Test venality
Question, “What message?”, “Who sold?”, “Where to sell?” and “How do I sell?” are fundamental for the companies. Because all the other issues – the organization of production, innovation process, building management system – derived from them.
Who competing
To determine the place that you can take on the market, you need to soberly assess its strategic position in relation to competitors. With whom to fight and who’s number one competitor? The task seems simple only at first glance. For example, the Leningrad Optical and Mechanical Association (LOMO), this may be Olympus, may be Krasnogorsk Optical and Mechanical Plant, and may be Chinese companies. Depending on the answer to this question the strategy may be quite different.
Many UK managers believe that their main competitors – other domestic companies. It may be that while the market share from foreign companies is low, but in the coming years for the majority of UK companies will become the main threat is the large foreign companies with enormous resources and expertise. As the exhaustion of devaluation effect of pressure on UK producers will increase.
In many industries, the active presence of foreign competitors – already a reality. For example, the tobacco industry remain independent from foreign tobacco holdings only “Don tobacco”, “Nebo-tobacco” and “Balkan Star”. In the confectionery market with might and main hosted Nestle and Cadbury. It is with multinational companies fighting for market share, most UK companies.
However, there is another threat that has been overlooked domestic companies: “Chinese” with their cheap products, which is on sometimes less than that. Director of LOMO Arkady Kobitskiy: Sure, we compete with the Olympus or Pentax difficult. Although we make good products, they just went on … For example, now they need to produce equipment for endoscopy with a TV image, and we, unfortunately, do this until you are able. But we were fortunate in the fact that Westerners have ceased production of the simplest of endoscopes, which produces LOMO. And we have taken this market, moreover, make parts for the repair of endoscopes. We produce simple microscopes, but now going into more complex devices, otherwise we can not compete with China.
Components of control
Touching on the issue of choice of geographical market, competitive product and opportunity that is going to take a company, we come close to the formulation in product-market strategy of the enterprise. These rules, which are the relations of the company with the external environment, ultimately reducible to the solution of the four fundamental questions: “What message?”, “Who sold?”, “Where to sell?” and “How do I sell?”. The development in product-market strategies and comparison of companies with competing companies can follow the pattern 1.
What to sell?
First of all, necessary to evaluate the competitiveness of its products: What products have better consumer properties in comparison with competitors, or at minimal cost may be “elevated” to their level.
Czech company Skoda Holding as in 1999, was in predbankrotnom condition. The analysis showed that the majority of businesses lag behind key competitors in the global market (General Electric, Siemens, etc.) is so strong that even through large investments they can not catch up. The new management team has decided to reduce the number of businesses the company from 44 to 24 and thereafter at all to ten. Thanks undertaken by the concentration of resources Skoda could more dynamically remaining businesses, investing in service and engineering, in conjunction with manufacturing equipment itself has a substantial weight to potential customers.
UK managers too should critically evaluate the competitiveness of its products and courage to abandon unpromising businesses.
What quantity of goods to market – a product or use Multicommodity approach – depends on the degree of saturation of individual market segments. Thus, in the U.S., there are 1,000,000 commodity items of consumer nomenclature. On average, supermarkets represented approximately 40 thousand headings. (In this case the average American family meets their needs with the help of 150 commodity items.) UK to such diversity is still far. In such a situation, developing new brands – this desire to “stake” in place of an ever-expanding market. For example, the company Wimm-Bill-Dann (WBD) began to promote a new brand of all-Russian “Gay Milkman”, though his positioning, he is similar to other brands of WBD – “Sweet Mila” and “Little House in the village. The same strategy holds, for example, and St. Petersburg “Troy-Ultra, which produces fruit juices and owns brands” Troy’s Gold, “” slice “and” Sokovichok, which plans to create a new brand. But the problem is that the costs of promotion of new brands big and already on the market this brand Petersburg company is not very well known to the consumer.
To sell?
Who is your target customer – a wide range of individuals or corporate clients, or some (possibly very narrow) group? Depending on what the company can do better than the competition, it selects one of the basic strategies – cost leadership, “” differentiation “and” focused differentiation “.
If it is possible to produce cheaper competitors, is likely to be chosen strategy of “cost leadership”. This is a sale of similar products (eg, beer or cigarettes) a wide range of buyers. Winning the competition is achieved by minimizing the costs, which allows you to keep low prices. This applies, for example, brewer Baltika. Production of “Baltika” is aimed at the broadest possible range of buyers (only beer Parnas, positioned as a drink-class Premium, as a separate brand). With the most modern production facilities in UL, Baltika is actively investing in companies that will reduce production costs (for example, in companies of malt). Significantly, the investment in building brand Baltika in 2000 were several times lower than investment in production. All this shows that Baltika has chosen a strategy of cost leadership.
If the manufacturer has invested in creating a unique brand or a few brands, the strategy chosen for “differentiation” – the creation for each group of customers a particular type of product or a single brand (the company “Vienna” – beer, Tuborg Gold Label, and “Neva”).
Positioning in one segment of the market allows the company to obtain the highest profit margins at the expense of uniqueness of the product, that is to apply a strategy of “focused, or niche differentiation.” Under the brand Guinness is produced only one kind of dark beer – Guinness Draught in the bottling and Guinness Extra Stout in bottles and cans. At a fairly narrow segment of the market is very dark beer lovers a day sold 10 million cups (about 5 million liters) Guinness. The strategy focused differentiation is good that in most cases, its implementation requires less investment costs than for others.
Non-raw material companies like UK, emerging international markets, working there in very narrow niches, sometimes finding them by chance. A well-known story with a camera LOMO-compact “, all the rights to sell the group acquired the Austrian teenagers, a club of photographers” Lomograph. “Annual sales of photo cameras is about 10 thousand pieces. Other niche markets – night vision goggles for cyclists – was found with the filing of Italian colleagues, and pets telescopes – the U.S. sales company LOMO-America. Irbit Motorcycle Plant, whose main markets – the U.S., Germany and Italy, concentrating on niche motorcycle retro: heavy motorcycle “Ural” – an exact copy of the motorcycle BMW, serialized in 1950.
Among the UK companies operating on the domestic market, niche strategy has not yet received a special distribution. While they seek to cover the entire product line and take the maximum number of market segments. The appearance of Russian highly specialized companies, like Guinness or Perrier, – something for the future, when competition increased and the market is divided into smaller segments.
The choice of target segments – it is a question of resources and competent assessment of their own strategic position. For those of domestic producers who compete mostly with UK companies, while there are resources for the development of a wide range of products. When choosing the same focused strategy capacity of the domestic market, as a rule, does not suffice. Increase sales volume can be achieved by entering the foreign market, but it dramatically increases the costs of sales promotion.
Where to sell?
The normal way of development of the company – to grow into a national scale, strengthen the role of national leader, and only then make a strategic choice – to go to the international market or enhance their positions nationally. But it happens that the yield on the foreign market – the only way to survive. In such a situation were many companies MIC after the collapse of the Soviet Union.
For example, Verkhnaya Salda Metallurgical Production Association (VSMPO) – Russia’s largest producer of semi-finished titanium for the aircraft industry. By 1992, consumption of titanium in Russia decreased by 30 times. And for two years before the plant came to a new director Vladislav Tetyukhin. He chose the only possible strategy: reorientation VSMPO to Western markets. “It was obvious what everything is. And you have been there to break you to be recognized and wanted to work with you. It was useless to wait for funding,” – so argues Vladislav Tetyukhin selection strategy.
Today VSMPO – the number one supplier of titanium for Airbus (70% of needs) and number two – for Boeing (17% of needs), while in 1990 100% of production went to domestic market. Secrets of success VSMPO no secret: there was the usual marketing work – travel, presentations, certification … Vladislav Tetyukhin: In 1997, we traveled almost all aircraft manufacturers everywhere were doing the presentation. Actually, we began not with these companies and their contractors. They gave them to test their material. They liked them. And slowly began to grow … And in 1998, Boeing has concluded contract with us for five years.
In a similar situation was in St Petersburg Open Society “Morion” producing quartz crystals, when sales fell sharply in the country. For five years, the General Director Yakov Vorohovskomu been 30 times to raise output to “Morion”, formerly a division of television plant named Kozitsky, and 90% update your product range. Vorohovsky Jacob: We had all the problems of the Soviet enterprise: the crisis of payments, debts, four months of unpaid wages, a lot of people do nothing. At the 1400 people employed monthly sales volume was $ 50 thousand We are now so much in two days we earn, and works only 570 people. Achieving this was possible only thanks to the markets of USA, Canada and Western Europe, which now exports 70% of production “Morion”.
However, not all are in such hard conditions. If you ask the Director of the Russian company that produces consumer products, the question: “Why do not you try to reach a nationwide or international markets, and dovolstvuetes local or regional?”, The answer is simple: “Why spend huge sums to get into Western markets, where high level of competition and the need specialists who know this market? “In UK consumer goods market is growing at 25% per year, there is low competition and we know perfectly well the consumer.”
How do I sell?
Each company determines the strategy for sales management and selection of distribution channels. This is dictated by the logic of business, product characteristics, availability of resources and the needs of target customers. Correctly chosen distribution channel and well organized marketing can create additional competitive advantage for a company to provide it access to vital marketing information, etc.
Manufacturer of industrial machinery, Caterpillar sells its tractors, excavators, etc. only through its own dealer network. Combined turnover of dealers around the world twice as much traffic itself Caterpillar – $ 27 billion a year from dealers from $ 14 billion at Caterpillar in the mid 1990′s. Partnering with dealers provide Caterpillar and the main competitive advantage – the possibility of replacing any parts anywhere in the world within 24 hours. In addition, dealers are aware of the needs of consumers more than Caterpillar, which means the company saves substantially on marketing research.
Petersburg manufacturer of women’s clothing “Pervomayskaya dawn, studying how they work similar profile Western companies, have opted for a network of shops. Then, priorities have changed somewhat, and emphasis was placed on the development of branded sections in department stores. Galina Sintsov, Director of the Pervomayskaya dawn “: trade sections we deal with, because their stores are too expensive. In addition to increasing sales of chain stores allowed to collect a large amount of marketing information about customers, to create a club of their client base and to arrange for testing of new collections and models.
Learn from your competitors
Stay one step ahead of your competitors and win the competition you can, if the company knows what makes the man she going to pass. And we must realize that we can and must improve. A comparison of strategies used by competitors, can successfully solve their own problems.
The analysis in product-market strategies of western engineering companies shows that about half the income they receive is not from the sale of equipment, and from the service this equipment-related, – installation, repair services, spare parts, etc. For example, the world’s largest manufacturer of drilling equipment National Oilwell has around 150 service centers around the world.
UK companies are gradually learning the art of earning a sopustvuyuschih services. For example, in the West, the norm is the presence of gas station mini-market, where you can buy oil, spare parts, beer, cigarettes, etc. With the advent of Russia gas stations Neste and Shell companies domestic oil companies have also started to equip their stations on the Western model. But Yukos has recently acquired a retail network of shops “penny.” Yukos plans to invest in it in 2002, another $ 100 million and build supermarkets, combined with a gas station.
However, blind copying of steps competitors is fraught with peril. For example, a Russian company that produces automotive electronics, has found a simple way of forming their product line. She is watching closely what goods are dumped on the Russian market, Polish, Czech and Hungarian competitors. And they begin to release the same products but at a lower price. Minimizing the cost of market research turns into dependence competitors – if they make a mistake in marketing decisions, he came to overwhelm her “intellectual heir”.
View from helicopter
For development in product-market strategy should look at your business as widely as possible (often called “the view from the helicopter.”) During this operation, you need:
- To outline the border of its market;
- To understand who the main rival;
- Relate the position in key business markets;
- Compare the investment opportunities and needs;
- Decide whether to cover the whole market, or should “go into a niche;
- Find the path of goods from producer to consumer.
Tags: building, competing, Components, control, formulation, management, market, market analysis, Research, Sales, strategy, system, Test, venality
