Fall 2009 issue of Horizons

Raise Your Expectations CERTIFIED PUBLIC ACCOUNTANTS AND BUSINESS CONSULTANTS

time, the market and the customers do not know that they have a need until they see it and are made aware of the product or service. The product or service must be developed knowing that the market will respond positively, therefore creating high demand. If a company can become an innovator and consistently deliver products that customers want to market, obtaining and sustaining market leadership will be very achievable. Apple is a great example of a company that has been able to obtain and sustain a market leader position as a result of its ability to have a high level of customer focus and innovation. Innovation also can be a key to unlocking economic hurdles. When the economy is strong, consumers tend to seek out new and innovative products. When the economy is down, consumers may not seek out new products, but they are more likely to spend on new and innovative products than on products that have been around. If you study the cell phone industry, you can see there is a constant amount of product innovation that generates a continual consumer demand. Even in the current state of the economy, many next-generation phones are sold out before they arrive in stores. Customer focus and innovation alone cannot get a company into the market leader position or keep it in that spot. Those elements only help determine what it takes to get there. Once the customer is understood and innovative products are created, a company must organize itself strategically to deliver the products or services efficiently and effectively to market, and it must execute on that strategy. This area includes knowing which market to be in, where the customers are and how to deliver the products and services to them, how to produce the product or service in the most efficient and effective manner with the highest quality, and many other aspects. From a market condition perspective, there are many strategic decisions that occur in this area. If a company has a strong product or service and is looking to gain Sound Strategy and Execution

Customer Focus

In order to both obtain and sustain market leadership, everything about the product or service that is being sold must be anchored around the customer. What is perceived as value to the customer must be understood by the company and then communicated back to the customer in a way that fully demonstrates the value provided by the product or service. While this process may sound simple, it can be very complicated. In order to accomplish total customer focus, a company must fully understand who its customers are and constantly monitor the conditions of the market, which will impact customer needs. As those needs change, the company must adapt either the message to the customer or the actual product or service being provided. In addition, the level of customer service provided to the customers must be perceived as superior to any competitor. As the market conditions change, different actions may be required to either change or sustain the market position. A company that produces compact fluorescent light bulbs initially communicated the customer value as being the environmentally friendly product or “green” bulb. It enjoyed a market leader position as the market was becoming very environmentally conscious. When the economy declined and the consumer was faced with paying $6 for a green bulb versus $1 for a regular bulb, it was hard to see the value. In order to maintain a strong market position, the value message was modified to more prominently highlight the fact that green bulbs save money, as much as $36 over the life of a 60-watt bulb, due to the reduced energy usage, which is what makes them environmentally friendly.

Innovation

Innovation is another important component in obtaining and sustaining market leadership. Innovation feeds off of customer focus. One of the customer focus concepts is to understand the needs of the customer. This concept is critical in delivering innovative products and services to the market. Most of the

8 u fall 2009 issue