In the past several weeks, we have worked with several clients that experience difficulty with defining their market. What we mean in market definition is where are your products being sold? OK, this is not tough, however, does require some thought.
Let us use a simple example to explain the concept. Let’s say that you make and bake bread. Let’s further identify that you make 3 different types of bread, white, whole wheat and rye bread. Now, I am interested in knowing how much of each type of bread is being sold, where it is being sold, how it is being sold (by the loaf or in packages), if people come into the bakery to buy it or we sell it through the distribution system.
As you can readily see, what appeared to be a simple example of selling bread has become a 3X4 factorial problem. Don’t get excited about the technical terms– what is important is that we need to know how much of each type of bread we make and sell every day. We want to know where it is being sold– here in town, or at the super markets across the state. We want to know if people just a loaf or two, or buy several packages. Why is this important? Well, that is a great question! Here is the answer– once we know what the customer is buying, how he/she is buying it, where they are buying it, we are then able to adapt and adjust our manufacturing processes to accomodate the customer demand. Ok, your next question– why is that important? Well, when we know the answers to the questions posited above, we are then able to adjust our baking process to insure that we have plenty of the right kind of product at the right place at the right time.
There is no reason to bake a whole rack (180) loaves of rye bread when the data tells us that we only sell 12 loaves of rye bread each week! Conversely, if we only bake 12 loaves of white bread and the data tells us that customers want more white bread, our production processes are out of alignment– and we are loosing sales.
It makes no difference if you bake bread, manufacture gears or cook jelly– what is important is what does the customer demand, how does he/she demand it, where do they demand it and how are you fulfilling that customer demand? If you don’t have the systems in place to address these questions, you will never be able to fulfill your customer expectations! This is not complicated or hard– however, once you have these systems in place, you are in a much better position to be able to fulfill your customer demand.
Another benefit of having these systems in place is to be able to adjust your production schedule to adapt to changing customer demands. When adapting to changing customer demands, you are in a better position to beat your competition!