Sales and Marketing Strategy in the IT Industry

yogin

Table of Contents
1 Introduction...................................... .................................................. ......... 1
1.1 Background .................................................. ....................................... 1
1.2 Purpose and Outcome .................................................. ....................... 2
1.3 Purpose Discussion .................................................. ........................... 2
1.4 Target Groups .................................................. ................................... 2
1.5 Definitions....................................... .................................................. .. 3
1.6 Delimitations..................................... .................................................. 3
2 Problem Description .................................................. ................................. 5
2.1 The IT Industry .................................................. ................................. 5
2.1.1 Characteristics of the IT Industry .................................................. . 5
2.1.2 A Focus on Applications and Total Solutions ................................ 7
2.2 The Industry Channel: Definitions and Participants........................... 7
2.2.1 The Industry Channel........................................... ........................... 7
2.2.2 Solution stack............................................. ..................................... 7
2.2.3 Hardware Vendor............................................ ................................ 8
2.2.4 Independent Software Vendor (ISV) .............................................. 8
2.2.5 System Integrator (SI and CSI).............................................. ......... 8
2.2.6 Distributor (VAD)............................................. .............................. 9
2.2.7 Reseller (VAR) .................................................. ............................. 9
2.2.8 Eco-system............................................ .......................................... 9
2.2.9 ISVs and the Hardware Vendor .................................................. .. 10
2.2.10 Partners’ Platform Influence .................................................. ... 10
2.2.11 Conclusions....................................... ........................................ 12
2.3 Hewlett-Packard........................................... ..................................... 12
2.3.1 General Information....................................... ............................... 12
2.3.2 Organisation...................................... ............................................ 12
2.3.3 The HP Market Offering.......................................... ..................... 14
2.3.4 Characteristics of HP’s Market Offering ...................................... 16
2.3.5 Market Segmentation .................................................. .................. 18
2.3.6 Customer and Sales Management........................................ ......... 20
2.3.7 Independent Software Vendors (ISVs) ......................................... 21
2.3.8 Collaboration and Partner Programs.......................................... ... 22
2.3.9 Conclusions....................................... ............................................ 24
2.4 Analysis.......................................... .................................................. . 24
3 Theoretical Framework......................................... .................................... 27
3.1 Marketing Essentials........................................ ................................. 27
3.1.1 Strategy .................................................. ....................................... 27
Antvik and Bihammar Sales and Marketing Strategy in the IT Industry
3.1.2 Product- and Service Marketing .................................................. . 29
3.1.3 Push and Pull Marketing......................................... ...................... 30
3.1.4 Business to Business Marketing .................................................. . 30
3.2 Understanding and Creating Value............................................. ...... 31
3.2.1 Value as a Cornerstone .................................................. ............... 31
3.2.2 Understanding Value: Customer Needs, Wants and Demands .... 32
3.2.3 Definition of Value .................................................. ..................... 32
3.2.4 Customer Satisfaction and Loyalty........................................... .... 34
3.2.5 Creating Value .................................................. ............................ 35
3.3 Delivering and Promoting Value .................................................. .... 37
3.3.1 Marketing Channels .................................................. .................... 37
3.3.2 Sales Channel Strategy .................................................. ............... 37
3.3.3 Motivating and Evaluating Channel Members ............................. 38
3.3.4 Promoting the Market Offering: The Value Proposition.............. 39
3.4 Organisational Structures for Value Creation and Delivery............. 40
3.4.1 The Value Chain .................................................. ......................... 40
3.4.2 Value Constellations and Value-Creating Networks .................... 41
3.5 Business Relationships..................................... ................................. 42
3.5.1 Relationship Marketing......................................... ........................ 43
3.5.2 Relationship Value............................................. ........................... 46
3.5.3 Relationship Forms .................................................. ..................... 49
3.5.4 Managing Relationships with Limited Resources ........................ 51
3.5.5 Relationship Retention......................................... ......................... 52
3.5.6 Reasons For and Against Deep Relationships .............................. 52
4 Problem Discussion........................................ ........................................... 55
4.1 Overview.......................................... ................................................. 55
4.2 Conclusions....................................... ................................................ 55
4.3 Implications...................................... ................................................. 56
4.4 Detailed Objectives........................................ ................................... 57
4.4.1 The Objectives .................................................. ............................ 57
5 Methodology .................................................. ........................................... 61
5.1 Theory .................................................. ............................................. 61
5.1.1 Methodological Approach .................................................. .......... 61
5.1.2 Research Approach .................................................. ..................... 61
5.1.3 Information....................................... ............................................. 62
5.2 Method .................................................. ............................................ 63
5.2.1 Work Process .................................................. .............................. 63
5.2.2 Information....................................... ............................................. 65
5.2.3 Stakeholders...................................... ............................................ 65
Antvik and Bihammar Sales and Marketing Strategy in the IT Industry
5.3 Method Discussion........................................ .................................... 65
5.3.1 Interview Process and Selection .................................................. . 66
5.3.2 Degree of Generalisation .................................................. ............ 66
5.3.3 Sources of Error .................................................. .......................... 67
6 Findings and Analysis.......................................... ..................................... 71
6.1 Introduction...................................... ................................................. 71
6.2 Reasons for Vendors to Collaborate with ISVs ................................ 71
6.3 Partner Findings .................................................. .............................. 72
6.3.1 Introduction...................................... ............................................. 72
6.3.2 Partners Agnostic to Hardware Platform ...................................... 73
6.3.3 Hardware Platform Selection......................................... ............... 74
6.3.4 Products and Technology........................................ ...................... 79
6.3.5 Importance of Competitive Pricing........................................... .... 79
6.3.6 Differences in Interests between Vendor and ISVs ...................... 80
6.3.7 Channel Conflict .................................................. ......................... 81
6.3.8 Ease of Doing Business .................................................. .............. 82
6.3.9 Joint Market- and Sales Strategies........................................ ........ 83
6.3.10 Perception that HP Services Lack Capabilities......................... 84
6.4 Analysis.......................................... .................................................. . 85
6.4.1 HP and Partners: Qualitative Analysis.......................................... 86
6.4.2 HP and Partners: Quantitative Analysis........................................ 88
6.4.3 Competitor Analysis .................................................. ................... 94
6.5 Synthesised Analysis .................................................. ...................... 99
6.5.1 Implications...................................... ........................................... 102
6.6 Closing: Success Factors........................................... ...................... 103
7 Recommendations................................... ................................................ 105
7.1 Selection of ISV Partners.......................................... ...................... 106
7.2 Categorisation and Management of the ISV partners..................... 108
7.3 Partner Engagement .................................................. ...................... 113
7.3.1 Decide and Promote the HP Value Proposition.......................... 113
7.3.2 Ease of Doing Business .................................................. ............ 115
7.3.3 Joint Business Planning and GTM Strategies............................. 116
7.3.4 Agree on Rules of Engagement .................................................. 117
7.3.5 Joint Market Offerings and Triangulating Opportunities ........... 119
7.4 Implement and Measure........................................... ....................... 121
7.5 Resource Requirements .................................................. ................ 123
7.6 Closing .................................................. .......................................... 124
8 Reflections .................................................. ............................................ 127
9 References........................................ .................................................. ..... 129
Antvik and Bihammar Sales and Marketing Strategy in the IT Industry
List of Figures
Figure 2.1: Industry Eco-System (Sumich, 2004) .............................................. 9
Figure 2.2: Partner Platform Influence Cycles (Sutton, 2005) ......................... 11
Figure 2.3: HP Organization Chart (HP, 2004) ................................................ 13
Figure 2.4: The Adaptive Enterprise Framework (HP, 2004) .......................... 17
Figure 2.5: Customer Segmentation (HP, 2004)............................................. .. 19
Figure 3.1: Total Value Metric (Johansson et al., 1993) .................................. 34
Figure 3.2: The Value Chain (Porter, 1985) .................................................. ... 40
Figure 3.3: Value-Creating Network (Kothandaraman & Wilson, 2001) ........ 42
Figure 5.1: Work Process........................................... ....................................... 63
Figure 7.1: DSPP Segmentation .................................................. ................... 110
Figure 7.2: Implementation Steps .................................................. ................. 121
List of Tables
Table 2.1: Solution Stack (Healy & Shooter, 2004) ........................................... 8
Table 2.2: Internal SWOT-Analysis of HP’s Market Situation........................ 25
Table 5.1: Methodological Approaches (Lekvall & Wahlbin, 2001) ............... 62
Table 6.1: Ranking of HP's Market Offering.......................................... .......... 90
Table 6.2: SWOT-Analysis of HP's ISV Situation ......................................... 100
Table 7.1: Recommendations................................... ....................................... 106
Appendices
Appendix A: History of the IT industry
Appendix B: Additional Information about HP
Appendix C: Computer Definitions
Appendix D: External Interview Questionnaire
Appendix E: ISV Survey Information
Appendix F: Information about the Interviewed Companies
Appendix G: List of Abbreviations and Acronyms