WQA Meeting

1
Surviving Business Adversity

• By Scott Yaeger
• President
• Filtration and Separation Technologies LLC

2
Keys to Business Success

• Growth
• Profitability
• Cash Flow

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Why Growth?

• If You are Not Growing You are Losing Market
  Share
• Zero Actual Growth is Negative Market Share
  Growth
• Increase Overhead Adsorption
• Lower Productivity
• Less Leverage
• Lower Profits
• Potential Beginning of a Downward Spiral

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Why Growth?

• Growth Equals
• Maintenance of Market Share
• Market Share Gain
• Dilution of Overhead
• Increased Value/Employee
• Better Vendor Leverage
• Lower Cost of Goods
• Higher Profitability
• Better Cash Flow

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Why Growth
Winners Grow!
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What Makes a Winner?

• Customers Value their Products and Services More
  than the Competition
• The Value of the Products and Services is Greater
  than the Price Differential between the Winners
  and the Competitors
• The Value the Customers Place on the Products and
  Services is Greater than the Total Cost to
  Provide Them Profits
• Sustainability to the Customers Perceived Value

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The Answer
Greater Perceived Value!
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Greater Perceived Value

• How do you get it?
• Added Value Differentiation
• What is that?
• Providing a valued benefit that is perceived
  greater than the competition
• Where do I find this Valued Benefit?
• Strategic Positioning Plan

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Strategic Positioning Plan

• Value Positions
• Added Value
• Market Analysis
• Competitive Analysis
• Your Strengths and Weaknesses
• Value Positioning
• Value Pricing
• Competitive Response
• Communication

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Value Positions

• Key Product or Service Attributes the Customer
  Perceives of Value
• Price
• Performance
• Quality
• Reliability
• Life
• Appearance
• Convenience
• Service
• Ease of Use
• Safety

11
Value Givens

• Every Market has Minimum Acceptable Values Below
  which the Products and Services become Non
  Competitive. E.g..
• Maximum Price Level
• Minimum Quality, Life, Performance, Reliability,
  Safety, etc.
• All Competitive Products and Services Must Meet
  the Minimum Acceptable Values

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Added Value

• Providing value differentiators greater than the
  minimum acceptable level and the competition E.g.
• Lowest Price or
• Best Performance or
• Superior Service or
• Etc.

13
Added Value

• Common Mistake
• Price as the Added Value Differentiator
• Easiest to Copy
• Reduces Margins
• Minimizes Profitability
• Hurts Cash Flow
• Only for the Rich, Foolish, or the ones with the
  Biggest Leverage
• Vendor
• Labor

14
Added Value

• Common Mistake
• Providing a Added Value other than Price but with
  a Pricing Differential Greater than the Perceived
  Value
• Over Pricing for its Worth
• Discounting the Risk of Change
• Competitive Pricing Response
• Minimal Incentive to Change

15
Market Analysis

• Identify the Most Likely User of the Product or
  Service
• Application
• Economics
• Culture
• Environment
• Geography
• Age
• Education
• Etc.

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Market Analysis

• Identify which Segment of the Market Best Fits
  Your Companys
• Products
• Services
• Geography
• Strengths
• Weaknesses
• Resources

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Market Analysis

• Select the Served Market Segment E.g.
• Market Segment Health Conscious Home Owners
  from 25 to 50 Years Old with a Middle to Upper
  Middle Class Income in Ventura County California

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Market Analysis

• Identify the Priority of the Value Positions for
  this Market Segment
• Performance
• Service
• Reliability
• Convenience
• Price
• Quality
• Safety
• Ease of Use
• Life
• Appearance

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Market Analysis

• Other Market Segments Would have Different
  Priorities for their Value Positions
• Senior Citizens in Hot Springs Village, AR would
  put Price Higher on the Priority List due to
  their Fixed Income and More Available Time
• Technology Products to a Technology Challenged
  Market would Have Reliability and Service Near
  the Top

20
Competitive Analysis

• Identify the Top Competitors in the Selected
  Served Market
• Identify their Positioning Strategies
• Identify their Strengths and Weaknesses
• Highlight the Strengths and Weaknesses that
  Support or Impede their Positioning Strategy
• Identify the Markets Value Positions Best
  Supported by their Strengths and Weaknesses
• Do their Strengths and Weaknesses Support their
  Positioning Strategy?
• How do the Best Fit Values Meet the Markets?

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Competitive Analysis
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Competitive Analysis
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Competitive Analysis
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Your Strengths Weaknesses

• Common Pitfalls
• Distorted View
• Rely on People Whom have a Stake in the Business
• Poor Analysis
• Too Close to the Business

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Your Strengths Weaknesses
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Your Strengths Weaknesses

• How do Your Value Positions Match the Competition
  and the Market?

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Your Strengths Weaknesses
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Value Positioning

• Market, Competition, and Your Strengths and
  Weaknesses Analysis
• Do you have the same best fit value position?
• Top 1, 2, or 3
• How do they fit with the Market Value Positions?
• How do your strengths support your position?
• How can your strengths be improved?
• Do your weaknesses deter from your value
  positions?
• Can your weaknesses be strengthened?
• Is there a defendable position to be taken with
  these value positions versus Competition?

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Best Fit Value Positions
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Supportive Strengths
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Improving Strengths

• Technical Image of Your Products, Services, and
  People
• Improvement of Perceived Performance of both the
  Product and Service
• Create the Strong Positive Image of Your Company
• Improved Perception of Reliability
• Service and Convenience Meet or Exceeds Market
  Values
• Price is In Line with Expectations
• Opportunity for Increasing Price
• Add Value Benefit of Improved Performance and
  Reliability
• Added Value Benefit of Strong Position in Service
  and Convenience

32
Weakness Detriments
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Weakness Improvements

• Strengthening Marketing can Improve Recognition
  with a Strong Message of your Performance and
  Service Strengths
• Image Building through Advertising, News Letters,
  Mailers, etc
• Your Price Weakness Appears Artificial Due to
  Your Cost Strength
• Adjust Price to Fit the Competition, Market and
  Added Value

34
Position Defense

• Your Existing Strengths and Value Positions Best
  Fit the Market Value Priorities
• Strengthening Performance and Reliability Values
  will Strengthen Your Positions Defense
• Improved Marketing can Lock in Your Position
• Correct Pricing Strategy will Lock Out the
  Competition

35
Relative Value Pricing

• Price Based on Your Added Value Competitive
  Position Less any Perceived Market Risk and
  Purchasing Incentive

Price (Comp Price Added Value Risk Value)
Incentive Discount
Price (100 25 - 5) 90 Price (120)
0.9 108
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Competitive Response

• If Your Value Positioning Strategy is Successful,
  You Will Get a Competitive Response
• Prepare for It
• Anticipate the Response Potential based on the
  Competitor Strengths and Weaknesses
• Have a Contingency Plan to Counter the
  Anticipated Response
• How does Your Value and Price Positioning
  Minimize the Effectiveness of a Competitive
  Response?
• What Additional Steps can be Taken that will Not
  Minimize Your Strengths or Maximize Your
  Weaknesses?

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Competitive Response

• Typical Responses
• Price
• The Greater the Added Value and the Stronger the
  Incentive is to Motivate Sales the Less the
  Effectiveness of the this Response
• Copy Cat
• If Your Competitive Analysis is Correct this will
  have a Minimal Long Term Effect Wait it Out
• Technical
• Difficult to Predict and Defend Against
• Continue Product and Service Improvements

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Communication

• An Strong Added Value Positioning Strategy is
  Minimized by a Weak Communication Plan
• Focus on the Value Added Positions
• Ensure Compliance to Competitive Lower Valued
  Positions
• Create a Perception of Added Value Worth Greater
  than any Pricing Differential
• Repetitive and Consistent Message

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Communication

• Result of Successful Communication of Your Added
  Value Position

Branding
Your Company to Your Added Value Position
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Review and Reassessment

• Change is a Constant
• Change is an Indicator that a Review and
  Reassessment is Necessary
• Market Changes
• Competitive Changes
• Technology Changes
• Personnel Changes
• Etc.

41
Summary

• Strategic Value Positioning Success
• Identify Your Served Market
• Prioritize Their Value Positions
• Know Your Market and Competition
• Identify Your Assets and Liabilities
• Determine Your Value Added Position
• Price to Win
• Minimize the Competitive Response
• Communicate, Communicate
• Dont Rest on Your Laurels