Monthly Q and A

June Question of the Month

What are the three conditions that are crucial for success when defining a new product?

Our experts answer...

The three conditions are:

1. A real need - Ensure that you have a truly defined customer need that that is sufficiently large to offer good profitability.

2. A reliable product - Make sure the new product will reliably meet the defined needs of the customer.

3. A growing market - Your prospects for long-term success with a new product should offer substantially increasing market size.

If these conditions can be met, you have a reasonable chance of success. Otherwise, there exists a high probability of failure.

Coming in July...

As a technical member of an account team, what are the important non-technical rules I should follow?

Come back in July to learn the answer to this question.

Past Questions and their Answers

2017

May When looking at an industry life cycle there are several sequential stages – embryonic growth, shake-out, mature and declining. In what stage is the semiconductor equipment and materials industry currently in and what are the characteristics?
A: The industry is in the shake-out stage and rapidly moving to the maturing stage. While we are still growing, the growth rate is slowing down substantially. Instead of growing at double digits, we are growing just above the worldwide GDP rate. For equipment, the CapEx spending as a percentage of customer sales is decreasing. The materials segment is less volatile than the equipment segment, but the same trend applies in terms of growth. A few firms supply products to the majority of the market, they have to make huge capital investments ($10B fabs), and they own IP or trade secrets which give them exclusive rights to produce a particular device using a particular production process.
April How would you define the purpose of strategic marketing?
A: Generally speaking, the goal of strategic marketing is to improve the firm’s overall competitive position and profitability. This is in contrast with the goal of product marketing, which is to improve the product’s competitive position and profitability. The focuses is on any disruption that can fundamentally change where, how and when to compete. The disruption can come from a customer, a competitor, or a new technology, whether internal and external. In other words, any major change in the environment that can force you to change your existing product strategy and plan should be managed. Note that we are talking about major changes, NOT incremental changes.
March Under what circumstances is it best to use reps/distributors as opposed to a captive salesforce?
A: The value of reps/distributors is highest when a company is new and small. They can provide three extremely important capabilities that are nearly impossible to economically replicate when a company to is in the start-up phase. These are access, credibility, and local knowledge Access means the capability to quickly get you and your product in front of the key decision-makers in the customer base. Credibility comes from success with other products at the customers' sites and is transferable to you, simply by virtue of your association with the trusted rep. Local knowledge means account knowledge based on experience and relationships established over time. It takes many years of successful business dealings with each account to duplicate these capabilities.

There are circumstances when reps/distributors could also be important for well-established, large companies that lack the above three capabilities in a new market.

February The Robinson-Patman Act makes "price discrimination" illegal. What does this mean?
A: The law prohibits price discrimination between different purchasers of product of like grade and quality, if this discrimination may substantially injure competition (1) with the person who grants or the person who receives the discriminatory price, or (2) with customers of either of these people." Price differentials are considered to be unlawfully discriminatory only when their effect may be to substantially lessen competition. In other words, a price difference is allowed if it does not substantially reduce competition.

If you are in doubt, discuss it with your corporate council.

January What is the difference between a Key Account, Strategic Account, and a Global Account Manager?
A: It depends upon the person who is answering the question. To most people the terms Strategic Account Management (SAM), Global Account Management (GAM), and Key Account Management (KAM) are interchangeable. They are used to define managers of customer accounts that are of vital importance to the organization, and to which an inordinate share of corporate support resources are allocated.

To people skilled in the application of Key/Strategic/Global Account Management, however, the words take on a distinction. A Key Account is one that is important to the company and may be managed on a nationwide or regional basis. A Strategic Account is similar except it is one that is crucial to the success of the company and it usually receives an enhanced level of attention compared to a Key Account. A Global Account is one that is crucial to the success of the company and is managed worldwide by a senior level manager–there are likely country or regional managers for the account that also report directly or dotted-line to the Global Account Manager. A Global Account Manager, for some larger companies, has his or her own staff of sales and service people for the account.


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