Companies in Transition

                                                                                             January 2007

Dear Friend,

      The theme of  “Companies in Transition” this month is increasing revenues through better market intelligence. While few mid-sized companies can afford customized market research, every company can benefit from an on-going program to gather and analyze information (“intelligence”) about the markets in which it operates. Effective business strategies are dependent upon continual assessments of the available market opportunities and the related obstacles to success. The first step in that process is to get the facts!

      We hope you enjoy this issue of “Companies in Transition.”

Wayne Wilson

Using Market Intelligence to Increase Your Sales

      A thorough understanding of markets and customers is the foundation on which business strategies and plans are built. Knowing your customers’ needs and wants, as well as what they are willing to pay to satisfy those needs and wants, is essential for defending your markets against the incursions of competitors as well as increasing your own profits.

      Market intelligence is about developing a picture of a market by using readily available sources of information to understand what is happening in that market and what the likely market potential is for a company’s products and/or services.[1]

      Large companies often invest significant amounts of money gathering and analyzing data about their markets, customers and competitors to better position and price their products and, hopefully, to gain an advantage over their competitors. Such market intelligence is even more vital to success for middle market companies in transition. Yet, those companies often lack an organized process for gathering and analyzing basic market data. How can middle market companies develop better market intelligence?

      Here are 5 market intelligence techniques any business can use to increase its sales.

Separating fact from fiction

      Everyday owner/CEOs and their managers hear stories from employees, customers, suppliers and others about why the sale was not made, the product is not ready, the payment is late, or the parts are not available, etc. In fact, one of their regular daily tasks is separating fact from fiction: Why did the customer not buy from us? What is the real cause of the product delay? Is the customer in financial difficulty? What is the proper process for ensuring parts availability?

      The challenge in each of these situations is to by-pass the “blame game” (“it’s someone else’s fault or problem”) and get to the heart of the matter so that appropriate corrective action can be taken when and as necessary.

      Here are some suggestions:

• Read the available reports, but
• Always have multiple sources of information inside and outside the company
• Talk with customers regularly
• Talk with suppliers and other external business partners
• Talk with front line employees
• Inspect all areas of the business, and
• Ask lots of questions

      The goal is to gain enough information to know when and where management intervention is needed. The real answers to our earlier questions may come from the most unlikely sources; paying attention is essential.

Pricing for profitability

      Maintaining profitable pricing is often one of the biggest challenges for companies in transition. And yet, raising prices can be one of the most direct ways to improve your bottom-line performance - assuming you don't lose profitable customers doing it. How is that possible?

      Pricing is a continuum not a series of fixed points: every customer has a range of prices which they are willing to pay for a given product or service. The upper end of the range is bounded by the highest price the customer will pay and the lower end by the lowest price the vendor / supplier will accept. For you as the supplier (and ignoring competitors for the moment), success involves clearly identifying those boundaries and then working smartly to position your price to the customer at the highest possible point in the range without going over the customer's upper threshold.

      How can you do that?

• Spend some time thinking about pricing issues in your business. Is sub-optimal pricing a function of poor competitive data, poor sales discipline, poor product positioning, other factors or some combination?
• Analyze your pricing versus that of your key competitors taking into consideration the business benefits received by your customers versus the customers of your competitors.
• Look for creative ways to re-position your product or service at a higher value, and therefore at a higher price. In some cases, simply raising a product’s price can improve sales by raising customers’ perception of the product’s value.
• Develop and implement a conscious plan to manage your company’s pricing practices based on market facts and objective analyses.

      A useful resource for pricing ideas is 46 Ways to Raise Prices . . . without losing sales! by Marlene Jensen. The ideas are straightforward and practical.