Perspectives: Segments

The Big Slice of the Pie
The head of one industry leader explains his company’s insistence on being a key supplier to each of his customers: “The guy with the big slice of the pie doesn’t go hungry.” The workings of the typical hostile market provide solid support for this philosophy.

Building On Customer Volatility
In one crucial respect, hostile markets are actually more stable than non-hostile markets. During market hostility, share shift slows.

The Commoditization of Scale
Scale is a commodity traded every day on the stock exchange. Scale alone no longer guarantees a company an advantage in the market place.

Customer Segmentation: Finding the Human Dimension
Many people talk about segmenting customers by needs, but few write about it. We have examined several thousand product innovations to determine the implied needs that the products met for customers. We have found three categories of human needs: intellectual, physical and emotional. Our work has led us to look for customer needs in any market by asking a series of fifteen questions derived from these three categories of need.

Failure Shifts More Share Than Success
For a company trying to gain share in a mature market, nothing succeeds like failure – the failure of a competitor.

Finding the Open Door
Volatility is the movement of volume from one supplier to another. A company can not gain volume unless customers are willing to make a change in suppliers. Volatility has special rules in hostile markets.

Hallmarks of Hostility

Companies whose industries are in hostility will have to confront several symptoms of this hostility that show themselves in the channels of distribution.

Hostility in a Differentiated Market
A bottle of wine is surely a differentiated product. Nevertheless, the table wine industry underwent the same economic traumas faced by more traditional industries.

How the Auto Rental Market Became Hostile
The auto rental market, during the ’80s, illustrates a typical trip into hostility.

If Whitey Ford Ran My Company
A well-managed company succeeds the same way that Whitey Ford won all of those games. Neither a pitcher nor a company can stay in the game long without the basic elements working together.

Is Bigger Really Better?
In the average large industry, the market share leader is only slightly more likely to lead the industry than is any one of the next three competitors in the industry. Market share leaders often fail to become return leaders because they serve some customers who yield low returns and rely on size alone to create economies of scale.

Managing Before and After Hostility Starts
Low levels of profitability for most competitors make a hostile industry a tough place to compete.

Overcapacity: Threat or Opportunity?
Overcapacity is a problem that occurs in service, as well as manufacturing industries. When it strikes, the problem affects most functions in a company, and astute managements in a wide range of industries have found common formulas to outperform competition in markets with overcapacity.

Rare Mettle: Gold and Silver Strategies to Succeed in Hostile Markets
Managements of winning companies have common themes for success in hostile markets. They each follow five basic themes. While virtually all successful companies are aware of these themes, their implementation differs according to their market position at the onset of hostility.

The Real Reason Market Share Matters
Market share does count, but for more than the reasons thought previously.

The Rust Belt Revival
The revival of the U.S. Rust Belt in the late 1980’s holds lessons for companies who would prosper in hostile marketplaces.

Sandlots and Super Bowls
A market that is not hostile is something like a sandlot game in sports.

Staying Alive in a Hostile Marketplace
A few companies survive and even prosper during periods of hostility. How do these companies avoid being the victims of tough market conditions?

Success Under Fire: Policies to Prosper in Hostile Times
A hostile market evolves through six predictable phases. Most companies fail, withdraw or become acquisitions before this evolution is complete. They fail because their management policies were not effective. The few who survive and prosper do so by making decisions that follow two rules: attract customers and discourage competition. Losers lose by not following the second rule.

Turmoil Below: Confronting Low-End Competition
There are four major types of competitor who offer your customers low prices. Each of them have distinct weaknesses. Your response to them depends on your answer to several tests that you would apply to your market and your competition.

The Two Best Consultants in the World
The two best consultants in the world are a company’s customers and its competition. The customer informs a company about the value of its product. The competitor is an authority on the company’s cost. Neither consultant is ever wrong.

Use Subtle Strategy in Tough Markets
A hostile market operates differently than a market with “normal” competitive conditions. But as difficult as a tough market can be, it can also present an astute management team with an unusual opportunity.

Which Customers Matter Most?
Average customer profitability differs dramatically in non-hostile and hostile markets. Does the relative importance of one customer versus another change as well? The answer is less evident than many business leaders believe.

 
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