Question

Topic: Strategy

Interview Presentation

Posted by Anonymous on 2/27/2014 at 11:30 PM ET 500 Points
On Monday I have as a part of my second interview for a manager's position a 15 minute presentation for the senior business manager's on the following:-

'You have a number of business's under your responsibility at various maturity and profit contribution levels. Head quarters (USA) have recommended for you to invest more resources in one of your smaller mature but profitable businesses as they feel that there are more opportunities in your local market that are not being realised.

Present the key elements of a business plan that you would use to justify your decision to local management and head quarters as to move ahead or not with this business.

Assumptions:
- mature market
- low level of competition
- limited external barriers to entry
- strong established channel to market
- B2B market

In the plan please outline how you would leverage your internal and external resources along with potential timelines. '

This is a well-known international company and this market is an Industrial products category. I don't expect you to do the work and have an idea of how I wanted to approach this but if you have some quick thoughts that would be great as it will help me gather my thoughts.
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RESPONSES

  • Posted by Peter (henna gaijin) on 2/28/2014 at 12:24 AM Accepted
    To start with, I would be skeptical about investing in a mature market unless I could show their is growth opportunities. Mature markets usually mean low growth, and the usual market plan is to treat them as cash cows.

    So I would work toward determining the possible growth opportunities. What are these opportunities that HQ seems to think exist for this market? The start would be to talk with them and determine what and why they feel that way, and then go about confirming (or denying) their assumption.

    Other thoughts:
    - low level of competition means that you usually have good pricing power as customers don't have other places to go should you raise your prices.

    - limited external barriers to entry is bad, as that means it would be easy for a competitor to enter the market if they perceive this as a profitable market.

    - strong established channel to market is good, as you have the contacts and sales channels in place already (but bad also, as sales channels are an easy place for improvements if they are lacking).

  • Posted on 2/28/2014 at 12:57 AM Author
    Just to show I am not looking for you to do all the work my initial thoughts on this are as follows:-

    My own assumptions (based on the limited information):-

    - mature market - the brand is a differentiated product in this market.
    - low level of competition - price competition is low, brands are either good market share and/or powerful.
    - limited external barriers to entry - a mid level risk of new entrants due to new technology, reductions in raw material costs, market mergers etc.
    - strong established channel to market - customers are known, established and little change in customers.

    Even though this is a mature and small market there is still a reasonable risk of market erosion of market share and profits if not monitored.

    My assumption is that there is little market research available (or old unreliable data) so my answer would be to do:-

    1. In initial market analysis based current customer profiling and analysis to determine in detail current products usage, company products audit, key issues that concern them, reasons why they purchase - their motivations, how they gather information to make decisions (social, blogs, research, internal personnel, forums etc).

    I'm a big believer of pain points and if customers have an issue that can be addressed from our products then look to developing and/or provide this option if cost effective to do so.

    2. Differentiated market - Customer focus

    a. focus on having customer intimacy and superior service options.
    b. superior quality - focus on technology (R&D) and spend where best potential & opportunities exist.
    c. Product Leadership - introduce product tiering, different/wider product options.

    Sorry this is still a work in progress. I have the weekend to finalise my thoughts for the presentation.
  • Posted on 2/28/2014 at 1:05 AM Author
    Thanks Peter, some great comments there and definitely an excellent question on why they think there are opportunities in a mature market. There are so many 'what-if' assumptions which I will have to make some assumptions myself!
  • Posted by Mike Steffes on 2/28/2014 at 8:16 AM Accepted
    Mature markets usually call for minor product tweaks that have an outsized effect on user perceptions of utility. Such as a new scent, different product packaging, re-shuffled/updated user interface, etc. These markets in general can't justify any actual R&D spending.
  • Posted by Jay Hamilton-Roth on 2/28/2014 at 8:27 AM Accepted
    It sounds like you could leverage the name recognition by creating a modified offering to a underserved audience in the region. For example, a lower-cost/lower-featured product for smaller businesses. Or, using the existing data for historical product purchases, offer a subscription service for the products. Or, depending on the products offered, create a B2C offering for the do-it-yourselfer (if this audience exists in the region). Can you offer customization services of the product (and/or services)?
  • Posted by telemoxie on 2/28/2014 at 11:28 AM Accepted
    if it were me, I would not deliver the presentation they requested. I would make the point that they should maintain the cash cow business, but invest more money in potential growth markets and new products.

    Maybe they aren't just asking you to work as directed. Maybe they are checking to see if you have a brain. Maybe they are checking to see if you are able to analyze situations. Maybe they are checking to see if you have the courage to tell the truth and look out for the company's best interest.

    If I had 15 minutes, I would spend the first five minutes with a very detailed presentation on specifically how I would market the mature products.

    But I would spend the next 10 minutes getting excited about the potential of the new growing markets, which are in fact, the future of the company. For example, I would discuss ways to talk about the exciting news relating to new products, generating sales of existing mature products. (People are more receptive to new things rather than hearing about the same products over and over again).

    Maybe I'm wrong. Please don't yell at me if you don't get the job. But please at least consider: what would you do if you had the job, and felt pressured by the status quo to do the wrong thing?

    Good luck.
  • Posted by Moriarty on 2/28/2014 at 3:54 PM Accepted
    It's Friday - make sure you do some serious relaxing over the weekend!

    This is more general background info. to chew on, by the way.

    Now: you say "as they feel that there are more opportunities in your local market that are not being realised" - may I ask how they know this? Is it just a "gut feeling"? Because I'm a direct marketer and this kind of comment is all too common - in a world where these things can be determined down to the cent. But you do need your head screwed on for this - and so do they! Not all companies want effective marketing, and the reasons for this haven't changed in a century.

    However, it's a well known fact that selling to return customers is way cheaper than getting new ones. There are two aspects to this: 1) what is it that you do that they buy so frequently and 2) what is their customer profile - ie. what are their needs compared to what you are doing so well. This "fitting like a glove" is the key to knowing who your best customers are. The great thing about this is that the companies are already doing it - the problem is that they often don't know who they're selling to (leave alone who their best customers are!).

  • Posted on 2/28/2014 at 5:08 PM Author
    Thanks so much for the great responses and gives me alot of insight into different ways of approaching it.

    The business was the No. 3 most admired company recently and has a few M's in it's name! They have many many businesses and it's related to their industrial division which I have alot of experience.

    How I see the exercise is more about how I think, how I form arguments and work. I won't expect to know the products and company structure. They are looking for a business strategist that can work across divisions to an end goal.

    Mike mentioned, 'Mature markets usually call for minor product tweaks that have an outsized effect on user perceptions of utility. Such as a new scent, different product packaging, re-shuffled/updated user interface, etc. These markets in general can't justify any actual R&D spending.'

    The business is already doing this to a certain degree. I've already mentioned this in the first interview about multi-tiering and specific customer requirements.

    Jay, I've just mentioned the company above and they are already doing dozens of markets. They are well known of taking one innovation from one market and putting it into another market. I will be certainly looking at this.

    Telemoxie, great response and I hear you! As they say, 'there are more than one way to skin a cat!'. The person I would be reporting to is very focused and open to debating options and would be open to what you suggest. He is certainly looking for someone to work across different divisions with their own KPI's. Always a difficult task in any large business.

    I upfront already and outlined some of the 'issues' I had with them in the past (being a manager of their product range) and he then proceeded to tell me the changes with the company I used to work for which were all positives.

    It's probably what got me to the next round.

    Moriarty, thanks for your industry insight. It's definately what I will be putting some outline on. Customer profiling is important and you are right, most of the market they don't know who they are selling to. Mainly because they are selling through distributors whom on-sell to manufacturers and customers etc.

    Thanks all, your views are invaluable but please do share more if you feel like it! :)

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