Dispelling the Four Myths of Solutions

As growth in global industrial markets now is rapidly slowing down, Nordic manufacturing firms will soon need to revisit their approaches to differentiation and positioning. The long-term outlook for competing on Price or Product Leadership to reach profitability is gloomy at best. More and more are aiming for the third position – Customer Leadership

As growth in global industrial markets now is rapidly slowing down, Nordic manufacturing firms will soon need to revisit their approaches to differentiation and positioning. The long-term outlook for competing on Price or Product Leadership to reach profitability is gloomy at best. More and more are aiming for the third position – Customer Leadership, to create unique customer value and a sustainable advantage. The ideas of customer orientation are by no means new in themselves, yet only in recent years have manufacturing firms made serious efforts to put them into practice, and started to view the position as a strategy. Business Units are increasingly defined by customer application rather than technology; coordinating roles – like Key Account Managers – have been strengthened, and heavy investments have been made in front-end support systems, like Customer Relationship Management (CRM).

The shift in strategic focus is triggered not only by the threat from lowcost product competitors, but also by shifting customer demands. Customers are getting bigger, tougher, and smarter. For many industrial firms, the customer relationship is changing, whether they like it or not. Customers expect suppliers not just to sell products, but to solve problems for them, customize, integrate, and support them in realizing the value of the products sold. Nevertheless, still expecting them to be competitive on product price!

Facing the risk of giving premium service at commodity prices, companies have dressed up their wanted Customer Leadership positioning in phrases like ”Integrated Solutions”, ”Value Added Services”, ”Performance Partner”, ”Optimizing customers’ processes”, ”Customer integration”, and so on. Above all, the word Solutions seems to have returned into fashion. Selling solutions tailored to solve a specific customer problem should – at least in theory – make differentiation easier and enable you to capitalize on your expertise. The strategy certainly seems to make sense, so where’s the problem?

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The White Paper is written by Jonas Strömgård, Partner at Differ, and responsible for the Industrial/B2B practice.

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