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Product Linkage Development

Leveraging hard-to-get product to expand customer base, penetration

July 10, 2005

A large distributor of semiconductors to the OEM electronics market had a clear strategy and corporate objectives that included growth generated by expanding its customer base. One problem was the cyclical nature of computer memory chips. When a new chip was introduced, it was expensive, had a long lead time and was hard to get. Most memory manufacturers had set up allocation procedures to ration chips to their wholesalers. In the early stage of this cycle, wholesaler-distributors could sell 10 chips for every one they could deliver. At the end of the cycle, prices would collapse, product would be readily available and customers would cancel their entire backlog.

The company's corporate objective was to use the hard-to-get memory product as a tool to help expand the ...

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