Drive Market Transformation

For companies concerned about:

The profit pool shifting away from their industry
New technologies, customer segments/needs or operating capabilities threatening their relevance

We can help them to:

Position their business to be in the path of increasing profits
Identify emerging customers, segments or needs they can address
Determine the redefinition of value delivery they can drive

Drive Market Transformation: Becoming a Service Provider

For this billion-dollar manufacturer of control equipment for major transportation crafts, we devised an approach for providing services to the end-users operating the finished equipment.

The Situation: While our client commanded a 40% share in its market, this control equipment manufacturer faced a very slow-growth market where its margins were structurally limited by the competitive bid process and long-term contracts prevalent in their industry.

Our Approach: Through detailed systems cost analysis we were able to demonstrate that the impact of delays when our client’s equipment failed significantly outweighed the product’s installation cost. This suggested the significant benefit a careful maintenance and repair program might offer to the operator. We also quantified the extent to which our client’s superior product familiarity, technical expertise and lower (wholesale) cost to hold inventory, positioned our client to offer this service at well below what it might cost the operator.

The Deliverable: The outcome was a new business plan. It included target customers and approaches, cost and pricing strategies, and major implementation hurdles to be overcome.

The Result: Our client piloted and subsequently launched the first of its kind business providing this recommended service. At the one-year point, service revenues had yet to outpace product sales, but the trajectory suggests that is exactly what will occur. Meanwhile the relative Return on Assets of the new business has already proven superior.

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