Components for renewable energy: growth and innovation strategy
The Challenge | A manufacturer of core components for renewable energy is under pressure to adapt. A general awareness of climate change and the government’s policy on subsidies have brought the enterprise rapid growth over the past years. Recently, however, competition has stepped up on the attractive market. New manufacturers from the Far East have been exploiting their cost advantages, offering cheap alternatives to win substantial shares of the market. The products themselves are regarded as interchangeable commodities on the market. Despite offering functions with tangible benefits, our customer’s components are not achieving premium pricing.
Our joint approach | First, the team of mm1 consultants meets the customer’s managers to develop a holistic response to the challenge. In addition to short-term, strict cost control, the approach focuses mainly on an organic growth strategy. The goal is for the customer to win back market shares permanently by setting itself apart from the competition, by achieving leadership in quality and innovation, and by developing a component brand. The fragmented consumer market is identified as the core market with the greatest growth prospects; this should be developed as a second mainstay of the market strategy, in addition to the large-supplier market that is already targeted by the customer. As well as being able to recognize the manufacturer’s products in their systems, end users should also explicitly request the customer’s components in the future. The strategy is transformed into an action plan covering multiple operational aspects, such as a brand strategy, user-based product innovation, and service orientation throughout the value chain.
mm1 also assists the customer with the implementation of the individual aspects: The “brand strategy” area of the project focuses on the creation of a component brand. The brand development process should work as a catalyst to transform the technology-oriented optimization of processes into a setup that is systematically geared toward user needs. The mm1 team and the customer develop the brand positioning as part of the brand strategy, draw up core values for the brand as guidelines, and pilot a package of measures to establish and continuously optimize brand contact points.
The strategy of the mm1 team also focuses on product innovation. First, an interdisciplinary project team with employees from mm1 and the customer observes and analyzes user behavior throughout the value chain – from direct customers through to system integrators and end users. They examine the competitors’ products as well as the customer’s own products. Ideas for improving the products are therefore systematically developed, prioritized, and consolidated into innovative product concepts for each process stage. This significantly improves the filling of the innovation pipeline, with the aim of increasing the number of new products from two to 10 the following year. As a pilot project, an existing product is revamped and then repositioned on the market after a development phase of just six months. In the first sales quarter, the revamped product immediately sees an increase in volume of over 400% compared to the average quarterly results of the previous product.
The growth strategy also includes a new direction for the after-sales area. The goal is to achieve quality leadership in customer service in this key area of the go-to-market strategy. The mm1 consultant assigned to the task works with the customer relationship managers to investigate where the products failed in the past and the corresponding customer service processes that were utilized. To standardize and improve the service (including response times and success rates in resolving errors on first visits), a systematic, three-stage escalation procedure is implemented. In addition, a comprehensive training offering is introduced for the customer service representatives in the field (escalation stage 1). This enables the mainly independent, hands-on customer service staff to familiarize themselves with the customer’s brand message, gain a clear picture of their own quality of service, and incorporate their practical experience and numerous observations directly into the customer’s innovation process.
