What would you do? A Business Case Study

Your product takes 8 years to build. You do have your pipeline full so you produce units to sell every year. But it takes 8 years from the very first step to shipping it. You are innovating, introducing changes and features that fit the times and customer segments. But any innovation or changes you want to introduce will take 8 years to hit the market.

Your customers are changing and the macroeconomy has its effect on customer buying behavior. The core customer group you used to sell has no need for your product. The newer crop is not interested because their taste, needs, lifestyle, business process etc are changing. In fact, over the past 30 years your addressable market reduced from 40% of  total market to just 23%. Your market share comes from this addressable market, you are not the only player in the same product category and there is excess supply as well.

Those customers who continue to buy your product prefer the cheaper version of the product,  the version that isn’t as profitable to you as your premium version.

You are seeing competition from alternatives. While these are priced at 75% premium over your product, these last 6 years while your product lasts just 1 year.

Your product is not without its value. Most of the value comes from non-utilitarian reasons while the competition is mainly competing on convenience. You have not done much in communicating this value differentiation to your customers.

Competition has different and more elaborate Go-To-Marketing strategy. They are available in more places while your channels are disjointed and limited.

Competition also has advantages on marketing while you hardly have any marketing.

How would you fix this? Where would you start first?

Fix marketing (messaging etc)?
Fix Go-To-Marketing along with Segmentation strategy?
Fix Product Strategy?
Fix Product Development?
Fix Pricing?
Or instead of fixing, just fold?

Think this is an unrealistic case? See here.

3 thoughts on “What would you do? A Business Case Study

  1. Segmentation
    I would look at re-positioning them (literally) as an outside ornament for peoples front yards. A lot of the perceived problem with real trees is the mess. If the vendor could deliver a tree in a stand and place it in the front yard, he may also be able to sell add ons such as outside decorations, or even sell a pre-decorated tree.

    Marketing / Messaging
    The other thing I would try is to see if my marketing/product package could somehow be targeted at children. Kids are really spoiled rotten over Christmas, and they have exceptional nagging skills. I would want them on my side, pushing the people with cash in the right direction.

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  2. That sounds like you would start with segmentation, GTM and asking what Clayton Christensen calls, “what job is the customer hiring the product for”. Good move. You actually seem to have hit upon a business idea for aging segment, “Christmas tree as a service. Deliver tree, mount it. Take it away when done”
    -Rags

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  3. “You have not done much in communicating this value differentiation to your customers.”

    Mostly based on this knowledge I would start with fixing the messaging.
    My wife always troubles me with wanting a fake tree. I explain the value of having a live tree that #1 it is more traditional and reminds me of my childhood, 2. There really is nothing like the nice smell of a new tree and 3. Tree farmers need our help as many are also traditional farmers and the local farm is slowly getting replaced by the corporate farm.

    Also, dealing with the fact that “baby- boomers stop buying live trees as they get older” perhaps adding a delivery service would help since older baby boomers may simply have trouble getting the tree into their house at an older age.

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