From volume to value: Managing the value-add reseller channel at Cisco Systems

California Management Review

Volumn 52, Issue 1, 2009, Pages

  Kalyanam, Kirthi ^a,b   Brar, Surinder ^c  

^a Retail Management Institute   (United States)

^b SANTA CLARA UNIVERSITY   (United States)

^c CISCO SYSTEMS   (United States)

Author keywords

[No Author keywords available]

Indexed keywords

EID: 73949106810     PISSN: 00081256     EISSN: None     Source Type: Journal    
DOI: 10.1525/cmr.2009.52.1.94     Document Type: Article

References (30)

1. Interview with Keith Goodwin, SVP Worldwide Channels, Cisco Systems, , accessed February 24, 2008.
2. Bonoma, for example, argues that field-based case studies are very useful in describing and classifying complex phenomenon and to build theory. Bonoma notes that the study of management of distributor relationships is particularly well suited for case-based research. Thomas V. Bonoma, "Case Research in Marketing: Opportunities, Problems, and a Process," Journal of Marketing Research, 22/2 (May 1985): 199-208.
3. Eisenhardt notes that such efforts should be well grounded in existing theory so they can create the appropriate contrasts and lead to theory that is frame breaking. K.M. Eisenhardt, "Building Theories from Case Study Research," Academy of Management Review, 14/4 (October 1989): 532-550.
4. Van Maanen notes that it is important to use field research to capture the richness of context so that the research does not become "sterile." John Van Maanen, "Redaiming Qualitative Methods for Organizational Research: A Preface," Administrative Science Quarterly, 24/4 (December 1979): 520-526.
5. Rangan, Corey, and Cespedes use case studies to illustrate the use of hybrid channel arrangements. V.K. Rangan, E.R. Corey, and F. Cespedes, "Transaction Cost Theory: Inferences from Clinical Field Research on Downstream Vertical Integration," Organization Science, 4/3 (August 1993): 454-477.
6. A. Rindfleisch and J.B. Heide, "Transaction Cost Analysis: Past, Present, and Future Applications," Journal of Marketing, 61/4 (October 1997): 30-54.
7. For example, see V.K. Rangan, Transforming Your Go-to-Market Strategy: The Three Disciplines of Channel Management (Boston, MA: Harvard Business School Press, 2006).
8. Background information on Cisco Systems, Inc. obtained from corporate fact sheet downloaded on February 10, 2008. Data on early evolution of Cisco Systems from Jennifer Chat-man, Charles O Reilly, and Victoria Chang, "Cisco Systems: Developing a Human Capital Strategy," California Management Review, 47/2 (Winter 2005): 137-167.
9. For a discussion of some of the issues related to key account management, see Christoph Senn and Axel Thoma, "Attracting and Managing Customers Isn't the Same When Business Goes Global: Companies Must Be Ready to Adjust," Wall Street Journal, March 3, 2007, p. R6.
10. The unbundling of channel functions between a manufacturer and a channel partner has also been discussed as a hybrid channel model. Rangan, Corey, and Cespedes, analyze the unbundling of channel functions between a manufacturer and a channel partner and refer to this as a hybrid channel model. Rangan, Corey, and Cespedes, op. cit. Examples of unbundling of channel functions in the context of electronic markets are discussed by M. Sarkar, B. Butler, and C. Steinfield, "Cybermediaries in Electronic Marketspace: Toward Theory Building," Journal of Business Research, 41/3 (March 1998): 215-221.
11. The use of volume discounts as a motivational device is different from other motivations for volume discounts such as channel co-ordination or price discrimination. For a discussion of these other motivations see R.J. Dolan, "Quantity Discounts: Managerial Issues and Research Opportunities," Marketing Science, 6/1 (Winter 1987): 1-22.
12. For example, high-tech market guru Geoffrey Moore notes that it is important for companies to consistently maintain their market share position. This will ensure that when the market switches into the tornado phase, the market leader become the Gorilla. See Geoffrey A. Moore, Inside The Tornado: Marketing Strategies From Silicon Valley's Cutting Edge (New York, NY: Harper Business, 1995).
13. The percentage of a VAR's revenue that consists of Cisco products varies by geographic theater and certification level. However, Cisco solutions typically represent 50-60 percent of the average VAR's total business - within this, revenue for VAR services is only 20-30 percent on average, the rest is product. So depending on the theater and specialization, the percentage of a VAR's revenue that comes from Cisco products could be in the range of 35-48 percent. This data was obtained from Cisco Systems Worldwide Channels.
14. For details on how Cisco handled this issue, see Kirthi Kalyanam, "Cisco Systems, Inc.: Restoring Partner Profitability in the IT Bust of 2001," Santa Clara University.
15. Data from Chatman, Reilly, and Chang, op. cit
16. G.A. Moore, Crossing the Chasm: Marketing and Selling High-Tech Products to Mainstream Customen (New York, NY: Harper Business 1999).
17. For a discussion of the push-pull marketing in business markets see G.L. Frazier and J.O. Summers, "Push and Pull Strategies in Industrial Markets: A Normative Framework," in G.L. Frazier and J.N. Sheth, eds., Contemporary Views on Marketing Practice (Lexington, MA: Lexington Books, 1987).
18. For example this point is also noted by E. Gerstner and J.D. Hess, "Pull Promotions and Channel Coordination," Marketing Science, 14/1 (Winter 1995): 43-60.
19. Specialization, a Cisco term for partners who are trained and certified is conceptually distinct from the definitions of Specialism and Generalism as articulated in the Organization ecology literature. For example, see M.T. Hannan and J. Freeman, "The Population Ecology of Organizations," The American Journal of Sociology, 82/5 (1977): 929-964. A partner may obtain several of Cisco's specializations, and in effect become a generalist.
20. One of the earliest references to the whole product concept came from Theodore Levitt, The Marketing Imagination (London: Collier Macmillan, 1986). Since then, this concept has been referenced extensively. For a discussion of how this concept applies to high-tech markets, see Moore (1999), op. cit;
21. W.H. Davidow Marketing High Technology: An Insider's View (New York, NY: Free Press, 1986).
22. .
23. See W.A. Hanson and K. Kalyanam, Internet Marketing de-Commerce (Mason, OH: Thomson/South-Western, 2007), also see Chapter 13 for a discussion of Amazon.com's customer satisfaction scores.
24. Based on Cisco Systems Worldwide Partner Profitability Study, Multiple Years. These documents are confidential and proprietary to Cisco.
25. See, for example, T.C. Doyle, "The Best Team In The Business?" VARBusiness, April 30, 2004.
26. Companies in many industries (ranging from fast food franchising, automobile manufacturing, and high technology) plan and implement training programs for their intermediaries. For example, Culver's Restaurants requires its franchisees to work in company-owned restaurants and at headquarters to learn all aspects of the business. See Erin Killian, "Butter 'Em Up," Forbes, June 9, 2003, pp. 175-176. Companies such as Microsoft go beyond training and require third-party engineers to take exams and certify them by formally recognizing them as Microsoft Certified Professionals. Kyocera-Mita commissions J.D. Powers and Company to measure customer satisfaction with dealers. See . However, Cisco's approach goes one step further and ties back incentives to both certification and customer satisfaction outcomes.
27. See, for example, Doyle, op. cit.
28. Seymour Merrin, "Shame Shame," The Channel Marker Newsletter, 2/5 (1990): 5.
29. For example, Rangan et al. note that the principal empirical result confirms vertical integration. See Rangan, Corey, and Cespedes, op. cit.
30. See Doyle, op. cit.