Using Competitive Intelligence to Create a Competitive Advantage
After introducing a new product, a large industrial component supplier found itself consistently losing bids to the market leader. Management became concerned that their new product had a significant competitive disadvantage, and continued funding for the business was in jeopardy. The company thought that its European competitor—the market leader—had a cost advantage that they could not overcome. They asked Newry to determine the source of their competitive disadvantage and recommend ways to grow the business. Newry led a product teardown—a detailed, side-by-side analysis of the two products—to gain insight into materials choices, manufacturing processes, and product design trade-offs. Supplementing this information with extensive primary (including a site visit) and secondary research, we found that our client actually had a 9 percent cost advantage. After interviewing many current and potential customers, we concluded that the competitor was pricing below cost, if necessary, on large OEM accounts in order to drive volume. Knowing that the competitor had neither the cost leverage nor production capacity to respond, we recommended that the client focus on high-margin non-OEM business and, in addition, implement design and sourcing improvements that would further reduce costs.
A producer of advanced energy storage components for the automotive industry was approaching a major competitive bid to an automotive OEM seeking new energy storage technologies for hybrid vehicles; with a successful bid, their new technology would be designed into new vehicles and present a major long-term revenue stream . They consulted Newry to determine what product price would win the bid. Newry estimated the likely bids of two competitors—a direct competitor with similar advanced technology and the supplier of the established incumbent technology--through extensive analysis of production processes and facilities as well as likely pricing strategies. We determined that, with the manufacturing volume the contract could provide, our client could compete with the incumbent on cost and could afford to price accordingly.
