Situation: an international business unit had a weak market position in Eastern Europe and Asia. Sales companies existed in Eastern Europe but they lacked a volume product with competitive cost position. The acquisition of a Russian company had led to expectations for achieving the needed cost situation for penetrating additional market segments but also to skepticism concerning quality and reliability. In Asia a variety of competitors had a strong market position.
Challenge: The competition had been present in the region for decades with production locations and secured high market shares. A new top management in the company wanted to be the world market leader and requested to increase market share with volume products.
Approach: For the Russian factory, the minimum technical requirements for products and for design and quality of packaging were defined together with sales. Countries for initial sales were decided and price guidelines agreed to promote the commodity product. Supply chain processes had to be changed successively. Regularly quality levels were demonstrated and delivery service from the Russian factory prioritized to achieve confidence with the sales teams.
For Asia a product differentiation had to be established in comparison to local competitors. By defining technical product features and special packaging, sales arguments for a middle product segment were concluded. The sales team was supported with promotion campaigns.
Result: In Eastern Europe the sales volume could be doubled within 3 years and the market share increased from 18% to 24%. In the same period the market share could be only increased from 8 to 9%.