Case Study 1.
The Problem: Inability to Gain Traction in a Profitable Market
A computer products manufacturer had several products that were well-suited for the low end of the computer aided design (CAD) market, but was unable to gain significant share in that market segment.
Analysis: There were two related problems underlying the company’s struggles. First, the company’s positioning was unclear. The products were produced in five different divisions, and each had their own distinct marketing programs. Hypothetically, they were coordinated through the same sales force, but in reality the message that got through to the customer was garbled. Second, the sales team did not understand the needs of this potentially lucrative market and often shied away from selling some of the products for fear for looking misinformed.
Solution: A cross-divisional team was put together to develop a common marketing strategy. Marketing budgets were pooled to ensure that only the unified marketing programs would be implemented. The team approached the challenge as if it was a new product launch and put together a comprehensive communication, training and promotional program. They emphasized the the fact that the company’s products could be mixed and matched to customize a solution without creating compatibility problems. Members of the team personally assisted in training the field sales force in how to present the unified message to customers.
Results: Overall sales into the low end computer aided design market increased 22% in just six months. The number of resellers that carried the products tripled in the same time period. One field sales team created a video of the training program to show other marketing teams how to conduct an effective sales training program. The overall success of the program led to an increase in cross-divisional marketing programs.
Case Study 2.
The Problem: Declining Sales
Analysis: A study of the sales process, the product sales trends, and customer feedback revealed that there were three problems. First, the sales team was trying to convince CIOs that it was cost effective to purchase an entire library of IT training materials, but most CIOs were not looking for training solutions. Second, all the programs were priced equally, regardless of the age of the program. Third: The lead qualification process was so woefully inadequate that the sales reps ignored all of the leads generated by marketing programs.
Solution: The first step was to re-packaged the entire library of training materials into modules that addressed specific issues that were relevant to IT departments. Second, the pricing strategy was revised, and the new prices reflected the technical complexity of the material, the relevance to current IT issues, the age of materials, and the total volume of material covered. Third, a new lead scoring system was implemented, which included an initial customer contact to verify interest level before the lead was passed to a sales rep. The final piece of the solution was a bold and humorous new advertising campaign which communicated the company’s new solutions-orientation and directly addressed the consequences of not keeping abreast of the rapidly evolving IT technologies.
Results: The sales decline was immediately arrested and sales to new prospects increased, as the sales reps quickly learned to use the re-positioned product line to create customized solutions for their clients. Within 2 weeks, sales that were a direct result of the new advertising campaign and the stricter lead qualifying system paid for the significant investment in new marketing and advertising programs. Overall advertising productivity, as measured by pipeline prospects from advertising leads, improved 300% within 3 months.
Case Study 3.
The Problem: New Product Line Threatens to Cannibalize Sales of Key Flagship Product
A manufacturer of equipment for in the health and beauty market wanted to introduce a lower-cost version of their primary product line, but was concerned that they would not only cannibalize sales of the exiting product, but also anger customers who had purchased the higher priced unit and might have preferred a lower cost version.
Analysis: Although the client engagement called for simply surveying high end customers and developing a two-tiered pricing strategy, an analysis of the technology trends and of the recent actions of the competitors was also completed. This info, coupled with an analysis of competitors’ pricing strategies, revealed that the market was shifting away from the high end. In addition, lower cost components were coming on the market that would effectively eliminate the high end of the market. Customer interviews revealed that while some customers were satisfied with their current product, there was a segment of customers who were disappointed that they had no on-going relationship with the company post-sale, and would likely be upset by the introduction of a significantly lower cost product.
Solution: Demonstrated to the client that the high end of the market was on the verge of imploding. Recommended that the current product line be discontinued altogether, and that the company focus on selling the new, lower-cost product. For existing customers, recommended that the client (a) communicate the data showing how technology advances were causing prices to drop and (b) create a forum that allowed customers to share strategies for increasing sales with the client’s equipment.
Results: Client dropped the higher- end product line and focused on selling the new, lower-cost product. The first manufacturing run sold out ahead of schedule. Company received minimal complaints about price differential on the new product versus the older version.
Case Study 4.
The Problem: Costly New Product Introductions
Analysis: A division of a computer products company was losing sales and market share each time they introduced a new version of a product. The typical approach was to manufacture just enough of the older version of the product to take care of sales through the introduction date, and no more. Almost invariably, there were delays in shipping the new product, and the company would run out of the older version before the new product could be shipped.
On the surface, it appeared that the management team was doing a great job of growing sales while holding down production costs, because sales continued to grow despite the shipping delays. But accounting systems don’t measure lost opportunities and what was not immediately apparent is that they were losing share in a rapidly growing market. More specifically, they were losing market share each time they introduced a new product with delayed ship dates. In addition, the company’s sales reps were becoming quite frustrated with the shipping delays on new products, and became reluctant to include a product in written proposals if they became aware that a newer version was about to be introduced.
Solution: This problem required a two step solution: The first step was to measure the real costs of shipping delays versus the cost of building excess inventory, a.k.a. safety stock, before introducing new products. This required developing a method for measuring lost sales opportunities as well as an in-depth analysis of the manufacturing costs and lead times. Using this data, a series of scenarios were created that looked at shipping delays versus the volume of safety stock. The scenario testing revealed that except in the most extreme and unlikely scenarios, the benefit of maintaining a moderate amount of safety stock far outweighed the cost.
The second part of the solution was to address the concern of some of the executives that sales of any excess inventory of the older products would cannibalize sales of the newer products. Using the financial models developed to analyze this issue, it was possible to demonstrate that any excess inventory could be sold through a tertiary distribution channel with minimal impact on sales through the two primary distribution channels.
Results: The first time the new approach was tested, the company actually gained market share during the transition from the older to the newer product. This was due in part because the sales reps could enthusiastically sell the older product knowing that if the new product was delayed, there would be no problem shipping the older product, and if the new product was available, they could delight their customers with a newer model. Moreover, because the sales of the small amount of excess inventory on the older products went through an alternate distribution channel, it damaged sales of the competition rather than cannibalized sales of the new product. The “pilot test” was so successful that it became a model for product line rollovers in other parts of the company.
Case Study 5.
The Problem: New Management Team Drowning in Problems
A high tech company created a new division to facilitate the growth of a promising set of products. Less than a year later, the management team was overwhelmed with problems. Promising new products were stuck in R&D, talented young managers were threatening to leave the company, and the division was falling short of its revenue objectives.
Analysis: A preliminary review of the company’s products, processes, and market situation indicated that the majority of problems were internally-driven, not market-driven. Extensive interviews were held with the entire executive team, their direct reports, and key stakeholders. When asked to identify the key issues facing the new division, the interviewees collectively provided a list of over 50 problems. But delving deeply into the information provided by the division manager and the interviewees, it became clear that there were only three problems that needed to be addressed: There was a rampant lack of clarity in the process for making decisions, especially with respect to who had the final say in product design issues. There were insufficient formal and informal communication channels, including inadequate methods for tracking and reporting progress on key initiatives. As a result, many promising younger managers felt shut out of the decision-making process. Also, serious HR issues were allowed to fester instead of being dealt with promptly.
Solution: A two-day strategic planning offsite was held with the leadership team. In addition to the executive team, key product line managers and section managers from R&D and manufacturing were included. The agenda of the offsite was designed to specifically address the three fundamental problems, as well as to produce an operating plan for the next year.
Results: Perhaps the most gratifying moment for the two facilitators of the planning meeting came at the end of the first day. The key issues had been put on the table and discussed in an open and non-judgmental fashion, and potential solutions were examined. There was so much excitement and relief in the room that when one of the younger managers turned on some music after dinner, the team literally stood up and started jumping and dancing. The facilitators slipped out, knowing this was a bonding experience for the previously fractured team. By the end of the second day of the planning, the team had worked out solutions to the root problems. The products that had been mired in design issues were introduced within a year. More importantly, talented young managers that were ready to jump ship became re-energized and stayed with the company.