Presentation examples used in Class 5 - Distribution Channels

The Lean LaunchPad

07/02/12

Book Publishing Channel Example

Example: Book Publishing

3

PublisherNational

DistributorPrinter Wholesaler Retailer Customer

Book Publishing

4

•Percent of

Retail

• You get- 35% of retail- the distributor gets 10%- the wholesaler gets 15% - the retailer gets 40%

- less any discount they offer the customer

PublisherNational

WholesalerDistributor Retailer Customer

35% 15% 10% 40%

$7.00 $3.00 $2.00 $8.00 $20.00

Book Publishing Economics

5

PublisherNational

DistributorWholesaler Retailer Customer

Wholesale costs

Markup

Allowances

Payment guarantees

Payments

Bills

Credit guarantees

Payment guarantees

Return rights

Credits

Book Publishing Delivery

6

PublisherNational

DistributorPrinter Wholesaler Retailer

Merchandise titles

Sell magazines

Acknowledge returns

Determine allocations

Dispose of returns

Prepare film (content)

Establish identity

Create demand

Prepare galleys

Receive Schedules Print orders Bundle

counts Film

Print and ship magazines

Deliver orders

Medical Device Channel Example

Patients

Product flow/Channel

Fluid SynchronyElectronic

Health Records

.Partners/

OEMS

Hospitals(AnesthesiologistsNeurosurgeons)

Pain Clinic(AnesthesiologistsNeurosurgeons)

Pump + Controller

Support Services

Bundled Kits

Electronic Records

Channels (Direct)

• Direct to institutions• Some formularies involved in purchase decisions• Some doctors make purchase decision directly

• Device company/Doctor relationship is key • Heavily influenced by :

• Clinical study results • Regulatory approval• Reimbursement

Hospitals

Pain Clinics

Farm Sensor IndustryChannel Example

Channel Model: Service Provider

OEM

Us

Large farm

USDA/EPA

Small farm

Product

Money

Nutrient Data

Licensing/sales

Channel Model: Service Provider

OEM

Us

Large farm

USDA/EPA

Small farm

Product

Money

Nutrient Data

Licensing/sales

Product

Service

Dental ProductChannel Example

COST / PROFIT ANALYSIS

R&D Maintaining IP

En

d u

ser

Our revenue 4-8% revenues List price

Per unit cost and profit estimation

Licensing Revenue Model

Raw materials

Manufacturing &

Packaging

License fee Distribution

14

Univ.License

fee

End User

Health-Care Providers:Hospitals

PractitionersClinics

InsuranceAgencies

Customer segment: Large

corporationsJ&J, GSK, 3M

DMXR&D

ProductsProcedures

IPs

$$$

~$40

$$

University

4-8% royalty

2-4% license fee

Licensing of Technology Ecosystem

15

Medical Device Channel Example 2

IndividualDoctors

Purchasing Administrato

rs

High value medical products

(e.g. cardiovascular stents)

Commodity medical products

(e.g. latex gloves)

• Doctor education• Direct feedback from doctors• Very expensive

• No doctor education• No customer feedback• Inexpensive

Direct Sales

Distributors

MammOpticsChannel Strategies and Costs

Individual Doctors

Purchasing Administrato

rs

Channel Strategies and CostsMammOptics

5 dedicated sales people$150,000 each/year

Hire nurses or technicianswith establishedrelationships

Early adopter feedback

Continue with core group of sales people

Use women’s healthcare equipment distributor

Already established network of customers

Sales strategy 1 Sales strategy 2

Dental Product 2Channel Example

Private PracticeDentist

PurchasingDepartment

Big Distributors

InstitutionalDentist

Direct Sales

Channels

Private PracticeDentist

PurchasingDepartment

Big Distributors

InstitutionalDentist

Direct Sales

Channels

80% Market Share30% Margin

Private PracticeDentist

PurchasingDepartment

Big Distributors

InstitutionalDentist

Direct Sales

Channels

80% Market Share30% Margin

ContinuingEducationCourses

Magazines& Email

TradeShows

Online RentalChannel Example

24

Listings Provider

Tenants

Landlords

PropertyManagers

Service Providers

Potential Landlords

Realtors

Web Info

Show, Advise, Valuate

Sell, Advise

MaintenanceFurnishing

Listings,ChecksRent Payment

Moving

CraigslistPadmapper.com

Rent.comApartment.com

Forrent.com

Credit ChecksSafetenantcheck.c

Erenter.com

Payment FacilitatorRentpayment.com

Clearnow.comOnline Cheque

Listings, ChecksRent Payment

Maintenance FindingZoospi.com

Redbeacon.comTaskrabbit.com

Schedule Tools

Yelp.com

Angie’s List

Setster.com

Find information

Servicemagic.com

Zoospi.com

Rentpost.comRentjuice.com

Buildium.comRentingsmart.co

Propertyware.com

Rentjuice.comPropertyware.co

Rentingsmart.co

Buildium.com

propertymanagemnt360

Maintenance Ratings

Trulia.com

PM Tools

Dental Product 3Channel Example

COST / PROFIT ANALYSIS

Raw active ingredient

Manufacturing &Packaging

Profit + R&D + License fee Distributor

$40 *$27%32 cut

$6 ? ($5) ~$11 ~$13

En

d u

ser

Our revenue List pricePer unit cost and profit estimation

Direct Sales Revenue Model

26

* Competition• NuPro prophy paste (Novamin $50)• NuPro desensitizer (Novamin $93)• MI varnish (Recaldent $100)• Gluma desensitizer (Glutaraldehyde $130)• Health-Dent desensitizer (Fluoride $49)

End User

Customer Segments;

Health-Care Providers:- Hospitals

- Practitioners- Clinics

InsuranceAgencies

Product Sales &

Distribution

Formulations& Packaging

Raw MaterialsManufacturing

DMXR&D

ProductsProcedures

IPs

$$??$6/pk

$5/pk$$??

University

-32%($27)

$?

Direct Sales Ecosystem

R&D &Regulation

$40/pk

27

Channel Example

Distribution Food Chain

29

Precursor Synthesis

Finished product

Precursor in Cassette

Cassette (device)

I-Corps Final Presentation 12/14/11

Channel Example

Travel IndustryChannel Example

Travel Services:Impact of Changing Technology

The Advent of GDS Systems (1980 -1995)

Turning the Screen AroundOnline Travel (1995-2010)