I sat with the owner of the company and we discussed their operations and financial performance. This was a little different engagement as I soon realized that the problem was not to come up with innovations to introduce new markets, products or strategies but a deep analysis of the core of the business strategy.
They offered a very high quality production at a very low price. The problem is that the price was higher then competitors who offered a much lower quality product and the majority of the customers are very price sensitive and although they will realize the advantages of the quality offered after they see the finished production they are not ready to understand this when they negotiate the price at the beginning.
The results are that in an effort to give the best product to their customers they spend much more time and resources and try to compete with prices of an inferior product because the customers find it hard to compare quality.
We went through the various customer types that usually approach them and their various buying scenarios and examined their ratio and profitability to the business.
I advised them to create two products, one at current price levels but in similar or a little better quality as the current market standard and a premium product that costs much more. Their strategy would be to compete with their lower quality / low effort product on price and then try to up-sell to their premium product or up-sell various components from the premium product on top of the basic package.
I told them that they must realize that maintaining minimal ROI on projects is crucial for their business survival and ability to grow their business.
It was a half-day session and something they described as a very positive experience. I really enjoyd it!
