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You know how to market your products and services. But do you know how to beat your competitors without going into the proce war or compromising quality? Growing your business is a challenging task. This presentation shows how growing companies are accomplishing it and how you can adopt these tactics for your business growth.
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1.562.860.8637
www.cpSphere.comITS NOT STRATEGY THAT MATTERS – ITS EXECUTION THAT COUNTS
Growth Strategies – Beat the Unbeatable
―There, there it is again—the invisible hand of the marketplace giving us the finger.‖
1.562.860.8637
www.cpSphere.comITS NOT STRATEGY THAT MATTERS – ITS EXECUTION THAT COUNTS
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Delivering Next Generation of Solutions
cpSphere
17215 Studebaker Rd. Suite 390
Cerritos, CA 90703
1.562.860.8637
1.562.860.8611
www.cpSphere.com
1.562.860.8637
www.cpSphere.comITS NOT STRATEGY THAT MATTERS – ITS EXECUTION THAT COUNTS
Business is somewhat like
Driving…
Open Roads, Fast Traffic
does it matter if you are driving a new fast or an old modest car?
Just like driving, best business strategy is to be in an industry that is growing fast
1.562.860.8637
www.cpSphere.comITS NOT STRATEGY THAT MATTERS – ITS EXECUTION THAT COUNTS
Unfortunately most of us drive
with the traffic …
Congested Roads, Slow Traffic
does it matter if you are driving a new fast or an old modest car
Just like congested roads, we are in slow growing industries with many competitors.
1.562.860.8637
www.cpSphere.comITS NOT STRATEGY THAT MATTERS – ITS EXECUTION THAT COUNTS
In congested roads, how will you reach your destination quickly?
• Be an aggressive driver and maneuver through the traffic• Drive in the car pool • Drive on the shoulder• Drive in an ambulance or a police car• Use a different route
OR• Use helicopter
For our businesses we also need an helicopter strategy that make our competition irrelevant.
1.562.860.8637
www.cpSphere.comITS NOT STRATEGY THAT MATTERS – ITS EXECUTION THAT COUNTS
The best business strategy is to be in a fast growing industry!
Just like driving against the traffic.
Unfortunately, most of us are driving our business with the traffic. To beat the traffic and grow our businesses
we need a ―Helicopter Strategy‖
1.562.860.8637
www.cpSphere.comITS NOT STRATEGY THAT MATTERS – ITS EXECUTION THAT COUNTS
What is your understanding of the growth strategy?
1.562.860.8637
www.cpSphere.comITS NOT STRATEGY THAT MATTERS – ITS EXECUTION THAT COUNTS
We believe Growth Strategies is about:
• Increase Sales or Revenue
• Capture Market share
• Beat the competition
• Exploit the existing demand
Find the new Pot of Gold!
1.562.860.8637
www.cpSphere.comITS NOT STRATEGY THAT MATTERS – ITS EXECUTION THAT COUNTS
Size of the market pie is fixedWe have to snatch competitor‘s share to increase our market?
1.562.860.8637
www.cpSphere.comITS NOT STRATEGY THAT MATTERS – ITS EXECUTION THAT COUNTS
How to capture the market share?
Low Price Differentiation
or
1.562.860.8637
www.cpSphere.comITS NOT STRATEGY THAT MATTERS – ITS EXECUTION THAT COUNTS
Low Cost Strategy
There could be only one price leader !
1.562.860.8637
www.cpSphere.comITS NOT STRATEGY THAT MATTERS – ITS EXECUTION THAT COUNTS
Low Cost Strategy
You might be able to capture the market share but it will erode your profit margins
Only way to make money with the Low Cost Strategy is by doing volume!
1.562.860.8637
www.cpSphere.comITS NOT STRATEGY THAT MATTERS – ITS EXECUTION THAT COUNTS
Differentiation Strategy
Differentiation means higher cost!
1.562.860.8637
www.cpSphere.comITS NOT STRATEGY THAT MATTERS – ITS EXECUTION THAT COUNTS
Differentiation Strategy
and/or
Customers Products
1.562.860.8637
www.cpSphere.comITS NOT STRATEGY THAT MATTERS – ITS EXECUTION THAT COUNTS
Differentiation Strategy – Customer
The WorldMARKET
• Original Market
• By Region
• By Ethnicity
• By Gender
• By Age
• Etc. etc.
My RegionCaliforniaSpanish
SpeakingFemale20 - 35
Higher the segmentation, smaller the market size
1.562.860.8637
www.cpSphere.comITS NOT STRATEGY THAT MATTERS – ITS EXECUTION THAT COUNTS
Differentiation Strategy – Product
• Quality
• Features
• Technology
Does your product innovation create buyer value?
In today‗s world, there is no way to stop imitators.
1.562.860.8637
www.cpSphere.comITS NOT STRATEGY THAT MATTERS – ITS EXECUTION THAT COUNTS
Both Low Cost and Differentiation Strategies have their pro and cons but they don‘t completely fit the bill of the
growth strategy because they are about war.
―The real purpose of any growth
strategy should be to create an
uncontested market place and
growth opportunities.”
1.562.860.8637
www.cpSphere.comITS NOT STRATEGY THAT MATTERS – ITS EXECUTION THAT COUNTS
Introduction Growth Maturity Decline
Low Price ORDifferentiation Strategy
Low Price Strategy
Differentiation Strategy
Differentiation ANDLow Price Strategy
Where each strategy fits . . .
Product Life Cycle
1.562.860.8637
www.cpSphere.comITS NOT STRATEGY THAT MATTERS – ITS EXECUTION THAT COUNTS
We Believe:
―Any business with less than
1%of the market share is in
Introduction state of life-cycle.”
The best growth strategy for such businesses is Differentiation & Low cost
1.562.860.8637
www.cpSphere.comITS NOT STRATEGY THAT MATTERS – ITS EXECUTION THAT COUNTS
Cost Reduce Cost• Production
• Material
• Marketing
• Layoffs, etc.
Pursuing Differentiation & Low Cost Strategy
Product Features
Differentiate by• Introducing new Product Features
• Customer Service, etc.
Product Innovation is offsetting Cost ReductionDo you really know where to cut cost and where to improve buyer value?
1.562.860.8637
www.cpSphere.comITS NOT STRATEGY THAT MATTERS – ITS EXECUTION THAT COUNTS
Cost
Strategically reduce cost that results in more value for customers
Buyer Value
Differentiation & Low Cost Strategy is about Value Innovation
This is the corner stone of
―Helicopter Strategy‖
1.562.860.8637
www.cpSphere.comITS NOT STRATEGY THAT MATTERS – ITS EXECUTION THAT COUNTS
How ?
• Conduct a detailed marketing research, highlighting
• Industry Conditions
• Competitive Situations
• Benchmark your operations
• Identify New Market Segments
• Define Detailed Budgets
Focus on the big picture, Not Numbers. . .
1.562.860.8637
www.cpSphere.comITS NOT STRATEGY THAT MATTERS – ITS EXECUTION THAT COUNTS
Strategy Canvas – A Diagnostic and Communication Tool
Factors the industry competes on
Price Factor 1 Factor 2 Factor 3 Factor 4 Factor 5
How
mu
ch in
du
stry
inve
sts i
n
Lo
wM
ed
ium
Hig
h
Industry
Strategy Canvas is a structured way to define your Value Proposition
1.562.860.8637
www.cpSphere.comITS NOT STRATEGY THAT MATTERS – ITS EXECUTION THAT COUNTS
Strategy Canvas – Grocery Stores
Factors the industry competes on
Price National
Brands
Store
Space
Choice of
Package Size
Sales &
CouponsAdvertisement Proximity of
Stores
Friendly
Staff
How
mu
ch in
du
stry
inve
sts i
n
Lo
wM
ed
ium
Hig
h
Industry
1.562.860.8637
www.cpSphere.comITS NOT STRATEGY THAT MATTERS – ITS EXECUTION THAT COUNTS
Strategy Canvas – What it ShowsCompany Caught In Fierce Competition
Factors the industry competes on
Price National
Brands
Store
Space
Choice of
Package Size
Sales &
CouponsAdvertisement Proximity of
Stores
Friendly
Staff
How
mu
ch in
du
stry
inve
sts i
n
Lo
wM
ed
ium
Hig
h
Industry
YouValue curve converges with competitor. Company‘s strategy is to outdo the competitors
1.562.860.8637
www.cpSphere.comITS NOT STRATEGY THAT MATTERS – ITS EXECUTION THAT COUNTS
Strategy Canvas – What it ShowsOver Delivering Without Payback
Factors the industry competes on
Price National
Brands
Store
Space
Choice of
Package Size
Sales &
CouponsAdvertisement Proximity of
Stores
Friendly
Staff
How
mu
ch in
du
stry
inve
sts i
n
Lo
wM
ed
ium
Hig
h
Industry
You
Delivering high level across all factors. Do you have highest market share? If not, profitability will be extremely low
1.562.860.8637
www.cpSphere.comITS NOT STRATEGY THAT MATTERS – ITS EXECUTION THAT COUNTS
Strategy Canvas – What it ShowsIncoherent Strategy
Factors the industry competes on
Price National
Brands
Store
Space
Choice of
Package Size
Sales &
CouponsAdvertisement Proximity of
Stores
Friendly
Staff
How
mu
ch in
du
stry
inve
sts i
n
Lo
wM
ed
ium
Hig
h
Industry
You
There is no strategy, things are done on ad-hoc basis which individually make sense and keep everyone busy, but do not help company to standout against competitors
1.562.860.8637
www.cpSphere.comITS NOT STRATEGY THAT MATTERS – ITS EXECUTION THAT COUNTS
Strategy Canvas – What it ShowsStrategic Contradiction
Factors the industry competes on
Price National
Brands
Store
Space
Choice of
Package Size
Sales &
CouponsAdvertisement Proximity of
Stores
Friendly
Staff
How
mu
ch in
du
stry
inve
sts i
n
Lo
wM
ed
ium
Hig
h
Industry
YouCompany is asking high price and offer bigger area, but offer few national brands, and low package sizes
1.562.860.8637
www.cpSphere.comITS NOT STRATEGY THAT MATTERS – ITS EXECUTION THAT COUNTS
How the Strategy Canvas Looks for a Company that is pursuing Differentiation and Low Cost
Strategy ?
1.562.860.8637
www.cpSphere.comITS NOT STRATEGY THAT MATTERS – ITS EXECUTION THAT COUNTS
Strategy Canvas – Trader‘s Joe
Factors the industry competes on
Price National
Brands
Store
Space
Choice of
Package Size
Sales &
Coupons
Advertisement
Pro
xim
ity o
f
Sto
res
Frie
nd
ly
Sta
ff
Ex
clu
siv
e
Int. F
oo
d
Fu
n/
Ad
ve
ntu
re
How
mu
ch in
du
stry
inve
sts i
n
Lo
wM
ed
ium
Hig
h
Industry
Trader Joe‘s
1.562.860.8637
www.cpSphere.comITS NOT STRATEGY THAT MATTERS – ITS EXECUTION THAT COUNTS
Trader Joe‘s Strategy Canvas
• Focus– Friendly Staff
– Exclusive International Food
– Fun place to shop
• Divergence– Value Curve diverge from
industry Standards
• Compelling Tag Line– Fun Place to get Exotic Food!
This curve clearly showswhere to cut cost that will deliver higher value for customers
1.562.860.8637
www.cpSphere.comITS NOT STRATEGY THAT MATTERS – ITS EXECUTION THAT COUNTS
We know how to create Strategy Canvas.
But
How to define a New Value Curve?
1.562.860.8637
www.cpSphere.comITS NOT STRATEGY THAT MATTERS – ITS EXECUTION THAT COUNTS
Four Action FrameworkAnswer Four Simple Questions
1 Identify factors that you can eliminate
2 Identify factors that you can reduce, well below the industry standard
3 Identify factors that you can increase well above industry standard
Strategically Reduce Cost
4 Identify new factors that do not exist in industry
Strategically Invest in
1.562.860.8637
www.cpSphere.comITS NOT STRATEGY THAT MATTERS – ITS EXECUTION THAT COUNTS
Strategy Canvas – Trader‘s Joe
Factors the industry competes on
Price National
Brands
Store
Space
Choice of
Package Size
Sales &
Coupons
Advertisement
Pro
xim
ity o
f
Sto
res
Frie
nd
ly
Sta
ff
Ex
clu
siv
e
Int. F
oo
d
Fu
n/
Ad
ve
ntu
re
How
mu
ch in
du
stry
inve
sts i
n
Lo
wM
ed
ium
Hig
h
Industry
Trader Joe‘s
Cut Cost
Invest
1.562.860.8637
www.cpSphere.comITS NOT STRATEGY THAT MATTERS – ITS EXECUTION THAT COUNTS
Example:Our Client – An Interior Design Firm
• Industry Annual Revenue: $7.0b
• 11,000+ Interior Design firms, major Companies are units of big architectural firms
• Industry is extremely fragmented. Big 50 companies account for only 10% of the revenue.
• Product Sales contribute to 60% of Revenue, Design Fee 35% and Sub-contracting 5%
• Gross Profit Margin is 35 – 40%
• Account Receivables are about 15% of gross assets
• Collection Period is 15 – 20 days
• Inventory is 5 – 10% of gross assets, and
• Inventory turn is about 10 times a year
Industry Landscape: Extremely Competitive and Fragmented Market with low barriers to entry
1.562.860.8637
www.cpSphere.comITS NOT STRATEGY THAT MATTERS – ITS EXECUTION THAT COUNTS
Strategy Canvas – Interior Design Firm
Pric
e
Des
ign
Ide
as
Wo
rkm
an
sh
ip
On
Tim
e
Deliv
ery
Wo
rkro
om
Em
otio
nal
Ap
pe
al
Sh
ow
roo
m
Des
ign
Po
rtfolio
Lo
wM
ed
ium
Hig
h
High-end Industry
Low-end Industry
1.562.860.8637
www.cpSphere.comITS NOT STRATEGY THAT MATTERS – ITS EXECUTION THAT COUNTS
Traditional Approach
• Segment MarketLet‘s define the market segment e.g. Home owners, Builders, Other Architect firms
• Cost-Payback tradeoffSince we have limited resources, let‘s see where we can get best bank for the buck
• Customize Offering to selected Market
1.562.860.8637
www.cpSphere.comITS NOT STRATEGY THAT MATTERS – ITS EXECUTION THAT COUNTS
Strategy Canvas – Interior Design Firm
Pric
e
Des
ign
Ide
as
Wo
rkm
an
sh
ip
On
Tim
e
Deliv
ery
Wo
rkro
om
Em
otio
nal
Ap
pe
al
Sh
ow
roo
m
Des
ign
Po
rtfolio
Bra
nd
Me
dia
Lo
wM
ed
ium
Hig
h
High-end Industry
Low-end Industry
Our Client
1.562.860.8637
www.cpSphere.comITS NOT STRATEGY THAT MATTERS – ITS EXECUTION THAT COUNTS
Recommended Growth Strategy
• Focus– Clear focus to create a
nationwide brand that signifies their Style
• Divergence
• Compelling Tagline– Leading Brand for
celebrities that reach mass audience through retailers
1.562.860.8637
www.cpSphere.comITS NOT STRATEGY THAT MATTERS – ITS EXECUTION THAT COUNTS
Value Curve Validation
• The litmus test i.e. – Focus
– Divergence, and
– Compelling Tagline
1.562.860.8637
www.cpSphere.comITS NOT STRATEGY THAT MATTERS – ITS EXECUTION THAT COUNTS
What to Reduce, what to Add
Think About:
• Non-Customers, and
• Alternatives
Reconstruct Industry Boundaries
1.562.860.8637
www.cpSphere.comITS NOT STRATEGY THAT MATTERS – ITS EXECUTION THAT COUNTS
Market
Tier 3: ―Unexplored‖ non-customers who are in the market distant from yours e.g. Retail Stores
Market
Tier 2: ―Refusing‖ non-customers They have consciously chosen against your markete.g. corporate housing and hospitality industryMarket
Three Tier of Non-Customers
Customers
Tier 1: ―Soon to be‖ non-customersThey are on the edge of market, waiting to jump shipe.g. Individual Home Owners
What are the common needs among largest cross-section of customers
1.562.860.8637
www.cpSphere.comITS NOT STRATEGY THAT MATTERS – ITS EXECUTION THAT COUNTS
How to Fulfill the needs of Non-Customers
Look Across
• Alternative Industries
• Strategic Group Within Industries
• Chain of Buyers
• Complementary Service Offering
• Functional and/or Emotional Appeal
• Time
1.562.860.8637
www.cpSphere.comITS NOT STRATEGY THAT MATTERS – ITS EXECUTION THAT COUNTS
Next Step
Identify Initiative• Does your product
offer exceptional Buyer utility?
• Use Buyer Utility Map
Strategic Pricing• Set the price which
is easily accessible to mass of buyers
• Use Pricing Corridor Tool
Align Operations• Set Target Profit• Come up with
Target Cost• Streamline Cost
Innovation
Adoption• Create a consensus • Address adoption
hurdles in actualizing the strategy
• Balance Scorecard
Operation ExcellenceOctober 4th , 2007 Name of the game is ―Profit‖. Learn techniques for streamlining your operations that results in positive bottom line for your growing business.
Measuring Business SuccessNovember 1st , 2007 It is a given fact; whatever you measure, it improves. Learn how to define an operating plan for your business and what to measure
1.562.860.8637
www.cpSphere.comITS NOT STRATEGY THAT MATTERS – ITS EXECUTION THAT COUNTS
Credits:
International Best Seller …
1.562.860.8637
www.cpSphere.comITS NOT STRATEGY THAT MATTERS – ITS EXECUTION THAT COUNTS
Results
CPSPHERE – HELP YOU FOCUS & GROW
