Telematics Today

The telematics industry has evolved from a largely military and navigational system to a commercialized business tool which will continue to become one of the most important and sophisticated industrial communication components of the next century.

From basic GPS systems like Google Maps, to the not-so futuristic remote maintenance systems and operation systems, to self-driving cars, the telematics industry is moving at a rapid rate and advancing by leaps and bounds. See how we categorize the telematics industry and what it means for the future.

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Best Practices for Conducting Secondary Research

For companies starting out with intelligence functions, terms like primary research and secondary research may have surfaced, but lacked context. So if you’ve had questions like: “When is research needed?” or, “What is secondary research?” Allow us clear up a few things.

The good news about secondary research is that most of the work has been done before you start. Meaning, you’re not looking for information that hasn’t been previously sourced. Think of it as your “information foundation”, on which more specific and specialized information can be layered. It’s worth considering a third party to conduct secondary research as this work is absolutely vital to your company before the more costly primary research. However, if you’re considering conducting secondary research on your own or with an in-house team, here are some best practices to implement:

Step one: Assess the questions you’re trying to answer

Set objectives that once achieved provide the information required to solve the problem. Generally, your objective is to validate a working hypothesis. For example, your objective may be to test a cause-effect relationship such as: if we reduce our price, what will the impact be on sales volume and profitability?

Be specific but make sure the questions you’re asking don’t rely on original research (that comes later with primary research!)

Step two: Know the best place to look for answers

The Internet is obviously a great place to start exploring, but may be an information overload, so know where to filter. Search engines are meant to provide relevant results, an uncluttered interface and helpful options to broaden or tighten a search.

We all know Google is a powerhouse tool, so be sure to use it to its full potential. Use the images, videos or maps functions. Dig deep – don’t just skim the first page for results, but instead dive down to the 20th for information you probably haven’t crossed before.

And beyond Google, here are a few other search engines you should consider:

1. DuckDuckGo: all answers are found on the first page, offers prompts to help clarify what question you are really asking and has less ad spam than Google.
2. Yippy: a deep web engine that searches other search engines for you. Primarily beneficial if search for obscure or tough to find news or research.
3. Google Scholar: a special version of Google that focuses on scientific and hard-research academic material that has been subjected to scrutiny by scientists and scholars.
4. Internet Archive: allows you to travel back in time to look at web pages years back

Step three: Consider HOW you’re searching and asking questions

Before you start searching, be sure you know what you’re searching for. If you’re searching for information on a specific industry or topic, focus on gathering information from:

  • Market/industry research
  • News/trade journals
  • Academic research/publications
  • Associations and think tanks
  • Companies
  • Governmental agencies

If you’re looking for information about a specific company, these resources may be more useful:

  • Analysts
  • Litigation
  • Intellectual property
  • Supply chain
  • Company filings
  • Advertising/marketing efforts

Finally, HOW you search is important. Use this chart in various ways to alter your search and improve results.
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Why Your Growth Strategy Needs Both an Offense and Defense

Defensive Strategies Enhance and Protect Your Firm’s Competitive Strategies

Two questions that commonly silenced the room during strategic and scenario business planning presentations:
1. How are our competitors going to react to these strategies?
2. What are we doing about retaining certain customer segments at risk because we know they’re considering the competition?

If your commercialization plans don’t carefully consider competitive threats, counter moves to your planned offense (promotions, product launches, etc.) and other threats or risks – by existing and potential competitors – your plans are unnecessarily exposed to failure. Despite widely publicized topics like disruption and convergence, the impact of new technologies and the actions of existing and new competitors and business continue to be an afterthought for a number of business and commercial leaders.

Proactive Worldwide’s rigorous and practical approach to commercialization strategy includes a balanced consideration of offensive and defensive strategies; even though offense typically gets the majority of funding. Our methodology considers an initial universe of potential strategies by commercialization phase (Exhibit 1) and flexibly drives-out the requirements and strategies – through meetings, interviews, workshops, war games and/or scenario planning.

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Throughout 2015 the majority of our client’s strategic plans and scenarios experienced across-the-board increases in the number of threats from new technologies and small, upstart firms with potentially disruptive business models and technologies in the initial landscape scanning phase. That fact highlighted the need for robust defensive strategies and mitigation plans – even if they were initially limited to outline – and resulted in much higher quality, holistic and complete strategies. Are your key customers considering new, disruptive product, service or technology solutions that could significantly displace your existing business? Worse yet, is your market facing new entrants from non-traditional competitors that have value propositions which are making your customers think about switching? How do you know?

Proactive Worldwide, Inc. has been providing some of the world’s most admired companies with actionable market and competitive insights to enable commercial and investment decisions which advance their competitive position since 1995. Our primary research, analysis and consulting services deliver clear and concise intelligence that empowers our clients to confidently act on their key opportunities and mitigate key risks.

Why Amazon Private Labels Will Be a Game Changer

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Every traditional retail store has felt the pain of online competition. But the truth is, things are going to change even more drastically for consumer product goods as Amazon enters into the Private Label sphere, launching its own product lines such as Happy Belly (food products), Wickedly Prime (snack foods) and Mama Bear (baby products).

What’s happening?

Amazon’s strategy to offer private label products is a power play. It means undercutting major brands and increasing profit margins. Recent history proves it will do just that. Private label reached $118B in 2015, up roughly $2.2B from 2014, indicating consumers continue to view private labels as good or better quality products compared to named brand products.

Additionally, Amazon’s entry into private label brands will accelerate the departure from traditional retail channels (stores). Large consumer product goods companies are the ones that need to worry most immediately. Amazon’s offering of necessary household goods with private labels will quickly shift consumer behavior to purchasing more products online and test loyalty from consumers of brand name products currently offered on the site to Amazon’s own private label product.

The Importance of Millennials

It’s no surprise that Amazon’s decision to enter this market is a reflection on consumer behavior, and more importantly the consumer themselves. Millennials are taking control of household purchase decisions and are statistically much more likely to purchase goods online. Millennials are loyal to Amazon and its endless offering of products, and most likely this loyalty will roll over to Amazon’s private labels. They’re also starting to have babies, making Amazon’s entry into the baby industry a very strategic move.

But it’s not just baby food, diapers and snacks. In the near future, entire households will be brought up with Amazon as the go-to source for almost any product.

Amazon knows where you live (and much more)

Amazon is also a consumer data powerhouse – it knows exactly what people are buying, browsing and returning, and can apply that information to their own private labels. It will develop and offer products they know consumers will buy. With that level of intelligence, we can anticipate continuing innovation and products designed to stay ahead of the curve, while traditional consumer product good companies rush to keep up.

What’s next?

Whether you’re ready for this shift or not, it’s happening. Rather than waiting to catch up, develop your response plan and position your brand better for the future.

Proactive’s primary source research and consulting services uncover evidence and deliver a fact base that enables:

  • Identifying and claiming market, product and service opportunities
  • Mitigating market and competitive risks
  • Creating and empowering your business growth and defense strategies

So, where does this shift leave you? How are companies going to develop a plan against Amazon? Or how are you going to work with it? These are the questions you need to think about and respond to now.

Industry Landscape Insights

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Emerging Threats: Customer Switching Strategies – Channel Partners as Competitors

Problem
Many companies are being caught by surprise by a recent trend: threats to their revenue and margins as a result of customer (buyer) consolidation and substitution strategies. These strategies are helping channel partners (buyers/distributors/dealers) significantly increase their bargaining power in a number of market segments, including rehabilitation, dentistry, pharmacies, specialty pharmacies and eye care.

Silent Revenue Killers
Channel partners are often tied to agreements that allow multiple suppliers to be offered, often under the premise of a tiered approach (pricing tiers, quality tiers, availability tiers, etc.). However, consolidation of channel partners (via market pressures, manufacturer preferences, or industry pressure) creates a situation that is silently killing leading manufacturer revenue streams.

As channel partners gain more volume and visibility to their operations, they quietly influence (while significantly shifting) the consumer’s choice from your brand to one on which they earn a higher margin, similar to the way grocery retailers operate when evaluating what brands to carry on a shelf. Technology has led to more transparency at the partner level, which helps fuel this shift even more. In many instances, top brands are used to attract the customer –and then partners seek to quietly switch them to brands that have lower operating costs (to the channel partners), higher margin agreements, and higher growth opportunities (brands that open doors to more profitable secondary or tertiary products).

Multi-Market Payoffs
This strategy is paying off handsomely for many segments because ultimately these channel partners are leveraging their access to the consumer at the moment of choice to drive their own sales and margin – typically at the expense of the manufacturers.

This strategy is being employed across multiple markets. The impact is felt in segments as diverse as beer, traditional pharmacies, inflammation/pain, spirits, pet food and even American cheese.

Which market segments are next? Our recent experience suggests that these strategies will accelerate or emerge in markets that include dermatology, pain, specialty pharmacy, healthcare coverage and respiratory care.
With buyers seeking to substitute your products and brands for each and every sale, while at the same time their purchasing leads are forcing concessions from your national accounts team, how can you really know which of your channel partners are actually ‘partners’?

Guerilla Tactics to Watch Out For
One highly effective tactic to watch out for is when a large company’s buyer implements a new partnership with a smaller, substitute competitive company. By leveraging the buyer’s access to consumers, these partnerships typically include co-promotion and point-of-sales (or treatment) intervention by the smaller manufacturer’s representatives to switch the consumer. This guerilla marketing tactic is shifting consumers in large numbers before their larger rival companies even notice and have a chance to act.
Are there areas where your business plan is underperforming expectations? In what region or market segment are your sales ‘soft’ this year? Are your traditional returns on branding and advertising metrics lagging? If so, your sales might be getting switched through a buyer and competitor alliance.

Solution
Proactive’s market entry and defense services can help you identify where and when these strategies are deployed against your brands. Our primary source research and detailed, actionable analyses can help you identify and implement strategies to blunt these initiatives – and ultimately meet your sales and profitability objectives.

Realities of Adjacent Market Entry

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Entering adjacent markets is touted as less risky than entering new markets. Why then do so many companies underperform their growth expectations when executing these strategies?

Growth strategies to enter adjacent geographic, product or service markets are supposed to be less risky and offer more upside because they leverage the core capabilities of the current business – buyers, consumers, products, technologies, suppliers, materials, etc. However, actual results from executing adjacency strategies are mixed. Here are some examples:

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Proactive Worldwide has provided intelligence that helped our clients create robust business cases that resulted in success. We have also completed intelligence projects to uncover the reasons why the original business case is underperforming – along with improvement roadmaps to course-correct their strategies. Here is an example:

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Proactive’s Market Entry and Defense Services can help you create a robust and fact-based business case so your plan is in the success column, the first time. We have helped clients leverage the focus they have in their core capabilities while benefitting from revenue growth through adjacent diversification. If you’re preparing a business plan, growth strategy or correcting current performance, contact us – we can help!

Trends: The “Endless Aisle”

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Online shopping and e-commerce channels are driving retailers to develop solutions that keep the retail experience relevant to consumers. One such strategy is leveraging POS technology to produce essentially an “endless aisle.”

The endless aisle strategy offers customers unlimited inventory and assortment ‒ whether they’re shopping online or in the physical store.

Over the last two years, the endless aisle approach has become a more mainstream experience. Technology has advanced, costs have come down, and retailers recognize that this strategy will let retail brick-and-mortar businesses provide consumers the “endless” options they can find online. In concept, it is a very powerful value proposition. And as the concept takes off even further, it may also change the retailers’ inventory strategies.

Are Consumers Buying In?

Initially, some speculated that the endless aisle concept was a fad, or a niche strategy limited to unique products or departments. However, evidence indicates not only a current economic impact, but – and more importantly – one that is becoming mainstream. Initial research by Forrester found that retailers that use endless aisle strategies based on POS technology generated between 1% and 10% of a store’s revenue. Why? Previously, when stores ran out of stock or did not have an option consumers wanted, consumers went elsewhere. With an endless aisle, though, they don’t have to.

Consumer expectations and behavior will continue to push the importance of the endless aisle strategy. The numbers may be surprising:

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The most important findings were the trends among younger consumers between the ages of 26 to 34:

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Retailers and brands are starting to invest more into the endless aisle concept. Brands such as Croc have found that using the concept enables retail stores to offer consumers more – indeed, “endless” – options, resulting in online sales greater than single digits.

Other brands and retailers reporting success include:

  • Barns and Noble
  • Bed Bath & Beyond
  • Nine West
  • Ikea
  • J.C. Penny
  • Walmart
  • Macy’s
  • Solstice Sunglasses

What This Means to You

The success of these initiatives relates directly to retailers’ expectations of and training for store associates. Endless aisle concepts can work in a variety of ways, with varying levels of associate engagement. For example, one option involves kiosks that enable consumers to check online or even order products at the kiosk. However, these have proven to be challenging, as volumes remain low.

On the other hand, store associates engaging consumers within the physical aisle or during their shopping experience have had significant success. Direct, immediate engagement helps capture the customer’s attention and addresses their needs, allowing for a more complete shopping experience. Increasingly, associates are using tablet technology to provide instant access to information on the consumer as well as how the store can solve a need. As stores leverage the potential power of these technologies, directing consumers to an associate to solve inventory or stock challenges will become common practice.

It may be difficult to maintain balance: Store associates must be available for support and be confident in their solution, but not come off as sales agents or disruptors to the retail experience that consumers often expect (i.e., free from sales pressure).

Use of the endless aisle concept will accelerate as other technology, such as augmented reality (AR), enters the retail environment. Already CPG companies are using AR options to educate associates on shelf-facing strategies and training. The endless aisle can eventually expand to include an entirely new sales experience related to providing consumers with options to see how they look, or how a room will look with options found both on the shelf and in the inventory system of a warehouse 300 miles away.

EVERYTHING Is Changing

Endless aisle development will change EVERYTHING related to retail associates: qualifications, hiring practices, training, compensation, role, and customer engagement strategy. Key changes expected include:

  • Hiring sales associates who have more customer engagement experience
  • Training on technology and POS selling
  • Changing compensation to help promote endless aisle sales activity and create the ability to track sales conversions
  • Developing best-in-class experiences and environments that engage customers without turning them off
  • Leveraging the newest concepts of online sales navigation

How PWW Can Help

Proactive Worldwide specializes in market, customer, and competitive insights. We can help your organization navigate these changes by providing intelligence that will keep you informed and Out in Front® of market developments.

We can help you win with endless aisle strategies by:

  • Providing insight on how competitors are leveraging endless aisle strategies, and what that means to your specific organization.
  • Benchmarking best practices and best in class execution related to hiring, training, and compensation strategies that support endless aisle concepts.
  • Identifying budgets and cost structures as well as ROI goals that retailers have related to endless aisle programs.
  • Executing studies that identify learnings from early endless aisle adopters and what they would do differently when hiring, training, and executing endless aisle programs.
  • Understanding how the market will be transformed, and identifying what will be needed not only today, but in the next five years.
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