationship with value-added resellers (VARs), Cisco has been able to create an extensive global network of resellers and leverage it to serve a large, geographically dispersed customer base.

Because of the high value of many technologically-sophisticated products, and because of the rapid pace of market evolution, high-tech marketers face serious incentives to minimize the amount of products held in inventory in the channel. So, manufacturers look for the most cost-efficient channel to take their products to market. Moreover, the advent of the Internet as a distribution channel for high-tech products has changed the nature of the relationship between channel members and manufacturers.

This chapter examines how to manage distribution channels for high-tech products, including:

• a discussion of basic issues in channel design and management;
• channel considerations unique to high-tech markets, including blurring of distinctions between members in the supply chain, need for indirect channels to provide value for manufacturers, evolution of high-tech channels, and issues related to gray markets, black markets, and export restrictions;
• managing the addition of an on-line channel to the existing distribution infrastructure, with an eye to avoiding or managing the resulting conflict between channel members, and managing hybrid channels;
• supply chain management issues for high-tech products, including the use of vertical electronic markets, specialized supply chain management software and outsourcing.

The chapter's technology tidbit addresses the use of automated fuel pumps that fill a car's gas tanks automatically via a robotic arm, while the driver sits in the comfort of his or her seat.

The chapter’s technology experts are:

Michael McDonough, Senior Vice President of Sales and Marketing, GTE Wireless, Atlanta, GA, who speaks to GTE's approach to wrestling with channel conflict arising from changes in channel strategy.

Wade Sikkink, Outsourcing Program Manager, Intel Corporation, who describes the approach Intel took to manage its complicated supply chain problems with the introduction of the Intel Centrino chip.

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