| I. TOOLS IN THE ARSENAL
Speed, accuracy and agility
How does your company win the competitive game? Everyone seems to be pursuing the same business that you are. How can you differentiate your company from all the others? The perspectives in answering these questions lie in your company’s ability and desire to demonstrate speed and agility to the changing market conditions.
Conditions of advantage and marketability do not remain fixed. Responding to these changing conditions in a timely manner will ensure success.
It would seem that winning in the new product arena is a formidable, almost impossible task. It could be, for firms that do not continually strive to improve their products, their marketability, and their position in the marketplace. If, however, your company does execute these continual steps in new product and market development, you will be well positioned to compete. If you have a strong foothold among the customer base, it will be that much easier to defend and grow.
Consultative selling
“Our customers come to us because they view us as the leaders and trust our expertise to resolve their needs.” This statement exemplifies the result of continued consultative selling. The company has positioned itself as the resource that the customer will use as a normal course of their business. It also creates a dependence on the company that results in a competitive advantage. In addition to the normal advantage in a bidding or competitive situation, it also positions the company to be on the customer’s cutting edge of new developments. This type of selling allows the customer to become a partner in their future success. Such a relationship requires mutual trust and involvement.
Facilitating the customer’s dependence
How can you create this dependence between your company and the customer? Your solution needs to provide features and benefit services that the customer would ordinarily need to provide. Inherent in the solution you are providing them, you can offload the customer having to provide this service themselves. If they re-deploy or reduce headcount, then you have created a certain dependence. You need to be selective in this area, because if not, you run the risk of attempting to be all things to all people. Create the dependence, where it does not cost your company too much in time and effort, or better yet, do this in an area where you are exceptionally proficient.
This type of selling, although very successful in the long run, does require a significant amount of energy and funds to develop and cultivate. Your company itself needs to make a commitment to select a customer and see it through to completion. By effective partnering with the customer’s future plans, links between the two companies can be cemented, which will help transcend competitive thrusts.
Identify opportunities in which small incremental changes mean big advantages
If you loosely define the competition of new product development as a game, then consider it to be in the organization’s best interest to learn to play the game well. It has been previously discussed to become proficient at incremental changes. An adjunctive activity is to become proficient at identifying those items that are small and can be accomplished with a minimum of effort, and execute them for incremental gains. A series of these will mean big payoffs in the near and long term. They serve as practice for larger programs and also keep competition at bay, by constantly raising the barrier to expectation level in the specific marketplace.
Determine latent opportunities for competitive advantage and incorporate them
Here is where the “engagement” of the customer becomes so important. It is at this interface, that if you listen carefully, the latent needs of the customer will become evident. It is in that latent need that the identification of the product features and/or configuration will be defined and value posted by the customer. By incorporating these features, the company can gain a competitive advantage with small, incremental effort and protect the margin against erosion as a result of competitive pricing actions.
II. THE NEW PRODUCT IS THE COMPETITIVE WEAPON
Here are some of the tools used to create the competitive weapon….
New product development is the survival means in a market
Most companies cannot compete on price and delivery alone. In fact, it is quite a dangerous pathway. New product development is often used as a competitive weapon in the marketplace. With most companies, customers and competitors know their history, patterns, and areas of comfort. New product development is a means for a company to gain advantage, secure a position, or win a new customer. It is the ultimate weapon in changing the playing field and should be used as such.
Leapfrogging the account and the industry
Examine the industry and the marketplace. Determine the products and the technology employed to solve customer problems. Cite advantages and disadvantages of each of these implementations, then forecast the future of each of these technologies. This is where the competition will be at your next product introduction. Will you exceed customer requirements, or be at parity with your competitor? Your program needs to leap ahead of where the others will be at that future point. Aim further as a starting point so that at the time of introduction, you will be in a superior position.
Attacking your own entrenched position
So things are going fairly well. No major problems, volume is reasonable, quality is acceptable, and costs permit a good margin. Time harvest the benefit of all the work right? Wrong. Now is the time to begin to “attack yourself”. Do the proper amount of introspection to determine how long you will have the advantage, what the vulnerable points of the business are, what steps need to be taken to secure the future business levels and more. The competition will be doing this, so it is in the company’s best interest to do the same, and to do it before anyone else. This activity is healthy, as it reduces complacency and rekindles a sense of urgency in continually improving the processes, the products, and the relationships with customers. Now is a good time to revisit that loyal customer and solicit their feedback.
The latent opportunity
Are there latent opportunities among your customer base? What are the specific requirements that they need to compete better? Find that specific requirement and seize the opportunity to capitalize on it. These are the actions that bind you to a loyal customer. The difficulty is in finding out what the latency is, as it is not always readily obvious. Often the customer needs to be led through the discussion to obtain this information. This skill may not be readily available through most sales channels and requires personnel who can communicate effectively and solicit information in an unbiased fashion. However, since it is somewhat difficult to obtain for your company, it will be difficult for your competitor also.
Raising the barrier to entry
In any situation, it benefits the company to keep the barriers to market entry as high as possible. Surround and imbue the company with expertise and equipment that gives specific market advantage. Investing in capital equipment financed from profits raises the barrier, thus discouraging ill-equipped start-ups from encroaching on your territory. Investment in the business will not only raise the barrier, but will also lower costs and improve repeatability and quality. These have a disproportionate effect in terms of competitive advantage and position. It makes someone chasing your business accounts all that much more difficult to capture.
Raise the customer expectations beyond competition’s ability to deliver
Your company’s actions should continually raise the customer’s expectations of provided products and services. By setting the standard for performance in your marketplace, you make the competition dance to the defacto standards you set, not visa versa. This continual resetting of the customer’s expectation level will also raise the barrier to entry from a features and business services perspective, another difficult target to reach for others. This can also catch others off guard because they won’t understand the schedules that the partnership establishes for implementation. Your schedules will chart the pathway and will be known only to you and the customer/partner, making it a guessing game for anyone else to intercept.
III. ENGAGING THE MARKET/CUSTOMER
In this section we will examine the issues on engaging the market and the customer. In the Business Development Process there are no absolutes and no one remains at rest. When your company launches a product or readjusts a price, the competition may take some action, the customer may take some action, and you must anticipate these actions.
To better position your firm to win at this, consider the following process:
We accept the customer buys the “Value” in a product. Therefore to align best with the customer’s needs and position yourself, you must seek the "value added solution" in your offering.
The embodiment of this value generally can fall into one of 3 categories:
PRODUCT EMBODIMENT - Create Customer Value by solving a problem with the Embodiment of the Product
PROCESS ORIENTATION - Create Customer Value by solving a customer problem by altering how the product is made, lower cost, faster lead time, venue
SUPPLY CHAIN STAGING - Create Customer Value by solving a customer problem by altering the supply chain in delivering the product to the customer.
Each of these methods enhances the firm’s ability to secure the business and provide a better situation for the customer.
It starts with truly listening to the customer. We must listen, however, in a completely different way than we have traditionally done. We must disconnect from our role in the corporation and place ourselves in the frame of reference of the customer and evaluate matters from a wider perspective:
The customer has an issue or problem to resolve.
The customer is not predisposed to your solution.
The best evaluation of your competitive standing is to remove yourself from the sales arena and place yourself at the customer’s perspective. When you create it, the value-engineered solution addresses direct and latent customer issues.
You must use the process of discovery: a customer interaction is a dialog and the interchange is a process of discovery where the seller probes for conditions, customer alternatives, and market situation.
Discovery should produce the customers and hidden opportunities, competitive situation and threats to securing the business.
The value-engineered solution is the Preferentially Compatible Deal, which is a result of this discovery and planning.
The firm in total must understand and frame the customer's business, alternatives, decision breakpoints and product pathways, then use this understanding to synthesize the better situation for the customer:
Some additional steps are to:
Scope Out How the Competitors Will React in the Proposal Stage
What Are the Competitive Alternatives?
Capitalizing on the Weakness in the Competitive Arena
Setting Up The Conditions For Customer Evaluation
Step Into the Customer's Mind to Evaluate Your Proposal
Evaluate the Competition Dynamic From the Customer's Perspective.
The Value Engineered Solution Positions the Seller and Benefits the Buyer
Your sales focus should then guide the transaction down the planned pathway and take action to accommodate changing competitive conditions the value-engineered solution is the better deal for the customer.
IV. CONCLUSION
There are many ways to win at the Business Development Game. The sustainable way is to define the product opportunity in a manner that addresses market needs and also facilitates the manufacturer’s requirements. A method in common use today is through the use of platform management. This will be discussed in the November 2007 article.
Portions excerpted from Marc A. Annacchino’s book The Pursuit of New Product Development, ISBN-10: 0-7506-7993-X, http://www.elsevier.com/wps/find/bookdescription.cws_home/709057/description#description. Marc Annacchino, P.E., is owner of Marconi Product Development Institute, Inc., a company providing consulting services, contract development, seminars, and other services. He can be reached at Marconi@execpc.com.
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