Logitech 2006 Annual Report Download - page 85

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The Company’s research and development expenses for fiscal years 2006, 2005 and 2004 amounted to
$88.0 million, $73.9 million and $61.3 million. The Company expects to continue to devote significant resources
to research and development to sustain its competitive position.
Marketing, Sales and Distribution
The Company’s retail products are targeted at consumers and businesses, as add-on peripherals for their PC,
gaming console, mobile entertainment and communication device, or home entertainment system. Logitech’s
OEM products are sold to PC manufacturers, who need high-quality, affordable, and functional personal
peripherals in high volumes; and also to console platform manufacturers, game publishers and mobile-technology
vendors.
The primary user markets for Logitech mice, trackballs and keyboards have traditionally been consumers,
small office and home office, or SoHo users, and through its OEM customers, corporate buyers. The primary user
market for Logitech entertainment devices, such as joysticks, gamepads, steering wheels and advanced remote
controls, is consumers. The primary users for Logitech’s audio products are consumers, SoHo, and OEM
customers. The Company’s user markets for its PC web cameras are SoHo users, corporate buyers and
consumers. Logitech’s primary user markets are in North America, Europe and Asia Pacific. It also markets its
products in Latin America, the Middle East and Africa.
Logitech builds awareness of its products and recognition of its brand through targeted advertising, public
relations efforts, distinct packaging of its retail products, in-store promotions and merchandising, a worldwide
Web site and other efforts. It also acquires knowledge of its users through customer feedback and market
research, including focus groups, product registrations, user questionnaires, primary and multi-client surveys and
other techniques. In addition, manufacturers of PCs and other products also receive customer feedback and
perform user market research, which sometimes result in specific requests to the Company for specific products,
features or enhancements.
Logitech sells through many distribution channels, including distributors, OEMs and regional and national
retail chains, including online retailers. The Company supports these retail channels with third-party distribution
centers located in North America, Europe and Asia Pacific. These centers perform final configuration of products
and product localization with local language manuals, packaging, software CDs and power plugs. In addition,
Logitech’s distribution mix includes e-commerce in the U.S. as well as e-commerce capabilities in several
European countries.
In retail channels, Logitech’s direct sales force sells to distributors and large retailers. Its distributor
customers typically resell products to retailers, value-added resellers, and systems integrators with whom
Logitech does not have a direct relationship. These distributors in the U.S. include Ingram Micro Inc. and Tech
Data Corporation, and in Europe include Tech Data Corporation, Ingram Micro, Actebis and many strong
national distributors such as Banque Magnetique in France, GEM in the United Kingdom and Also-ABC in
Switzerland.
Logitech’s products can be found in major retail chains, where they typically enjoy access to significant
shelf space. These chains in the U.S. include Best Buy Co., Inc., CompUSA, Inc., Office Depot, Inc., Staples,
Inc., Target and Wal-Mart, and in Europe include MediaMarkt/Saturn, Carrefour, KESA Group, FNAC, Dixons
Stores Group PLC and most key national consumer electronics chains. Logitech products also can be found at the
top online e-tailers, which include Amazon.com, Buy.com, CDW, Insight, and others.
Logitech’s OEM products are sold to large OEM customers through a direct sales force, and the Company
supports smaller OEM customers through distributors. The Company counts the majority of the world’s largest
PC manufacturers among its customers.
Through its operating subsidiaries, the Company maintains sales offices or sales representatives in more
than 30 countries and throughout the United States.
27
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