hublikar

Value Propositions in B2B Markets

Consumer vs. Industrial MarketsCommodity vs. Specialty Industrial MarketsPicking markets / applicationsDefining value and market needsCompetitive BenchmarkingValue Capture ChecklistOrganizational & Process IssuesSummary

AgendaAgenda

Sudhir HublikarSudhir HublikarVice President of TechnologyVice President of TechnologyAGY, Inc.AGY, Inc.

Industrial vs Consumer Markets

TechnicalTechnicalUnderstandingUnderstanding

ImpulsiveImpulsiveBuyingBuying

Dependency Dependency on Supplierson Suppliers

Number of Number of BuyersBuyers

Number of Number of Product AppProduct App’’ss

HighHigh

LowLow

ConsumerConsumer

IndustrialIndustrialBuyerBuyer

Industrial buyers are sophisticated and use a deliberate, technical process.Source: Advanced Industrial Marketing, Inc.

Commodity vs Specialty Industrial Markets

SpecialtySpecialtySemiSemi--SpecialtySpecialtyCommodityCommodity

Market data are well documented.Market segments and product needs are well understood.Competitors’ products are easily obtained & analyzed.Product testing & qualification driven by industry standards.

Market data are very limitedMarket segments and product needs are very poorly understood.Competitors products difficult to obtain and analyze.Product testing & qualification is very customer-specific.

In specialty industrial markets, understanding market segments, customers’product needs and competitive landscape are all significant challenges!

Example - AGY Markets and Applications

Aerospace

Defense

Automotive

Construction

Industrial-Other

Electronics

Filtration

ThermalInsulation

Protective Fabric

Cable Insulation

Printed Circuit Boards

RoofingInsect

Screening

Timing Belts

Ignition Cables

Solar Screens

Reinforcement Tapes

Sewing Thread

Concrete Boards

Bazookas

Humvee Armor

Auto Mufflers

Helicopter Blades

Aircraft Interior Panels

Aircraft Cargo Liner

Understand the market but focus on the application.

Winning Strategy For Specialty Industrial Markets

Pick the right market segments/applicationsPick the right market segments/applications

Understand unmet needsUnderstand unmet needs

Know the competitionKnow the competition

Define winning value propositionsDefine winning value propositions

Develop the right new productsDevelop the right new products

Understand You Applications Portfolio

0.0

0.5

1.0

1.5

2.0

-5 0 5 10 15 20 25

Application Growth Rate, % CAGR

Mark

et P

ower

(Rela

tive s

hare

)

Application Leader

Are there Are there ““PerformancePerformance””

applications in the applications in the portfolio?portfolio?

Application Follower

Which Growth Strategy Do You Want to Follow?

0.0

0.5

1.0

1.5

2.0

-5 0 5 10 15 20 25

Follower0.0

0.5

1.0

1.5

2.0

-5 0 5 10 15 20 25

Focused Leader

Opportunistic

0.0

0.5

1.0

1.5

2.0

-5 0 5 10 15 20 25

Leader

0.0

0.5

1.0

1.5

2.0

-5 0 5 10 15 20 25

Grow

th R

ate

Grow

th R

ate

Marg

inMa

rgin

Example - AGY Application Portfolio

0.0

1.0

2.0

3.0

4.0

5.0

-4 0 4 8 12 16

Application Growth Rate, % CAGR

Mark

et P

ower

(Rela

tive s

hare

)

BBAABAAAircraft Coatings

BCBAABCBridge Coatings

CBACCCBRailcar Coatings

CCBBBCAMaintenance Coatings

CCAABCBMarine Coatings

7. Current Market

Presence

6. Likelihood of

TechnicalSolution

5. Likely Power

of ValueProposition

4. Unmet

Customer Needs

3. Market

Segment Profitability

2. Market

Segment Growth

1. Size of

Revenue Opportunity

Market Segments or

Sub-Segments

Attractiveness Criteria

Pick the Right Markets & Applications

Source: Advanced Industrial Marketing, Inc.

BBAABAAAircraft Coatings

BCBAABCBridge Coatings

CBACCCBRailcar Coatings

CCBBBCAMaintenance Coatings

CCAABCBMarine Coatings

7. Current Market

Presence

6. Likelihood of

TechnicalSolution

5. Likely Power

of ValueProposition

4. Unmet

Customer Needs

3. Market

Segment Profitability

2. Market

Segment Growth

1. Size of

Revenue Opportunity

Market Segments or

Sub-Segments

Attractiveness Criteria

Picking Markets / Applications: Example

AA

BB

CC

: Very Attractive: Very Attractive: Moderately Attractive: Moderately Attractive: Unattractive: Unattractive


Understand the Application Lifecycle

Performance Phase Optimization Phase

• Sale depends on one or two performance attributes

• Sale depends on optimization of multiple product & service attributes• Cost is a minor factor • Cost is a major factor

• Multiple materials, processes & designs

• Standard materials, processes & designs

• Grow with market • Steal growth from competitors• Growth rate >> GDP • Growth rate ~ GDP• Path to competitive advantage is clear

• Path to competitive advantage is complex

Defining Needs: Don’t Just Talk to Direct Customers

END

USER

Automotive Timing Belt

Application

AGYAGY Cord MfgCord Mfg

AGYAGY WeaverWeaver PrepreggerPrepregger Panel MfgPanel MfgSub-

ComponentMfg

Sub-Component

MfgSystem

IntegratorSystem

Integrator

AGYAGY WeaverWeaver PC BoardShop

PC BoardShop

AGYAGY WeaverWeaver DistributorDistributorComponentMfg

ComponentMfg

ElectronicsPC Boards

Aerospace -Interior Panels

Armor

Most firms listen only to direct customersMost firms listen only to direct customers……

Focus on decision makers and influencers.

Belt MfgBelt Mfg

PrepreggerPrepregger

LaminatorLaminator

Finding Value in the Value Chain

Your New

ProductAqueous Aqueous

ResinResin

Immediate Customer’s OperationProduction Production of Coatingsof Coatings

Immediate Customer’s

ProductsClear Clear

CoatingCoating

Customer’s Customer’s OperationPart Mfgr & Part Mfgr &

CoatingCoating

Customer’s Customer’s

ProductsCoated Coated PartsParts

Example: You sell a resin used in a clear coatingExample: You sell a resin used in a clear coating…… which is sprayed on automotive exterior parts which is sprayed on automotive exterior parts

Reduced oven drying timeElimination of solvent recoveryOne coating for many part typesLonger coating pot life

Higher gloss levelsMore durable coatingsBetter mar resistanceFewer coating defects

Reduced mixing time & laborElimination of another ingredientReduced waste streamHigher usage efficiency


Operational benefits are often predictable & measurable

Product benefits can deliver high value & change the basis of competition.

Your New


ResinResin



ProductsClear Clear

CoatingCoating


CoatingCoating




Higher gloss levelsMore durable coatingsBetter tar resistanceFewer coating defects


Finding Value in the Value Chain

Your New


ResinResin



ProductsClear Clear

CoatingCoating


CoatingCoating




Higher gloss levelsMore durable coatingsBetter tar resistanceFewer coating defects


After identifying a benefit, you must quantify it, preferably inAfter identifying a benefit, you must quantify it, preferably in $/yr. Example:$/yr. Example:

A. Reduced A. Reduced waste streamwaste stream

B. 1.5% less B. 1.5% less waste generatedwaste generated

C. Annual C. Annual savings = $160ksavings = $160k


Compare With Competitive Products – ExampleExample: Armor

0

1

2

3

4

Strain toFailure

Impact TensileStrength

FST Density

S-2 Glass E Glass Carbon Aramid

0 1 2 3 4 5 6

S-2 Glass

E Glass

Carbon

Aramid

Mg/ccASTM D792DensityMsecASTM E162FlammabilityMMPaASTM D638Tensile StrengthHKJ/m2ASTM D6110Impact ResistanceH%ASTM D638Strain to Failure

Impor-tance

UnitsTest MethodProperty1. Identify key properties, tests &

importance, as defined by value chain

2. Perform side-by-side testing against competitive materials

3. Generate weighted scores to understand our competitive position

Defining New Products - Product Roadmapping

123456789

10Filter Life

Housing Size

Pressure Rating

Impurity Size

Unit Durability

Max Flow

Our New ProductBest Competitor

Value Capture Checklist

Value Proposition– We understand how the customer defines value– We have evaluated existing products using the customer’s definition of value– We have developed a product roadmap to exploit gaps between customer

needs and existing products. – Our (new) product target better meets the customer’s definition of value

Value Capture– We know how much incremental value we will generate for customers– Our pricing plan will capture a fair share of this value for our company

Product Development– We have defined product specifications– We have a technical plan and understand risks– We have a marketing plan– We have defined the resources needed for success

Organizational & Process Issues

Use a simple process to focus the organization on a few key projects– Example : The AGY Idea-to-Profit Process

Use multifunctional project teams to execute large projects– Co-Leaders: Commercial or Manufacturing + Technical– Have the “end-user” function be accountable for the project

Use a multifunctional leadership team to manage the project portfolio

Don’t give engineers more than two must-do projects

Involve the (lead) customer as early as possible– Customer relationship & access is more critical than size, etc.– Co-develop with a lead customer if you are entering a new application

You need to be “in” the application to really understand needs– Don’t be afraid to get a me-too version 1.0 out there

Review projects thoroughly and don’t be afraid to say “No”

SummarySummary…

In specialty industrial markets, understand the market but focus on applications

Analyze your applications portfolio and focus on a few applications

Understand who are the decision makers and influencers in the value chain

Understand how the value chain defines value

Use side-by-side testing to assess yours and competitors’ products

Use the Value Capture Checklist

Define projects thoroughly and resource them properly

Focus, focus, focus….and get something done!

Value Propositions in B2B Markets

Questions?Questions?Consumer vs Industrial Markets

Commodity vs Specialty Industrial Markets

Picking markets / applications

Defining value and market needs

Competitive Benchmarking

Value Capture Checklist

Organizational & Process Issues

Summary

AGY Idea-to-Profit Process

OpportunitiesOpportunities

DevelopDevelopProjectProject

LaunchLaunchProductProduct

Fast-trackProjects

Fast-trackProjectsY

DevelopDevelopBusinessBusiness

CaseCaseDevelopDevelopProductProductApproval LaunchLaunch

ProductProductApprovalKeyProjects

KeyProjectsN

Few Resources Needed?

Y

GoodAGY Fit?

New Business

Core Business

Concept Developed by…New BusinessNew BusinessDevelopmentDevelopment

BusinessBusinessTeamsTeams

hublikar

Business

market steal growth

application growth rate

limited market segments

leader market power

b aab bbridgecoatingsc

advanced industrial

attractive b

clear coating