Customer Manufacturing Update
Helping You Increase Your Sales In A Competitive Market	June 9, 2004

In This Issue Rethinking Your Business Model Errors in Judgment More Effective Sales Management The Secret of Baby Carrots Closing Thoughts Rethinking Your Business Model Back in January of 2003 we presented a white paper by our Principal, Ralph Mroz, entitled, Is Your Business Model Right for Tomorrow's Market. Many of you provided us positive feedback on that paper (thank you). We recently ran across an example of business model change we thought you would find enlightening. To quickly summarize the definition of a business model: Your business model is the component of your strategy that determines How you execute to serve your market(s). As many of you know, and some of you are examples of, a lot of today's car buyers are using the Web to prepare themselves for the car buying "experience." Car dealers across the U.S., regardless of manufacturer represented, have been struggling with making a profit given the knowledge that today's buyer has when visiting a dealer. Today's new car buyer is armed with "complete" knowledge of costs, features, and probable selling price. It is estimated that 60% of today's U.S. car buyers shop online before visiting a dealer. While other car companies and their dealers have been bemoaning this new situation (and wishing for the "good old days"), Mazda Motor Company has been doing something about it. Mazda appears to be the first (only?) company to figure out how to make a profit by leveraging what 60% (and growing) of the buying public is going to do anyway...use the Web. So what is Mazda doing? They are using a variation of something Roy Fields, a former Group VP at Teledyne, used to say, "If you can't fix it, feature it." Recognizing that a majority, and growing percentage, of their customers were using the Web to be "savvy" car buyers, Mazda decided to embrace this "new" buyer. By acknowledging that their customers know the "secret," Mazda has stopped trying to pretend it isn't so. By dealing with the price issue one-on-one with the buyer and getting past it, they are finding that their sales people can then have truly meaningful conversations with the prospective buyers about their needs, wants and demands. Once the dialogue moves to that arena, the sales people are better able to sell (read, help the customer buy) accessories, extended warranties, service contracts, etc. that are high margin items. Mazda has accepted that their business model has changed. Today's customers are different than yesterday's. You may have noticed that dealers have been reluctant to offer test drives since the buyer shopped on price, a test drive was often a waste of time in terms of getting the sale for the dealer. Mazda has recognized that a test drive is still something that the buyer wants from the dealer. So, as part of making the "new" buyer comfortable with the dealer, their dealers focus on getting you into a test drive as soon as possible. They have a "fleet" of available vehicles to test drive. As Mazda's COO points out, "It helps sell the product before you even talk about cost." They have also made their dealerships a destination. Not only can you "price shop" on their Internet terminals, you can spend time in their new central cafe and entertainment zones. These also tend to bring the customer back for post-sale service needs (another profit center). Besides, if the service customer is "waiting" in a cafe surrounded by new cars...what might happen? Does it work? Mazda reports that at the showrooms that have been revamped they are seeing a 32% jump in sales and a doubling of profits compared to the dealerships still doing it the "old way." When the customer changes How they want to buy, that is a flag to you that your business model may no longer be effective. Recognizing the need (and opportunity) to make a change to your business model can give you a competitive advantage. We hear many business people talking about the price-driven, inevitable commodization of their markets. We suggest you remember to "think like a customer," and focus on where you can add value (and therefore achieve higher margins) in your new business model. If you would like to read (or re-read) our white paper Is Your Business Model Right for Tomorrow's Market?, just click the link below. Read the Business Model white paper...

Dear Mitchell, Welcome to the June 2004 Customer Manufacturing Update. This month's white paper, written by Bob Johnson, our member in Boston (bjohnson@customermfg.com), looks at how people make decisions. Bob provides interesting insights into the decision making process. If you have friends or colleagues who would appreciate receiving this e-zine, feel free to forward a copy to them using the "Forward email" link at the bottom of the e-zine. Errors in Judgment    How do you make decisions? That is, what decision making process do you use? Why do novices often make "better" decisions than apparent experts? When (if ever) is outside expertise valuable? When is outside expertise likely to lead you down the wrong path? It is surprising (and profitable) to learn what reseachers have found about the errors many of us make in decision-making. To read this month's white paper, Errors in Judgment, and learn more about these issues, click the link below. Read this month's white paper... More Effective Sales Management    Is sales management in your company a part-time job? For small- to medium-sized companies, where your sales force may be 10-15 people or less, it's common that one hat your President wears is "VP Sales" (along with controller/operations/HR/marketing and more). Alternatively, your sales manager may be "part-time" in that he/she is also responsible for their own accounts. In larger companies, satellite sales offices frequently have managers who also cover a territory. In both cases, the challenges of being a part-time sales manager can be daunting, and the other tasks typically take precedence over managing the salespeople (who don't like being managed, anyway!) We have designed a solution specifically for you, the "part-time" sales manager. You will learn a truly useful set of tools, approaches, and methods to be an effective and efficient part-time sales manager in our one-day seminar, Sales Management for the Part-Time Sales Manger. For more information on this program and the take-away tools and techniques it provides, click on the link below. Learn more about being an effective and efficient sales manager... The Secret of Baby Carrots    One of the "questions of the ages" is whether baby carrots are really carrot babies. And why does it matter anyway? (In case you're unclear, a baby carrot is about 2-inches [6cm] long and consumed as "snack food.") Between 1970 and 1986 U.S. annual per capita consumption of fresh carrots was effectively static at about 6 pounds. Not an exciting, growth business, and all the makings of a "commodity" market indeed. Starting in 1987, fresh carrot consumption in the U.S. started a growth spurt reaching a per capita consumption rate of almost 11 pounds in 2002. This almost 100% growth was driven by the "baby carrot." So how did they learn to grow these small, snack wonders? The answer ... marketing. Given that one of Marketing's key jobs is to determine What the customer wants to buy, the carrot industry determined that the "baby carrot" was the answer. So what is a baby carrot? It turns out that a baby carrot (at least the popular snack food version) is actually a full size carrot that is cut, peeled, and polished to make it a "baby carrot." They are a special breed of carrot grown to be sweeter and more orange and they ripen in 120 days, but that's it. Marketing made the baby carrot, which accounts for 50% of carrot production from the largest carrot producer in the U.S. Baby carrots sell for twice as much per pound as their "full grown" counterparts and the cost to make them babies is no where near double. It's only a commodity if you keep looking at it the same old way. As an fyi, there really is such a thing as a true baby carrot. It is a specialty crop grown in small quantities. Closing Thoughts    We appreciate any feedback you can provide to help us make sure these Updates give you value each month. Feel free to respond to this e-mail with any comments or suggestions for future topics or ways we can make these Customer Manufacturing Updates more valuable to you. Thank you for your interest, and if we can provide any additional assistance in sales, marketing, strategy, or innovation to help you increase your sales, let us know. Our mission is to help you improve the performance of your System to Manufacture Customers®.

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