distribution - entrepreneurship 101

E101: Distribution Ryan Poissant - MaRS email: rpoissant@marsdd.com twitter: @ryanpoissant

3

The Four “P”s

Product

Price

Place

Promotion 3

4

The Four “P”s Product

Price

Distribution

Promotion

5

3 Parts: Delivery, Sales, Service

6

2 Flavours: Direct, Indirect

6 It’s OK and often optimal to mix & match.

7

How to Choose?

8

Market type; Existing, Re-segmented, New

9

Market Stage

10

Complexity

11

Price

12

Customer Preference

12

13 “Default” Choices

New Existing Re-segmented

Market Type

Early Mature Midstage

Market Stage

Simple Complex

Product Complexity

Cheap Expensive

Price

Direct Indirect

Channel Type

14

Other Factors

14

• Size of market

• Diversity/complexity of market

• “Proximity” of market

• Completeness of offering

• Cost of channel

• Speed to market

15

Not just a tactic...

16

...for some a Strategy Amazon

Dell Apple

17

18

19

Background

1970 - Invented

1976 - Patented

1986 – Launched

Sold as a complete solution, machines & coffee for a per cup price to restaurants and offices.

20

Background

1970 - Invented

1976 - Patented

1986 - Launched

Sold as a complete solution, machines & coffee for a per cup price to restaurants and offices.

1988 - Acknowledged dud, Nestle considers shutdown.

21 21

Background

1989 - Jean Paul Gaillard named Commercial Director.

“Pivots”

22

Separate machine & coffee. Sell to consumers.

23

Machines

Made and serviced by 3rd parties.

Sold through independent retail stores.

Manufacturers handle delivery and stocking.

Nespresso handles sales training.

24 24

Coffee

Sold online and over the phone direct to members of the Nespresso Club.

Delivered direct to consumers in 24 hours or less.

25

Later

As market matured Nespresso added their own brand machines made by an OEM.

Added it’s own retail boutiques to further control the sales message.

Created Nespresso Pro channel to serve the office market.

26

Results

12 million machines

20 billion capsules

50 countries

30% CAGR

over 10 years

~$3 billion in annual revenue

27

Thanks! Ryan Poissant rpoissant@marsdd.com @ryanpoissant

Questions?

Comments?

Suggestions? 27