Expert's Panel

A collection of timely and important topics posed to our panel of experts.

My competitor owns the top 10 – 20 customers. How do I approach those customers?

 (ep1070)
1. If you want to go head-to-head with somebody that owns the market, you better really have something the customer needs that is well and above what the competitor offers. Don't go head-to-head with the leader in his own territory. Instead try to segment the market in a manner that you can isolate key customers who would benefit by your differentiation— preferably a customer base the leaders don't routinely serve. For example, Applied Materials goes after the big guys, leaving a lot of the small fabs alone as they don't represent significant dollar value to them. These are usually niche fabs or specialty type fabs that make non-mainstream type devices. Companies like Tegal or Veeco, for example, have a nice business in these areas. But they don't try to go after Applied, Novellus, or KLA head-to-head.
2. Fortunately and unfortunately, the market goes like this—up and down. For you it is a wonderful thing that the market goes down. Because those top 10-20 customers, when things go down, the bosses say, "find a way to save money." This is the opportune time for you. But, the only way you'll capture the business is to have something so unbelievably different. Usually it is price. That's often how you grab the business. If your competitor has the lion's share of the market, they are not going to cut their price. The business cycles are therefore the friend of the little guy. Successful products, companies and trends never have their roots in the down-tick never in the up-tick.
3. Remember that KLA, Applied or the other guys don't always do everything wonderfully. So if you find something you can exploit and chip off a chunk of the marketplace they are not doing a good job with, this also is opportunity. If you add unique value, that is a way to get in.
4. Differentiation, differentiation, differentiation . . . often routed in the use of segmentation is the answer.