Cisco Case Presentation

Managing the GTM
evolution
Presented by:
Group B1
Surabhi Agarwal
Shubham Gupta
Sandhu Sajeevan
Abhishek Saurav
Nihal Singh
Cisco Systems – Market leader in switches and routers
Product line across networking layers
Basic solutions for small businesses
High-end solutions for large enterprises Market share Market size

Market cap >$500 bn in 2000 Corporate
Strategy of growth through acquisitions networking Enterprise - >70% $20 bn
gear SMB – 40% (market leader)

Tier-based market coverage model Telecom 5% overall

Five tiers of customers based on opportunity service 25% in top end $50 bn
Good relationships with reseller-distributor providers
High reliability, innovation and quality Consumer 40% $2 bn

Superior product design and development market (market leader)
Outsourced manufacturing
2
Cisco’s channel design has evolved to cater to its strategic priorities
01 Direct
channel
sales
02 Indirect
channel
sales
03 Volume-
based tiers
04 Value-based
tiers
3
Cisco first started with direct channels, but gradually indirect channels
occupied the lions share
Telecom
VARs
~ 25-30%
System Houses ~ 30-35%
SBC etc.
~ 25-30% Small & Medium
Businesses
IBM, HP,
Accenture
Direct Market
Direct Resellers/ Retailers
~ 10% ~ 10%
Enterprise Retail
Customers Customers
4
After the Dot Com crash, Cisco re-engineered its channels and shifted
focus from volume to value-based incentives
Prior to Dot Com Bubble Burst Post Dot Com Bubble Burst
Approach Volume Based Value Based
No. of resellers 6,000 3,000
CCIE Requirements One per $ 10 M revenue One per $ 40 M revenue
Specialization, Expertise
Incentive Basis Units sold by VARs
& Customer satisfaction
Customer Focus Hardware Post Sales Services
Gold 5%, Silver 5%, Gold 15%, Silver 10%,

Tier Breakup Premier 90% Premier 75%
Apart from shifting focus from volume to value, Cisco also started selling
online, signed contracts and formed new policies for VAR engagement
Online sales channel

Launched at selling its products directly over website to SMB space and SOHO space directly via website.
CISCO “network in a box” was sold online

Bundling of hardware and services and one stop shop
Carrier contract, network management, e-commerce storefront, solution design services and hardware
provided by one PoC
Shift to value engagement instead of neutral engagement with VARs

In high-margin, presales design and Consulting services, CISCO would consult with resellers early and
provide partners with opportunities to add value to the product
6
Cisco’s channel management had several positives and some negatives
Focused strategy Flexible approach Quality Conflicts in the Lack of

for each customer based on strategic relationships with existing marketing communication on
segment priorities resellers channels new initiatives
Tier-based customer Volume to value- Collaboration with Overcrowding, Resellers expressed
segment model based incentives channel partners internet channel, etc. concerns
7
Cisco’s channel design led to several conflicts among the channel partners
Cross-Channel Raiding Territorial Conflicts

• Result of overcrowding of channel • Over-lapping territories and
partners customer segments
• Router dumping & bundling by • Poor channel governance
telecom service providers
Channel
Conflicts
Online Sales CCIE Requirement Conflicts

• Product line assortment • Relaxation of engineering
• Insecurities among VARs related requirements could thrust a
to mid & high range products number of silver partners into gold
category
Channel conflicts require mitigation and addressal at first hand
Channel-wise Establish assigned Invest in

Adjust Pricing Incentive
product line segments and/or technological
structure Programs
assortment territories capabilities
Proper Govern price floor Offer solutions

Mark geographical Channel specific like CRM, DBMS
segregation of for the Telecom incentives to
boundaries and providing
product lines by operators to prevent channel
customer segments analytics support
channels - online achieve price raiding
for channels to enhance
and offline parity
customer service
VoIP telephony : rapidly growing, new market opportunity
Single network infrastructure to transmit audio, video and data

VOICE OVER $750 billion telecommunications and equipment market; potential to generate
INTERNET PROTOCOL derived demand for Cisco’s core products

Decreased maintenance cost of networks; chances of higher revenue
Huge cost advantage would pull customers
Quick response on competitors like Avaya, Nortel, and Siemens;

Cisco’s market share dropped drastically from 40% to 23%
Competitors’ advantage of better relationship with voice channels
Voice channel more consolidated than data channel

Voice channel margins: ~20% plus; Data channel margins: ~12-20%
10
Both CISCO and its consumers expect the channel to cater to their needs
and provide best in class service
High • Easy and efficient access to market • Value added services – pre and post sales
Order or Importance
• Superior technological capabilities • Easy availability and accessibility
• Quality pre-sales and post sales service to • Complementary products

customers
• Incremental updates with changing
• Inter channel cooperation and collaboration technology
Cisco should use a mix of Data and Voice VARs for VoIP distribution
Voice VAR Data VAR
A Top 1-100 enterprise accounts, 25 SPs

Degree of Cisco interface
B Next 125 – 10,000 customers
C Next 10,000- 1L customers
D ~1mn small businesses
E ~10mn retail/ web

consumers
12
Thank You

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Managing the GTM

Tier-based market coverage model Telecom 5% overall

High reliability, innovation and quality Consumer 40% $2 bn

Approach Volume Based Value Based

No. of resellers 6,000 3,000

CCIE Requirements One per $ 10 M revenue One per $ 40 M revenue

Customer Focus Hardware Post Sales Services

Gold 5%, Silver 5%, Gold 15%, Silver 10%,

Online sales channel

Shift to value engagement instead of neutral engagement with VARs

Focused strategy Flexible approach Quality Conflicts in the Lack of

Cross-Channel Raiding Territorial Conflicts

Online Sales CCIE Requirement Conflicts

Channel-wise Establish assigned Invest in

Proper Govern price floor Offer solutions

Single network infrastructure to transmit audio, video and data

Quick response on competitors like Avaya, Nortel, and Siemens;

Voice channel more consolidated than data channel

• Superior technological capabilities • Easy availability and accessibility

• Quality pre-sales and post sales service to • Complementary products

Voice VAR Data VAR

A Top 1-100 enterprise accounts, 25 SPs

B Next 125 – 10,000 customers

C Next 10,000- 1L customers

D ~1mn small businesses

E ~10mn retail/ web

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