Stuart E. Jackson

Market share is not enough: why strategic market positioning works

Purpose – The author and his colleagues at LEK Consulting LLC have helped hundreds of firms over the years to achieve higher growth, increase their profit margins in existing businesses, add scores of new services and products, and make hundreds of successful M&A transactions while using strategic market positioning principles. This article has been written by the author with the aim of making the principles better known to others after having seen these principles work for his clients.Design/methodology/approach – Research conducted by the authors firm, LEK Consulting LLC, combined with experience gained from hundreds of client engagements, has shown that while average shareholder returns for most industries tend to cluster in the 0 percent to 20 percent range with amazing consistency, there can be spectacular differences among companies within almost every industry sector. A top performer in a particular sector can be 200, 300, or even 1,000 percent better than the sectors worst performer. The researc...

The value of a dollar

Purpose – Most business executives understand the importance of offering good value for money to their customers. But sometimes they do not put enough thought into how customers perceive value. This is particularly true in todays recessionary environment. Executives need to communicate clearly how and why their offerings are good value for customers. In doing so, they can help customers overcome resistance to discretionary spending and improve perceptions of value versus alternatives.Design/methodology/approach – In this article, Jackson considers a number of case examples of businesses that have improved their price‐value perceptions by adjusting their product offerings in subtle ways that help communicate value. Examples industries cited in the article include food service, retailing and the auto industry. The author then draws lessons that can be applied broadly across any business considering strategies to communicate the value of their offering.Findings – Companies should proactively communicate the...

Making growth make sense for retail and franchise businesses

Purpose – The purpose of this paper is to show that most retail and franchise businesses have the goal of rapidly expanding to create a nationwide or even international network of outlets. Achieving that goal requires more than just having an appealing offering that works in one city. Business leaders need to determine a pathway to national presence that takes account of the geographic scale economics for their particular business. Some businesses will benefit from rapidly going national with simultaneous growth in many regions of the country. Others will benefit from a much more measured approach, building strong scale advantages in one region before expanding into the next. In this column, Stuart Jackson considers examples of both business types and offers lessons to help companies decide which type of growth strategy is right for them.Design/methodology/approach – In this article, Jackson considers the expansion strategies of two different retail businesses, Starbucks coffee shops and Staples office su...

Channel innovation for the rest of us

Purpose – This article discusses one approach to innovation involving changing the way a product is delivered to customers. Building on the work of Kim and Mauborgne in the book Blue Ocean Strategy, Jackson acknowledges the appeal new product concepts with limited competition in “Blue ocean” competitive environments. The challenge for most consumer goods is coming up with entirely new products that have strong customer appeal, because most consumers have a familiarity and loyalty to products they already use. One solution to this is channel innovation. This involves finding new ways to deliver products that consumers already use and love.Design/methodology/approach – The author uses case studies of successful consumer products channel innovations in the areas of baked goods, juice drinks, pizza, salad and fresh produce.Findings – The key lessons from the case studies are in three areas: understanding consumer frustrations with how existing products are delivered; understanding the value of the channel inn...

Creating value through acquisitions

Purpose – Acquisitions can be a powerful tool to achieve growth, enter new markets and expand the range of a firms capabilities. But with the highly competitive market for acquisitions and the correspondingly high acquisition prices, all too often transactions fail to create value for shareholders. Does this mean companies should avoid acquisitions and focus solely on organic growth? If acquisitions are to be part of a companys growth strategy, how can management identify which targets have the potential to more than justify the required investment and create value. In this article, the author shows how the discipline of strategic market position (SMP) can be used to test whether a proposed acquisition will really improve a companys overall competitive position and enhance its ability to deliver strong profitability for the future.Design/methodology/approach – Using the example of Northrop Grumman, the author shows how to apply a four‐part “SMP test” to assess potential deals.Findings – The example ser...

New media: debunking the myths

Purpose – This article describes emerging trends in the usage of new media – internet, mobile broadband, e‐commerce, internet‐enabled entertainment, social networking and others – and outlines implications for commercial companies seeking to communicate more effectively with their customers and media companies seeking to develop new business models. The article includes the findings from a proprietary survey of new media usage among 2,100 US households.Design/methodology/approach – In this article, the author leverages the findings from a proprietary survey of new media usage conducted by L.E.K. Consulting. The author then draws strategic implications for both commercial users of new media and media companies themselves.Findings – Key findings from the survey are: new media are not only for the young. In fact, internet users in the 50‐64 age demographic spend more time online than the those in the 18‐24 age group. Traditional demographic segmentation based on age and income level does not work well to des...

The value of weak connections

Purpose – Most business leaders are aware of the success and high market valuations associated with internet networking businesses such as Facebook and LinkedIn. But they often fail to apply the lessons from the success of these businesses to their own brick and mortar operations. This article discusses the underlying human willingness to help others with whom we have relatively weak connections. Businesses that tap into this human trait can expect increased loyalty from customers and improved business performance. The author proposes four key strategies for companies wishing to address this opportunity.Design/methodology/approach – In this article, Jackson discusses fundamental human behaviors behind the success of Facebook, LinedIn and many other off‐line networking organizations. The author cites a number of case examples of executives and businesses that have reinforced their commercial success through the principle of leveraging weak connections. Examples of businesses in the article include food and...

Making consultants earn their keep

Purpose – This article discusses the use of consultants in helping set business strategy. Starting with the perspective that many consultants end up not delivering good value for companies seeking help with their strategy, this article considers some of the causes of unfulfilled expectations and what companies can do to get better value from consultants when they need external support.Design/methodology/approach – The author draws lessons from his own experience with hundreds of strategy consulting engagements and from interviews with other consultants and senior corporate executives who have extensive experience of strategy consulting projects.Findings – Findings and recommendations are divided into four categories: defining the project; selecting a firm; managing the process; and getting value after the consultants have left.Originality/value – The key message of this article is that use business consultants can be a valuable addition to the range of resources available to executives with responsibility...

The value of prime customer relationships

Purpose – The author has previously written about the concept of “strategic market position.” Simply stated, SMP is a strategic discipline which ties together the principles of customer preference, producer economics, and corporate finance and helps companies understand when and how increased market share leads to stronger competitive position and higher profitability. This enables businesses to make smart decisions about where to expand and go after increased market share – and, conversely, where not to dig in deeper. Customer Market Position (CMP) carries SMP down to the individual customer level. It keys off the extra value inherent in what the author calls “prime customer relationships.” This paper aims to address these issues.Design/methodology/approach – The author discusses the benefits that accrue to businesses that have a high CMP with customers that account for the majority of their business. He cites a number of case examples of businesses that have reinforced their commercial success through c...

Money for nothing

Purpose – Most business organizations put lots of thought and effort into how to sell and deliver to customers a product or service that meets their needs at a particular point in time. But they often neglect to think about what is important to the customer to get the most value from the product or service after the sale is complete. For example, customers may be concerned about product maintenance, ongoing monitoring, protection in the event of breakdowns or the need to fund overhaul or replacement of the product when it wears out. The author discusses case examples of companies that do a good job of anticipating and addressing these needs, which often leads to highly profitable recurring revenue streams for providers. The author proposes six key strategies for companies considering going down this path.Design/methodology/approach – In this article, the author cites a number of case examples of businesses that have built recurring revenues from after‐sales service offerings. Examples industries included ...