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Customer Decisions on Benefits

Reasons for Positive Volatility

Capsule: Your competition will constantly improve their performance, even in your areas of strength. You should understand the reasons for positive volatility in order to be sure that you can protect and develop your strengths of the Company in your future innovations.

Of course, you do not want to throw the baby out with the bath water by concentrating solely on your Company’s shortcomings. The Company has many areas of strength. You need to keep these areas in mind as you develop your future value proposition. You may develop some of these benefits further to enhance your future positive volatility. At a minimum, you want to protect the benefit advantages you now enjoy over competition. Your next step is to analyze the reasons for your positive volatility. (See Perspective: “Rare Mettle: Gold and Silver Strategies to Succeed in Hostile Markets.”)

The Company’s positive volatility has two components. The first component encompasses the instances where the Company had “wins” over its competitors. The second component is the positive volatility that the Company realized only after an incumbent supplier had “failed” its customer and opened the customer relationship. After the “failed” relationship came up for competition, the Company gained the customer’s purchases over the other suitors for the customer. These latter instances of positive volatility are called ” weak wins.” (See Symptom: “Product Innovation has Accelerated.”)

“Weak Win” Examples>>

Reasons for Positive Volatility Questions

Analysis 36
:
Comparison of Company to Industry on Reasons for Positive Volatility
  • How does the Company compare to the industry on reasons for positive volatility? An index measure expresses the Company’s relative strength most effectively. Any index above 150 indicates an area of real strength for the Company. (Analysis 36)
  • How much of the Company’s positive volatility is due to an outright “win” rather than due to a “weak win”?
  • What are the reasons, in rank order of importance, for the Company’s “wins” over competition?
    1. In the Company’s total positive volatility
    2. In the Company’s Get In volatility
    3. In the Company’s Increase Use volatility
  • What are the reasons, in rank order of importance, for the Company’s gains after an incumbent supplier has “failed” a customer relationship?
    1. In the Company’s total positive volatility
    2. In the Company’s Get In volatility
    3. In the Company’s Increase Use volatility
  • After the review of all the reasons for the Company’s positive volatility, which are the most important benefits to protect and develop further in creating the future value proposition?

Basic Strategy Guide Users Return to: Step 17
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