DuPont Latin America Programa de Formación en Marketing

DuPont Latin America Programa de Formación en Marketing Taller 2: Entendiendo el Mercado Hojas de trabajo 13 y 14 de junio de 2006 Buenos Aires

Workshop 1:Business Strategy Inputs Objective: Full understanding of the Business Strategy environment affecting the Team’s project Output: A list of Business Strategy considerations/parameters/ limitations/guidelines the Team must incorporate in its strategic thinking Steps: • Review the list of sample Business Strategy inputs (Slide #11) • Write down the Business Strategy inputs that affect this project; rephrase as appropriate to business situation as you know it • Decide which one require validation and note plan accordingly • Review Slide #12 for possible relevance to Team’s project; incorporate as appropriate • Designate spokesperson to characterize Team’s Business Situation for the class.

Value Adding Chain Definition: A progress of steps from fundamental raw materials through goods purchased by end-use consumers

Simplified Value-Adding Chain C O N S U M E R Customers E N D U S E R Raw MaterialSupplier Value Driver Transactional Customer DuPont Information Offering Revenue

VAC Player Definitions • Transactional Customer • That level in the chain that we exchange goods and services for revenue • Value Driver • That level in the chain that best interprets end-user needs and values into specifications and represents (sometimes dictates) them along the chain • Power Center • That level of the chain having the ability to affect what happens in the industry • May be same level as Value Driver • VAC Influencer - People or entities(who may not purchase/handle products) that influence the buying decisions made by targeted customers

US Mobile AC After Market VAC

Industrial Motors Value Adding Chain (Global) • OEMs are primary value • drivers and power center • Laminators have been gaining • power Equipment Vendors (15) Other Insulation Materials Sub-assembler (20) End-user (1000’s) Distributor/ Fabricator (12) DuPont NOMEX® Laminator NMN DMD (80) Motor OEM (50) Polyester Film & Matt Core Steel Magnet Wire Suppliers Influencers UL, IEC • Key competitors: • Lower temperature sheet • insulation materials Mfg. (Quin-T) • Laminators - polyester based • laminates

VAC Dynamics Questions • What level is the value driver? • What level has the power currently? • How would you anticipate that power distribution might change in the future? Why? • Do we anticipate structural changes due to: • Acquisitions/Divestitures -Technology Shifts • Backward/Forward Integration -Failures / New Entrants • Alliances • How might we gain power and influence along the chain to create and extract greater value? • Where along the chain is the business currently focused? • Where should it be focused in the future?

Workshop 2: Value Adding Chain (VAC) Update Objective: Update each Team’s “Process Map” of how the VAC operates Output: An easily-understood drawing showing: -- VAC Players & relationships along the VAC; approx. # per level -- Key flows of Value Adding activity -- Key influencers -- Notes indicating key dynamics -- Value Driver & estimated % of decision making power re inputs like ours at each level -- Current allocation of DP marketing effort at each level of VAC Steps: • Review current draft of VAC diagram; list new inputs from Team pre-work exploration • Incorporate new information into outputs listed above; update VAC Process Map accordingly • Prepare report back: overview of Project VAC and key learnings.

Value Adding Chain Analysis Summary Understanding the VAC is a foundation for effective marketing Planning: • Describes the various levels of the Value Chain in terms of roles, power, critical success factors, values and needs • Recognizes value-adding activities throughout • Forces attention beyond the transactional customer—all the way to the End User/Consumer, the ultimate determiner of value • Assesses how well the Value Chain is working (effectiveness and efficiency) and opportunities for improvement • Prompts real consideration of how your business should allocate/focus marketing resources along the VAC to become more influential in selection of products/services used.

Capturing Value Downstream Your Business Direct Customer End Customer Distribution • Does our offering provide benefit/value to the End Customer? If not, what is the last level of the VAC to recognize DuPont’s contribution to value? • Does our Direct Customer recognize (and acknowledge) the benefit/value our offering delivers to the End Customer? To his Customer? Is he capturing value for benefits/uniqueness of what we provide? • What might we do to help our direct customers (and other VAC Players) be more successful? • Do downstream customers have a reason to specify our product to our Direct Customer? Or to exert other pull-through influence? Do we have a means of explaining tos them the value of specifying DP inputs?

Workshop 3:Brainstorming Ways DP might Gain Influence Objective: Broad early-stage thinking about possibilities for improving DP’s Influence / Value Add / Value Capture in the VAC Output: A prioritized list of possible strategies/actions that would improve DP’s position Steps: • Designate Scribe • Encourage open participation by all Team members • Generate un-evaluate list of possibilities • Review list and highlight those that seem most “exciting” and somewhat practical

Workshop 3:Brainstorming Guidelines • Everyone participates equally • No criticism / evaluation of ideas during idea collection phase • Don’t be limited by practicality • As ideas dwindle, take a “new perspective” on the problem: • Turn it upside down or inside out • Paint it a new “color” or “texture” • Think about it from POV of customer at each level of VAC • Think about the most dreaded moves competitors might make and what they suggest you might do to preclude them • Write everything down; you’ll come back later to sort it all out • Be sure to highlight your best ideas for easy reference later

Workshop #4: Trends Affecting your VAC Objective: Identify trends affecting Industry and VAC that need to be considered in the Strategic Plan Output: A prioritized list of relevant trends, ranked according to likelihood of occurrence and significance to the business Steps: With reference to the Industry/VAC in which you plan to participate: • Have each Team member write relevant trends on Post-It® notes, one per sheet. Capture as many as come to mind. (Be sure to reflect on VAC interviews you’ve conducted) • Arrange Post-It® notes on a 2x2 matrix • Vertical = Degree of Certainty, Lo to Hi • Horizontal = Impact on the business, Lo to Hi • As a Team, confirm location of each trend • Capture a list of trends remaining in upper right quadrant, starting in top right corner • Highlight 3-5 that have greatest leverage on Project success

External Trend Analysis Map High Minimum Resources If Any Must Plan For DegreeofCertainty Maintain Flexibility In Plan Forget It High Low Impact on Business

Prioritized List of TrendsIndustry/VAC = ______________________ Trends in order of Significance to our Project: • Trends working FOR us: • Trends working AGAINST us:

Workshop #5:Competitive Analysis Objective: Determine how competitive activity or intentions might affect decisions about opportunities to influence VAC and extract value Output: Completed Competitive Analysis Worksheets showing type of competitive activity present at each level of VAC Steps: • Fill in key VAC levels at top of Competitive Activity in VAC template provided • On left, list companies that provide alternative solutions to DP inputs or services in subject VAC • Characterize competitive activities at each level of the VAC • Complete theCompetitor Analysis Map (you may modify axis titles if others are of greater value) • Complete Competitor Analysis Worksheet for 2-3 key levels of VAC, focusing on last 4 columns • Consider the “thought expansion” questions

Competitive Activity in the VAC First Question: What have your VAC explorations told you about the nature and strength of activity by key competitors at each level of the VAC? • Valuable for understanding competitive strategy • Valuable for knowing what you’re “up against” in marketing at each level of the VAC

Competitive Activity in the VAC Level of VAC M A R K E T Highlight Boxes where Activity is Strong/Effective

Competitor Analysis Assess each competitor’s: • Strategic thrust • Capabilities/limitations • Likely outcomes (if they succeed with their strategic thrust) • Impact on us • Customers/markets on which they focus • Recent initiatives to better serve customers

Competitor Analysis Elements • Capabilities/Limitations • Business resolve/commitment • Market/Customer focus • Offering match • Amount of synergy • Degree of mobility • Access to resources • Interface competency • eBusiness capability • Threats/Opportunities • Threats to your business • Opportunities for your business • Marketplace Behavior • Competitor intentions related to: • Choices of markets/customers • Customer interface approach • Resource commitment • Interaction with target markets • Likely Outcomes • Strategic thrust vs. strengths/weaknesses • Impact of external forces

Competitor Analysis Map Broad Scope of Customer’s Participation Narrow Commodity Differentiated Type of Offering

Competitor Analysis Worksheet Level of VAC:__________________________ Impact on Us Likely Outcomes Capabilities & Limitations Vol. Rev Share Prods/Srvcs Strategic Thrusts Competitor 1 2 3 4 5 6 7 8 DuPont

Strategic Thrust • Based on observations of competitive activities, • what seems to be each company’s strategic thrust in • this market? • Thought starters: • Aggressively invest, grow • Maintain • Defend at all costs • Respond aggressively to competition • Harvest or exit • Develop • Penetrate • Gain share on price • Exit

Competitor Analysis: Questions to Expand Your Thinking • How satisfied is each competitor with its position? • What are their likely moves? • What are the implications for the industry and your business? • What are they doing to better meet customer needs? • Competitive Threats • New Entrants? • What are the incentives to enter this market? • What are the Barriers to Entry? • Substitute Products? • What can you do to deter new entrants? • What competitive moves would have most serious impact on our business? Which competitor is most likely to adopt that strategy?

Workshop #6:Customer Analysis Objective: Understand customer needs and buying behavior at 2-4 levels of the VAC Output: Draft Customer Analysis Worksheets for 2-4 levels of VAC Steps: • Select 2-4 levels of the VAC that you feel might offer opportunity to influence input decisions • Write those VAC functions across the top of the Customer Analysis worksheet. • Working on one level of the VAC at a time, use the template to summarize what you know about CSFs, Needs, and Sources of Competitive Advantage from your VAC explorations to date. • At each level, take a few moments to note possible ways DuPont could gain leverage on input decision making.

Customer Analysis Worksheet(Capturing What’s Important to Players at key levels of VAC) Level of VAC M A R K E T CriticalSuccessFactors Values Sources of Competitive Advantage % of DP Focus: Ways to Influence: CSFs = MUST achieve for their business to prosper; VALUES = Things they care deeply about; SOURCES OF COMP. ADVANTAGE = How they WIN vs. competitors

Workshop #7:Marketing Effort “Future State” Allocation Objective: Allocate future marketing efforts along the VAC in accordance with VAC dynamics and opportunities to favorably influence use of DP products and services. Output: A list of VAC functions/players/influencers with corresponding percentages for future marketing emphasis and preliminary thinking about appropriate types of marketing effort. Steps: • Insert VAC players/functions in the table provided. Remember not to overlook influencers • Allocate 100% of marketing effort (all types) to the various points on the VAC where opportunity to influence exists • Begin characterizing the types of marketing effort most suitable for each place where marketing effort has been allocated.

Workshop #7: Marketing Emphasis “Future State”

Understand the Market Conclusion: Level of VAC for Primary Marketing Emphasis • Project Title: ____________________ • Team Leader: __________________ • Team Members: _________________________________________________________________________________________________________________________________________________________ • Industry / Market ______________________________ • LEVEL OF VAC chosen for Mktg Emphasis________________ • Three key reasons why this level has been chosen: • __________________________________________________ • __________________________________________________ • __________________________________________________

Marketing Insight for Improved Results Information is a source of business improvement: • VOC data to guide customer-focused strategic planning & actions • Marketing Research to make better business decisions • Competitive info to better anticipate competitive responses • A formalized approach to “knowing” the marketplace • Market sensing to anticipate the future • Customer database management to support customer care and retention • A formalized approach to sharing information among members of the Business Team

Workshop #8:Path Forward to Complete Understand Market Objective: Leave Session 2 with clear plan for what has to be done to complete Understand the Market module Output: A list of PF items, with responsibilities and completion dates Steps: • Complete the Path Forward template, paying special attention to unresolved questions or “need-to-confirm” information from Session 2 Workshops • As a Team, determine whether you can confidently select a level of the VAC for special marketing emphasis for your Project to be successful—and make that selection -- If you’re not yet comfortable making this key decision, make specific plans to reconvene the Team when the additional info required will be available. This decision must be made so that customers at the targeted level can be interviewed prior to Session III (Segmentation, Targeting and Positioning) Time: 45 Mins RECONVENE AT:

Path Forward to Complete Understand the Mkt:Industry/VAC: _____________________

Marketing Research Issues Project Title:_______________________________

Understand the Market Conclusion:Selected Level of VAC for Marketing Emphasis • Project Title: ____________________ • Team Leader: __________________ • Team Members: _________________________________________________________________________________________________________________________________________________________ • Industry / Market ______________________________ • LEVEL OF VAC chosen for Mktg Emphasis________________ • Three key reasons why this level has been chosen: • __________________________________________________ • __________________________________________________ • __________________________________________________

Pre-work for Segmentation & Target Workshop To prepare for the next workshop in the Marketing Competency Development series, your Team must: • Arrange and conduct VOC interviews with customers at the selected level(s) of the VAC. • At least six companies • High share. medium share, low share • At least two members of the Buying Center at each company • In-person interviews preferred • Two Team members per interview • Explore relative perceptions of competitive offerings • Explore CSFs, needs, values, sources of competitive advantage • Summarize the knowledge acquired in these interviews and share with all Project Team members • Create a draft (preliminary) of criteria the would make a segment… • Attractive for a marketer to pursue • One where DuPont can compete effectively

DuPont Latin America Programa de Formación en Marketing