Customers are consolidating their purchases
Symptom: Customers are consolidating their purchases.
Implications for the market:
In most hostile markets, customers buy from several suppliers, asking each supplier to fill a specific role different from that of any other supplier. Typically, these roles are: Primary Supplier, Secondary Supplier, and Tertiary Supplier.
As volume consolidates, it becomes especially important for a supplier to fill the most important role–the role of Primary Supplier if at all possible — because the resulting volume is essential to keep the supplier's costs down and profitability up.
But to win or hold this primary role with the customer, a supplier must understand what the customer requires of that position and focus its business proposition on filling that need. And these needs change as customer segments change.
In such a market, a company must first improve its position with its best customers and avoid any volume loss with them.
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Perspectives: Conclusions we have reached as a result of our long-term study and observations.