An important market for this international joint venture had become very price competitive with some major players apparently cross-subsidising their product offerings from their other streams of business. Our clients wished to avoid price competition and retain their considerable presence in the market.
Our team, comprising both business and technical expertise from our own staff and client personnel, focused on gaining a thorough understanding of the marketplace, including an investigation of competitors and customers. Having gained a good understanding of market structure and client needs, we organised a series of joint client/consultant workshops. In these workshops we used the evidence to identify and assess the strategic options.
The evidence suggested that focusing on standard industry products and abiding by the conventional purchasing process, lead inexorably to reducing margins. An alternative strategic approach was developed which resulted in a radically new product range, the high margin part of which addressed a non-conventional customer base.
What we learned
That blindly accepting market conventions can be dangerous, while challenging them can be very profitable.