SlideShare a Scribd company logo

2014-Navigate-Essentials Foundations of Market Entry Strategies

•
•
Navigate Consulting Australia Pty Ltd
Navigate Consulting Australia Pty Ltd

Our consultants have been lucky enough to live and work in some of the fastest emerging markets in the world, such as China. In the markets, foreign firms and multi-nationals are in a competitive race to enter these markets quickly. This is a full 3 day MBA seminar given to student at the University of Western Australia as part of their

Marketing
1 of 151
Download to read offline
Economics, Planning & Development Community Research & Strategy Building a Strategic Foundation for New Market Entry August, 6th – 7th, 2014 University of Western Australia Executive MBA – Winter Workshop Series Two Day Seminar Information & Knowledge Management Business Strategy & Finance Design, Marketing & Advertising John Gregg Principal Navigate Consulting in a Changing A leading Australian consulting group recognised through the success of our clients
Table of Contents • Agenda and Introduction Pages 3-4 • Overview of the Strategic Pillars underpinning market analysis Pages 6-9 • Pillar 1 – Understanding the Industry Structure Pages 12 – 54 • Pillar 2 – Understanding Customer Value and Who to Target Pages 55 – 110 • Pillar 3 – Identifying and Understanding Your Competitors Pages 111 – 128 • Pillar 4 – Understanding you Own Business Capabilities Pages 129 – 150 • A Brief Introduction to the Basics of a Market Entry Strategy Pages 151 - 158 2
Agenda for This Weekend’s Workshop • Introduction to the course • Quick brief on the importance of developing a strategic foundation to prepare for entering a new market • Overview of the four strategic foundation components • Deep dive into each of the steps 1. Industry Structure Analysis 2. Customer Identification and Value 3. Competitor Identification 4. Our Business Capabilities • Brief introduction to the market entry strategy 3
Why does it matter? • In a globalised and internationally competitive world, entering new markets is often critical to the continued growth of firms. • But before developing a market entry plan a comprehensive strategic knowledge base of all relevant aspects of the market must be gathered. • This knowledge base becomes the foundation which should guide and help shape the market entry strategy. • The foundation comprises four key pillars; 1. The industry structure 2. The customer target and their value 3. A full audit of the existing market competitors 4. A fearless examination of your business capabilities and fit with the dynamics of the market. • Our objective today and tomorrow is to learn about these steps in an interactive ways, we’ll be doing group exercises, problems solving tasks and running analysis on real case studies to help us assimilate the ideas 3
Overview Of the Four Pillars 5
6 The Four Pillars of a Solid Strategic foundation to Guide Market Entry Strategies • To capture basic snapshot of industry • To identify paradigm shifts and external trends • To identify a company’s core competencies and gaps • To understand a company’s competitive advantage and sustainability 1. Strategic foundation Industry structure Customer value Competitor Identification Business capabilities • To identify customer needs and company role in their fulfillment • To prioritize customer requirements and competitive markets • To understand differentiating qualities of competitor portfolios • To predict competitor moves and market positions Developing a comprehensive understanding of the structure of and industry in a new market is often determine whether market entry strategies succeed or rail. The four pillars
7 Strategic questions answeredRelated tools 1. Industry structure key concepts and tools Industry structure Customer value Business capabilities Competitor Identification 1. Market overview • What is the forecasted size and growth of the market? • How attractive are the major market segments? • What returns should I expect? 2. Value chain analysis • What are the components of the full product value chain? • What segments of the value chain drive competitive advantage? • Which segments provide opportunities for performance improvement and competitive advantage? 3. Profit pools • What are the main drivers of profitability in the industry? • How is this shifting? 4. Technology overview and evolution • How is new technology changing industry dynamics? • Are there emerging applications of technology from other industries/markets 6. Regulatory, geo-political and globalization trends • Are there any emerging regulatory, geo-political or globalization trends that could significantly change the “rules of the game”? 5. New threat assessment • Are there any emerging macro-trends that could significantly change the “rules of the game”? 6
8 Industry structure Customer value Business capabilities Competitor Identification 2. Customer value key concepts and tools Strategic questions answeredRelated tools 2. Assessment of customer segment attractiveness • What are the most attractive customer segments for the business? • Which segments fit most clearly with business core competencies? • Which segments are most profitable to serve? 5. Channel segmentation and attractiveness • What are the most attractive channels for the business? • Which channels fit most clearly with business core competencies? • Which channels are most profitable to use? 4. Share of wallet • What is the full portfolio of customer needs? • How does the business fit within a customer segment’s spending habits? 1. Customer segmentation • What customers constitute the market, and what are their differentiating needs? • How do customers segment according to their needs and behaviors? • How do customers segment according to observable characteristics (e.g. demographic)? 3. Customer needs and attitudes • What needs drive customer requirements and satisfaction? • How well does the business (and its competitors) fulfill these needs? 6. Customer loyalty • How “loyal” are the business’ customer segments? • What advantages/disadvantages does customer loyalty have on the business? 7
9 3. Competitive position tools Industry structure Customer value Business capabilities Competitor Identification Strategic questions answeredRelated tools 1. Competitor portfolio overview • What do competitors offer? • How does this compare to your business’ portfolio/offerings? 3. Return/relative market share (RMS) • What is the industry relationship between return and market share? • How do competitors perform according to this relationship? 4. Competitor investment strategy and technology assessment • On what market segments or products are competitors focusing investments and where do they expect future growth? • What new technologies are competitors developing, and how will this be leveraged across product lines and their portfolios? • How do likely competitor actions interact with your business’ strategy? 2. Competitor profitability assessment • How profitable are competitors, and what are their main profit drivers? • Competitor strengths, weaknesses, opportunities and threats 8
1 0 4. Business capabilities tools Industry structure Customer value Competitor Identification Business capabilities Strategic questions answeredRelated tools 3. Capabilities assessment • What are the business’ capabilities, strengths and key gaps, especially across technology, personnel and financial strength? • How does the business perform in meeting the industries’ required competencies across the value chain? 2. Core capabilities definitions • What are the key elements of your industry’s value chain? • What special skills or technologies could the business use to drive or create differential customer value? 1. Relative cost position (RCP) • How does business cost align with the industry/market? • Does the business’ profitability/cost position fall within the industry’s norms? • What is the full potential cost position? 9
1 1 After completing the industry analysis, Strategic decisions on growth must be made 1. Strategic foundation Industry structure Customer value Competitive position 2. Strategic decisions Insights for business decisions Where should I compete? How do I win? - What businesses, segments, geographies? - What is my core(s)? - What drives profit? - How and where do I differentially invest/divest? Business capabilities 10
1. Industry structure 12
13 1. Industry structure Strategic foundation Industry structure Customer value Business capabilitiesCompetitive position • To capture basic snapshot of industry • To identify paradigm shifts and external trends • To identify a company’s core competencies and gaps • To understand a company’s competitive advantage and sustainability • understand differentiating qualities of competitor portfolios • To predict competitor moves and market positions
14 Strategic questions answeredRelated tools Industry structure tools Industry structure Customer value Business capabilities Competitor Identification 1. Market overview • What is the forecasted size and growth of the market? • How attractive are the major market segments? • What returns should I expect? 2. Value chain analysis • What are the components of the full product value chain? • What segments of the value chain drive competitive advantage? • Which segments provide opportunities for performance improvement? 3. Profit pools • What are the main drivers of profitability in the industry? • How is this shifting? 4. Technology overview and evolution • How is new technology changing industry dynamics? • Are there emerging applications of technology from other industries/markets? 6. Regulatory, geo-political and globalization trends • Are there any emerging regulatory, geo-political or globalization trends that could significantly change the “rules of the game”? 5. New threat assessment • Are there any emerging trends that could significantly change the “rules of the game”?
15 A market can be segmented many ways Customer ProductTechnology ChannelGeography What is the most important way to segment your business? To what level should you segment?
16 Source: Medical and Healthcare Marketplace Guide; Analyst Reports Australian Medical Device Market Market maps show the size of market segments, market share and level of fragmentation It is important to first cut your market at a high level. If you are the #1 or #2 player in your market, how can you more largely cut the boundaries of your market so you only have 5-10% market share? By starting at a high level, you are able to see where some potential adjacent or lateral opportunities could exist.
17 Mapping regional market segments can also uncover distinct differences Regional subtleties can help determine where you should prioritize potential expansion and/or where to potentially divest. Many times the differences may result from different regional “tastes.” other times regulatory and/or other government issues can drive the differences. Source: Jaako Pöyry; ABC estimates 2011
18 Market sizing procedures may vary based on how well an industry is documented Market sizing objectives: Identify growth and size of defined market to establish target company/business growth potential and market share Illustrate company/business position relative to competitors within and across segments Identify key events which influence market size Poorly Documented • Market size information is usually publicly available • Examples: - Government purchases - Consumer products - Housewares - Automobile industry • Market size information needs to be constructed • Examples: - Unique goods (e.g., weather forecasting software) - Handicrafts • Get to the central data source quickly • Look at the “source’s source” - Talk to industry associations • Be willing to make educated assumptions • Look for proxies to represent missing data • Develop creative approaches and calculations to obtain market size Well Documented
19 Strategic questions answeredRelated tools Industry structure tools Industry structure Customer value Business capabilities Competitor Identification 1. Market overview • What is the forecasted size and growth of the market? • How attractive are the major market segments? • What returns should I expect? 2. Value chain analysis • What are the components of the full product value chain? • What segments of the value chain drive competitive advantage? • Which segments provide opportunities for performance improvement? 3. Profit pools • What are the main drivers of profitability in the industry? • How is this shifting? 4. Technology overview and evolution • How is new technology changing industry dynamics? • Are there emerging applications of technology from other industries/markets? 6. Regulatory, geo-political and globalization trends • Are there any emerging regulatory, geo-political or globalization trends that could significantly change the “rules of the game”? 5. New threat assessment • Are there any emerging trends that could significantly change the “rules of the game”?
20  Value chain analysis provides a systematic method for disaggregating a firm or industry into its major discrete activities to understand sources of competitive advantage • Value chain analysis can help identify opportunities and clarify business boundaries - Opportunities for cost advantage/improve performance - Where to increase competitive differentiation - Distinct boundaries across business (or industry) processes - Clear framework to evaluate and prioritize activities on which to focus Value Chain analysis Equipment Design Install Operate Service Monitor Successively finer disaggregations of activities can expose differences important to competitive advantage
21 Distribution/ Outbound Logistics Service Value chain scope depends largely on the purpose for which it is being used Firm value chain: Major activity value chain: Tech., R&D Purchasing/ Inbound Logistics Manu- facturing/ Operations Marketing & Sales Conversion Final Assembly Quality Assurance Packaging  Cost analysis  Process re- engineering  Cost analysis System or industry value chain: Inputs (Supplier) Conversion (Manufacturer) Distribution (Distributor/ Retailer) Consumption (End-User)  Potential supplier identification Sample Use Material Preparation
22 When to use value chain analysis at different levels Cost analysis Process re-engineering Business definition Industry collaboration/ Identifying potential suppliers Competitive positioning Map Major Activities Map Sub-Activities Always Sometimes Unlikely
23 Disaggregating the chain helps you decide where you should or need to play Description: Importance of local market share: Revenue stream: Compe- tencies: Influence on buying decision: Spec systems for larger projects ($100K+) Medium One time Engineering and design High Install and commission equipment High One time Technician Low Merge databases of disparate systems Low One time Computer programming Low Mainte nance On going Medium Monitor system On going Manufacture and sell hardware and software Manuf: low Dealer: high (except nat’l accounts) One time + upgrades and service R&D, manufacturing, distribution Low Install Product (Equipment and software) Database integration Service Monitor Software onlyEquip – ongoing Consulting/ Engineering AssessAssess Plan Specify Support, upgrade Low High Low High Low On-site Central station Tech. Computer programm ing Guard Operator Security Systems Several chain sections (Consulting/Engineering, Service and Monitor) have been further sub-divided To build long-term relationships and revenue streams, the business may want to consider participating in the servicing and monitoring components of the chain
24 Strategic questions answeredRelated tools Industry structure tools Industry structure Customer value Business capabilities Competitor Identification 1. Market overview • What is the forecasted size and growth of the market? • How attractive are the major market segments? • What returns should I expect? 2. Value chain analysis • What are the components of the full product value chain? • What segments of the value chain drive competitive advantage? • Which segments provide opportunities for performance improvement? 3. Profit pools • What are the main drivers of profitability in the industry? • How is this shifting? 4. Technology overview and evolution • How is new technology changing industry dynamics? • Are there emerging applications of technology from other industries/markets? 6. Regulatory, geo-political and globalization trends • Are there any emerging regulatory, geo-political or globalization trends that could significantly change the “rules of the game”? 5. New threat assessment • Are there any emerging trends that could significantly change the “rules of the game”?
25 Profit pools learning objectives • Learn the profit pool concept and how you can use profit pools to better understand your industry and where to compete • Learn the basic steps on how to create a profit pool
26  Accounting profit - business earnings as formally reported - Most commonly used as the basic profit measure - Examples include Net Income or Earnings per Share calculations  Return on investment - business earnings after taking the cost of capital into account. Commonly used measures include: - Return on Capital (book value) - Return on Invested Capital (book value) - Return on Assets • Cash-flow contribution - business earnings before taking fixed-asset and capital costs into account (e.g. Earnings before interest, tax, depreciation and amortization – EBITDA) - Used as a basis for decision-making in mature, high fixed cost and cyclical industries “Profit” can be defined in several ways Be aware of differences in accounting standards when evaluating companies with profits spanning different industries
27 Mapping a profit pool involves four steps 1. Define the pool 2. Determine the size of the pool 3. Estimate the distribution of profits 4. Reconcile the estimates Tasks: • Identify which value chain activities influence the industry’s ability to generate current and future profits • Develop a baseline estimate of the profits generated by all profit pool activities within the value chain • Determine the profits generated by each activity within the value chain • Compare the results previous two steps and reconcile numbers • List of value chain activities in profit pool (in sequential order) • Estimate of total profit pools (may be a range) • Point estimates of profit for each value chain activity • Final estimates of activity and total pool profits Output:
28 Profit pool “choke points” control profit flow Examples: Computer industry example Impact: •Intel’s dominance of microprocessors •Establishment of an industry-wide standard that all companies must now follow •Microsoft’s dominance of Windows •Consolidation of control over the customer interface Micro- processors Other Components Personal Computers Software Peripherals Services Control of a choke point can influence the distribution of profits among competitors and more distant value-chain participants
29 Three ways to use profit pools •“Take a Truck”: identified a large untapped source of profit in the low margin truck rental business - Seized first mover advantage - Entered accessory business at a low cost - Reduced prices (and profits) in core truck rental business to attract customers for higher margin accessory business Identify new sources of profit •Dell: evaluates which customers to pursue and which channels to use - With direct sales, Dell splits what would be dealer’s profits with itself and customers through lower prices - Regular customer re-segmentation identifies most profitable customers, allowing Dell to react quickly to new profit sources Develop distribution strategy Guide pricing, product and operating decisions •Lion Nathan in Australia: recognized industry’s profit pool driven by premium beer - Increased marketing of premium brands - Vertically integrated into can production, thereby raising competitive barriers around the pool by cutting manufacturing and distribution cost Seeing what others do not will best prepare you to capture a disproportionate share of industry profits
30 Tips for success Take a broad view of the value chain Examine the industry from different views, building estimates from multiple perspectives Prioritize focus to look at the largest and easiest components first Look at relevant internal and external comparables Think creatively Creating profit pools can be a difficult exercise, but generates highly valuable insights Key Activities in doing profit pools: •Lay out the key supplier and buyer elements of the value chain •Find overall revenue (i.e. market size) for each of the supplier and buyer side elements •Find an average industry profit margin for each of the supplier and buyer side elements
31 Strategic questions answeredRelated tools Industry structure tools Industry structure Customer value Business capabilities Competitor Identification 1. Market overview • What is the forecasted size and growth of the market? • How attractive are the major market segments? • What returns should I expect? 2. Value chain analysis • What are the components of the full product value chain? • What segments of the value chain drive competitive advantage? • Which segments provide opportunities for performance improvement? 3. Profit pools • What are the main drivers of profitability in the industry? • How is this shifting? 4. Technology overview and evolution • How is new technology changing industry dynamics? • Are there emerging applications of technology from other industries/markets? 6. Regulatory, geo-political and globalization trends • Are there any emerging regulatory, geo-political or globalization trends that could significantly change the “rules of the game”? 5. New threat assessment • Are there any emerging trends that could significantly change the “rules of the game”?
32 Technology overview and evolution learning objectives • View potential frameworks and tools you can use to assess technology evolution and convergence • Gain a better understanding as to why some technologies failed to live up to their hype • See how studying analogies and talking to customers can help provide insights into and better predict technological evolution
33 Assessing technology’s evolution and its’ potential impact is a multi-step process Competitors’ capabilities My capabilities Current and future customer needs
34 Printers and related As product life cycles (PLCs) continue to shorten, assessing new threats is more important than ever
35 Diagnose Intervene Monitor/Manage In vitro In vivo internal Non- invasive Min. invasive Inva- sive Rehab/ Recovery Moni- toring Disease Mgmt IT R&D Research Dvpt. In vivo external Targeted Rx delivery GEMS Core GEMS Core Radiation Implants Smart Implants Endoscopy-enabled Procedures Image-enabled Procedures Imaging for Soft Tissue Characterization Molecular Imaging, Radiopharmaceuticals Pharmacogenomics Treatment Efficacy Monitoring PoC Dx Monitoring, Remote Monitoring Convergence has created new combinations in health care
36 There are four requirements for technology convergence to be successful Unmetneeds Attractive economics (Consumer vs Supplier) Manageable adoption barriers Existing triggers --------------------- Convergence requirements --------------------- Media & digital technology (TV + PC) eg: AOL Time Warner Internet telephony eg: various start-ups •Always up-to-date, customized information •No unmet need (regular tel lines satisfactory) •Cons: Weak willingness to pay for internet content •Suppl: No critical mass for sufficient revenue •Cons: Cheaper than traditional •Supplnot attractive; start- ups unable to reach critical mass •Customer behavior (passive communi- cation with TV, inte- ractive with PC) •Cumbersome dialing required •Lack of sufficient, widespread broadband •Immature technology (=> inferior connec-tion quality) Failure Unfavorable Favorable Neutral Financial services (banking + brokerage + insurance) eg: Citigroup, USAA Electric & gas utilities eg: Reliant •One-stop shopping •None •Cons: Lower aggregate fees •Suppl: Significant cross- selling opportunities •Cons: Some price benefit •Suppl: Strong customer and cost synergies •Time-consuming account consolidation •No customer behavior change required •Deregulation •IT enabling sharing of info across platforms •Deregulation (and pri-vatization overseas) Success 40
37 Customer interviews can help assess trends and their impact on current/future boundaries • For each key product or service (and related business extension currently being discussed), who at the customer makes the buying decision? Who are the influencers? • Which products or services are bought at the same time? Different? • What else does each decision maker buy? Each influencer? • How valuable would a fully integrated system be? Why? • How will the buying process change in the near to medium term? (Convergence?)
38 Strategic questions answeredRelated tools Industry structure tools Industry structure Customer value Business capabilities Competitor Identification 1. Market overview • What is the forecasted size and growth of the market? • How attractive are the major market segments? • What returns should I expect? 2. Value chain analysis • What are the components of the full product value chain? • What segments of the value chain drive competitive advantage? • Which segments provide opportunities for performance improvement? 3. Profit pools • What are the main drivers of profitability in the industry? • How is this shifting? 4. Technology overview and evolution • How is new technology changing industry dynamics? • Are there emerging applications of technology from other industries/markets? 6. Regulatory, geo-political and globalization trends • Are there any emerging regulatory, geo-political or globalization trends that could significantly change the “rules of the game”? 5. New threat assessment • Are there any emerging trends that could significantly change the “rules of the game”?
39 New threat assessment learning objectives • Understand how to apply Porter’s Five Forces market analysis tool, with special focus on assessing new threats
40 Porter's Five Forces offers a framework to assess new threats (1 of 6) Rivalry among existing firms Suppliers Bargaining power of suppliers Potential entrants Substitutes Buyers Threat of new entrants Bargaining power of buyers Threat of substitute products or services Industry competitors
41 • Economies of scale • Proprietary product differences • Brand identity • Switching costs • Capital requirements • Access to distribution • Absolute cost advantages - Proprietary learning curve access to necessary inputs proprietary low-cost product design • Government policy • Expected retaliation Entry barriers Porter’s Five Forces (2 of 6) Suppliers Potential entrants Substitutes Buyers Industry competitors
42 • Industry growth • Fixed (or storage) costs/value added • Intermittent overcapacity • Product differences • Brand identity • Switching costs • Concentration and balance • Informational complexity • Diversity of competitors • Corporate stakes • Exit barriers Porter’s Five Forces (3 of 6) Determinants of rivalry among existing firms Suppliers Potential entrants Substitutes Buyers Industry competitors
43 • Differentiation of inputs • Switching costs of suppliers and firms in the industry • Presence of substitute inputs • Supplier concentration • Importance of volume to supplier • Cost relative to total purchases in the industry • Impact of inputs on cost or differentiation • Threat of forward integration relative to threat of backward integration by firms in the industry Porter’s Five Forces (4 of 6) Determinants of supplier power Suppliers Potential entrants Substitutes Buyers Industry competitors
44 • Relative price performance of substitutes • Switching costs • Buyer propensity to substitute Porter’s Five Forces (5 of 6) Determinants of substitution threat Suppliers Potential entrants Substitutes Buyers Industry competitors
Substitution example: Pricing and sales trends uncover insights and potential threats The convergence of granite and solid surface pricing has led to solid surface share loss 45
46 • Buyer concentration versus firm concentration • Buyer volume • Buyer switching costs relative to firm switching costs • Buyer information • Ability to backward integrate • Substitute products • Pull-through • Price/total purchases • Product differences • Brand identity • Impact on quality/ performance • Buyer profits • Decision makers’ incentives Porter’s Five Forces (6 of 6) Determinants of buyer power Bargaining Leverage Price Sensitivity Suppliers Potential entrants Substitutes Buyers Industry competitors
47 Qantas 11% Baker’s Delight 10% Samsung 13% Continental -10% Virgin Air (5%) Low High High Low Airlines Bread Smartphones Relative competitive advantage Relative Industry Attractiveness Narrow application of Five Forces can miss possibility of earning good returns in bad businesses Iphone 67% Key takeaway: Using Porter’s Five forces to assess threats can be very helpful, but the Five Forces framework should not be solely relied upon in any look at strategy. • Firms in lousy businesses that fail to develop a competitive advantage destroy shareholder wealth (Qantas), but firms in lousy businesses can provide excess returns to shareholders (Virgin) • Competitive advantage in an attractive business leads to excess returns (Iphone), but being in an attractive business does not guarantee excess returns (Samsung)
48 Strategic questions answeredRelated tools Industry structure tools Industry structure Customer value Business capabilities Competitor Identification 1. Market overview • What is the forecasted size and growth of the market? • How attractive are the major market segments? • What returns should I expect? 2. Value chain analysis • What are the components of the full product value chain? • What segments of the value chain drive competitive advantage? • Which segments provide opportunities for performance improvement? 3. Profit pools • What are the main drivers of profitability in the industry? • How is this shifting? 4. Technology overview and evolution • How is new technology changing industry dynamics? • Are there emerging applications of technology from other industries/markets? 6. Regulatory, geo-political and globalization trends • Are there any emerging regulatory, geo-political or globalization trends that could significantly change the “rules of the game”? 5. New threat assessment • Are there any emerging trends that could significantly change the “rules of the game”?
49 Regulatory, geo-political and globalization trends learning objectives • View some potential tools and frameworks to help you better assess opportunities and challenges provided by regulatory, geo-political and globalization trends
50 Regulations are one of the a of inter-related forces that can change industries Telecom Regulation  1992 Australian Productivity Commission report recommended the break of Teltra’s Australian telecommunication monopoly  Telecom and Media Act 1996 - 50% of Telstra privatized - Market competition opened for both services and hardware (exchanges, fiber optic routes) - Broadcast ownership rules opened • 2014 – Over 40 carriers and hardware suppliers vying for market share Rule changes have opened markets and resulted in intensified competition (E.G Current privatization of many UK NHS service areas)
51 Regulatory structure and government involvement can significantly impact profitability Examples Government intervention Repossession/ senior debt laws Pricing environment Low • Germany • Banks often used to further public policy goals • Supplier has claim on goods until they are paid for • Banks not return driven • France/Italy • France: Lenders potentially subject to usury laws at high yield levels • Supplier has claim on inventory until sold • France: Can exploit niches with attractive pricing • Italy: Captives not return driven High • UK • Low; favorable lending environment • No claim on inventory • Attractive Structural attractiveness
52 • Government stability • China/Taiwan/Hong Kong • World currencies • Levels and locations of Foreign Direct Investment (FDI) • Middle income trap (Mexico, Thailand,) • Western world stagnation posy 2007 • Sudden unexpected military action Geo-political and globalization trends must be examined Geo-Political Key Issues Globalization Key Trends • Global capital markets • Trade liberalization - WTO, GATT, NAFTA, EU • Technology innovation & electronic distribution • Deregulation Potential data sources • Analyst reports • Industry trade groups • Industry lobby groups • Literature searches • Expert interviews
53 Example: The Chinese express delivery market is structurally very different from Australia • Paper-based articles that fit into a standard-sized express envelop • Weight <500g Definition Domestic regulation International regulation • Non-Express Mail Service (EMS) companies not allowed to deliver documents with informational content • Heavily restricted market • All non-EMS companies are allowed to participate, BUT… • …Grey area due to definition of personal mail, business mail and parcels • Packages that weigh up to 25kg (international) and up to ~30kg (domestic) per shipment • Heavy weight parcels, greater than 25kg (international) and ~30kg (domestic) per shipment • All companies are allowed to participate • Non-EMS companies are allowed to participate, BUT… • …can not deliver documents with informational content • All companies are allowed to participate • All non-EMS companies are allowed to participate, BUT… • …EMS and China Post are trying to close up this segment Documents: Express Freight: Parcels: Source: Literature Search; Interviews. 2009 data.
54 Using a “heat map” can help identify global opportunities United States Germany Japan Italy UK Korea Peru Credit cards Mort- gages Mutual funds De- posits Life insur- ance P&C insur- ance M&A Under- writing Deriva- tives Corp. lending Foreign ex- change Hot Cold Each cell represents a geographic product market and is shaded according to its likely profitability and growth Opportunity assessment
2. Customer Targeting and Value 55
2. Customer Value Strategic foundation Industry structure Customer value Competitor Identification Business capabilities • To capture basic snapshot of industry • To identify paradigm shifts and external trends • To identify customer needs and their implications for the business • To prioritize customer requirements and competitive markets • To identify a business’ core competencies and gaps • To understand a business’ competitive advantage and sustainability • To understand differentiating qualities of competitor portfolios • To predict competitor moves and market positions 61
5 7 Industry structure Customer value Business capabilities Competitor Identification Customer value tools Strategic questions answeredRelated tools 2. Assessment of customer segment attractiveness • What are the most attractive customer segments for the business? • Which segments fit most clearly with the business’s core competencies? • Which segments are most profitable to serve? 5. Channel segmentation and attractiveness • What are the most attractive channels for the business? • Which channels fit most clearly with the business’s core competencies? • Which channels are most profitable to use? 4. Share of wallet • What is the full portfolio of customer needs? • How does the business fit within a customer segment’s spending habits? 1. Customer segmentation • What customers constitute the market and what are their differentiating needs? • How do customers segment according to their needs and behaviors? • How do customers segment according to observable characteristics (e.g., demographic)? 3. Customer needs and attitudes • What needs drive customer requirements and satisfaction? • How well does the business (and its competitors) fulfill these needs? 6. Customer loyalty • How “loyal” are the business’ customer segments? • What advantages/disadvantages does customer loyalty have on the business? 62
• Each customer segment has a unique set of needs and requires its own value proposition • Profit potential varies dramatically by customer segment Customer segmentation helps companies efficiently focus scarce resources Resources should be allocated differentially across customer segments All customers are not created equal 58
59 The "right" customers tend to look quite different from others 0 6 12 18 24 30 36 -120 26 43 43 41 44 46 -150 -100 -50 0 $50 Profit per customer Months 0 6 12 18 24 30 36 -70 11 11 -0 12 -2 12 -4 13 -4 14 -3 -150 -100 -50 0 $50 Profit per customer Months NPV $190 NPV $6 Example: Financial services industry Spending Growth Referrals Base Acquisition Cost “Right” customers “Other” customers
There are three segmentation approaches, each of which answers different questions • Who are the most profitable customers in our customer base? • How many more customers like these are there in the market? • Customer value • Customer attitudes/ behavior • Customer profile Segmentation approach Questions answered • What value proposition will increase our most profitable customers’ loyalty to us and attract more like them? • What demographic/product usage characteristics, if any, can we use to find high potential customers? 60
1. Divide customers into profitability buckets 2. Collect data 3. Combine variables to determine segments • Determine appropriate profitability metric • Bucket according to intuitive divisions • Iterate depending on distribution between categories • Create a list of key profit- driving behaviors • Develop segmentation hypotheses • Group into segments based on their responses to key variables • “Reality check” based on distribution between categories Example: • Top 10%, bottom 10% of customers in terms of yearly profitability Example: • Frequency of use • Duration of use Example: • High frequency but short duration of use • Low frequency but long duration of use Identification of customer groupings and their relative profitability The Customer value approach is based on profitability 61
62 • Make a complete list of likely customer and non-customer attitudes and behaviors • Select attitudes that - Drive purchase behavior - Are actionable - Differ across customers • Select behaviors that - Drive usage and cost-to-serve differences - Are easily measured - Differ across customers • Develop segmentation hypotheses 1. Create a list of key profit- driving behaviors and attitudes 2. Collect data 3. Conduct factor/cluster analysis to determine segments • Conduct a quantitative survey of a representative sample of customers and non-customers to gauge their key attitudes and behavior • Gather additional data in the survey to make segmentation actionable - Profitability data - Demographic profile - Competitor perceptions - Defection drivers • Customers and non-customers are statistically placed in segments based on their responses to key variables - Attitudes/behaviors - Demographic profile Customer attitudes/behavior and Customer profile take a slightly different approach Identification of profitability impact of various customer needs and groupings
• Identify gaps or redundancies in the product portfolio • Screen out unacceptable new products • Choose product features • Determine product pricing • Establish appropriate service options • Determine optimal distribution strategy • Advise on advertising strategy Customer segmentation can be used to drive to a number of important insights 63
High profit customers were segmented based on their behavioral and demographic characteristics A target segment was chosen based on its attractiveness and Highland’s ability to serve it Customers were divided into groups based on their profitability The behavioral and demographic drivers of profitability were determined A value proposition was created for the target segment Customer segmentation Assessment of segment attractiveness (Covered in next section) Example: Customer segmentation for 4 Seasons Hotels is a multi-step process 64
Low profit Medium profit High profit Customers Profit 0 20 40 60 80 100% Percent of Total Example: One third of 4 Seasons customers account for more than 60% of its total profits 65
Business/leisure Leisure only Business only $250 $75 $50 0 100 200 $300 Average Annual Profit per Customer Type 1-2 3-5 6-8 9-10 11 $50 $85 $140 $150 $260 0 100 200 $300 Average Annual Profit per Customer Type Days per Year Less than 2 days 2-4 days 4+ days $40 $70 $130 0 50 100 $150 Average Annual Profit per Customer Type Occasion Visit Frequency Length of Visit Example: The primary profit drivers for4 Seasons are visit frequency, duration and occasion 66
67 “Hotel-aholics” Very frequent (9.2x) Medium (3.9 days) Business/leisure “Honeymooners” Infrequent (1.5x) Long (10.0 days) Leisure “Hello again” Frequent (6.2x) Short (1.8 days) Business “One-timers” Infrequent (1.3x) Long (5.4 days) Business 4 Seasons identified four types of high value customers based on these drivers High profit segments Annual frequency Length of stay Occasion
68 Industry structure Customer value Business capabilities Competitor Identification Customer value tools Strategic questions answeredRelated tools 2. Assessment of customer segment attractiveness • What are the most attractive customer segments for the business? • Which segments fit most clearly with the business’s core competencies? • Which segments are most profitable to serve? 5. Channel segmentation and attractiveness • What are the most attractive channels for the business? • Which channels fit most clearly with the business’s core competencies? • Which channels are most profitable to use? 4. Share of wallet • What is the full portfolio of customer needs? • How does the business fit within a customer segment’s spending habits? 1. Customer segmentation • What customers constitute the market and what are their differentiating needs? • How do customers segment according to their needs and behaviors? • How do customers segment according to observable characteristics (e.g., demographic)? 3. Customer needs and attitudes • What needs drive customer requirements and satisfaction? • How well does the business (and its competitors) fulfill these needs? 6. Customer loyalty • How “loyal” are the business’ customer segments? • What advantages/disadvantages does customer loyalty have on the business?
Assessment of segment attractiveness has two components: “fit” and economics Fit: Ability to serve in a differentiated way Business’ overall strategy and capabilities Business’ competitive position • Strategic objectives • Ability to leverage: - Technology - Costs - Skills - Existing resources • Existing base in segment • Existing market perceptions of strengths and weaknesses • Competitive performance Economic attractiveness: Profit potential Revenue potential Cost to serve • Size • Growth potential • Buyer power • Product requirements • Price sensitivity • Advertising requirements • Channel preference • Service requirements 69
Fit is a fairly qualitative assessment that accounts for both internal capabilities… 1. Does segment leverage key strengths of the business? Example: Should Stanley Tools enter the rotary saw market? 2. Does segment conflict with existing positions? Example: Should Mercedes introduce a medium-priced ($20-$30K) line of family sedans? Does segment fit with the business’ overall strategy and capabilities? 70
…and competitive positioning Does the business have a strong competitive position within the segment 1. What are segment perceptions of the business’ strengths and weaknesses? Example: Should McDonald’s offer vegetarian burgers in the US? 2. What are segment perceptions of the business’ relative position vs. competitors? Example: Should Volvo design a sports car? 71
Calculate economic attractiveness: Profit potential Calculate revenue potential Calculate cost to serve Current customers New customers Current customers New customers Determining economic attractiveness is more straightforwardly quantitative • Number of potential customers • Penetration • Lifetime • Margin • Investment required in headcount, technology, new product development, etc. 72
Develop capabilities to serve this segment Target this segment Avoid this segment Adjust value proposition to improve attractiveness of this segment Low Low High High Fit: Ability to serve segment in a differentiated Way Once segment attractiveness is assessed, “target segments” can be chosen 73
High profit customers were segmented based on their behavioral and demographic characteristics A target segment was chosen based on its attractiveness and Highland’s ability to serve it Customers were divided into groups based on their profitability The behavioral and demographic drivers of profitability were determined A value proposition was created for the target segment Example: Four Seasons reassessed customer segment attractiveness Customer segmentation Assessment of segment attractiveness (Covered in previous section) 74
Low profit Medium profit High profit One-timers Hello again Honeymooners Hotel- aholics Customers High profit customers High profit customers' profitability 0 20 40 60 80 100% Percent of Total Ability to serve in a differentiated way “Hotel-aholics” were the most attractive and a good fit with HH capabilities 75
Priority service Special services • Favorite room ready • “Permanent” electronic key • Complimentary dry cleaning • Two phone lines • Fax machine in room • One 20 minute complimentary call to home Rewards • Frequent flier miles • “Kids Stay Free” days Four Seasons created a tailored value proposition for this target segment Differentiation from competitors 76
Tips for success “Fit” assessment: • Iterate as necessary as “Fit” relies heavily on correct business definition (see “Where do I compete?”) • Be open-minded: put everything “on the table” Economic attractiveness assessment: • Ensure that the costs and revenues from the full customer lifecycle are captured • Take into consideration “hidden” costs - Include differential costs to serve (e.g., FTEs) - Include rework/returns 77
7 8 Industry structure Customer value Business capabilities Competitor Identification Customer value tools Strategic questions answeredRelated tools 2. Assessment of customer segment attractiveness • What are the most attractive customer segments for the business? • Which segments fit most clearly with the business’s core competencies? • Which segments are most profitable to serve? 5. Channel segmentation and attractiveness • What are the most attractive channels for the business? • Which channels fit most clearly with the business’s core competencies? • Which channels are most profitable to use? 4. Share of wallet • What is the full portfolio of customer needs? • How does the business fit within a customer segment’s spending habits? 1. Customer segmentation • What customers constitute the market and what are their differentiating needs? • How do customers segment according to their needs and behaviors? • How do customers segment according to observable characteristics (e.g., demographic)? 3. Customer needs and attitudes • What needs drive customer requirements and satisfaction? • How well does the business (and its competitors) fulfill these needs? 6. Customer loyalty • How “loyal” are the business’ customer segments? • What advantages/disadvantages does customer loyalty have on the business? 85
Customer needs and attitudes learning objectives • Understand how to identify customer needs and assess customer satisfaction • Understand how customer needs and attitudes fit into the Customer value analytical process • View potential slide formats to fully utilize the information gleaned from this analysis 79
Product quality • Usability/features • Superior technology • Prestige • Serviceability • Failure recovery Service quality • Speed • Recognition • Customer knowledge • Treatment and interaction • Tangibles • Failure recovery Cost • Low original price • Value ratio • Discounts/sales • Reliability • Frequent buyer plans • Terms, tax • Durability • Convenience ExampleCategory Customer satisfaction is driven by three main categories of customer needs and attitudes 80
Comprehensive research captures four levels of customer needs and attitudes Unknown – “I never thought of that.” Withheld – “I did not know I could get that.” Assumed – “I thought you knew I needed that.” Stated – “This is what I want or need.” 81
Customer needs and attitudes can be described both qualitatively and quantitatively Quantitative Qualitative • “Service is very important to me because I don’t have time to deal with it myself.” • “The product had problems with durability and that was simply unacceptable.” Example: Customer perception of relative importance in product purchasing criteria • “Service” importance rating of 5 (“very important”) vs. “Price” importance rating of 3 (“moderately important”) • “Design” importance rating of 5 vs. “durability” importance rating of 1 (“not at all important”) 82
Are you good at the things that matter most to customers? Price Speed Reliability Relationships Flexibility Relativeimportance/performance Price Speed Relationships Reliability Par/servicing LTV Flexibility Relativeimportance/performance GECRE Heller Traditional on-book GECRE Nomura High Low High Low Commercial Mortgage Backed Securities 83
Tips for success • Select customer sample that is representative of overall sales. Key criteria may include: - Geography - Industry focus - Product mix - Discount levels - Use of customer service hot-line - Satisfaction levels from existing research - Sales team tenure • Use alternative metrics to determine sample representation if applicable. For example, sample can be representative of customer counts 84
85 Industry structure Customer value Business capabilities Competitor Identification Customer value tools Strategic questions answeredRelated tools 2. Assessment of customer segment attractiveness • What are the most attractive customer segments for the business? • Which segments fit most clearly with the business’s core competencies? • Which segments are most profitable to serve? 5. Channel segmentation and attractiveness • What are the most attractive channels for the business? • Which channels fit most clearly with the business’s core competencies? • Which channels are most profitable to use? 4. Share of wallet • What is the full portfolio of customer needs? • How does the business fit within a customer segment’s spending habits? 1. Customer segmentation • What customers constitute the market and what are their differentiating needs? • How do customers segment according to their needs and behaviors? • How do customers segment according to observable characteristics (e.g., demographic)? 3. Customer needs and attitudes • What needs drive customer requirements and satisfaction? • How well does the business (and its competitors) fulfill these needs? 6. Customer loyalty • How “loyal” are the business’ customer segments? • What advantages/disadvantages does customer loyalty have on the business?
Share of wallet learning objectives • Understand share of wallet concept and potential applications to customer value analysis • Learn how to interpret data to determine share of wallet 86
The share of wallet (SOW) tool quantifies potential customer value What portion of a customer’s spend is captured by the business? What portion of a customer’s spend can be captured by the business? Identification of untapped customer potential 87
SOW has multiple applications • Strategic tool to identify full potential and to prioritize regions, verticals, customers and products • Operational tool to increase sales effectiveness - Prioritization of installed base and prospects - Identification of potential for growth • Financial controlling tool to measure operational performance on account/segment level 88
Metric Definition Example • Share of wallet • Share of spend of a single customer • Customer buys $10M of softwear per year. Revenue with this customer is $2M • -> SOW = 2/10 = 20% • Share of visits/trades • Share of use by a single customer • Customer buys/has ___ number of visits/trades. Portion served by business is 50% • -> SOW = 50% SOW is the share of spend for a single customer Variation 89
SOW analysis is a multi-step process Activities Output Determine bottom-up wallet • Build-up wallet beginning with single customer spend • Quantify to limits of Business Definition • Bottom-up wallet sizing and appropriate segmentation Match top-down wallet • Assess wallet size beginning with highest macro- impact • Quantify to limits of Business Definition • Top-down market sizing that ties to Bottom-up version - Wallet by business - Wallet by vertical - Wallet by region - Wallet by product Determine share of wallet • Determine applicable share definition • Calculate across all segments • Quantitative assessment of share of wallet vis-à-vis competitors in key segments Assess customer full potential • Prioritize and assess segments according to potential • Create action plan to reach full potential • List of “target” segments and recommended actions • Action plan to reach full potential Database build up Database analysis 90
Trade- Online ACo BCo CCo 16% 23% 39% 42% 0 10 20 30 40 50% Household assets under management Overall average: 67% Frequent trader Most frequent 64% 57% 0 20 40 60 80% Percent of trades conducted with TradeOnline Active traders Share of wallet Active traders Share of trades Example: CommSec has room to improve SOW among frequent traders 91
Industry structure Customer value Business capabilities Competitor Identification Customer value tools Strategic questions answeredRelated tools 2. Assessment of customer segment attractiveness • What are the most attractive customer segments for the business? • Which segments fit most clearly with the business’s core competencies? • Which segments are most profitable to serve? 5. Channel segmentation and attractiveness • What are the most attractive channels for the business? • Which channels fit most clearly with the business’s core competencies? • Which channels are most profitable to use? 4. Share of wallet • What is the full portfolio of customer needs? • How does the business fit within a customer segment’s spending habits? 1. Customer segmentation • What customers constitute the market and what are their differentiating needs? • How do customers segment according to their needs and behaviors? • How do customers segment according to observable characteristics (e.g., demographic)? 3. Customer needs and attitudes • What needs drive customer requirements and satisfaction? • How well does the business (and its competitors) fulfill these needs? 6. Customer loyalty • How “loyal” are the business’ customer segments? • What advantages/disadvantages does customer loyalty have on the business? 92
93 Demand Creation Access (Reach) Profitable Revenue + + = Product success Key Aspects: • Create product awareness • Articulate value proposition • Educate customer • Market towards target customer • Provide easy access to all target consumers • Allow for “touch & feel” of product • Provide rich information at POS • Access target customers • Generate large base of profitable revenue Channels can be prioritized according to three general attributes No single channel must provide all of these necessary components, but overall channel mix should deliver all three
Example: Harvey Norman has four distribution choices if it chooses to prioritize reach Big Box A Big Box B RegionalCo DeptStoreCo MallRetailCo E-tail Company website Demand creation Med Med Med Low High High Low Reach High High Low High High High Low Revenue opportunity High High Low Low Low Med Low Classification Reach Reach Reach Reach Demand creation Mixed Mixed 94
Example: Further analysis identifies channel potential and drivers of success Revenue through Big Box A channel Units: 3,000 33,100 92,400 Placement • Will need to fund premium placement so it will not be mistaken as “just another box” Knowledge • Business would have to train sales force, quality control should not be a huge problem Fulfillment • Low volumes should make fulfillment easy Main challenges • Confusion with other “boxes” • Getting on the shelves with such low prediction volumes could be problem • Big Box A carries the whole range of competing products 95
Industry structure Customer value Business capabilities Competitive position 2. Customer value Strategic questions answeredRelated tools 2. Assessment of customer segment attractiveness • What are the most attractive customer segments for the business? • Which segments fit most clearly with the business’s core competencies? • Which segments are most profitable to serve? 5. Channel segmentation and attractiveness • What are the most attractive channels for the business? • Which channels fit most clearly with the business’s core competencies? • Which channels are most profitable to use? 4. Share of wallet • What is the full portfolio of customer needs? • How does the business fit within a customer segment’s spending habits? 1. Customer segmentation • What customers constitute the market and what are their differentiating needs? • How do customers segment according to their needs and behaviors? • How do customers segment according to observable characteristics (e.g., demographic)? 3. Customer needs and attitudes • What needs drive customer requirements and satisfaction? • How well does the business (and its competitors) fulfill these needs? 6. Customer loyalty • How “loyal” are the business’ customer segments? • What advantages/disadvantages does customer loyalty have on the business? 96
Customer loyalty is a requirement for maximizing customer value Success is built on getting the right customers and keeping them 97
"Satisfaction" sets too low a standard for measuring customers loyalty Most defectors are generally satisfied 98
Loyalty includes multiple customer needs and attitudes beyond simple satisfaction Referral Repurchase Satisfaction Pride Trust Deserves Loyalty 99
“Loyalty Leaders” achieve better costs and growth Average Loyalty Leader 100% 85% 0 50 100 150 200 250% Indexed average costs Costs Average Loyalty Leader 100% 220% 0 50 100 150 200 250% Indexed average growth Growth 100
Extending the customer lifecycle maximizes profit potential from the target segment 67656260585549444230 (51) (80) (40) 0 40 80 120 5549444230 (51) (80) (40) 0 40 80 120 0 1 2 3 4 5 6 7 8 9 10 AnnualProfits Year Example: Credit card company 101
Root cause analysis can uncover important issues for at-risk customers Uncontrollable issues 102
Strategy Marketing Sales/Service Channels Redesign Customer Experience Teams/Compensation/Rewards Process Statistics • On time, first time fix • Line increase requests Behavior • Retention • Share of wallet Feedback • Employees • Customer Loyalty/Sat. • Complaints Customer Experience Metrics Customer loyalty Feedback/Results should be addressed through an ongoing process 103
3. Competitor Identification 111
Overview Competitor analysis enables an organization: – To gain an understanding of the future strategies and decisions of key competitors – To predict competitor reactions to an organization's strategic initiatives and environmental changes – To understand how to influence the behavior of competitors to gain competitive advantage •It permits an organization to address the following questions: – What can it learn from its competitors? – What are they key differences between the company and its competitors? Do these differences explain the differences in performance (financial, operational) between all players? – What are the likely changes in the competitive landscape it will need to respond to? •It is important to understand that competitive analysis is not a strategy but merely one of the components feeding in to the identification of opportunities and the development of a strategy. 105
Framework for Competitive AnalysisActivities Tools/ Techniques Competitor Identification & Segmentation Competitor Performance Analysis Competitor Objectives & Strategy Analysis Improvement Opportunities & Competitive Response  Competitor identification (traditional, new entrants, substitutes, …)  Competitor segmentation/ competitive advantages (size, segment, customers, pricing, products/services, relative threat)  Analysis of value proposition (price, service, product offering, quality)  Competitor positioning in value  Porter's 5 Forces  Competitor positioning map  Value Chain  Mekko  Market share analysis  Analysis of competitive strengths & weaknesses (profitability, performance, competencies, capabilities)  Benchmark of competitor performance  Assessment of performance/value drivers  Activity mapping  Capability assessment  Share gain line  Identification of competitive position improvement opportunities  Assessment of competitor response to changes in environment and new strategic initiatives  Analysis of company goals and current strategy (strategic, financial, operational)  Assessment of future trends/movements in positioning  Game theory  Scenario modeling  SWOT Analysis  Industry, market, company predictions and forecasts 106
Competitor Identification & Segmentation Competitor Identification & Segmentation Competitor Performance Analysis Competitor Objectives & Strategy Analysis 114
Identifying Your Competitors Issues  Boundaries are not always clear  Direct vs. indirect can be on the basis of: ─ Product type (e.g. soft drinks vs alcohol) ─ Activity type/position within the industry value chain (e.g. a manufacturing company may compete with distributors if it also distributes its products)  Typical focus of effort can be: ─ Segments targeted within the industry ─ Competitive advantages characterized by each segment (e.g. price, quality, etc.) Company X Competitive Landscape Typical focus of effort Regional National Direct Indirect Small Large Size of competitor Type of competitor Geographic focus of competitor 108
Identifying Their Competitive Advantages (1/3) (1)Source: M. Porter, Competitive Advantage Common behavior types;  Generalists: These companies compete on most market segments  Specialists: They usually compete in one particular segment  Multi-specialists: They compete on several market segments Firms behaviors towards industry segments • Market image • Price policy/price positioning • Services offered • Product quality • Degree of technological leadership (innovation vs. imitation) • Sales and distribution channels • Customer Intimacy Types of competitive advantages(1) Industries where innovation plays a key role Complex products (requiring exploitation of very different competencies) High fixed costs Leveraging success factors Being present in all positions of the value chain Occupying several spots within the value chain and by outsourcing others etc. Positioning in the value chain Some competitors may belong to larger groups/conglomerates Origin of equity funds plays a key role (external shareholders, managers, suppliers, etc.) Other characteristics 109
Competitor Performance Analysis Competitor Identification & Segmentation Competitor Performance Analysis Competitor Objectives & Strategy Analysis 117
Competitor Market Share Examples (1/4) Top 5 players (2012) Market share evolution (1992-2012) 18% 11% 10% 5% 22% Comp #4 Top 5 players represent XX % of market % Market Share 10% 20% 0% Comp #3Comp #2Comp #1Company 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 35 0 5 10 15 20 25 30 % 1 2 3 4 5 6 7/8 111
Competitor Market Share Examples (2/4) Market Size (2012, $m) Co.X (2012, $m) Market Share (%) Books 2,100 225 10.7% Stationery 1,500 130 8.7% News 4,000 120 3.0% Video 550 90 16.4% Cards 1,000 75 7.5% Music 1,200 60 5.0% 112
Competitor Market Share Examples (3/4) 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Others Woolworths Books etc John Menzies Dillons Multitail Waterstones 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Others Boots Paperchase Disney Store John Menzies Ryman's Multitail Woolworths 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Books Stationery News Others Woolworths John Menzies Multitail $ 2.1 bn $ 1.5 bn $ 4.0 bn Competitor share by sector (%) 113
-10% 0% 10% 20% 30% 40% 50% 60% -10% 0% 10% 20% 30% 40% 50% 60% Company X Share Movements – By Sector Total Market Growth Company X gaining share Company X losing share Video News Music Cards Stationery Books Company X Growth (% over 4 years) Competitor Market Share Share Gain Line By Sector 114
Competitor Market Share - Growth Vs. Market Share Competitors sales growth vs. relative market share (1999 – 2009) Relative market share (units), 2000 -20% 0% 20% 40% 60% 80% 100% 120% 0 0.5 1.0 1.5 G H X F B E A D C CAGR (units) 1999-2009 115
Competitor Profitability Examples (1/2) Profitability by Competitor in Industry "A" Sales Profit ROS Comp 1 400,000 44,000 11.0% Comp 2 180,000 28,800 16.0% Comp 3 120,000 8,400 7.0% Comp 4 110,000 9,900 9.0% Comp 5 60,000 4,800 8.0% Comp 6 40,000 2,800 7.0% Comp 7 30,000 -1,500 -5.0% Comp 8 30,000 1,800 6.0% Comp 9 20,000 800 4.0% Comp 10 10,000 300 3.0% 116
Benchmarking Competitor Performance • There are many other dimensions against which to measure competitor performance, each being associated with a set of Key Performance Indicators (KPIs). • Outlined below is an example of the performance dimensions that can be studied, with corresponding KPIs.  Supply chain efficiency  Customer retention level  Manufacturing service level  Staff utilisation level  etc Performance Dimension  Logistics as % of sale  % of lapsed customers/year  Average manufacturing lead time  Store staff cost as % of sale  etc Illustrative KPIs 117
Benchmarking Competitor Performance Measuring KPIs For example, world-class retailers use a combination of external and internal KPIs to align their supply chain towards the optimum level of performance What do retailers measure in their supply chain? Why do retailers measure their supply chain? Financial indicators Operational indicators Costs Accuracy Speed Mix, balance and trade-offs vary with Nature of business Maturity of supply chain Absolute levels Relative trends Externally comparable Internally consistent Drive improvement targets Monitor progress and realise benefits 118
Benchmarking Competitor Performance Competitor Benchmark Outcome Display KPI Comp. 1 Comp. 2 Comp. 3 Comp. 4 Etc. Supply chain efficiency Customer retention level Staff utilisation level etc etc Competitors 119
Assessment of Performance Drivers Insights on Specific Issues Conclusion Insight Strategic Direction Indicated? Example 1  Lower gross margin  High operator costs  Skewed installed base  Reduce costs  Avoid price aggression  Upsell existing tone customers Example 2  Higher operator costs  Lower productivity  Reduce operator costs ─ OAS cost reduction ─ Subcontract ─ Explore voice recognition opportunities, push canned alpha message Example 3  Fixed costs lower  Higher transmission costs more than offset by other costs  Reduce transmission costs ─ Reduce leased times per transmitter (to 0 on outposts, to 1 on others) ─ Use satellites or dial-ups ─ Drop marginal locations 120
Competitor Strategy Analysis: SWOT Analysis Once the competitors have been identified and their performance analyzed, their particular characteristics can be more specifically assessed. Fill in a SWOT analysis for each competitor you are assessing. Outlined below is an example of a SWOT analysis for a football club. Strength Weaknesses  Experienced players  Key real estate location  "Cultured" football common methods shared across the squad  Midfield play  Attract further key international names  Umbrella branding (internationally recognized names)  Little development opportunities for the youth teams  Old players more accident prone  Low scoring  Inexperienced manager  Still backed by private investors cash?  Other clubs keep getting bigger  Other teams back in contention for N° 3 spot Opportunities Threats 121
4. Business Capabilities 129
123 Strategic foundation roles Strategic foundation Industry structure Customer value Business capabilities Competitor Identification • To capture basic snapshot of industry • To identify paradigm shifts and external trends • To identify customer needs and company role in their fulfillment • To prioritize customer requirements and competitive markets • To understand differentiating qualities of competitor portfolios • To predict competitor moves and market positions • To understand a business’ competitive advantage and sustainability • To identify a business’ core competencies and gaps
Business capabilities tools Industry structure Customer value Competitive position Business capabilities Strategic questions answeredRelated tools 3. Capabilities assessment • What are the business’ capabilities, strengths and key gaps, especially across technology, personnel and financial strength? • How does the business perform in meeting the industries’ required competencies across the value chain? 2. Core capabilities definitions • What are the key elements of your industry’s value chain? • What special skills or technologies could the business use to drive or create differential customer value? 1. Relative cost position (RCP) • How does business cost align with the industry/market? • Does the business’ profitability/cost position fall within the industry’s norms? • What is the full potential cost position? 130
Lower cost position is a major difference between leaders and followers Higher Value Lower Cost Total difference in profitablity (#1 vs. #5) 0 20 40 60 80 100% 131
132 Theoretical full potential $1.10 RCP determines full potential cost position by comparing unit costs to those of competitors  RCP = Relative Cost Position  Quantifies cost differences between your business and competitors  Insight into processes, practices, technologies resulting in cost differentials  Reveals necessary actions to close cost gaps and gain competitive advantage Practical $1.27 Over- head Labor Materials Client-current Competitor A Competitor B Competitor C $1.75 $1.45 $1.35 $1.30 0.00 0.50 1.00 1.50 $2.00 Unit Cost Lowest cost Practical cost
133 RCP analysis helps answer both strategic and tactical questions Strategic questions Tactical questions • In what areas do our competitors have the biggest cost advantage? • What is driving competitors’ profitability? • How much flexibility would our competitors have in a price war? • Where should we focus our cost reduction efforts? (e.g., wage rates, amounts of raw material inputs) • Which cost elements would decrease significantly with an increase in scale? • Which cost elements might benefit from different business practices?
134 RCP can be approached from the bottom-up or top-down Detailed bottom-up analysis Top-down analysis • Build up each major cost element for key competitors based on primary data • Triangulate using cost data from multiple sources Less accurate; less time intensive • Compare competitors’ cost structures to client’s cost structure at macro level - Define key process/business practice differences for major cost elements - Make assumptions about the cost impact of differences • Test assumptions vs. overall financial data More accurate; more time intensive Oftentimes use a combination of these approaches
135 RCP – The Key Steps Map the business value chain Identify cost elements and drivers Scour information sources for cost data on clients and competitors Build, compare, and reality check cost bars Calculate practical full potential cost position and savings Draw strategic implications Process Steps Key Success Factors • Map value chain from end to end (e.g., raw materials to finished product or delivery) • Tie costs to operations not accounting categories • Build up cost bars category by category • Reality check results against similar companies • Focus on areas with greatest cost savings potential • Adjust for situation (e.g., different strategy [high vs. low quality], different equipment, different plant locations) • Determine how to take advantage of the improved cost position • Be persistent and creative, but ethical
130 Mapping the value chain can facilitate an understanding of cost elements % of total cost: Tech., R&D Purchasing/ Inbound Logistics Manufact- uring/ Operations Marketing & Sales Distribution/ Outbound Logistics Service Major cost elements: Drivers of cost:
136 Costs are detailed and drivers are noted • Quality of ingredients • Mix of ingredients • Volume of ingredients • Amount of waste • Cost of ingredients • Reverse engineering • Suppliers • Purchasing managers • Industry reports Cost drivers Data sources
132 Cost data can be found in many places Cost information Former employees Utility companies Financial analysis Client sales and marketing Industry experts Market research reports Plant/site tours Industry conventions Reverse engineering reports Product brochures Government filings and patent filings Supplier interviews Literature searches Local newspapers Equipment vendors Customer interviews Current employees Labor unions Multiple data sources should be used whenever possible
137 RCP can highlight strategic decisions Situation • Chewing gum manufacturer • Diaper manufacturer with scale-driven cost advantage, but too high prices • Bakery products manufacturer contemplating an acquisition Action • RCP analysis in materials usage and purchasing, process improvements, and inventory management • RCP identified price business could charge and still be profitable, but competitors would not • RCP of competition Result • Identified $29M in annual savings • Business increased market share by 10% • Substantial positive impact on the client’s sales and profits • Competitor had 30% cost advantage. Acquired company would not be able to close the gap • Prevented business from making poor acquisition decision
138 Example: RCP details all cost drivers Cost Drivers Sure Coat First Paints Sure Coat Advantage First Paint Differences Raw materials Packaging materials Labor Taxes, insurance, depreciation Recharge Maintenance Other Utilities Operating supplies Total $11.30 $13.80 $7.90 $3.60 $3.40 $2.80 $1.20 $0.60 $0.30 $44.90 $17.50 $12.80 $3.70 $2.30 $3.10 $2.00 $0.90 $0.50 $0.30 $43.10 $6.20 ($1.00) ($4.20) ($1.30) ($0.30) ($0.80) ($0.30) ($0.10) ($1.80) 3.5 pounds per case; $0.50 per pound (market) Lighter container ~5% lower cost Lower wage rate; less overhead Same cost per line 10% less than Sure Coat; shared with other products, smaller site Labor - 4.5 maintenance workers vs. 7 for Sure Coat, lower wage rate Expenses - Sure Coat dollars per line 20% less than Sure Coat (Department of Energy) 10% less than Sure Coat; shared with other products (travel, purchased services) 10% less than Sure Coat; shared with other products; scale Dollars per 100 Gallons
Standard Weatherproof • Modified manufacturing layout to reduce labor • Shifted salesforce focus to larger sizes (higher margins) • Outsourced “back-end” processes • Test marketing new weatherproof product with new raw material Example: RCP analysis led to direct action implications and results Increased margins by 15% 17% margin increase potential 139
140 Business capabilities tools Industry structure Customer value Competitive position Business capabilities Strategic questions answeredRelated tools 3. Capabilities assessment • What are the business’ capabilities, strengths and key gaps, especially across technology, personnel and financial strength? • How does the business perform in meeting the industries’ required competencies across the value chain? 2. Core capabilities definitions • What are the key elements of your industry’s value chain? • What special skills or technologies could the business use to drive or create differential customer value? 1. Relative cost position (RCP) • How does business cost align with the industry/market? • Does the business’ profitability/cost position fall within the industry’s norms? • What is the full potential cost position?
141 Core capability and core competency definition Core capabilities are attributes of a business or industry (e.g.,shared knowledge, expertise or skill) which increase the likelihood of creating sustained competitive advantage Core competencies are the skills and knowledge of the people in the business that help create core capabilities
142 Types of core capabilities Core capabilities Partial list Example Distinctive Capabilities • 3M with new adhesive/abrasive products • Canon with fine graphics, precision mechanics • WalMart - assistants to approach customers • Hanson in the 1980s in acquiring manufacturing businesses • J&J with branding of consumer health products • Number 2 players in former monopolies with special access privileges • Microsoft • Newmont Mining • Duty Free Shoppers Ltd airport arrangements • Coca Cola • Avon door-to-door sales network • Nutrasweet • Continuously innovate • Control processes/behaviors • Management/acquisition skills • Manage information • Control point • Physical asset • Location/space • Brand/reputation • Distribution/sales network • Patent • Access-conveying relationships Privileged Assets Special Relationships
143 Companies differentiate by innovating around their strengths Product Development Manufacturing Distribution & Logistics Marketing Sales Service Manufacturing Distribution & Logistics Marketing Sales Service Manufacturing Distribution & Logistics Traditional “innovation” (invention) Big box home improvement retailer with innovative format that’s user-friendly for females and “weekend do-it-yourselfers” Innovative low-cost manufacturing and distribution model to commoditize markets and compete on price Innovative Bundling of critical services to address pet owners’ total cost of pet ownership
144 Example: 3M has created competitive advantage by combining knowledge sharing with technology R&Dpractices • Intranet - Best practices database - Tech expertise database • Other collaboration tools • Cross functional meetings - Tech fairs - Cross-divisional meetings by sales personnel • Incentives - Awards and career benefits for sharing and utilizing knowledge • 14 Technology centers - Supplement to R&D labs - Leverage technologies across businesses units • Tech audits - Evaluation of R&D projects by peers (business & technical) from other business units Knowledge sharing
Business capabilities tools Industry structure Customer value Competitive position Business capabilities Strategic questions answeredRelated tools 3. Capabilities assessment • What are the business’ capabilities, strengths and key gaps, especially across technology, personnel and financial strength? • How does the business perform in meeting the industries’ required competencies across the value chain? 2. Core capabilities definitions • What are the key elements of your industry’s value chain? • What special skills or technologies could the business use to drive or create differential customer value? 1. Relative cost position (RCP) • How does business cost align with the industry/market? • Does the business’ profitability/cost position fall within the industry’s norms? • What is the full potential cost position? 145
146 Assessment requires asking key questions around existing and required capabilities Where are our capability gaps? What capabilities do we have and which are necessary to succeed? - Technology - Personnel - Financial How can we leverage our capabilities? How do we fill the gaps? Should we divest or prune low capability areas? Key questions 1. Capability baseline 2. Gap assessment 3. Capability execution
147 Different analysis can help answer these questions  Comparison of required capabilities against internal competencies - Management evaluation  Capability reviews - Identification of required capabilities - Literature searches/competitor interviews - Management evaluation  SWOT analysis of our key capabilities vs. competitors  Capability acquisition analysis - Internal benchmarking to estimate acquisition cost - Comp analysis to determine market price to obtain capability through an acquisition Approaches 1. Capability baseline 2. Gap assessment 3. Capability execution
148 Core capability gaps can emanate from different places, including competency gaps People • Wrong person • Right person, overworked • No person responsible today • Does somebody perform the capability at the moment? • Who is responsible for the capability performance ? • If so, then… - Work load? - Years of experience? - Type of experience? - Performance? - Fit? Incentives/culture • Inadequate incentives scheme • Incomplete measurement/ reporting • Lack of accountability • Is the capability correctly measured/ reported? • Have incentives been established/ implemented? • If so, then… - Are they the right incentives? - Is the magnitude of the incentive adequate? - Is the right person incented? Information/ Technology • Lack of technology to take advantage of blurring business boundaries • Inappropriate technology/wrong bets • Do we clearly understand convergence opportunities? • Do business units communicate with each other about possible cross-applications of existing technology? • Is the technology functional and easy to use? • Is appropriate capex allocated to technology? Process/structure • Inadequate process • Misaligned organisational structure • Is the process clearly defined? • Are all parties involved clear about the process? • What are the bottlenecks or choke points? • Does the process reside within appropriate BU? • Has there been sufficient investment in improving process, tools and structure? Institutional lack of knowledge • No experience, expertise or knowledge about this capability • Does the capability exist today? • Is this a new area of business? Root cause: Critical questions: People Incentives/ culture Information/ Technology Process/ structure Institutional lack of knowledge
145 Example: Health Food Co.  Broad scale R&D experience  Clinical trial/ regulatory experience  Significant service offering  Broad scale clinician & expert marketing  Experience building channel creation  Non-F&B industry knowledge  Unique “molecule” access  Clinical trials to obtain claims  Regulatory process  Science integration into products  Solution services  Brand building  Multi- constituent access end support  Value-added alliances  “Own” management skills  Cross-functional coordination  Long-term view/learning integration  Multi-industry knowledge New wellness paradigm: Health Food Co.’s assets and capabilities: Health Food Co. critical gaps: Science Product and Service Offering Sales and Marketing Channel Integration Target Consumer
149 Example: De Beers Situation Complication Actions • Worldwide leader in mining and distributing raw diamonds • De Beers wanted to assess potential retail growth opportunities Results • De Beers has no retail experience, making development of new retail venture difficult • Developed business case for a joint venture to feature DeBeers products in retail outlets • Identified several internal core capability deficiencies that would introduce execution risk - Partnership with retailer was a key success factor - Identified optimal partners and supported JV negotiations • Formed De Beers LV (separate operating company) through a joint venture with LVMH • Launched “flagship” stores in London and New York
150 Example: De Beers capability assessment • Identified De Beers’ core capabilities/assets - Strong brand (De Beers) - Product knowledge - Understanding of consumer needs • Determined capability requirements for success • Identified capability gaps - Retail operations experience - Jewelry manufacturing - Quality control of luxury goods - Management of luxury retail brand • Determined from capability gaps that a retail partnership was required for success • Developed “short-list” of most attractive partnership candidates - Strong retailer filling core capability gaps - Good fit with De Beers • Prepared negotiation strategy for finalizing the agreement with potential partners • Joint Venture formed with LVMH 1. Capability baseline 2. Gap assessment 3. Capability execution
4. A Quick Look At Market Entry Strategies 151
The Strategic Foundation Underpins, Market Entry Planning 1. Industry structure Summary and conclusions Market opportunity description Market entry strategy Strategic directions Pricing Brand and communication Sales and distribution Products and services Customer service Launch phasing The Strategic Foundation Vision and Mission Objectives Overall Strategy Positioning Value proposition Brand Target segments Tactical launch plan Contingency plan Internal and external factors Products & services Pricing Brand and communication Sales & distribution channels Customer service149 2. Customer Identification & Targeting 3. Competitor Identification & Analysis 4. Frankly Assessing Your Own Business Capabilities
Market Entry Strategy – The Essential Ingredients  A description of the company’s vision and mission statements as well as financial objectives form the starting point for the market entry strategy as they set the framework in which a new entrant will function  Short-term objectives, sales targets, market share and brand awareness, will be set against the market opportunity and supplied as input to the business planning team  The positioning statement visibly describes the company’s strategy in relation to competition and the value proposition captures the company’s differentiating advantages and their benefits to potential customer  The brand strategy explains which values are important to communicate in order to enhance the company’s relationship with its customers  Targeted customer segments that need be addressed in order to deliver desired objectives will be specified and prioritised  Strategic directions in all functional areas; products & services, pricing, brand & communication, sales & distribution and customer service further detail the overall entry strategy. Finally, the launch phasing section explores the various viable market entry options, their pro’s, con’s and pre-conditions
Detailed tactical launch plans enable efficient and ans manageable lmplementation  A tactical launch plan covers all functional areas and provides the launch team and vendors with necessary details for implementation  Pricing products and services can be helped by price modelling and conjoint research to assist in the choice of, from customer perspective, the most valuable pricing option  Brand and communication plan for market entry should include development of brand wheel (attributes, benefits, values) and full launch campaign planning  The sales and distribution channel plan involves creation of a tailor made sales and commission model, detailing of the company’s sales and distribution channel structure and analysis and recommendation on commission structure and levels  The customer service plan includes high level customer service processes and customer centre dimensioning  Clear contingency planning enables the company to pre-empt the occurrence of situations that affect the planned activities and prepare plans to remedy those, resulting in shortened reaction time. Both internal and external factors will be analysed – Internal – e.g. technical and organisational issues – External – e.g. competitive market activities and regulatory actions 151

Recommended

Business Model Innovation Tool Kit
Business Model Innovation Tool KitBusiness Model Innovation Tool Kit
Business Model Innovation Tool Kit
aaltoglobalimpact
 
Kase commercialization-20160801
Kase commercialization-20160801Kase commercialization-20160801
Kase commercialization-20160801
Ed Kase
 
Industry analysis
Industry analysisIndustry analysis
Industry analysis
Shriram Purankar
 
Competitor Analysis
Competitor AnalysisCompetitor Analysis
Competitor Analysis
Nur Agustinus
 
Market Analysis and Surveying
Market Analysis and SurveyingMarket Analysis and Surveying
Market Analysis and Surveying
Edward Erasmus
 
Situation Analysis
Situation AnalysisSituation Analysis
Situation AnalysisRich Kohler
 
Strategic Marketing: Session 1: Market Driven Strategies
Strategic Marketing: Session 1: Market Driven StrategiesStrategic Marketing: Session 1: Market Driven Strategies
Strategic Marketing: Session 1: Market Driven Strategies
Anik Saha
 
Gathering Marketing Intelligence & Competitive Landscaping
Gathering Marketing Intelligence & Competitive LandscapingGathering Marketing Intelligence & Competitive Landscaping
Gathering Marketing Intelligence & Competitive Landscaping
Laura Faulconer
 

Recommended

Business Model Innovation Tool Kit
Business Model Innovation Tool KitBusiness Model Innovation Tool Kit
Business Model Innovation Tool Kit
aaltoglobalimpact
 
Kase commercialization-20160801
Kase commercialization-20160801Kase commercialization-20160801
Kase commercialization-20160801
Ed Kase
 
Industry analysis
Industry analysisIndustry analysis
Industry analysis
Shriram Purankar
 
Competitor Analysis
Competitor AnalysisCompetitor Analysis
Competitor Analysis
Nur Agustinus
 
Market Analysis and Surveying
Market Analysis and SurveyingMarket Analysis and Surveying
Market Analysis and Surveying
Edward Erasmus
 
Situation Analysis
Situation AnalysisSituation Analysis
Situation AnalysisRich Kohler
 
Strategic Marketing: Session 1: Market Driven Strategies
Strategic Marketing: Session 1: Market Driven StrategiesStrategic Marketing: Session 1: Market Driven Strategies
Strategic Marketing: Session 1: Market Driven Strategies
Anik Saha
 
Gathering Marketing Intelligence & Competitive Landscaping
Gathering Marketing Intelligence & Competitive LandscapingGathering Marketing Intelligence & Competitive Landscaping
Gathering Marketing Intelligence & Competitive Landscaping
Laura Faulconer
 
Marketing Analysis
Marketing AnalysisMarketing Analysis
Marketing AnalysisChandra Marsono
 
Tcm step 1 technology analysis
Tcm step 1 technology analysisTcm step 1 technology analysis
Tcm step 1 technology analysis
Stephen Ong
 
Market & competitor analysis template in PPT
Market & competitor analysis template in PPTMarket & competitor analysis template in PPT
Market & competitor analysis template in PPT
Aurelien Domont, MBA
 
How to Conduct Competitive Analysis & SWOT
How to Conduct Competitive Analysis & SWOTHow to Conduct Competitive Analysis & SWOT
How to Conduct Competitive Analysis & SWOT
Dragana Djuricic Mendel, MBA, MCS
 
Market analysis
Market analysisMarket analysis
Market analysis
ARUNAYESUDAS
 
Market Analysis
Market AnalysisMarket Analysis
Market Analysis
Governance Learning Network®
 
Trade Fairs Effectiveness & Evaluations by Pakistan IT Companies – A Manageri...
Trade Fairs Effectiveness & Evaluations by Pakistan IT Companies – A Manageri...Trade Fairs Effectiveness & Evaluations by Pakistan IT Companies – A Manageri...
Trade Fairs Effectiveness & Evaluations by Pakistan IT Companies – A Manageri...
dano-30
 
Competitor-Analysis-Demo
Competitor-Analysis-DemoCompetitor-Analysis-Demo
Competitor-Analysis-DemoSasa Radjenovic
 
Lukasz Gogolewski | Business growth strategy
Lukasz Gogolewski | Business growth strategyLukasz Gogolewski | Business growth strategy
Lukasz Gogolewski | Business growth strategy
lukaszgogolewski1
 
Market analysis
Market analysisMarket analysis
Market analysis
Ahtezaz Parways
 
Market Entry & Expansion Strategies for Africa: Factors for Consideration - E...
Market Entry & Expansion Strategies for Africa: Factors for Consideration - E...Market Entry & Expansion Strategies for Africa: Factors for Consideration - E...
Market Entry & Expansion Strategies for Africa: Factors for Consideration - E...
Ruth Adams
 
Market research template
Market research templateMarket research template
Market research templateallanmerve
 
Oct 14 ecd lecture 3 scanning the business environment (student)
Oct 14 ecd lecture 3 scanning the business environment (student)Oct 14 ecd lecture 3 scanning the business environment (student)
Oct 14 ecd lecture 3 scanning the business environment (student)gayporkkkkkk
 
Tech connect fall 2014 technology commercialziation overview
Tech connect fall 2014 technology commercialziation overviewTech connect fall 2014 technology commercialziation overview
Tech connect fall 2014 technology commercialziation overview
Lassonde School of Engineering
 
Building The Outer Structure
Building The Outer StructureBuilding The Outer Structure
Building The Outer Structure
Rufus Simmons III,MBA
 
Conducting an industry analysis (1)
Conducting an industry analysis (1)Conducting an industry analysis (1)
Conducting an industry analysis (1)Anna Grace Pasamba
 
Banking & Financial Services Cases
Banking & Financial Services CasesBanking & Financial Services Cases
Banking & Financial Services Cases
UC STRATEGY (Universal Consulting India Pvt Ltd)
 
Strategic planning and technology management
Strategic planning and technology managementStrategic planning and technology management
Strategic planning and technology management
Self employed
 
Market opportunity analysis
Market opportunity analysisMarket opportunity analysis
Market opportunity analysis
gihan aboueleish
 
Complete guide to Building an Acquistion Strategy and Valuation Methodologies
Complete guide to Building an Acquistion Strategy and Valuation MethodologiesComplete guide to Building an Acquistion Strategy and Valuation Methodologies
Complete guide to Building an Acquistion Strategy and Valuation Methodologies
STRATICX
 
Strategic Marketing Plan for Swan Jet Adventures
Strategic Marketing Plan for Swan Jet AdventuresStrategic Marketing Plan for Swan Jet Adventures
Strategic Marketing Plan for Swan Jet AdventuresPatrick Gallagher
 
Pudumjee hygiene Tissues Business For B2 C
Pudumjee hygiene Tissues Business For B2 CPudumjee hygiene Tissues Business For B2 C
Pudumjee hygiene Tissues Business For B2 C
Pudumjee Hygiene Products Limited
 

More Related Content

What's hot

Tcm step 1 technology analysis
Tcm step 1 technology analysisTcm step 1 technology analysis
Tcm step 1 technology analysis
Stephen Ong
 
Market & competitor analysis template in PPT
Market & competitor analysis template in PPTMarket & competitor analysis template in PPT
Market & competitor analysis template in PPT
Aurelien Domont, MBA
 
How to Conduct Competitive Analysis & SWOT
How to Conduct Competitive Analysis & SWOTHow to Conduct Competitive Analysis & SWOT
How to Conduct Competitive Analysis & SWOT
Dragana Djuricic Mendel, MBA, MCS
 
Market analysis
Market analysisMarket analysis
Market analysis
ARUNAYESUDAS
 
Market Analysis
Market AnalysisMarket Analysis
Market Analysis
Governance Learning Network®
 
Trade Fairs Effectiveness & Evaluations by Pakistan IT Companies – A Manageri...
Trade Fairs Effectiveness & Evaluations by Pakistan IT Companies – A Manageri...Trade Fairs Effectiveness & Evaluations by Pakistan IT Companies – A Manageri...
Trade Fairs Effectiveness & Evaluations by Pakistan IT Companies – A Manageri...
dano-30
 
Competitor-Analysis-Demo
Competitor-Analysis-DemoCompetitor-Analysis-Demo
Competitor-Analysis-DemoSasa Radjenovic
 
Lukasz Gogolewski | Business growth strategy
Lukasz Gogolewski | Business growth strategyLukasz Gogolewski | Business growth strategy
Lukasz Gogolewski | Business growth strategy
lukaszgogolewski1
 
Market analysis
Market analysisMarket analysis
Market analysis
Ahtezaz Parways
 
Market Entry & Expansion Strategies for Africa: Factors for Consideration - E...
Market Entry & Expansion Strategies for Africa: Factors for Consideration - E...Market Entry & Expansion Strategies for Africa: Factors for Consideration - E...
Market Entry & Expansion Strategies for Africa: Factors for Consideration - E...
Ruth Adams
 
Market research template
Market research templateMarket research template
Market research templateallanmerve
 
Oct 14 ecd lecture 3 scanning the business environment (student)
Oct 14 ecd lecture 3 scanning the business environment (student)Oct 14 ecd lecture 3 scanning the business environment (student)
Oct 14 ecd lecture 3 scanning the business environment (student)gayporkkkkkk
 
Tech connect fall 2014 technology commercialziation overview
Tech connect fall 2014 technology commercialziation overviewTech connect fall 2014 technology commercialziation overview
Tech connect fall 2014 technology commercialziation overview
Lassonde School of Engineering
 
Building The Outer Structure
Building The Outer StructureBuilding The Outer Structure
Building The Outer Structure
Rufus Simmons III,MBA
 
Conducting an industry analysis (1)
Conducting an industry analysis (1)Conducting an industry analysis (1)
Conducting an industry analysis (1)Anna Grace Pasamba
 
Banking & Financial Services Cases
Banking & Financial Services CasesBanking & Financial Services Cases
Banking & Financial Services Cases
UC STRATEGY (Universal Consulting India Pvt Ltd)
 
Strategic planning and technology management
Strategic planning and technology managementStrategic planning and technology management
Strategic planning and technology management
Self employed
 
Market opportunity analysis
Market opportunity analysisMarket opportunity analysis
Market opportunity analysis
gihan aboueleish
 
Complete guide to Building an Acquistion Strategy and Valuation Methodologies
Complete guide to Building an Acquistion Strategy and Valuation MethodologiesComplete guide to Building an Acquistion Strategy and Valuation Methodologies
Complete guide to Building an Acquistion Strategy and Valuation Methodologies
STRATICX
 

What's hot (20)

Marketing Analysis
Marketing AnalysisMarketing Analysis
Marketing Analysis
 
Tcm step 1 technology analysis
Tcm step 1 technology analysisTcm step 1 technology analysis
Tcm step 1 technology analysis
 
Market & competitor analysis template in PPT
Market & competitor analysis template in PPTMarket & competitor analysis template in PPT
Market & competitor analysis template in PPT
 
How to Conduct Competitive Analysis & SWOT
How to Conduct Competitive Analysis & SWOTHow to Conduct Competitive Analysis & SWOT
How to Conduct Competitive Analysis & SWOT
 
Market analysis
Market analysisMarket analysis
Market analysis
 
Market Analysis
Market AnalysisMarket Analysis
Market Analysis
 
Trade Fairs Effectiveness & Evaluations by Pakistan IT Companies – A Manageri...
Trade Fairs Effectiveness & Evaluations by Pakistan IT Companies – A Manageri...Trade Fairs Effectiveness & Evaluations by Pakistan IT Companies – A Manageri...
Trade Fairs Effectiveness & Evaluations by Pakistan IT Companies – A Manageri...
 
Competitor-Analysis-Demo
Competitor-Analysis-DemoCompetitor-Analysis-Demo
Competitor-Analysis-Demo
 
Lukasz Gogolewski | Business growth strategy
Lukasz Gogolewski | Business growth strategyLukasz Gogolewski | Business growth strategy
Lukasz Gogolewski | Business growth strategy
 
Market analysis
Market analysisMarket analysis
Market analysis
 
Market Entry & Expansion Strategies for Africa: Factors for Consideration - E...
Market Entry & Expansion Strategies for Africa: Factors for Consideration - E...Market Entry & Expansion Strategies for Africa: Factors for Consideration - E...
Market Entry & Expansion Strategies for Africa: Factors for Consideration - E...
 
Market research template
Market research templateMarket research template
Market research template
 
Oct 14 ecd lecture 3 scanning the business environment (student)
Oct 14 ecd lecture 3 scanning the business environment (student)Oct 14 ecd lecture 3 scanning the business environment (student)
Oct 14 ecd lecture 3 scanning the business environment (student)
 
Tech connect fall 2014 technology commercialziation overview
Tech connect fall 2014 technology commercialziation overviewTech connect fall 2014 technology commercialziation overview
Tech connect fall 2014 technology commercialziation overview
 
Building The Outer Structure
Building The Outer StructureBuilding The Outer Structure
Building The Outer Structure
 
Conducting an industry analysis (1)
Conducting an industry analysis (1)Conducting an industry analysis (1)
Conducting an industry analysis (1)
 
Banking & Financial Services Cases
Banking & Financial Services CasesBanking & Financial Services Cases
Banking & Financial Services Cases
 
Strategic planning and technology management
Strategic planning and technology managementStrategic planning and technology management
Strategic planning and technology management
 
Market opportunity analysis
Market opportunity analysisMarket opportunity analysis
Market opportunity analysis
 
Complete guide to Building an Acquistion Strategy and Valuation Methodologies
Complete guide to Building an Acquistion Strategy and Valuation MethodologiesComplete guide to Building an Acquistion Strategy and Valuation Methodologies
Complete guide to Building an Acquistion Strategy and Valuation Methodologies
 

Viewers also liked

Strategic Marketing Plan for Swan Jet Adventures
Strategic Marketing Plan for Swan Jet AdventuresStrategic Marketing Plan for Swan Jet Adventures
Strategic Marketing Plan for Swan Jet AdventuresPatrick Gallagher
 
Pudumjee hygiene Tissues Business For B2 C
Pudumjee hygiene Tissues Business For B2 CPudumjee hygiene Tissues Business For B2 C
Pudumjee hygiene Tissues Business For B2 C
Pudumjee Hygiene Products Limited
 
2009 china microwaves strategy
2009 china microwaves strategy2009 china microwaves strategy
2009 china microwaves strategy
Navigate Consulting Australia Pty Ltd
 
Resonate - Presenting Stories That Transform Your Audience
Resonate - Presenting Stories That Transform Your AudienceResonate - Presenting Stories That Transform Your Audience
Resonate - Presenting Stories That Transform Your Audience
Navigate Consulting Australia Pty Ltd
 
Samsung's transparent and flexible display
Samsung's transparent and flexible displaySamsung's transparent and flexible display
Samsung's transparent and flexible display
Jeffrey Funk Business Models
 
Porter's Five Force Model and Value Chain of Lenovo
Porter's Five Force Model and Value Chain of LenovoPorter's Five Force Model and Value Chain of Lenovo
Porter's Five Force Model and Value Chain of Lenovo
farranadia91
 

Viewers also liked (6)

Strategic Marketing Plan for Swan Jet Adventures
Strategic Marketing Plan for Swan Jet AdventuresStrategic Marketing Plan for Swan Jet Adventures
Strategic Marketing Plan for Swan Jet Adventures
 
Pudumjee hygiene Tissues Business For B2 C
Pudumjee hygiene Tissues Business For B2 CPudumjee hygiene Tissues Business For B2 C
Pudumjee hygiene Tissues Business For B2 C
 
2009 china microwaves strategy
2009 china microwaves strategy2009 china microwaves strategy
2009 china microwaves strategy
 
Resonate - Presenting Stories That Transform Your Audience
Resonate - Presenting Stories That Transform Your AudienceResonate - Presenting Stories That Transform Your Audience
Resonate - Presenting Stories That Transform Your Audience
 
Samsung's transparent and flexible display
Samsung's transparent and flexible displaySamsung's transparent and flexible display
Samsung's transparent and flexible display
 
Porter's Five Force Model and Value Chain of Lenovo
Porter's Five Force Model and Value Chain of LenovoPorter's Five Force Model and Value Chain of Lenovo
Porter's Five Force Model and Value Chain of Lenovo
 

Similar to 2014-Navigate-Essentials Foundations of Market Entry Strategies

Assessment and commercialization of entrepreneurial opportunities
Assessment and commercialization of entrepreneurial opportunitiesAssessment and commercialization of entrepreneurial opportunities
Assessment and commercialization of entrepreneurial opportunities
Tecnológico de Monterrey
 
industry and competitor analysis ppt free
industry and competitor analysis ppt freeindustry and competitor analysis ppt free
industry and competitor analysis ppt free
20DCS054TufielGulzar
 
DesigningMarketStrategy v2
DesigningMarketStrategy v2DesigningMarketStrategy v2
DesigningMarketStrategy v2Nanci Vogtli
 
Target segmentation theory
Target segmentation theoryTarget segmentation theory
Target segmentation theory
Incubation & Industry
 
Customer success platforms market ppt
Customer success platforms market pptCustomer success platforms market ppt
Customer success platforms market ppt
DheerajPawar4
 
Customer success platforms market ppt
Customer success platforms market pptCustomer success platforms market ppt
Customer success platforms market ppt
DheerajPawar4
 
Education and learning analytics market vendors by size, share &amp; growth s...
Education and learning analytics market vendors by size, share &amp; growth s...Education and learning analytics market vendors by size, share &amp; growth s...
Education and learning analytics market vendors by size, share &amp; growth s...
DheerajPawar4
 
Education and learning analytics market is expected to grow $8.2 billion by 2024
Education and learning analytics market is expected to grow $8.2 billion by 2024Education and learning analytics market is expected to grow $8.2 billion by 2024
Education and learning analytics market is expected to grow $8.2 billion by 2024
DheerajPawar4
 
Education and learning analytics market is projected to register a moderate 2...
Education and learning analytics market is projected to register a moderate 2...Education and learning analytics market is projected to register a moderate 2...
Education and learning analytics market is projected to register a moderate 2...
DheerajPawar4
 
Business Plan.ppt
Business Plan.pptBusiness Plan.ppt
Business Plan.ppt
SomblingoLouiMark
 
Sample contents of a completed feasibility study
Sample contents of a completed feasibility studySample contents of a completed feasibility study
Sample contents of a completed feasibility studynazcats
 
2014 navigate-a guide to marketing planning
2014 navigate-a guide to marketing planning2014 navigate-a guide to marketing planning
2014 navigate-a guide to marketing planning
Navigate Consulting Australia Pty Ltd
 
408 Marketing Strategy Unit 1
408 Marketing Strategy Unit 1408 Marketing Strategy Unit 1
408 Marketing Strategy Unit 1
ashishjaswal
 
Course Learning OutcomesMarks 151. Demonstrate a solid.docx
Course Learning OutcomesMarks 151. Demonstrate a solid.docxCourse Learning OutcomesMarks 151. Demonstrate a solid.docx
Course Learning OutcomesMarks 151. Demonstrate a solid.docx
marilucorr
 
Marketing plan- NET DOWNLORD
Marketing plan- NET DOWNLORDMarketing plan- NET DOWNLORD
Marketing plan- NET DOWNLORDVaibhavi Dalvi
 
I UNIT.pptx sales and distribution management
I UNIT.pptx sales and distribution managementI UNIT.pptx sales and distribution management
I UNIT.pptx sales and distribution management
19UBCA020HARIHARANK
 
2 ba563_analyzing marketing opportunities
2 ba563_analyzing marketing opportunities 2 ba563_analyzing marketing opportunities
2 ba563_analyzing marketing opportunities
Ingrid Abella
 
2 ba563_analyzing marketing opportunities
2 ba563_analyzing marketing opportunities 2 ba563_analyzing marketing opportunities
2 ba563_analyzing marketing opportunities
Ingrid Abella
 
Segmentation, Value proposition & Go-to-market approach
Segmentation, Value proposition & Go-to-market approachSegmentation, Value proposition & Go-to-market approach
Segmentation, Value proposition & Go-to-market approach
Implement Consulting Group
 

Similar to 2014-Navigate-Essentials Foundations of Market Entry Strategies (20)

Assessment and commercialization of entrepreneurial opportunities
Assessment and commercialization of entrepreneurial opportunitiesAssessment and commercialization of entrepreneurial opportunities
Assessment and commercialization of entrepreneurial opportunities
 
industry and competitor analysis ppt free
industry and competitor analysis ppt freeindustry and competitor analysis ppt free
industry and competitor analysis ppt free
 
DesigningMarketStrategy v2
DesigningMarketStrategy v2DesigningMarketStrategy v2
DesigningMarketStrategy v2
 
Target segmentation theory
Target segmentation theoryTarget segmentation theory
Target segmentation theory
 
Customer success platforms market ppt
Customer success platforms market pptCustomer success platforms market ppt
Customer success platforms market ppt
 
Customer success platforms market ppt
Customer success platforms market pptCustomer success platforms market ppt
Customer success platforms market ppt
 
Education and learning analytics market vendors by size, share &amp; growth s...
Education and learning analytics market vendors by size, share &amp; growth s...Education and learning analytics market vendors by size, share &amp; growth s...
Education and learning analytics market vendors by size, share &amp; growth s...
 
Education and learning analytics market is expected to grow $8.2 billion by 2024
Education and learning analytics market is expected to grow $8.2 billion by 2024Education and learning analytics market is expected to grow $8.2 billion by 2024
Education and learning analytics market is expected to grow $8.2 billion by 2024
 
Education and learning analytics market is projected to register a moderate 2...
Education and learning analytics market is projected to register a moderate 2...Education and learning analytics market is projected to register a moderate 2...
Education and learning analytics market is projected to register a moderate 2...
 
Business Plan.ppt
Business Plan.pptBusiness Plan.ppt
Business Plan.ppt
 
Sample contents of a completed feasibility study
Sample contents of a completed feasibility studySample contents of a completed feasibility study
Sample contents of a completed feasibility study
 
2014 navigate-a guide to marketing planning
2014 navigate-a guide to marketing planning2014 navigate-a guide to marketing planning
2014 navigate-a guide to marketing planning
 
Market entry strategy
Market entry strategyMarket entry strategy
Market entry strategy
 
408 Marketing Strategy Unit 1
408 Marketing Strategy Unit 1408 Marketing Strategy Unit 1
408 Marketing Strategy Unit 1
 
Course Learning OutcomesMarks 151. Demonstrate a solid.docx
Course Learning OutcomesMarks 151. Demonstrate a solid.docxCourse Learning OutcomesMarks 151. Demonstrate a solid.docx
Course Learning OutcomesMarks 151. Demonstrate a solid.docx
 
Marketing plan- NET DOWNLORD
Marketing plan- NET DOWNLORDMarketing plan- NET DOWNLORD
Marketing plan- NET DOWNLORD
 
I UNIT.pptx sales and distribution management
I UNIT.pptx sales and distribution managementI UNIT.pptx sales and distribution management
I UNIT.pptx sales and distribution management
 
2 ba563_analyzing marketing opportunities
2 ba563_analyzing marketing opportunities 2 ba563_analyzing marketing opportunities
2 ba563_analyzing marketing opportunities
 
2 ba563_analyzing marketing opportunities
2 ba563_analyzing marketing opportunities 2 ba563_analyzing marketing opportunities
2 ba563_analyzing marketing opportunities
 
Segmentation, Value proposition & Go-to-market approach
Segmentation, Value proposition & Go-to-market approachSegmentation, Value proposition & Go-to-market approach
Segmentation, Value proposition & Go-to-market approach
 

More from Navigate Consulting Australia Pty Ltd

Writing a compelling business plan
Writing a compelling business planWriting a compelling business plan
Writing a compelling business plan
Navigate Consulting Australia Pty Ltd
 
2015 - Navigate Consulting-Project Management Masterclass
2015 - Navigate Consulting-Project Management Masterclass2015 - Navigate Consulting-Project Management Masterclass
2015 - Navigate Consulting-Project Management Masterclass
Navigate Consulting Australia Pty Ltd
 
2014-john gregg-WA Labor:"Fatally Flawed Domestic Violence in Western Australia"
2014-john gregg-WA Labor:"Fatally Flawed Domestic Violence in Western Australia"2014-john gregg-WA Labor:"Fatally Flawed Domestic Violence in Western Australia"
2014-john gregg-WA Labor:"Fatally Flawed Domestic Violence in Western Australia"
Navigate Consulting Australia Pty Ltd
 
2013 john gregg-navigate consult-trans cosmos-china mkt entry-call centre
2013 john gregg-navigate consult-trans cosmos-china mkt entry-call centre2013 john gregg-navigate consult-trans cosmos-china mkt entry-call centre
2013 john gregg-navigate consult-trans cosmos-china mkt entry-call centre
Navigate Consulting Australia Pty Ltd
 
2009 john gregg-monitor-china-medical devices-risks & rewards
2009 john gregg-monitor-china-medical devices-risks & rewards2009 john gregg-monitor-china-medical devices-risks & rewards
2009 john gregg-monitor-china-medical devices-risks & rewards
Navigate Consulting Australia Pty Ltd
 
2010 monitor-john gregg-tc logistics strategy
2010 monitor-john gregg-tc logistics strategy2010 monitor-john gregg-tc logistics strategy
2010 monitor-john gregg-tc logistics strategy
Navigate Consulting Australia Pty Ltd
 
2007 monitor-mulino bianco-us-market_entry
2007 monitor-mulino bianco-us-market_entry2007 monitor-mulino bianco-us-market_entry
2007 monitor-mulino bianco-us-market_entry
Navigate Consulting Australia Pty Ltd
 
2008 monitor-the bank-of_new_york-_re-branding
2008 monitor-the bank-of_new_york-_re-branding2008 monitor-the bank-of_new_york-_re-branding
2008 monitor-the bank-of_new_york-_re-branding
Navigate Consulting Australia Pty Ltd
 
2007 monitor-club med-world_wide_
2007 monitor-club med-world_wide_2007 monitor-club med-world_wide_
2007 monitor-club med-world_wide_
Navigate Consulting Australia Pty Ltd
 
2010 navigate-university branding-_rmit_case_study
2010 navigate-university branding-_rmit_case_study2010 navigate-university branding-_rmit_case_study
2010 navigate-university branding-_rmit_case_study
Navigate Consulting Australia Pty Ltd
 
2011 navigate-dairy indust-global-fact_base
2011 navigate-dairy indust-global-fact_base2011 navigate-dairy indust-global-fact_base
2011 navigate-dairy indust-global-fact_base
Navigate Consulting Australia Pty Ltd
 
2013 asia pacific-global_hotel_chain_growth_strategy
2013 asia pacific-global_hotel_chain_growth_strategy2013 asia pacific-global_hotel_chain_growth_strategy
2013 asia pacific-global_hotel_chain_growth_strategy
Navigate Consulting Australia Pty Ltd
 
2013- multiplying the contribution of chinese tourism to qld
2013- multiplying the contribution of chinese tourism to qld2013- multiplying the contribution of chinese tourism to qld
2013- multiplying the contribution of chinese tourism to qld
Navigate Consulting Australia Pty Ltd
 
2011 spend reduction guide-masterclass
2011 spend reduction guide-masterclass2011 spend reduction guide-masterclass
2011 spend reduction guide-masterclass
Navigate Consulting Australia Pty Ltd
 

More from Navigate Consulting Australia Pty Ltd (20)

Writing a compelling business plan
Writing a compelling business planWriting a compelling business plan
Writing a compelling business plan
 
Bristol Myers Squibb China
Bristol Myers Squibb ChinaBristol Myers Squibb China
Bristol Myers Squibb China
 
LVMH-Modern Premium Brands
LVMH-Modern Premium BrandsLVMH-Modern Premium Brands
LVMH-Modern Premium Brands
 
Tourism Australia-Business Events Strategy
Tourism Australia-Business Events StrategyTourism Australia-Business Events Strategy
Tourism Australia-Business Events Strategy
 
APG Silver Award-Toyota Landcruiser
APG Silver Award-Toyota LandcruiserAPG Silver Award-Toyota Landcruiser
APG Silver Award-Toyota Landcruiser
 
Corporate Cost Reduction
Corporate Cost ReductionCorporate Cost Reduction
Corporate Cost Reduction
 
2015 - Navigate Consulting-Project Management Masterclass
2015 - Navigate Consulting-Project Management Masterclass2015 - Navigate Consulting-Project Management Masterclass
2015 - Navigate Consulting-Project Management Masterclass
 
2014-john gregg-WA Labor:"Fatally Flawed Domestic Violence in Western Australia"
2014-john gregg-WA Labor:"Fatally Flawed Domestic Violence in Western Australia"2014-john gregg-WA Labor:"Fatally Flawed Domestic Violence in Western Australia"
2014-john gregg-WA Labor:"Fatally Flawed Domestic Violence in Western Australia"
 
2013 john gregg-navigate consult-trans cosmos-china mkt entry-call centre
2013 john gregg-navigate consult-trans cosmos-china mkt entry-call centre2013 john gregg-navigate consult-trans cosmos-china mkt entry-call centre
2013 john gregg-navigate consult-trans cosmos-china mkt entry-call centre
 
2015 john gregg-navigate-menopause mkt research australia
2015 john gregg-navigate-menopause mkt research australia2015 john gregg-navigate-menopause mkt research australia
2015 john gregg-navigate-menopause mkt research australia
 
2009 john gregg-monitor-china-medical devices-risks & rewards
2009 john gregg-monitor-china-medical devices-risks & rewards2009 john gregg-monitor-china-medical devices-risks & rewards
2009 john gregg-monitor-china-medical devices-risks & rewards
 
2010 monitor-john gregg-tc logistics strategy
2010 monitor-john gregg-tc logistics strategy2010 monitor-john gregg-tc logistics strategy
2010 monitor-john gregg-tc logistics strategy
 
2007 monitor-mulino bianco-us-market_entry
2007 monitor-mulino bianco-us-market_entry2007 monitor-mulino bianco-us-market_entry
2007 monitor-mulino bianco-us-market_entry
 
2008 monitor-the bank-of_new_york-_re-branding
2008 monitor-the bank-of_new_york-_re-branding2008 monitor-the bank-of_new_york-_re-branding
2008 monitor-the bank-of_new_york-_re-branding
 
2007 monitor-club med-world_wide_
2007 monitor-club med-world_wide_2007 monitor-club med-world_wide_
2007 monitor-club med-world_wide_
 
2010 navigate-university branding-_rmit_case_study
2010 navigate-university branding-_rmit_case_study2010 navigate-university branding-_rmit_case_study
2010 navigate-university branding-_rmit_case_study
 
2011 navigate-dairy indust-global-fact_base
2011 navigate-dairy indust-global-fact_base2011 navigate-dairy indust-global-fact_base
2011 navigate-dairy indust-global-fact_base
 
2013 asia pacific-global_hotel_chain_growth_strategy
2013 asia pacific-global_hotel_chain_growth_strategy2013 asia pacific-global_hotel_chain_growth_strategy
2013 asia pacific-global_hotel_chain_growth_strategy
 
2013- multiplying the contribution of chinese tourism to qld
2013- multiplying the contribution of chinese tourism to qld2013- multiplying the contribution of chinese tourism to qld
2013- multiplying the contribution of chinese tourism to qld
 
2011 spend reduction guide-masterclass
2011 spend reduction guide-masterclass2011 spend reduction guide-masterclass
2011 spend reduction guide-masterclass
 

Recently uploaded

AI-Powered Personalization: Principles, Use Cases, and Its Impact on CRO
AI-Powered Personalization: Principles, Use Cases, and Its Impact on CROAI-Powered Personalization: Principles, Use Cases, and Its Impact on CRO
AI-Powered Personalization: Principles, Use Cases, and Its Impact on CRO
VWO
 
Offissa Dizayn - Otel, Kafe, Restoran Kataloqu_240603_011042.pdf
Offissa Dizayn - Otel, Kafe, Restoran Kataloqu_240603_011042.pdfOffissa Dizayn - Otel, Kafe, Restoran Kataloqu_240603_011042.pdf
Offissa Dizayn - Otel, Kafe, Restoran Kataloqu_240603_011042.pdf
offisadizayn
 
The Old Oak - Press Kit - Cannes Film Festival 2023
The Old Oak - Press Kit - Cannes Film Festival 2023The Old Oak - Press Kit - Cannes Film Festival 2023
The Old Oak - Press Kit - Cannes Film Festival 2023
Pascal Fintoni
 
Your Path to Profits - The Game-Changing Power of a Marketing OS for Your Bus...
Your Path to Profits - The Game-Changing Power of a Marketing OS for Your Bus...Your Path to Profits - The Game-Changing Power of a Marketing OS for Your Bus...
Your Path to Profits - The Game-Changing Power of a Marketing OS for Your Bus...
DigiMarCon - Digital Marketing, Media and Advertising Conferences & Exhibitions
 
Is AI-Generated Content the Future of Content Creation?
Is AI-Generated Content the Future of Content Creation?Is AI-Generated Content the Future of Content Creation?
Is AI-Generated Content the Future of Content Creation?
Cut-the-SaaS
 
The New Era Of SEO - How AI Has Changed SEO Forever - Danny Leibrandt
The New Era Of SEO - How AI Has Changed SEO Forever - Danny LeibrandtThe New Era Of SEO - How AI Has Changed SEO Forever - Danny Leibrandt
The New Era Of SEO - How AI Has Changed SEO Forever - Danny Leibrandt
DigiMarCon - Digital Marketing, Media and Advertising Conferences & Exhibitions
 
Core Web Vitals SEO Workshop - improve your performance [pdf]
Core Web Vitals SEO Workshop - improve your performance [pdf]Core Web Vitals SEO Workshop - improve your performance [pdf]
Core Web Vitals SEO Workshop - improve your performance [pdf]
Peter Mead
 
May 2024 - VBOUT Partners Meeting Group Session
May 2024 - VBOUT Partners Meeting Group SessionMay 2024 - VBOUT Partners Meeting Group Session
May 2024 - VBOUT Partners Meeting Group Session
Vbout.com
 
Digital Marketing Training In Bangalore
Digital Marketing Training In BangaloreDigital Marketing Training In Bangalore
Digital Marketing Training In Bangalore
syedasifsyed46
 
Mastering Multi-Touchpoint Content Strategy: Navigate Fragmented User Journeys
Mastering Multi-Touchpoint Content Strategy: Navigate Fragmented User JourneysMastering Multi-Touchpoint Content Strategy: Navigate Fragmented User Journeys
Mastering Multi-Touchpoint Content Strategy: Navigate Fragmented User Journeys
Search Engine Journal
 
How to Use AI to Write a High-Quality Article that Ranks
How to Use AI to Write a High-Quality Article that RanksHow to Use AI to Write a High-Quality Article that Ranks
How to Use AI to Write a High-Quality Article that Ranks
minatamang0021
 
Email Marketing Master Class - Chris Ferris
Email Marketing Master Class - Chris FerrisEmail Marketing Master Class - Chris Ferris
Email Marketing Master Class - Chris Ferris
DigiMarCon - Digital Marketing, Media and Advertising Conferences & Exhibitions
 
Top 3 Ways to Align Sales and Marketing Teams for Rapid Growth
Top 3 Ways to Align Sales and Marketing Teams for Rapid GrowthTop 3 Ways to Align Sales and Marketing Teams for Rapid Growth
Top 3 Ways to Align Sales and Marketing Teams for Rapid Growth
Demandbase
 
SEO Master Class - Steve Wiideman, Wiideman Consulting Group
SEO Master Class - Steve Wiideman, Wiideman Consulting GroupSEO Master Class - Steve Wiideman, Wiideman Consulting Group
SEO Master Class - Steve Wiideman, Wiideman Consulting Group
DigiMarCon - Digital Marketing, Media and Advertising Conferences & Exhibitions
 
ThinkNow 2024 Consumer Financial Wellness Report
ThinkNow 2024 Consumer Financial Wellness ReportThinkNow 2024 Consumer Financial Wellness Report
ThinkNow 2024 Consumer Financial Wellness Report
ThinkNow
 
How to Run Landing Page Tests On and Off Paid Social Platforms
How to Run Landing Page Tests On and Off Paid Social PlatformsHow to Run Landing Page Tests On and Off Paid Social Platforms
How to Run Landing Page Tests On and Off Paid Social Platforms
VWO
 
Unlocking Everyday Narratives: The Power of Storytelling in Marketing - Chad...
Unlocking Everyday Narratives: The Power of Storytelling in Marketing - Chad...Unlocking Everyday Narratives: The Power of Storytelling in Marketing - Chad...
Unlocking Everyday Narratives: The Power of Storytelling in Marketing - Chad...
DigiMarCon - Digital Marketing, Media and Advertising Conferences & Exhibitions
 
BLOOM_May2024. Balmer Lawrie Online Monthly Bulletin
BLOOM_May2024. Balmer Lawrie Online Monthly BulletinBLOOM_May2024. Balmer Lawrie Online Monthly Bulletin
BLOOM_May2024. Balmer Lawrie Online Monthly Bulletin
BalmerLawrie
 
Turn Digital Reputation Threats into Offense Tactics - Daniel Lemin
Turn Digital Reputation Threats into Offense Tactics - Daniel LeminTurn Digital Reputation Threats into Offense Tactics - Daniel Lemin
Turn Digital Reputation Threats into Offense Tactics - Daniel Lemin
DigiMarCon - Digital Marketing, Media and Advertising Conferences & Exhibitions
 
Monthly Social Media News Update May 2024
Monthly Social Media News Update May 2024Monthly Social Media News Update May 2024
Monthly Social Media News Update May 2024
Andy Lambert
 

Recently uploaded (20)

AI-Powered Personalization: Principles, Use Cases, and Its Impact on CRO
AI-Powered Personalization: Principles, Use Cases, and Its Impact on CROAI-Powered Personalization: Principles, Use Cases, and Its Impact on CRO
AI-Powered Personalization: Principles, Use Cases, and Its Impact on CRO
 
Offissa Dizayn - Otel, Kafe, Restoran Kataloqu_240603_011042.pdf
Offissa Dizayn - Otel, Kafe, Restoran Kataloqu_240603_011042.pdfOffissa Dizayn - Otel, Kafe, Restoran Kataloqu_240603_011042.pdf
Offissa Dizayn - Otel, Kafe, Restoran Kataloqu_240603_011042.pdf
 
The Old Oak - Press Kit - Cannes Film Festival 2023
The Old Oak - Press Kit - Cannes Film Festival 2023The Old Oak - Press Kit - Cannes Film Festival 2023
The Old Oak - Press Kit - Cannes Film Festival 2023
 
Your Path to Profits - The Game-Changing Power of a Marketing OS for Your Bus...
Your Path to Profits - The Game-Changing Power of a Marketing OS for Your Bus...Your Path to Profits - The Game-Changing Power of a Marketing OS for Your Bus...
Your Path to Profits - The Game-Changing Power of a Marketing OS for Your Bus...
 
Is AI-Generated Content the Future of Content Creation?
Is AI-Generated Content the Future of Content Creation?Is AI-Generated Content the Future of Content Creation?
Is AI-Generated Content the Future of Content Creation?
 
The New Era Of SEO - How AI Has Changed SEO Forever - Danny Leibrandt
The New Era Of SEO - How AI Has Changed SEO Forever - Danny LeibrandtThe New Era Of SEO - How AI Has Changed SEO Forever - Danny Leibrandt
The New Era Of SEO - How AI Has Changed SEO Forever - Danny Leibrandt
 
Core Web Vitals SEO Workshop - improve your performance [pdf]
Core Web Vitals SEO Workshop - improve your performance [pdf]Core Web Vitals SEO Workshop - improve your performance [pdf]
Core Web Vitals SEO Workshop - improve your performance [pdf]
 
May 2024 - VBOUT Partners Meeting Group Session
May 2024 - VBOUT Partners Meeting Group SessionMay 2024 - VBOUT Partners Meeting Group Session
May 2024 - VBOUT Partners Meeting Group Session
 
Digital Marketing Training In Bangalore
Digital Marketing Training In BangaloreDigital Marketing Training In Bangalore
Digital Marketing Training In Bangalore
 
Mastering Multi-Touchpoint Content Strategy: Navigate Fragmented User Journeys
Mastering Multi-Touchpoint Content Strategy: Navigate Fragmented User JourneysMastering Multi-Touchpoint Content Strategy: Navigate Fragmented User Journeys
Mastering Multi-Touchpoint Content Strategy: Navigate Fragmented User Journeys
 
How to Use AI to Write a High-Quality Article that Ranks
How to Use AI to Write a High-Quality Article that RanksHow to Use AI to Write a High-Quality Article that Ranks
How to Use AI to Write a High-Quality Article that Ranks
 
Email Marketing Master Class - Chris Ferris
Email Marketing Master Class - Chris FerrisEmail Marketing Master Class - Chris Ferris
Email Marketing Master Class - Chris Ferris
 
Top 3 Ways to Align Sales and Marketing Teams for Rapid Growth
Top 3 Ways to Align Sales and Marketing Teams for Rapid GrowthTop 3 Ways to Align Sales and Marketing Teams for Rapid Growth
Top 3 Ways to Align Sales and Marketing Teams for Rapid Growth
 
SEO Master Class - Steve Wiideman, Wiideman Consulting Group
SEO Master Class - Steve Wiideman, Wiideman Consulting GroupSEO Master Class - Steve Wiideman, Wiideman Consulting Group
SEO Master Class - Steve Wiideman, Wiideman Consulting Group
 
ThinkNow 2024 Consumer Financial Wellness Report
ThinkNow 2024 Consumer Financial Wellness ReportThinkNow 2024 Consumer Financial Wellness Report
ThinkNow 2024 Consumer Financial Wellness Report
 
How to Run Landing Page Tests On and Off Paid Social Platforms
How to Run Landing Page Tests On and Off Paid Social PlatformsHow to Run Landing Page Tests On and Off Paid Social Platforms
How to Run Landing Page Tests On and Off Paid Social Platforms
 
Unlocking Everyday Narratives: The Power of Storytelling in Marketing - Chad...
Unlocking Everyday Narratives: The Power of Storytelling in Marketing - Chad...Unlocking Everyday Narratives: The Power of Storytelling in Marketing - Chad...
Unlocking Everyday Narratives: The Power of Storytelling in Marketing - Chad...
 
BLOOM_May2024. Balmer Lawrie Online Monthly Bulletin
BLOOM_May2024. Balmer Lawrie Online Monthly BulletinBLOOM_May2024. Balmer Lawrie Online Monthly Bulletin
BLOOM_May2024. Balmer Lawrie Online Monthly Bulletin
 
Turn Digital Reputation Threats into Offense Tactics - Daniel Lemin
Turn Digital Reputation Threats into Offense Tactics - Daniel LeminTurn Digital Reputation Threats into Offense Tactics - Daniel Lemin
Turn Digital Reputation Threats into Offense Tactics - Daniel Lemin
 
Monthly Social Media News Update May 2024
Monthly Social Media News Update May 2024Monthly Social Media News Update May 2024
Monthly Social Media News Update May 2024
 

2014-Navigate-Essentials Foundations of Market Entry Strategies

  • 1. Economics, Planning & Development Community Research & Strategy Building a Strategic Foundation for New Market Entry August, 6th – 7th, 2014 University of Western Australia Executive MBA – Winter Workshop Series Two Day Seminar Information & Knowledge Management Business Strategy & Finance Design, Marketing & Advertising John Gregg Principal Navigate Consulting in a Changing A leading Australian consulting group recognised through the success of our clients
  • 2. Table of Contents • Agenda and Introduction Pages 3-4 • Overview of the Strategic Pillars underpinning market analysis Pages 6-9 • Pillar 1 – Understanding the Industry Structure Pages 12 – 54 • Pillar 2 – Understanding Customer Value and Who to Target Pages 55 – 110 • Pillar 3 – Identifying and Understanding Your Competitors Pages 111 – 128 • Pillar 4 – Understanding you Own Business Capabilities Pages 129 – 150 • A Brief Introduction to the Basics of a Market Entry Strategy Pages 151 - 158 2
  • 3. Agenda for This Weekend’s Workshop • Introduction to the course • Quick brief on the importance of developing a strategic foundation to prepare for entering a new market • Overview of the four strategic foundation components • Deep dive into each of the steps 1. Industry Structure Analysis 2. Customer Identification and Value 3. Competitor Identification 4. Our Business Capabilities • Brief introduction to the market entry strategy 3
  • 4. Why does it matter? • In a globalised and internationally competitive world, entering new markets is often critical to the continued growth of firms. • But before developing a market entry plan a comprehensive strategic knowledge base of all relevant aspects of the market must be gathered. • This knowledge base becomes the foundation which should guide and help shape the market entry strategy. • The foundation comprises four key pillars; 1. The industry structure 2. The customer target and their value 3. A full audit of the existing market competitors 4. A fearless examination of your business capabilities and fit with the dynamics of the market. • Our objective today and tomorrow is to learn about these steps in an interactive ways, we’ll be doing group exercises, problems solving tasks and running analysis on real case studies to help us assimilate the ideas 3
  • 6. 6 The Four Pillars of a Solid Strategic foundation to Guide Market Entry Strategies • To capture basic snapshot of industry • To identify paradigm shifts and external trends • To identify a company’s core competencies and gaps • To understand a company’s competitive advantage and sustainability 1. Strategic foundation Industry structure Customer value Competitor Identification Business capabilities • To identify customer needs and company role in their fulfillment • To prioritize customer requirements and competitive markets • To understand differentiating qualities of competitor portfolios • To predict competitor moves and market positions Developing a comprehensive understanding of the structure of and industry in a new market is often determine whether market entry strategies succeed or rail. The four pillars
  • 7. 7 Strategic questions answeredRelated tools 1. Industry structure key concepts and tools Industry structure Customer value Business capabilities Competitor Identification 1. Market overview • What is the forecasted size and growth of the market? • How attractive are the major market segments? • What returns should I expect? 2. Value chain analysis • What are the components of the full product value chain? • What segments of the value chain drive competitive advantage? • Which segments provide opportunities for performance improvement and competitive advantage? 3. Profit pools • What are the main drivers of profitability in the industry? • How is this shifting? 4. Technology overview and evolution • How is new technology changing industry dynamics? • Are there emerging applications of technology from other industries/markets 6. Regulatory, geo-political and globalization trends • Are there any emerging regulatory, geo-political or globalization trends that could significantly change the “rules of the game”? 5. New threat assessment • Are there any emerging macro-trends that could significantly change the “rules of the game”? 6
  • 8. 8 Industry structure Customer value Business capabilities Competitor Identification 2. Customer value key concepts and tools Strategic questions answeredRelated tools 2. Assessment of customer segment attractiveness • What are the most attractive customer segments for the business? • Which segments fit most clearly with business core competencies? • Which segments are most profitable to serve? 5. Channel segmentation and attractiveness • What are the most attractive channels for the business? • Which channels fit most clearly with business core competencies? • Which channels are most profitable to use? 4. Share of wallet • What is the full portfolio of customer needs? • How does the business fit within a customer segment’s spending habits? 1. Customer segmentation • What customers constitute the market, and what are their differentiating needs? • How do customers segment according to their needs and behaviors? • How do customers segment according to observable characteristics (e.g. demographic)? 3. Customer needs and attitudes • What needs drive customer requirements and satisfaction? • How well does the business (and its competitors) fulfill these needs? 6. Customer loyalty • How “loyal” are the business’ customer segments? • What advantages/disadvantages does customer loyalty have on the business? 7
  • 9. 9 3. Competitive position tools Industry structure Customer value Business capabilities Competitor Identification Strategic questions answeredRelated tools 1. Competitor portfolio overview • What do competitors offer? • How does this compare to your business’ portfolio/offerings? 3. Return/relative market share (RMS) • What is the industry relationship between return and market share? • How do competitors perform according to this relationship? 4. Competitor investment strategy and technology assessment • On what market segments or products are competitors focusing investments and where do they expect future growth? • What new technologies are competitors developing, and how will this be leveraged across product lines and their portfolios? • How do likely competitor actions interact with your business’ strategy? 2. Competitor profitability assessment • How profitable are competitors, and what are their main profit drivers? • Competitor strengths, weaknesses, opportunities and threats 8
  • 10. 1 0 4. Business capabilities tools Industry structure Customer value Competitor Identification Business capabilities Strategic questions answeredRelated tools 3. Capabilities assessment • What are the business’ capabilities, strengths and key gaps, especially across technology, personnel and financial strength? • How does the business perform in meeting the industries’ required competencies across the value chain? 2. Core capabilities definitions • What are the key elements of your industry’s value chain? • What special skills or technologies could the business use to drive or create differential customer value? 1. Relative cost position (RCP) • How does business cost align with the industry/market? • Does the business’ profitability/cost position fall within the industry’s norms? • What is the full potential cost position? 9
  • 11. 1 1 After completing the industry analysis, Strategic decisions on growth must be made 1. Strategic foundation Industry structure Customer value Competitive position 2. Strategic decisions Insights for business decisions Where should I compete? How do I win? - What businesses, segments, geographies? - What is my core(s)? - What drives profit? - How and where do I differentially invest/divest? Business capabilities 10
  • 13. 13 1. Industry structure Strategic foundation Industry structure Customer value Business capabilitiesCompetitive position • To capture basic snapshot of industry • To identify paradigm shifts and external trends • To identify a company’s core competencies and gaps • To understand a company’s competitive advantage and sustainability • understand differentiating qualities of competitor portfolios • To predict competitor moves and market positions
  • 14. 14 Strategic questions answeredRelated tools Industry structure tools Industry structure Customer value Business capabilities Competitor Identification 1. Market overview • What is the forecasted size and growth of the market? • How attractive are the major market segments? • What returns should I expect? 2. Value chain analysis • What are the components of the full product value chain? • What segments of the value chain drive competitive advantage? • Which segments provide opportunities for performance improvement? 3. Profit pools • What are the main drivers of profitability in the industry? • How is this shifting? 4. Technology overview and evolution • How is new technology changing industry dynamics? • Are there emerging applications of technology from other industries/markets? 6. Regulatory, geo-political and globalization trends • Are there any emerging regulatory, geo-political or globalization trends that could significantly change the “rules of the game”? 5. New threat assessment • Are there any emerging trends that could significantly change the “rules of the game”?
  • 15. 15 A market can be segmented many ways Customer ProductTechnology ChannelGeography What is the most important way to segment your business? To what level should you segment?
  • 16. 16 Source: Medical and Healthcare Marketplace Guide; Analyst Reports Australian Medical Device Market Market maps show the size of market segments, market share and level of fragmentation It is important to first cut your market at a high level. If you are the #1 or #2 player in your market, how can you more largely cut the boundaries of your market so you only have 5-10% market share? By starting at a high level, you are able to see where some potential adjacent or lateral opportunities could exist.
  • 17. 17 Mapping regional market segments can also uncover distinct differences Regional subtleties can help determine where you should prioritize potential expansion and/or where to potentially divest. Many times the differences may result from different regional “tastes.” other times regulatory and/or other government issues can drive the differences. Source: Jaako Pöyry; ABC estimates 2011
  • 18. 18 Market sizing procedures may vary based on how well an industry is documented Market sizing objectives: Identify growth and size of defined market to establish target company/business growth potential and market share Illustrate company/business position relative to competitors within and across segments Identify key events which influence market size Poorly Documented • Market size information is usually publicly available • Examples: - Government purchases - Consumer products - Housewares - Automobile industry • Market size information needs to be constructed • Examples: - Unique goods (e.g., weather forecasting software) - Handicrafts • Get to the central data source quickly • Look at the “source’s source” - Talk to industry associations • Be willing to make educated assumptions • Look for proxies to represent missing data • Develop creative approaches and calculations to obtain market size Well Documented
  • 19. 19 Strategic questions answeredRelated tools Industry structure tools Industry structure Customer value Business capabilities Competitor Identification 1. Market overview • What is the forecasted size and growth of the market? • How attractive are the major market segments? • What returns should I expect? 2. Value chain analysis • What are the components of the full product value chain? • What segments of the value chain drive competitive advantage? • Which segments provide opportunities for performance improvement? 3. Profit pools • What are the main drivers of profitability in the industry? • How is this shifting? 4. Technology overview and evolution • How is new technology changing industry dynamics? • Are there emerging applications of technology from other industries/markets? 6. Regulatory, geo-political and globalization trends • Are there any emerging regulatory, geo-political or globalization trends that could significantly change the “rules of the game”? 5. New threat assessment • Are there any emerging trends that could significantly change the “rules of the game”?
  • 20. 20  Value chain analysis provides a systematic method for disaggregating a firm or industry into its major discrete activities to understand sources of competitive advantage • Value chain analysis can help identify opportunities and clarify business boundaries - Opportunities for cost advantage/improve performance - Where to increase competitive differentiation - Distinct boundaries across business (or industry) processes - Clear framework to evaluate and prioritize activities on which to focus Value Chain analysis Equipment Design Install Operate Service Monitor Successively finer disaggregations of activities can expose differences important to competitive advantage
  • 21. 21 Distribution/ Outbound Logistics Service Value chain scope depends largely on the purpose for which it is being used Firm value chain: Major activity value chain: Tech., R&D Purchasing/ Inbound Logistics Manu- facturing/ Operations Marketing & Sales Conversion Final Assembly Quality Assurance Packaging  Cost analysis  Process re- engineering  Cost analysis System or industry value chain: Inputs (Supplier) Conversion (Manufacturer) Distribution (Distributor/ Retailer) Consumption (End-User)  Potential supplier identification Sample Use Material Preparation
  • 22. 22 When to use value chain analysis at different levels Cost analysis Process re-engineering Business definition Industry collaboration/ Identifying potential suppliers Competitive positioning Map Major Activities Map Sub-Activities Always Sometimes Unlikely
  • 23. 23 Disaggregating the chain helps you decide where you should or need to play Description: Importance of local market share: Revenue stream: Compe- tencies: Influence on buying decision: Spec systems for larger projects ($100K+) Medium One time Engineering and design High Install and commission equipment High One time Technician Low Merge databases of disparate systems Low One time Computer programming Low Mainte nance On going Medium Monitor system On going Manufacture and sell hardware and software Manuf: low Dealer: high (except nat’l accounts) One time + upgrades and service R&D, manufacturing, distribution Low Install Product (Equipment and software) Database integration Service Monitor Software onlyEquip – ongoing Consulting/ Engineering AssessAssess Plan Specify Support, upgrade Low High Low High Low On-site Central station Tech. Computer programm ing Guard Operator Security Systems Several chain sections (Consulting/Engineering, Service and Monitor) have been further sub-divided To build long-term relationships and revenue streams, the business may want to consider participating in the servicing and monitoring components of the chain
  • 24. 24 Strategic questions answeredRelated tools Industry structure tools Industry structure Customer value Business capabilities Competitor Identification 1. Market overview • What is the forecasted size and growth of the market? • How attractive are the major market segments? • What returns should I expect? 2. Value chain analysis • What are the components of the full product value chain? • What segments of the value chain drive competitive advantage? • Which segments provide opportunities for performance improvement? 3. Profit pools • What are the main drivers of profitability in the industry? • How is this shifting? 4. Technology overview and evolution • How is new technology changing industry dynamics? • Are there emerging applications of technology from other industries/markets? 6. Regulatory, geo-political and globalization trends • Are there any emerging regulatory, geo-political or globalization trends that could significantly change the “rules of the game”? 5. New threat assessment • Are there any emerging trends that could significantly change the “rules of the game”?
  • 25. 25 Profit pools learning objectives • Learn the profit pool concept and how you can use profit pools to better understand your industry and where to compete • Learn the basic steps on how to create a profit pool
  • 26. 26  Accounting profit - business earnings as formally reported - Most commonly used as the basic profit measure - Examples include Net Income or Earnings per Share calculations  Return on investment - business earnings after taking the cost of capital into account. Commonly used measures include: - Return on Capital (book value) - Return on Invested Capital (book value) - Return on Assets • Cash-flow contribution - business earnings before taking fixed-asset and capital costs into account (e.g. Earnings before interest, tax, depreciation and amortization – EBITDA) - Used as a basis for decision-making in mature, high fixed cost and cyclical industries “Profit” can be defined in several ways Be aware of differences in accounting standards when evaluating companies with profits spanning different industries
  • 27. 27 Mapping a profit pool involves four steps 1. Define the pool 2. Determine the size of the pool 3. Estimate the distribution of profits 4. Reconcile the estimates Tasks: • Identify which value chain activities influence the industry’s ability to generate current and future profits • Develop a baseline estimate of the profits generated by all profit pool activities within the value chain • Determine the profits generated by each activity within the value chain • Compare the results previous two steps and reconcile numbers • List of value chain activities in profit pool (in sequential order) • Estimate of total profit pools (may be a range) • Point estimates of profit for each value chain activity • Final estimates of activity and total pool profits Output:
  • 28. 28 Profit pool “choke points” control profit flow Examples: Computer industry example Impact: •Intel’s dominance of microprocessors •Establishment of an industry-wide standard that all companies must now follow •Microsoft’s dominance of Windows •Consolidation of control over the customer interface Micro- processors Other Components Personal Computers Software Peripherals Services Control of a choke point can influence the distribution of profits among competitors and more distant value-chain participants
  • 29. 29 Three ways to use profit pools •“Take a Truck”: identified a large untapped source of profit in the low margin truck rental business - Seized first mover advantage - Entered accessory business at a low cost - Reduced prices (and profits) in core truck rental business to attract customers for higher margin accessory business Identify new sources of profit •Dell: evaluates which customers to pursue and which channels to use - With direct sales, Dell splits what would be dealer’s profits with itself and customers through lower prices - Regular customer re-segmentation identifies most profitable customers, allowing Dell to react quickly to new profit sources Develop distribution strategy Guide pricing, product and operating decisions •Lion Nathan in Australia: recognized industry’s profit pool driven by premium beer - Increased marketing of premium brands - Vertically integrated into can production, thereby raising competitive barriers around the pool by cutting manufacturing and distribution cost Seeing what others do not will best prepare you to capture a disproportionate share of industry profits
  • 30. 30 Tips for success Take a broad view of the value chain Examine the industry from different views, building estimates from multiple perspectives Prioritize focus to look at the largest and easiest components first Look at relevant internal and external comparables Think creatively Creating profit pools can be a difficult exercise, but generates highly valuable insights Key Activities in doing profit pools: •Lay out the key supplier and buyer elements of the value chain •Find overall revenue (i.e. market size) for each of the supplier and buyer side elements •Find an average industry profit margin for each of the supplier and buyer side elements
  • 31. 31 Strategic questions answeredRelated tools Industry structure tools Industry structure Customer value Business capabilities Competitor Identification 1. Market overview • What is the forecasted size and growth of the market? • How attractive are the major market segments? • What returns should I expect? 2. Value chain analysis • What are the components of the full product value chain? • What segments of the value chain drive competitive advantage? • Which segments provide opportunities for performance improvement? 3. Profit pools • What are the main drivers of profitability in the industry? • How is this shifting? 4. Technology overview and evolution • How is new technology changing industry dynamics? • Are there emerging applications of technology from other industries/markets? 6. Regulatory, geo-political and globalization trends • Are there any emerging regulatory, geo-political or globalization trends that could significantly change the “rules of the game”? 5. New threat assessment • Are there any emerging trends that could significantly change the “rules of the game”?
  • 32. 32 Technology overview and evolution learning objectives • View potential frameworks and tools you can use to assess technology evolution and convergence • Gain a better understanding as to why some technologies failed to live up to their hype • See how studying analogies and talking to customers can help provide insights into and better predict technological evolution
  • 33. 33 Assessing technology’s evolution and its’ potential impact is a multi-step process Competitors’ capabilities My capabilities Current and future customer needs
  • 34. 34 Printers and related As product life cycles (PLCs) continue to shorten, assessing new threats is more important than ever
  • 35. 35 Diagnose Intervene Monitor/Manage In vitro In vivo internal Non- invasive Min. invasive Inva- sive Rehab/ Recovery Moni- toring Disease Mgmt IT R&D Research Dvpt. In vivo external Targeted Rx delivery GEMS Core GEMS Core Radiation Implants Smart Implants Endoscopy-enabled Procedures Image-enabled Procedures Imaging for Soft Tissue Characterization Molecular Imaging, Radiopharmaceuticals Pharmacogenomics Treatment Efficacy Monitoring PoC Dx Monitoring, Remote Monitoring Convergence has created new combinations in health care
  • 36. 36 There are four requirements for technology convergence to be successful Unmetneeds Attractive economics (Consumer vs Supplier) Manageable adoption barriers Existing triggers --------------------- Convergence requirements --------------------- Media & digital technology (TV + PC) eg: AOL Time Warner Internet telephony eg: various start-ups •Always up-to-date, customized information •No unmet need (regular tel lines satisfactory) •Cons: Weak willingness to pay for internet content •Suppl: No critical mass for sufficient revenue •Cons: Cheaper than traditional •Supplnot attractive; start- ups unable to reach critical mass •Customer behavior (passive communi- cation with TV, inte- ractive with PC) •Cumbersome dialing required •Lack of sufficient, widespread broadband •Immature technology (=> inferior connec-tion quality) Failure Unfavorable Favorable Neutral Financial services (banking + brokerage + insurance) eg: Citigroup, USAA Electric & gas utilities eg: Reliant •One-stop shopping •None •Cons: Lower aggregate fees •Suppl: Significant cross- selling opportunities •Cons: Some price benefit •Suppl: Strong customer and cost synergies •Time-consuming account consolidation •No customer behavior change required •Deregulation •IT enabling sharing of info across platforms •Deregulation (and pri-vatization overseas) Success 40
  • 37. 37 Customer interviews can help assess trends and their impact on current/future boundaries • For each key product or service (and related business extension currently being discussed), who at the customer makes the buying decision? Who are the influencers? • Which products or services are bought at the same time? Different? • What else does each decision maker buy? Each influencer? • How valuable would a fully integrated system be? Why? • How will the buying process change in the near to medium term? (Convergence?)
  • 38. 38 Strategic questions answeredRelated tools Industry structure tools Industry structure Customer value Business capabilities Competitor Identification 1. Market overview • What is the forecasted size and growth of the market? • How attractive are the major market segments? • What returns should I expect? 2. Value chain analysis • What are the components of the full product value chain? • What segments of the value chain drive competitive advantage? • Which segments provide opportunities for performance improvement? 3. Profit pools • What are the main drivers of profitability in the industry? • How is this shifting? 4. Technology overview and evolution • How is new technology changing industry dynamics? • Are there emerging applications of technology from other industries/markets? 6. Regulatory, geo-political and globalization trends • Are there any emerging regulatory, geo-political or globalization trends that could significantly change the “rules of the game”? 5. New threat assessment • Are there any emerging trends that could significantly change the “rules of the game”?
  • 39. 39 New threat assessment learning objectives • Understand how to apply Porter’s Five Forces market analysis tool, with special focus on assessing new threats
  • 40. 40 Porter's Five Forces offers a framework to assess new threats (1 of 6) Rivalry among existing firms Suppliers Bargaining power of suppliers Potential entrants Substitutes Buyers Threat of new entrants Bargaining power of buyers Threat of substitute products or services Industry competitors
  • 41. 41 • Economies of scale • Proprietary product differences • Brand identity • Switching costs • Capital requirements • Access to distribution • Absolute cost advantages - Proprietary learning curve access to necessary inputs proprietary low-cost product design • Government policy • Expected retaliation Entry barriers Porter’s Five Forces (2 of 6) Suppliers Potential entrants Substitutes Buyers Industry competitors
  • 42. 42 • Industry growth • Fixed (or storage) costs/value added • Intermittent overcapacity • Product differences • Brand identity • Switching costs • Concentration and balance • Informational complexity • Diversity of competitors • Corporate stakes • Exit barriers Porter’s Five Forces (3 of 6) Determinants of rivalry among existing firms Suppliers Potential entrants Substitutes Buyers Industry competitors
  • 43. 43 • Differentiation of inputs • Switching costs of suppliers and firms in the industry • Presence of substitute inputs • Supplier concentration • Importance of volume to supplier • Cost relative to total purchases in the industry • Impact of inputs on cost or differentiation • Threat of forward integration relative to threat of backward integration by firms in the industry Porter’s Five Forces (4 of 6) Determinants of supplier power Suppliers Potential entrants Substitutes Buyers Industry competitors
  • 44. 44 • Relative price performance of substitutes • Switching costs • Buyer propensity to substitute Porter’s Five Forces (5 of 6) Determinants of substitution threat Suppliers Potential entrants Substitutes Buyers Industry competitors
  • 45. Substitution example: Pricing and sales trends uncover insights and potential threats The convergence of granite and solid surface pricing has led to solid surface share loss 45
  • 46. 46 • Buyer concentration versus firm concentration • Buyer volume • Buyer switching costs relative to firm switching costs • Buyer information • Ability to backward integrate • Substitute products • Pull-through • Price/total purchases • Product differences • Brand identity • Impact on quality/ performance • Buyer profits • Decision makers’ incentives Porter’s Five Forces (6 of 6) Determinants of buyer power Bargaining Leverage Price Sensitivity Suppliers Potential entrants Substitutes Buyers Industry competitors
  • 47. 47 Qantas 11% Baker’s Delight 10% Samsung 13% Continental -10% Virgin Air (5%) Low High High Low Airlines Bread Smartphones Relative competitive advantage Relative Industry Attractiveness Narrow application of Five Forces can miss possibility of earning good returns in bad businesses Iphone 67% Key takeaway: Using Porter’s Five forces to assess threats can be very helpful, but the Five Forces framework should not be solely relied upon in any look at strategy. • Firms in lousy businesses that fail to develop a competitive advantage destroy shareholder wealth (Qantas), but firms in lousy businesses can provide excess returns to shareholders (Virgin) • Competitive advantage in an attractive business leads to excess returns (Iphone), but being in an attractive business does not guarantee excess returns (Samsung)
  • 48. 48 Strategic questions answeredRelated tools Industry structure tools Industry structure Customer value Business capabilities Competitor Identification 1. Market overview • What is the forecasted size and growth of the market? • How attractive are the major market segments? • What returns should I expect? 2. Value chain analysis • What are the components of the full product value chain? • What segments of the value chain drive competitive advantage? • Which segments provide opportunities for performance improvement? 3. Profit pools • What are the main drivers of profitability in the industry? • How is this shifting? 4. Technology overview and evolution • How is new technology changing industry dynamics? • Are there emerging applications of technology from other industries/markets? 6. Regulatory, geo-political and globalization trends • Are there any emerging regulatory, geo-political or globalization trends that could significantly change the “rules of the game”? 5. New threat assessment • Are there any emerging trends that could significantly change the “rules of the game”?
  • 49. 49 Regulatory, geo-political and globalization trends learning objectives • View some potential tools and frameworks to help you better assess opportunities and challenges provided by regulatory, geo-political and globalization trends
  • 50. 50 Regulations are one of the a of inter-related forces that can change industries Telecom Regulation  1992 Australian Productivity Commission report recommended the break of Teltra’s Australian telecommunication monopoly  Telecom and Media Act 1996 - 50% of Telstra privatized - Market competition opened for both services and hardware (exchanges, fiber optic routes) - Broadcast ownership rules opened • 2014 – Over 40 carriers and hardware suppliers vying for market share Rule changes have opened markets and resulted in intensified competition (E.G Current privatization of many UK NHS service areas)
  • 51. 51 Regulatory structure and government involvement can significantly impact profitability Examples Government intervention Repossession/ senior debt laws Pricing environment Low • Germany • Banks often used to further public policy goals • Supplier has claim on goods until they are paid for • Banks not return driven • France/Italy • France: Lenders potentially subject to usury laws at high yield levels • Supplier has claim on inventory until sold • France: Can exploit niches with attractive pricing • Italy: Captives not return driven High • UK • Low; favorable lending environment • No claim on inventory • Attractive Structural attractiveness
  • 52. 52 • Government stability • China/Taiwan/Hong Kong • World currencies • Levels and locations of Foreign Direct Investment (FDI) • Middle income trap (Mexico, Thailand,) • Western world stagnation posy 2007 • Sudden unexpected military action Geo-political and globalization trends must be examined Geo-Political Key Issues Globalization Key Trends • Global capital markets • Trade liberalization - WTO, GATT, NAFTA, EU • Technology innovation & electronic distribution • Deregulation Potential data sources • Analyst reports • Industry trade groups • Industry lobby groups • Literature searches • Expert interviews
  • 53. 53 Example: The Chinese express delivery market is structurally very different from Australia • Paper-based articles that fit into a standard-sized express envelop • Weight <500g Definition Domestic regulation International regulation • Non-Express Mail Service (EMS) companies not allowed to deliver documents with informational content • Heavily restricted market • All non-EMS companies are allowed to participate, BUT… • …Grey area due to definition of personal mail, business mail and parcels • Packages that weigh up to 25kg (international) and up to ~30kg (domestic) per shipment • Heavy weight parcels, greater than 25kg (international) and ~30kg (domestic) per shipment • All companies are allowed to participate • Non-EMS companies are allowed to participate, BUT… • …can not deliver documents with informational content • All companies are allowed to participate • All non-EMS companies are allowed to participate, BUT… • …EMS and China Post are trying to close up this segment Documents: Express Freight: Parcels: Source: Literature Search; Interviews. 2009 data.
  • 54. 54 Using a “heat map” can help identify global opportunities United States Germany Japan Italy UK Korea Peru Credit cards Mort- gages Mutual funds De- posits Life insur- ance P&C insur- ance M&A Under- writing Deriva- tives Corp. lending Foreign ex- change Hot Cold Each cell represents a geographic product market and is shaded according to its likely profitability and growth Opportunity assessment
  • 55. 2. Customer Targeting and Value 55
  • 56. 2. Customer Value Strategic foundation Industry structure Customer value Competitor Identification Business capabilities • To capture basic snapshot of industry • To identify paradigm shifts and external trends • To identify customer needs and their implications for the business • To prioritize customer requirements and competitive markets • To identify a business’ core competencies and gaps • To understand a business’ competitive advantage and sustainability • To understand differentiating qualities of competitor portfolios • To predict competitor moves and market positions 61
  • 57. 5 7 Industry structure Customer value Business capabilities Competitor Identification Customer value tools Strategic questions answeredRelated tools 2. Assessment of customer segment attractiveness • What are the most attractive customer segments for the business? • Which segments fit most clearly with the business’s core competencies? • Which segments are most profitable to serve? 5. Channel segmentation and attractiveness • What are the most attractive channels for the business? • Which channels fit most clearly with the business’s core competencies? • Which channels are most profitable to use? 4. Share of wallet • What is the full portfolio of customer needs? • How does the business fit within a customer segment’s spending habits? 1. Customer segmentation • What customers constitute the market and what are their differentiating needs? • How do customers segment according to their needs and behaviors? • How do customers segment according to observable characteristics (e.g., demographic)? 3. Customer needs and attitudes • What needs drive customer requirements and satisfaction? • How well does the business (and its competitors) fulfill these needs? 6. Customer loyalty • How “loyal” are the business’ customer segments? • What advantages/disadvantages does customer loyalty have on the business? 62
  • 58. • Each customer segment has a unique set of needs and requires its own value proposition • Profit potential varies dramatically by customer segment Customer segmentation helps companies efficiently focus scarce resources Resources should be allocated differentially across customer segments All customers are not created equal 58
  • 59. 59 The "right" customers tend to look quite different from others 0 6 12 18 24 30 36 -120 26 43 43 41 44 46 -150 -100 -50 0 $50 Profit per customer Months 0 6 12 18 24 30 36 -70 11 11 -0 12 -2 12 -4 13 -4 14 -3 -150 -100 -50 0 $50 Profit per customer Months NPV $190 NPV $6 Example: Financial services industry Spending Growth Referrals Base Acquisition Cost “Right” customers “Other” customers
  • 60. There are three segmentation approaches, each of which answers different questions • Who are the most profitable customers in our customer base? • How many more customers like these are there in the market? • Customer value • Customer attitudes/ behavior • Customer profile Segmentation approach Questions answered • What value proposition will increase our most profitable customers’ loyalty to us and attract more like them? • What demographic/product usage characteristics, if any, can we use to find high potential customers? 60
  • 61. 1. Divide customers into profitability buckets 2. Collect data 3. Combine variables to determine segments • Determine appropriate profitability metric • Bucket according to intuitive divisions • Iterate depending on distribution between categories • Create a list of key profit- driving behaviors • Develop segmentation hypotheses • Group into segments based on their responses to key variables • “Reality check” based on distribution between categories Example: • Top 10%, bottom 10% of customers in terms of yearly profitability Example: • Frequency of use • Duration of use Example: • High frequency but short duration of use • Low frequency but long duration of use Identification of customer groupings and their relative profitability The Customer value approach is based on profitability 61
  • 62. 62 • Make a complete list of likely customer and non-customer attitudes and behaviors • Select attitudes that - Drive purchase behavior - Are actionable - Differ across customers • Select behaviors that - Drive usage and cost-to-serve differences - Are easily measured - Differ across customers • Develop segmentation hypotheses 1. Create a list of key profit- driving behaviors and attitudes 2. Collect data 3. Conduct factor/cluster analysis to determine segments • Conduct a quantitative survey of a representative sample of customers and non-customers to gauge their key attitudes and behavior • Gather additional data in the survey to make segmentation actionable - Profitability data - Demographic profile - Competitor perceptions - Defection drivers • Customers and non-customers are statistically placed in segments based on their responses to key variables - Attitudes/behaviors - Demographic profile Customer attitudes/behavior and Customer profile take a slightly different approach Identification of profitability impact of various customer needs and groupings
  • 63. • Identify gaps or redundancies in the product portfolio • Screen out unacceptable new products • Choose product features • Determine product pricing • Establish appropriate service options • Determine optimal distribution strategy • Advise on advertising strategy Customer segmentation can be used to drive to a number of important insights 63
  • 64. High profit customers were segmented based on their behavioral and demographic characteristics A target segment was chosen based on its attractiveness and Highland’s ability to serve it Customers were divided into groups based on their profitability The behavioral and demographic drivers of profitability were determined A value proposition was created for the target segment Customer segmentation Assessment of segment attractiveness (Covered in next section) Example: Customer segmentation for 4 Seasons Hotels is a multi-step process 64
  • 65. Low profit Medium profit High profit Customers Profit 0 20 40 60 80 100% Percent of Total Example: One third of 4 Seasons customers account for more than 60% of its total profits 65
  • 66. Business/leisure Leisure only Business only $250 $75 $50 0 100 200 $300 Average Annual Profit per Customer Type 1-2 3-5 6-8 9-10 11 $50 $85 $140 $150 $260 0 100 200 $300 Average Annual Profit per Customer Type Days per Year Less than 2 days 2-4 days 4+ days $40 $70 $130 0 50 100 $150 Average Annual Profit per Customer Type Occasion Visit Frequency Length of Visit Example: The primary profit drivers for4 Seasons are visit frequency, duration and occasion 66
  • 67. 67 “Hotel-aholics” Very frequent (9.2x) Medium (3.9 days) Business/leisure “Honeymooners” Infrequent (1.5x) Long (10.0 days) Leisure “Hello again” Frequent (6.2x) Short (1.8 days) Business “One-timers” Infrequent (1.3x) Long (5.4 days) Business 4 Seasons identified four types of high value customers based on these drivers High profit segments Annual frequency Length of stay Occasion
  • 68. 68 Industry structure Customer value Business capabilities Competitor Identification Customer value tools Strategic questions answeredRelated tools 2. Assessment of customer segment attractiveness • What are the most attractive customer segments for the business? • Which segments fit most clearly with the business’s core competencies? • Which segments are most profitable to serve? 5. Channel segmentation and attractiveness • What are the most attractive channels for the business? • Which channels fit most clearly with the business’s core competencies? • Which channels are most profitable to use? 4. Share of wallet • What is the full portfolio of customer needs? • How does the business fit within a customer segment’s spending habits? 1. Customer segmentation • What customers constitute the market and what are their differentiating needs? • How do customers segment according to their needs and behaviors? • How do customers segment according to observable characteristics (e.g., demographic)? 3. Customer needs and attitudes • What needs drive customer requirements and satisfaction? • How well does the business (and its competitors) fulfill these needs? 6. Customer loyalty • How “loyal” are the business’ customer segments? • What advantages/disadvantages does customer loyalty have on the business?
  • 69. Assessment of segment attractiveness has two components: “fit” and economics Fit: Ability to serve in a differentiated way Business’ overall strategy and capabilities Business’ competitive position • Strategic objectives • Ability to leverage: - Technology - Costs - Skills - Existing resources • Existing base in segment • Existing market perceptions of strengths and weaknesses • Competitive performance Economic attractiveness: Profit potential Revenue potential Cost to serve • Size • Growth potential • Buyer power • Product requirements • Price sensitivity • Advertising requirements • Channel preference • Service requirements 69
  • 70. Fit is a fairly qualitative assessment that accounts for both internal capabilities… 1. Does segment leverage key strengths of the business? Example: Should Stanley Tools enter the rotary saw market? 2. Does segment conflict with existing positions? Example: Should Mercedes introduce a medium-priced ($20-$30K) line of family sedans? Does segment fit with the business’ overall strategy and capabilities? 70
  • 71. …and competitive positioning Does the business have a strong competitive position within the segment 1. What are segment perceptions of the business’ strengths and weaknesses? Example: Should McDonald’s offer vegetarian burgers in the US? 2. What are segment perceptions of the business’ relative position vs. competitors? Example: Should Volvo design a sports car? 71
  • 72. Calculate economic attractiveness: Profit potential Calculate revenue potential Calculate cost to serve Current customers New customers Current customers New customers Determining economic attractiveness is more straightforwardly quantitative • Number of potential customers • Penetration • Lifetime • Margin • Investment required in headcount, technology, new product development, etc. 72
  • 73. Develop capabilities to serve this segment Target this segment Avoid this segment Adjust value proposition to improve attractiveness of this segment Low Low High High Fit: Ability to serve segment in a differentiated Way Once segment attractiveness is assessed, “target segments” can be chosen 73
  • 74. High profit customers were segmented based on their behavioral and demographic characteristics A target segment was chosen based on its attractiveness and Highland’s ability to serve it Customers were divided into groups based on their profitability The behavioral and demographic drivers of profitability were determined A value proposition was created for the target segment Example: Four Seasons reassessed customer segment attractiveness Customer segmentation Assessment of segment attractiveness (Covered in previous section) 74
  • 75. Low profit Medium profit High profit One-timers Hello again Honeymooners Hotel- aholics Customers High profit customers High profit customers' profitability 0 20 40 60 80 100% Percent of Total Ability to serve in a differentiated way “Hotel-aholics” were the most attractive and a good fit with HH capabilities 75
  • 76. Priority service Special services • Favorite room ready • “Permanent” electronic key • Complimentary dry cleaning • Two phone lines • Fax machine in room • One 20 minute complimentary call to home Rewards • Frequent flier miles • “Kids Stay Free” days Four Seasons created a tailored value proposition for this target segment Differentiation from competitors 76
  • 77. Tips for success “Fit” assessment: • Iterate as necessary as “Fit” relies heavily on correct business definition (see “Where do I compete?”) • Be open-minded: put everything “on the table” Economic attractiveness assessment: • Ensure that the costs and revenues from the full customer lifecycle are captured • Take into consideration “hidden” costs - Include differential costs to serve (e.g., FTEs) - Include rework/returns 77
  • 78. 7 8 Industry structure Customer value Business capabilities Competitor Identification Customer value tools Strategic questions answeredRelated tools 2. Assessment of customer segment attractiveness • What are the most attractive customer segments for the business? • Which segments fit most clearly with the business’s core competencies? • Which segments are most profitable to serve? 5. Channel segmentation and attractiveness • What are the most attractive channels for the business? • Which channels fit most clearly with the business’s core competencies? • Which channels are most profitable to use? 4. Share of wallet • What is the full portfolio of customer needs? • How does the business fit within a customer segment’s spending habits? 1. Customer segmentation • What customers constitute the market and what are their differentiating needs? • How do customers segment according to their needs and behaviors? • How do customers segment according to observable characteristics (e.g., demographic)? 3. Customer needs and attitudes • What needs drive customer requirements and satisfaction? • How well does the business (and its competitors) fulfill these needs? 6. Customer loyalty • How “loyal” are the business’ customer segments? • What advantages/disadvantages does customer loyalty have on the business? 85
  • 79. Customer needs and attitudes learning objectives • Understand how to identify customer needs and assess customer satisfaction • Understand how customer needs and attitudes fit into the Customer value analytical process • View potential slide formats to fully utilize the information gleaned from this analysis 79
  • 80. Product quality • Usability/features • Superior technology • Prestige • Serviceability • Failure recovery Service quality • Speed • Recognition • Customer knowledge • Treatment and interaction • Tangibles • Failure recovery Cost • Low original price • Value ratio • Discounts/sales • Reliability • Frequent buyer plans • Terms, tax • Durability • Convenience ExampleCategory Customer satisfaction is driven by three main categories of customer needs and attitudes 80
  • 81. Comprehensive research captures four levels of customer needs and attitudes Unknown – “I never thought of that.” Withheld – “I did not know I could get that.” Assumed – “I thought you knew I needed that.” Stated – “This is what I want or need.” 81
  • 82. Customer needs and attitudes can be described both qualitatively and quantitatively Quantitative Qualitative • “Service is very important to me because I don’t have time to deal with it myself.” • “The product had problems with durability and that was simply unacceptable.” Example: Customer perception of relative importance in product purchasing criteria • “Service” importance rating of 5 (“very important”) vs. “Price” importance rating of 3 (“moderately important”) • “Design” importance rating of 5 vs. “durability” importance rating of 1 (“not at all important”) 82
  • 83. Are you good at the things that matter most to customers? Price Speed Reliability Relationships Flexibility Relativeimportance/performance Price Speed Relationships Reliability Par/servicing LTV Flexibility Relativeimportance/performance GECRE Heller Traditional on-book GECRE Nomura High Low High Low Commercial Mortgage Backed Securities 83
  • 84. Tips for success • Select customer sample that is representative of overall sales. Key criteria may include: - Geography - Industry focus - Product mix - Discount levels - Use of customer service hot-line - Satisfaction levels from existing research - Sales team tenure • Use alternative metrics to determine sample representation if applicable. For example, sample can be representative of customer counts 84
  • 85. 85 Industry structure Customer value Business capabilities Competitor Identification Customer value tools Strategic questions answeredRelated tools 2. Assessment of customer segment attractiveness • What are the most attractive customer segments for the business? • Which segments fit most clearly with the business’s core competencies? • Which segments are most profitable to serve? 5. Channel segmentation and attractiveness • What are the most attractive channels for the business? • Which channels fit most clearly with the business’s core competencies? • Which channels are most profitable to use? 4. Share of wallet • What is the full portfolio of customer needs? • How does the business fit within a customer segment’s spending habits? 1. Customer segmentation • What customers constitute the market and what are their differentiating needs? • How do customers segment according to their needs and behaviors? • How do customers segment according to observable characteristics (e.g., demographic)? 3. Customer needs and attitudes • What needs drive customer requirements and satisfaction? • How well does the business (and its competitors) fulfill these needs? 6. Customer loyalty • How “loyal” are the business’ customer segments? • What advantages/disadvantages does customer loyalty have on the business?
  • 86. Share of wallet learning objectives • Understand share of wallet concept and potential applications to customer value analysis • Learn how to interpret data to determine share of wallet 86
  • 87. The share of wallet (SOW) tool quantifies potential customer value What portion of a customer’s spend is captured by the business? What portion of a customer’s spend can be captured by the business? Identification of untapped customer potential 87
  • 88. SOW has multiple applications • Strategic tool to identify full potential and to prioritize regions, verticals, customers and products • Operational tool to increase sales effectiveness - Prioritization of installed base and prospects - Identification of potential for growth • Financial controlling tool to measure operational performance on account/segment level 88
  • 89. Metric Definition Example • Share of wallet • Share of spend of a single customer • Customer buys $10M of softwear per year. Revenue with this customer is $2M • -> SOW = 2/10 = 20% • Share of visits/trades • Share of use by a single customer • Customer buys/has ___ number of visits/trades. Portion served by business is 50% • -> SOW = 50% SOW is the share of spend for a single customer Variation 89
  • 90. SOW analysis is a multi-step process Activities Output Determine bottom-up wallet • Build-up wallet beginning with single customer spend • Quantify to limits of Business Definition • Bottom-up wallet sizing and appropriate segmentation Match top-down wallet • Assess wallet size beginning with highest macro- impact • Quantify to limits of Business Definition • Top-down market sizing that ties to Bottom-up version - Wallet by business - Wallet by vertical - Wallet by region - Wallet by product Determine share of wallet • Determine applicable share definition • Calculate across all segments • Quantitative assessment of share of wallet vis-à-vis competitors in key segments Assess customer full potential • Prioritize and assess segments according to potential • Create action plan to reach full potential • List of “target” segments and recommended actions • Action plan to reach full potential Database build up Database analysis 90
  • 91. Trade- Online ACo BCo CCo 16% 23% 39% 42% 0 10 20 30 40 50% Household assets under management Overall average: 67% Frequent trader Most frequent 64% 57% 0 20 40 60 80% Percent of trades conducted with TradeOnline Active traders Share of wallet Active traders Share of trades Example: CommSec has room to improve SOW among frequent traders 91
  • 92. Industry structure Customer value Business capabilities Competitor Identification Customer value tools Strategic questions answeredRelated tools 2. Assessment of customer segment attractiveness • What are the most attractive customer segments for the business? • Which segments fit most clearly with the business’s core competencies? • Which segments are most profitable to serve? 5. Channel segmentation and attractiveness • What are the most attractive channels for the business? • Which channels fit most clearly with the business’s core competencies? • Which channels are most profitable to use? 4. Share of wallet • What is the full portfolio of customer needs? • How does the business fit within a customer segment’s spending habits? 1. Customer segmentation • What customers constitute the market and what are their differentiating needs? • How do customers segment according to their needs and behaviors? • How do customers segment according to observable characteristics (e.g., demographic)? 3. Customer needs and attitudes • What needs drive customer requirements and satisfaction? • How well does the business (and its competitors) fulfill these needs? 6. Customer loyalty • How “loyal” are the business’ customer segments? • What advantages/disadvantages does customer loyalty have on the business? 92
  • 93. 93 Demand Creation Access (Reach) Profitable Revenue + + = Product success Key Aspects: • Create product awareness • Articulate value proposition • Educate customer • Market towards target customer • Provide easy access to all target consumers • Allow for “touch & feel” of product • Provide rich information at POS • Access target customers • Generate large base of profitable revenue Channels can be prioritized according to three general attributes No single channel must provide all of these necessary components, but overall channel mix should deliver all three
  • 94. Example: Harvey Norman has four distribution choices if it chooses to prioritize reach Big Box A Big Box B RegionalCo DeptStoreCo MallRetailCo E-tail Company website Demand creation Med Med Med Low High High Low Reach High High Low High High High Low Revenue opportunity High High Low Low Low Med Low Classification Reach Reach Reach Reach Demand creation Mixed Mixed 94
  • 95. Example: Further analysis identifies channel potential and drivers of success Revenue through Big Box A channel Units: 3,000 33,100 92,400 Placement • Will need to fund premium placement so it will not be mistaken as “just another box” Knowledge • Business would have to train sales force, quality control should not be a huge problem Fulfillment • Low volumes should make fulfillment easy Main challenges • Confusion with other “boxes” • Getting on the shelves with such low prediction volumes could be problem • Big Box A carries the whole range of competing products 95
  • 96. Industry structure Customer value Business capabilities Competitive position 2. Customer value Strategic questions answeredRelated tools 2. Assessment of customer segment attractiveness • What are the most attractive customer segments for the business? • Which segments fit most clearly with the business’s core competencies? • Which segments are most profitable to serve? 5. Channel segmentation and attractiveness • What are the most attractive channels for the business? • Which channels fit most clearly with the business’s core competencies? • Which channels are most profitable to use? 4. Share of wallet • What is the full portfolio of customer needs? • How does the business fit within a customer segment’s spending habits? 1. Customer segmentation • What customers constitute the market and what are their differentiating needs? • How do customers segment according to their needs and behaviors? • How do customers segment according to observable characteristics (e.g., demographic)? 3. Customer needs and attitudes • What needs drive customer requirements and satisfaction? • How well does the business (and its competitors) fulfill these needs? 6. Customer loyalty • How “loyal” are the business’ customer segments? • What advantages/disadvantages does customer loyalty have on the business? 96
  • 97. Customer loyalty is a requirement for maximizing customer value Success is built on getting the right customers and keeping them 97
  • 98. "Satisfaction" sets too low a standard for measuring customers loyalty Most defectors are generally satisfied 98
  • 99. Loyalty includes multiple customer needs and attitudes beyond simple satisfaction Referral Repurchase Satisfaction Pride Trust Deserves Loyalty 99
  • 100. “Loyalty Leaders” achieve better costs and growth Average Loyalty Leader 100% 85% 0 50 100 150 200 250% Indexed average costs Costs Average Loyalty Leader 100% 220% 0 50 100 150 200 250% Indexed average growth Growth 100
  • 101. Extending the customer lifecycle maximizes profit potential from the target segment 67656260585549444230 (51) (80) (40) 0 40 80 120 5549444230 (51) (80) (40) 0 40 80 120 0 1 2 3 4 5 6 7 8 9 10 AnnualProfits Year Example: Credit card company 101
  • 102. Root cause analysis can uncover important issues for at-risk customers Uncontrollable issues 102
  • 103. Strategy Marketing Sales/Service Channels Redesign Customer Experience Teams/Compensation/Rewards Process Statistics • On time, first time fix • Line increase requests Behavior • Retention • Share of wallet Feedback • Employees • Customer Loyalty/Sat. • Complaints Customer Experience Metrics Customer loyalty Feedback/Results should be addressed through an ongoing process 103
  • 105. Overview Competitor analysis enables an organization: – To gain an understanding of the future strategies and decisions of key competitors – To predict competitor reactions to an organization's strategic initiatives and environmental changes – To understand how to influence the behavior of competitors to gain competitive advantage •It permits an organization to address the following questions: – What can it learn from its competitors? – What are they key differences between the company and its competitors? Do these differences explain the differences in performance (financial, operational) between all players? – What are the likely changes in the competitive landscape it will need to respond to? •It is important to understand that competitive analysis is not a strategy but merely one of the components feeding in to the identification of opportunities and the development of a strategy. 105
  • 106. Framework for Competitive AnalysisActivities Tools/ Techniques Competitor Identification & Segmentation Competitor Performance Analysis Competitor Objectives & Strategy Analysis Improvement Opportunities & Competitive Response  Competitor identification (traditional, new entrants, substitutes, …)  Competitor segmentation/ competitive advantages (size, segment, customers, pricing, products/services, relative threat)  Analysis of value proposition (price, service, product offering, quality)  Competitor positioning in value  Porter's 5 Forces  Competitor positioning map  Value Chain  Mekko  Market share analysis  Analysis of competitive strengths & weaknesses (profitability, performance, competencies, capabilities)  Benchmark of competitor performance  Assessment of performance/value drivers  Activity mapping  Capability assessment  Share gain line  Identification of competitive position improvement opportunities  Assessment of competitor response to changes in environment and new strategic initiatives  Analysis of company goals and current strategy (strategic, financial, operational)  Assessment of future trends/movements in positioning  Game theory  Scenario modeling  SWOT Analysis  Industry, market, company predictions and forecasts 106
  • 107. Competitor Identification & Segmentation Competitor Identification & Segmentation Competitor Performance Analysis Competitor Objectives & Strategy Analysis 114
  • 108. Identifying Your Competitors Issues  Boundaries are not always clear  Direct vs. indirect can be on the basis of: ─ Product type (e.g. soft drinks vs alcohol) ─ Activity type/position within the industry value chain (e.g. a manufacturing company may compete with distributors if it also distributes its products)  Typical focus of effort can be: ─ Segments targeted within the industry ─ Competitive advantages characterized by each segment (e.g. price, quality, etc.) Company X Competitive Landscape Typical focus of effort Regional National Direct Indirect Small Large Size of competitor Type of competitor Geographic focus of competitor 108
  • 109. Identifying Their Competitive Advantages (1/3) (1)Source: M. Porter, Competitive Advantage Common behavior types;  Generalists: These companies compete on most market segments  Specialists: They usually compete in one particular segment  Multi-specialists: They compete on several market segments Firms behaviors towards industry segments • Market image • Price policy/price positioning • Services offered • Product quality • Degree of technological leadership (innovation vs. imitation) • Sales and distribution channels • Customer Intimacy Types of competitive advantages(1) Industries where innovation plays a key role Complex products (requiring exploitation of very different competencies) High fixed costs Leveraging success factors Being present in all positions of the value chain Occupying several spots within the value chain and by outsourcing others etc. Positioning in the value chain Some competitors may belong to larger groups/conglomerates Origin of equity funds plays a key role (external shareholders, managers, suppliers, etc.) Other characteristics 109
  • 110. Competitor Performance Analysis Competitor Identification & Segmentation Competitor Performance Analysis Competitor Objectives & Strategy Analysis 117
  • 111. Competitor Market Share Examples (1/4) Top 5 players (2012) Market share evolution (1992-2012) 18% 11% 10% 5% 22% Comp #4 Top 5 players represent XX % of market % Market Share 10% 20% 0% Comp #3Comp #2Comp #1Company 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 35 0 5 10 15 20 25 30 % 1 2 3 4 5 6 7/8 111
  • 112. Competitor Market Share Examples (2/4) Market Size (2012, $m) Co.X (2012, $m) Market Share (%) Books 2,100 225 10.7% Stationery 1,500 130 8.7% News 4,000 120 3.0% Video 550 90 16.4% Cards 1,000 75 7.5% Music 1,200 60 5.0% 112
  • 113. Competitor Market Share Examples (3/4) 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Others Woolworths Books etc John Menzies Dillons Multitail Waterstones 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Others Boots Paperchase Disney Store John Menzies Ryman's Multitail Woolworths 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Books Stationery News Others Woolworths John Menzies Multitail $ 2.1 bn $ 1.5 bn $ 4.0 bn Competitor share by sector (%) 113
  • 114. -10% 0% 10% 20% 30% 40% 50% 60% -10% 0% 10% 20% 30% 40% 50% 60% Company X Share Movements – By Sector Total Market Growth Company X gaining share Company X losing share Video News Music Cards Stationery Books Company X Growth (% over 4 years) Competitor Market Share Share Gain Line By Sector 114
  • 115. Competitor Market Share - Growth Vs. Market Share Competitors sales growth vs. relative market share (1999 – 2009) Relative market share (units), 2000 -20% 0% 20% 40% 60% 80% 100% 120% 0 0.5 1.0 1.5 G H X F B E A D C CAGR (units) 1999-2009 115
  • 116. Competitor Profitability Examples (1/2) Profitability by Competitor in Industry "A" Sales Profit ROS Comp 1 400,000 44,000 11.0% Comp 2 180,000 28,800 16.0% Comp 3 120,000 8,400 7.0% Comp 4 110,000 9,900 9.0% Comp 5 60,000 4,800 8.0% Comp 6 40,000 2,800 7.0% Comp 7 30,000 -1,500 -5.0% Comp 8 30,000 1,800 6.0% Comp 9 20,000 800 4.0% Comp 10 10,000 300 3.0% 116
  • 117. Benchmarking Competitor Performance • There are many other dimensions against which to measure competitor performance, each being associated with a set of Key Performance Indicators (KPIs). • Outlined below is an example of the performance dimensions that can be studied, with corresponding KPIs.  Supply chain efficiency  Customer retention level  Manufacturing service level  Staff utilisation level  etc Performance Dimension  Logistics as % of sale  % of lapsed customers/year  Average manufacturing lead time  Store staff cost as % of sale  etc Illustrative KPIs 117
  • 118. Benchmarking Competitor Performance Measuring KPIs For example, world-class retailers use a combination of external and internal KPIs to align their supply chain towards the optimum level of performance What do retailers measure in their supply chain? Why do retailers measure their supply chain? Financial indicators Operational indicators Costs Accuracy Speed Mix, balance and trade-offs vary with Nature of business Maturity of supply chain Absolute levels Relative trends Externally comparable Internally consistent Drive improvement targets Monitor progress and realise benefits 118
  • 119. Benchmarking Competitor Performance Competitor Benchmark Outcome Display KPI Comp. 1 Comp. 2 Comp. 3 Comp. 4 Etc. Supply chain efficiency Customer retention level Staff utilisation level etc etc Competitors 119
  • 120. Assessment of Performance Drivers Insights on Specific Issues Conclusion Insight Strategic Direction Indicated? Example 1  Lower gross margin  High operator costs  Skewed installed base  Reduce costs  Avoid price aggression  Upsell existing tone customers Example 2  Higher operator costs  Lower productivity  Reduce operator costs ─ OAS cost reduction ─ Subcontract ─ Explore voice recognition opportunities, push canned alpha message Example 3  Fixed costs lower  Higher transmission costs more than offset by other costs  Reduce transmission costs ─ Reduce leased times per transmitter (to 0 on outposts, to 1 on others) ─ Use satellites or dial-ups ─ Drop marginal locations 120
  • 121. Competitor Strategy Analysis: SWOT Analysis Once the competitors have been identified and their performance analyzed, their particular characteristics can be more specifically assessed. Fill in a SWOT analysis for each competitor you are assessing. Outlined below is an example of a SWOT analysis for a football club. Strength Weaknesses  Experienced players  Key real estate location  "Cultured" football common methods shared across the squad  Midfield play  Attract further key international names  Umbrella branding (internationally recognized names)  Little development opportunities for the youth teams  Old players more accident prone  Low scoring  Inexperienced manager  Still backed by private investors cash?  Other clubs keep getting bigger  Other teams back in contention for N° 3 spot Opportunities Threats 121
  • 123. 123 Strategic foundation roles Strategic foundation Industry structure Customer value Business capabilities Competitor Identification • To capture basic snapshot of industry • To identify paradigm shifts and external trends • To identify customer needs and company role in their fulfillment • To prioritize customer requirements and competitive markets • To understand differentiating qualities of competitor portfolios • To predict competitor moves and market positions • To understand a business’ competitive advantage and sustainability • To identify a business’ core competencies and gaps
  • 124. Business capabilities tools Industry structure Customer value Competitive position Business capabilities Strategic questions answeredRelated tools 3. Capabilities assessment • What are the business’ capabilities, strengths and key gaps, especially across technology, personnel and financial strength? • How does the business perform in meeting the industries’ required competencies across the value chain? 2. Core capabilities definitions • What are the key elements of your industry’s value chain? • What special skills or technologies could the business use to drive or create differential customer value? 1. Relative cost position (RCP) • How does business cost align with the industry/market? • Does the business’ profitability/cost position fall within the industry’s norms? • What is the full potential cost position? 130
  • 125. Lower cost position is a major difference between leaders and followers Higher Value Lower Cost Total difference in profitablity (#1 vs. #5) 0 20 40 60 80 100% 131
  • 126. 132 Theoretical full potential $1.10 RCP determines full potential cost position by comparing unit costs to those of competitors  RCP = Relative Cost Position  Quantifies cost differences between your business and competitors  Insight into processes, practices, technologies resulting in cost differentials  Reveals necessary actions to close cost gaps and gain competitive advantage Practical $1.27 Over- head Labor Materials Client-current Competitor A Competitor B Competitor C $1.75 $1.45 $1.35 $1.30 0.00 0.50 1.00 1.50 $2.00 Unit Cost Lowest cost Practical cost
  • 127. 133 RCP analysis helps answer both strategic and tactical questions Strategic questions Tactical questions • In what areas do our competitors have the biggest cost advantage? • What is driving competitors’ profitability? • How much flexibility would our competitors have in a price war? • Where should we focus our cost reduction efforts? (e.g., wage rates, amounts of raw material inputs) • Which cost elements would decrease significantly with an increase in scale? • Which cost elements might benefit from different business practices?
  • 128. 134 RCP can be approached from the bottom-up or top-down Detailed bottom-up analysis Top-down analysis • Build up each major cost element for key competitors based on primary data • Triangulate using cost data from multiple sources Less accurate; less time intensive • Compare competitors’ cost structures to client’s cost structure at macro level - Define key process/business practice differences for major cost elements - Make assumptions about the cost impact of differences • Test assumptions vs. overall financial data More accurate; more time intensive Oftentimes use a combination of these approaches
  • 129. 135 RCP – The Key Steps Map the business value chain Identify cost elements and drivers Scour information sources for cost data on clients and competitors Build, compare, and reality check cost bars Calculate practical full potential cost position and savings Draw strategic implications Process Steps Key Success Factors • Map value chain from end to end (e.g., raw materials to finished product or delivery) • Tie costs to operations not accounting categories • Build up cost bars category by category • Reality check results against similar companies • Focus on areas with greatest cost savings potential • Adjust for situation (e.g., different strategy [high vs. low quality], different equipment, different plant locations) • Determine how to take advantage of the improved cost position • Be persistent and creative, but ethical
  • 130. 130 Mapping the value chain can facilitate an understanding of cost elements % of total cost: Tech., R&D Purchasing/ Inbound Logistics Manufact- uring/ Operations Marketing & Sales Distribution/ Outbound Logistics Service Major cost elements: Drivers of cost:
  • 131. 136 Costs are detailed and drivers are noted • Quality of ingredients • Mix of ingredients • Volume of ingredients • Amount of waste • Cost of ingredients • Reverse engineering • Suppliers • Purchasing managers • Industry reports Cost drivers Data sources
  • 132. 132 Cost data can be found in many places Cost information Former employees Utility companies Financial analysis Client sales and marketing Industry experts Market research reports Plant/site tours Industry conventions Reverse engineering reports Product brochures Government filings and patent filings Supplier interviews Literature searches Local newspapers Equipment vendors Customer interviews Current employees Labor unions Multiple data sources should be used whenever possible
  • 133. 137 RCP can highlight strategic decisions Situation • Chewing gum manufacturer • Diaper manufacturer with scale-driven cost advantage, but too high prices • Bakery products manufacturer contemplating an acquisition Action • RCP analysis in materials usage and purchasing, process improvements, and inventory management • RCP identified price business could charge and still be profitable, but competitors would not • RCP of competition Result • Identified $29M in annual savings • Business increased market share by 10% • Substantial positive impact on the client’s sales and profits • Competitor had 30% cost advantage. Acquired company would not be able to close the gap • Prevented business from making poor acquisition decision
  • 134. 138 Example: RCP details all cost drivers Cost Drivers Sure Coat First Paints Sure Coat Advantage First Paint Differences Raw materials Packaging materials Labor Taxes, insurance, depreciation Recharge Maintenance Other Utilities Operating supplies Total $11.30 $13.80 $7.90 $3.60 $3.40 $2.80 $1.20 $0.60 $0.30 $44.90 $17.50 $12.80 $3.70 $2.30 $3.10 $2.00 $0.90 $0.50 $0.30 $43.10 $6.20 ($1.00) ($4.20) ($1.30) ($0.30) ($0.80) ($0.30) ($0.10) ($1.80) 3.5 pounds per case; $0.50 per pound (market) Lighter container ~5% lower cost Lower wage rate; less overhead Same cost per line 10% less than Sure Coat; shared with other products, smaller site Labor - 4.5 maintenance workers vs. 7 for Sure Coat, lower wage rate Expenses - Sure Coat dollars per line 20% less than Sure Coat (Department of Energy) 10% less than Sure Coat; shared with other products (travel, purchased services) 10% less than Sure Coat; shared with other products; scale Dollars per 100 Gallons
  • 135. Standard Weatherproof • Modified manufacturing layout to reduce labor • Shifted salesforce focus to larger sizes (higher margins) • Outsourced “back-end” processes • Test marketing new weatherproof product with new raw material Example: RCP analysis led to direct action implications and results Increased margins by 15% 17% margin increase potential 139
  • 136. 140 Business capabilities tools Industry structure Customer value Competitive position Business capabilities Strategic questions answeredRelated tools 3. Capabilities assessment • What are the business’ capabilities, strengths and key gaps, especially across technology, personnel and financial strength? • How does the business perform in meeting the industries’ required competencies across the value chain? 2. Core capabilities definitions • What are the key elements of your industry’s value chain? • What special skills or technologies could the business use to drive or create differential customer value? 1. Relative cost position (RCP) • How does business cost align with the industry/market? • Does the business’ profitability/cost position fall within the industry’s norms? • What is the full potential cost position?
  • 137. 141 Core capability and core competency definition Core capabilities are attributes of a business or industry (e.g.,shared knowledge, expertise or skill) which increase the likelihood of creating sustained competitive advantage Core competencies are the skills and knowledge of the people in the business that help create core capabilities
  • 138. 142 Types of core capabilities Core capabilities Partial list Example Distinctive Capabilities • 3M with new adhesive/abrasive products • Canon with fine graphics, precision mechanics • WalMart - assistants to approach customers • Hanson in the 1980s in acquiring manufacturing businesses • J&J with branding of consumer health products • Number 2 players in former monopolies with special access privileges • Microsoft • Newmont Mining • Duty Free Shoppers Ltd airport arrangements • Coca Cola • Avon door-to-door sales network • Nutrasweet • Continuously innovate • Control processes/behaviors • Management/acquisition skills • Manage information • Control point • Physical asset • Location/space • Brand/reputation • Distribution/sales network • Patent • Access-conveying relationships Privileged Assets Special Relationships
  • 139. 143 Companies differentiate by innovating around their strengths Product Development Manufacturing Distribution & Logistics Marketing Sales Service Manufacturing Distribution & Logistics Marketing Sales Service Manufacturing Distribution & Logistics Traditional “innovation” (invention) Big box home improvement retailer with innovative format that’s user-friendly for females and “weekend do-it-yourselfers” Innovative low-cost manufacturing and distribution model to commoditize markets and compete on price Innovative Bundling of critical services to address pet owners’ total cost of pet ownership
  • 140. 144 Example: 3M has created competitive advantage by combining knowledge sharing with technology R&Dpractices • Intranet - Best practices database - Tech expertise database • Other collaboration tools • Cross functional meetings - Tech fairs - Cross-divisional meetings by sales personnel • Incentives - Awards and career benefits for sharing and utilizing knowledge • 14 Technology centers - Supplement to R&D labs - Leverage technologies across businesses units • Tech audits - Evaluation of R&D projects by peers (business & technical) from other business units Knowledge sharing
  • 141. Business capabilities tools Industry structure Customer value Competitive position Business capabilities Strategic questions answeredRelated tools 3. Capabilities assessment • What are the business’ capabilities, strengths and key gaps, especially across technology, personnel and financial strength? • How does the business perform in meeting the industries’ required competencies across the value chain? 2. Core capabilities definitions • What are the key elements of your industry’s value chain? • What special skills or technologies could the business use to drive or create differential customer value? 1. Relative cost position (RCP) • How does business cost align with the industry/market? • Does the business’ profitability/cost position fall within the industry’s norms? • What is the full potential cost position? 145
  • 142. 146 Assessment requires asking key questions around existing and required capabilities Where are our capability gaps? What capabilities do we have and which are necessary to succeed? - Technology - Personnel - Financial How can we leverage our capabilities? How do we fill the gaps? Should we divest or prune low capability areas? Key questions 1. Capability baseline 2. Gap assessment 3. Capability execution
  • 143. 147 Different analysis can help answer these questions  Comparison of required capabilities against internal competencies - Management evaluation  Capability reviews - Identification of required capabilities - Literature searches/competitor interviews - Management evaluation  SWOT analysis of our key capabilities vs. competitors  Capability acquisition analysis - Internal benchmarking to estimate acquisition cost - Comp analysis to determine market price to obtain capability through an acquisition Approaches 1. Capability baseline 2. Gap assessment 3. Capability execution
  • 144. 148 Core capability gaps can emanate from different places, including competency gaps People • Wrong person • Right person, overworked • No person responsible today • Does somebody perform the capability at the moment? • Who is responsible for the capability performance ? • If so, then… - Work load? - Years of experience? - Type of experience? - Performance? - Fit? Incentives/culture • Inadequate incentives scheme • Incomplete measurement/ reporting • Lack of accountability • Is the capability correctly measured/ reported? • Have incentives been established/ implemented? • If so, then… - Are they the right incentives? - Is the magnitude of the incentive adequate? - Is the right person incented? Information/ Technology • Lack of technology to take advantage of blurring business boundaries • Inappropriate technology/wrong bets • Do we clearly understand convergence opportunities? • Do business units communicate with each other about possible cross-applications of existing technology? • Is the technology functional and easy to use? • Is appropriate capex allocated to technology? Process/structure • Inadequate process • Misaligned organisational structure • Is the process clearly defined? • Are all parties involved clear about the process? • What are the bottlenecks or choke points? • Does the process reside within appropriate BU? • Has there been sufficient investment in improving process, tools and structure? Institutional lack of knowledge • No experience, expertise or knowledge about this capability • Does the capability exist today? • Is this a new area of business? Root cause: Critical questions: People Incentives/ culture Information/ Technology Process/ structure Institutional lack of knowledge
  • 145. 145 Example: Health Food Co.  Broad scale R&D experience  Clinical trial/ regulatory experience  Significant service offering  Broad scale clinician & expert marketing  Experience building channel creation  Non-F&B industry knowledge  Unique “molecule” access  Clinical trials to obtain claims  Regulatory process  Science integration into products  Solution services  Brand building  Multi- constituent access end support  Value-added alliances  “Own” management skills  Cross-functional coordination  Long-term view/learning integration  Multi-industry knowledge New wellness paradigm: Health Food Co.’s assets and capabilities: Health Food Co. critical gaps: Science Product and Service Offering Sales and Marketing Channel Integration Target Consumer
  • 146. 149 Example: De Beers Situation Complication Actions • Worldwide leader in mining and distributing raw diamonds • De Beers wanted to assess potential retail growth opportunities Results • De Beers has no retail experience, making development of new retail venture difficult • Developed business case for a joint venture to feature DeBeers products in retail outlets • Identified several internal core capability deficiencies that would introduce execution risk - Partnership with retailer was a key success factor - Identified optimal partners and supported JV negotiations • Formed De Beers LV (separate operating company) through a joint venture with LVMH • Launched “flagship” stores in London and New York
  • 147. 150 Example: De Beers capability assessment • Identified De Beers’ core capabilities/assets - Strong brand (De Beers) - Product knowledge - Understanding of consumer needs • Determined capability requirements for success • Identified capability gaps - Retail operations experience - Jewelry manufacturing - Quality control of luxury goods - Management of luxury retail brand • Determined from capability gaps that a retail partnership was required for success • Developed “short-list” of most attractive partnership candidates - Strong retailer filling core capability gaps - Good fit with De Beers • Prepared negotiation strategy for finalizing the agreement with potential partners • Joint Venture formed with LVMH 1. Capability baseline 2. Gap assessment 3. Capability execution
  • 148. 4. A Quick Look At Market Entry Strategies 151
  • 149. The Strategic Foundation Underpins, Market Entry Planning 1. Industry structure Summary and conclusions Market opportunity description Market entry strategy Strategic directions Pricing Brand and communication Sales and distribution Products and services Customer service Launch phasing The Strategic Foundation Vision and Mission Objectives Overall Strategy Positioning Value proposition Brand Target segments Tactical launch plan Contingency plan Internal and external factors Products & services Pricing Brand and communication Sales & distribution channels Customer service149 2. Customer Identification & Targeting 3. Competitor Identification & Analysis 4. Frankly Assessing Your Own Business Capabilities
  • 150. Market Entry Strategy – The Essential Ingredients  A description of the company’s vision and mission statements as well as financial objectives form the starting point for the market entry strategy as they set the framework in which a new entrant will function  Short-term objectives, sales targets, market share and brand awareness, will be set against the market opportunity and supplied as input to the business planning team  The positioning statement visibly describes the company’s strategy in relation to competition and the value proposition captures the company’s differentiating advantages and their benefits to potential customer  The brand strategy explains which values are important to communicate in order to enhance the company’s relationship with its customers  Targeted customer segments that need be addressed in order to deliver desired objectives will be specified and prioritised  Strategic directions in all functional areas; products & services, pricing, brand & communication, sales & distribution and customer service further detail the overall entry strategy. Finally, the launch phasing section explores the various viable market entry options, their pro’s, con’s and pre-conditions
  • 151. Detailed tactical launch plans enable efficient and ans manageable lmplementation  A tactical launch plan covers all functional areas and provides the launch team and vendors with necessary details for implementation  Pricing products and services can be helped by price modelling and conjoint research to assist in the choice of, from customer perspective, the most valuable pricing option  Brand and communication plan for market entry should include development of brand wheel (attributes, benefits, values) and full launch campaign planning  The sales and distribution channel plan involves creation of a tailor made sales and commission model, detailing of the company’s sales and distribution channel structure and analysis and recommendation on commission structure and levels  The customer service plan includes high level customer service processes and customer centre dimensioning  Clear contingency planning enables the company to pre-empt the occurrence of situations that affect the planned activities and prepare plans to remedy those, resulting in shortened reaction time. Both internal and external factors will be analysed – Internal – e.g. technical and organisational issues – External – e.g. competitive market activities and regulatory actions 151