Tools Book

Associate Training

© 1999 Arthur Andersen. All rights reserved.

Tools Book
Key Question
1. Strategy Concepts
• Porter’s 5 Forces
Tool Description
• SWOT
• Growth Share (BCG) Matrix
• Product Life Cycle
• EOS : ROS – RMS
• EOS : Learning Curve
Typical Output Format
• ROS / RONA
• Value Disciplines
• Happy Line
• Conversion Waterfall
• SWOT
2. Key Visual Tools
• Pareto Curve (“80:20”)
• Value Map (“Mekko”)
• Value Chain
• Weighted Column Maker
• Share Gain Line
• KPC Combs
• Harvey Balls
• Quotes
Typical Process
• Lollipops
• Channel Maps
• Conceptual Maps
• Forces at Work
• Crocodile Chart
• Parfait
3. Analysis Techniques
• Logic Tree
• Process Maps
• Sanity Checks
• Top-down Estimation
• One-Off Interviews
• Interview Programmes
• Focus Groups
• Clustering
• Factorial Analysis
4. Sources
Training Modules
• Desk Sources
• Usual AABC Sources
Table of Contents
What are the key market drivers ?
What are the top-line factors affecting the issue at hand ?
What industries or sectors should we be in ?
What stage of the product cycle are we at ?
Does size matter ?
What are the benefits of scale or experience ?
How well are we using our assets ?
What type of possible strategies are there in this market ?
Where are we over-satisfying our customers ?
Where do we lose potential customers ?
What are the top-line factors affecting the issue at hand ?
What matters ?
What are the various segments and sub-segments ?.
Where do our core competencies reside ?
Which are the most profitable competitors in absolute terms ?
Who has been gaining market share ?
What are the main purchasing criteria, and how do we fare ?
What is the best way to display “soft” quantitative data ?
What is the best way to display qualitative data ?
Tricks & Tips
Can I come up with creative data displays of my own ?
What is the relative importance of various routes to market ?
How can I simply structure a set of data before analysing it ?
What are the forces at work ?
Can I come up with creative data displays of my own too ?
What is the easiest way to display market growth ?
How does one organise the research ?
What are the key steps ?
Does this number make sense ?
How can I estimate a sub-set ?
What are the main issues with one-off interviews ?
What are the main issues with interview programmes ?
What are the main issues with organising focus groups ?
How can I group people by preferences ?
How can I group people’s preferences in broader sets ?
Where can I find secondary data ?
What are the2usual AABC sources ?
Tools Book Table of Contents

Key Question

Tool Description

Typical Output Format

1. Strategy Concepts

Typical Process Tricks & Tips

Training Modules

3
Tools Book Porter’s 5 Forces

Key Question

What are the key market drivers ?

Tool Description

Porter’s model is a great check list when starting to describe an industry. It helps you organise
your research and, more importantly, provides a good framework in which to present your
findings.

Typical Output Format

Porter’s 5 forces map

Threat of
New Entrants

Bargaining power of Rivalry among Bargaining power of

Suppliers Competitors Customers

Threat of
Substitution

Typical Process Tricks & Tips

• Start with top-line list of the main • Keep a good balance between
players in each of the 5 boxes words and data
- key competitors
- key suppliers • “Force quantification” of words.
- key customers For example if you read “customer
- most likely entrants power is likely to continue growing
- most likely substitution at broadly the same rate” try and
find relevant data and write
• Carry out lit. search on the names “customer power is likely to
compiled above continue growing, keeping price
hikes on historical level of 2%p.a.”
• Gather all relevant articles in one binder
• Think about Newton and
• “lift” most common comments into a Archimedes (every proactive force
word document creates its own reactive force) and
try capturing both the net effect
• Organize results into 5 boxes and the 2 opposing forces

• Summarize • Ground model in the analytical

process: what further research
would be required to conclude on a
given trend?

Training Modules

Market-I 4
Tools Book SWOT

Key Question

What are the top-line factors affecting the issue at hand ?

Tool Description

The SWOT box is a less formal , more intuitive version of Porter’s model . It provides a good
framework in which to lay out initial findings - and can be used to start a Logic Tree (see below)

Typical Output Format

SWOT analysis of Chelsea FC

• Experienced players • Little development

• Key real estate location opportunities for the youth
• teams
“Cultured” football
Strengths methods shared across the • Old players more accident Weaknesses
squad prone
• Midfield play • Low scoring
• Inexperienced manager

• Attract further key • Still backed by private

international names
• Umbrella branding
Opportunities (internationally recognised
name)
investors
• MUFC and Arsenal keep
getting bigger Threats
• Leeds, Liverpool, etc back
in contention for N° 3 spot

Typical Process Tricks & Tips

• Self-explanatory • Many issues are both an

opportunity and a threat, or a
strength and a weakness !

• Do not sit on the fence; you will

revisit this analysis in due course
but start by choosing a box for
every phenomenon observed /
anticipated

Training Modules

Competitor-I 5
Tools Book Growth Share (BCG) Matrix

Key Question

Which industries or sectors should we be in?

Tool Description

The Share-Growth matrix is a simple matrix devised to visualise multiple investment

alternatives. It helps you compares relative attractiveness of different shares vs. growth
situations. It requires an Excel sheet and the Bubble function in the Chart Menu.

Typical Output Format

Fish food service segments, Share & growth, 1998

Low High
Segment
12,0%
FORECAST Services
growth
10,0%
(%)
Hotels High
8,0%
Pubs
6,0% Restaurants

4,0% Health Fish & Chips

Catering
2,0% Low

0,0%
Clubs Education
-2,0%
0 10 20 30 40 50 60%
Segment share (% of market)

Typical Process Tricks & Tips

• Compile competitor or division market • Each quadrant of the matrix

shares in their relevant market corresponds to a generic term,
describing the strategic opportunities
• Gather market growth rates for each available to a company or division
industry or segment present there:
- bottom-left quadrant, “dog”, small
• Plot market share of a below par growth
industry, little opportunity
• Split chart in 4 quadrants : Dog; Question - top-left , “question mark”, small
Mark; Star; and Milk market share of an above par growth
industry, good opportunity
• Do not worry exceedingly about - top-right, “star”, big market share of
accuracy of positioning of a given data above par growth industry, great
point in the matrix but focus rather on opportunity
relative positioning - bottom-right, “cow”, big market share
at below par growth, superb position
but little opportunity , time to milk !

• Original BCG had the x-axis with RMS

(relative market share) and was
plotted with leaders on the left rather
than the right

Training Modules

Market-I 6
Tools Book Product Life Cycle

Key Question

What stage of the cycle are we at ?

Tool Description

The Product Life Cycle is a concept devised to keep in mind that relative competitive
advantages can ebb and flow. It helps you position competitors or industries against one
another and against a time line. Works better on a theoretical level rather than with lots of data

Typical Output Format

Product life cycle curve

Measure or
phenomenon
(ie sales in £,
penetration in %,
etc)

Time line of phenomenon

(in years, or months, or days, etc)

Typical Process Tricks & Tips

• Find start date of timeline (i.e. first • Tip : it is usually quicker - and as
recorded mention of the technology, the illustrative to plot 3 or 4 milestones
product, the industry, etc) than it is plotting the whole line

• Define a vertical axis (i.e. sales,

penetration levels, etc)

• Create Excel table with measurement

records over time

• Plot

Training Modules

Market-II 7
Tools Book EOS : ROS - RMS

Key Question

Does size matter ?

Tool Description

The ROS-RMS is a simple chart displaying together relative size of competitors and profitability
levels. It requires an Excel table and the Bubble function in the Chart Menu. The parallel band
lines need be added afterwards

Typical Output Format

ROS - RMS ROS - RMS

Industry A Industry B
25% 25%
ROS 20 ROS 20
(last 3 (last 3
years, 15 years, 15
%) 10 %) 10
5 5
0 0
0,01 0,10 1,00 10,00 0,01 0,10 1,00 10,00
-5 -5
-10 -10
-15 -15
-20 -20
-25 RMS (log) -25 RMS (log)

Typical Process Tricks & Tips

• Define list of competitors to be • Order annual reports in advance : 2

included, and order annual reports weeks lead-time for foreign
companies
• Create Excel table with last year’s sales
+ last 3 years’ profits • Don’t forget 3 years average for ROS

• Plot • Start plotting data you have : partial

• Annotate competitors with incomplete
and / or misguiding data, such as less
than 3 years of profits; latest year of
sales is not last year; finer data
available includes other divisions, not
just sales and profits of relevant
segments, etc
is better than nothing
• Do not hesitate to call competitor
directly - after clearance from case
team manager - to gain idea of
segment profitability (ie “higher
than average of company”, etc)

• Strip down competitor sales to relevant

segments

• Estimate comparative profitability of

remaining segments

Training Modules

Competitor-I & II 8
Tools Book EOS : Learning Curve

Key Question

What are the benefits of scale or experience ?

Tool Description

The Learning Curve is a very simple concept: it is the trend line of a set of data where the Y axis
represents the cost/unit of the X axis. It requires an Excel table and the Scatter function in Chart
Menu

Typical Output Format

Manufacturing scale curve, Biscuits industry, 1997

1,2
Cost per Tonne A 10 times increase in scale represents a
Broxburn theoretical cost improvement of £275p.T.
(excl. materials, 1,0
Some of this, however, would be offset
1993, £k/Tonne) by increased distribution and other costs
Linkoping
0,8 Hatton
Durango Ashby
Gyor
0,6
Lauragais X1 Maastricht Carlisle
Dortmund
0,4
Jyvas Hyva X2 R2 = 65%
Genoa
0,2 Tyneside

0,0
1 000 10 000 100 000
Manufacturing Capacity (kTonnes, 1996, Log scale)

Typical Process Tricks & Tips

• Define the exact value chain dimension
whose learning curve you want to
display (manufacturing, purchasing,
etc)
• Choose the number of data points you
need (5 will result in rather illustrative
outcome, 10 - 12 will give more
confidence)
• Gather data on cost/unit from client for
relevant objects (eg: get exact capacity
and cost/tonne for client in 4 plants)
• Interview competitors’ relevant director
for missing data using smart approach
(eg: by how much would your cost/unit
drop if you doubled size
• Careful! There are 2 versions of the
“learning curve”. One is really about
learning, the other really about scale
• In the first case, the X axis represents
the cumulative N° of units produced
to date and the Y axis the cost/unit
over time (A typical example is plane
production. Few units produced per
year, and the cost of each unit keeps
coming down as assemblers get
better at it with experience)
• In the second case, the X axis
represents the size of a given process
(eg. plant capacity) and the Y axis
the cost/unit for this process in
various plants.

• Tip: manufacturing directors are not

often approached for market
research and thus tend to talk a lot

Training Modules

Competitor-II 9
Tools Book ROS / RONA

Key Question

How well are we using our assets ?

Tool Description

The ROS-RONA is a simple chart displaying together asset turn and profitability of a set of
competitors. It requires an Excel table and the Bubble function in the Chart Menu. The RONA
iso-curves need be added afterwards

Typical Output Format

Major retailers ROS-RONA, UK, 1993-95

20%
ROS 1,8%
(last 3 Body
16%
years, %) Shop
14%
M&S
12% Boots RONA
10% (%)
8%
WH Smith 70%
6% Kingfisher
50%
4% House of John Menzies 30%
2% Fraser
10%
0%
0 1 2 3 4 5 6 7 8 9 10
Asset Turn

Typical Process Tricks & Tips

• Check with manager the definition of • Order annual reports in advance : 2

net assets that will be used weeks lead-time for foreign
• Define list of competitors to be companies
included, and order annual reports
• Create Excel table with last year’s sales • Don’t forget 3 years average for ROS
+ last 3 years’ profits + last 3 years’ net
assets • Start plotting data you have : partial
• Plot, and create RONA iso-curves is better than nothing

• Annotate competitors with incomplete • Let manager know early if agreed

and / or misguiding data, such as
different definition of net assets, less
than 3 years of profits; finer data
available includes other divisions, not
just sales and profits of relevant
segments, etc
• Strip down competitor sales to relevant
segments
• Estimate comparative profitability of
remaining segments
definition of net assets creates data
problem - there are many possible
definitions and another one might
make things easier for you without
affecting usefulness of information
• Do not hesitate to call competitor
directly - after clearance from case
team manager - to gain idea of
segment profitability (ie “higher
than average of company”, etc)

Training Modules

Competitor-I & II 10
Tools Book Value Disciplines

Key Question

What types of possible strategies are there in this market ?

Tool Description

The Value Discipline model helps you position competitors or industries against one another
according to 3 possible main generic strategies. Works better on a theoretical level rather than
with lots of data

Typical Output Format

Value disciplines, Car industry, UK, 1999

Product Leadership

BMW

Rolls

Lada
Vauxhall
Daewoo

Operational Customer
Excellence Intimacy

Typical Process Tricks & Tips

• If without data : • If using data :

• Define list of competitors to be included • Create Excel table with score of

each competitor against each of the
• Position each competitor on map based 3 dimensions
on available evidence (lit.search, annual
reports, brokers’ reports, gutfeel, etc) • Plot data using the Radar function
in the Chart Menu

Training Modules

Competitor-I 11
Tools Book Customer “Happy Line”

Key Question

Where are we over-satisfying our customers ?

Tool Description

The Customer “Happy Line” is a complex, but powerful concept that helps illustrate the areas
where we under-deliver on customers’ expectations and those where we over-deliver. It requires
an Excel table and the Scatter function in the Chart Menu. The Line needs be added afterwards

Typical Output Format

« Happy Line », Company X, Industy Y, 1999

10

Good 9
Our score
against each 8
KPC (1 to 10)
Average 7

Bad 5

4
9 8,5 8 7,5 7 6,5 6 5,5 5 4,5

Critical Important Secondary

KPC Score (i.e. relative importance of criteria to Customers)

Typical Process Tricks & Tips

• Create Excel table with outcome of • Tip : set Y axis by choosing a

customer interview programme : relevant set of competitors for
average score given to each criteria and which to obtain lowest and highest
score of each competitor against the scores (you do not want to
criteria benchmark the client against no-
hopers in the industry)
• Plot client score, with X axis as criteria
score • Happy Line goes from Top left of
chart to the middle, and then
• Set X axis so that Min and Max equal the horizontally to the right
scores of respectively the lowest and
highest ranking customer purchasing
criteria

• Reverse X axis so that Max is to the left

• Set Y axis so that Min and Max equal

respectively the lowest and highest
scores obtained by one of the relevant
competitors against any criteria

• Add Happy line

Training Modules

Customer-I 12
Tools Book Conversion Waterfall

Key Question

Where do we lose potential customers ?

Tool Description

The Conversion Waterfall is a concept that helps you summarise the findings of a customer
interview programme along 6 major measures. It requires an Excel table and the Bar function in
the Chart Menu. Can work as well on a preliminary, data-less level

Typical Output Format

Conversion waterfall, Retailer X, France & Germany, 1997

100%
% of
population 90% France
80% Germany

70%
60%
50%
40%
30%
20%
10%
0%
Awareness Knowledge Liking Preference Visit Purchase

Typical Process Tricks & Tips

• Create Excel table with outcome of • Self-explanatory

customer interview programme : share of
the sample population that meets the
successive measures

• Plot

Training Modules

Customer-I 13
Tools Book Table of Contents

Key Question

Tool Description

Typical Output Format

2. Key Visual Tools

Typical Process Tricks & Tips

Training Modules

14
Tools Book Pareto Curve (“80:20”)

Key Question

What matters ?

Tool Description

The Pareto Curve is a simple and powerful concept : it posits that quite regularly 20% of a given
population will account for 80% of this population’s actions with a third party (ie sales,
purchases, etc). It requires an Excel table and the Scatter function in the Chart Menu*

Typical Output Format

Company X, Customer Pareto, 1998

100%
Cumulative
% of Sales
80%

Pareto Rule
60%
20% of a given population accounts
for 80% of this population’s actions
40%
(eg. 20% of a customer base account
for 80% of sales)
20%

0%
0 10 20 30 40 50 60 70 80 90 100
Customers (Ranked by decreasing Sales)

Typical Process Tricks & Tips

• Let’s assume we are drawing a Pareto of • * : instead of using the scatter

a client’s customers
• Gather client total sales, and sales by
customer
• Tip : do not despair if you only
• Rank customers in column by decreasing
sales
• Calculate weight of each customer as a %
of total client’s sales
• Set-up column with cumulative share of
customer sales
• Plot scatter of cumulative sales column
function you can use the Bar
function, Select Data series, and set
Options / Gap to “0”
have sales of the Top 50 customers
(or of the Top 50 suppliers) . Find
out how many customers (or
suppliers) make up the total list
and posit that each of the smaller
ones has the same - tiny - weight.
You can now draw a pseudo-Pareto
where the top right hand part of the
curve will effectively be a near-flat
straight line

Training Modules

Customer-I & II 15
Tools Book Value Maps (“Mekko”)

Key Question

What are the various segments and sub-segments ?

Tool Description

A Mekko is a visually simple but analytically complex tool that helps you display in one sole
slide 2 successive cuts at a data set (eg market size by product category and by product, industry
sales by sector and by competitor, etc). It requires a special input tool; the “Mekko Maker”

Typical Output Format

General insurance market, UK, 1998

Accident Pecuniary
Property Motor & Health Loss Liability
Total Market = £21.9bn
100% £8.2bn £6.8bn £2.7bn £2.3bn £ 1.9bn
Domestic
Personal vs Private Non-Comprehensive
Other
Mortgage
commercial Extended Public/
split for
80 Warranty General = PI
Liability
sector Private Comprehensive
Personal Property Personal
60

Payment
Protection
40

Corp Other Employers

20 Commercial Vehicles orate Liability
Commercial Property
Consequential
Fleet Loss
0
0 20 40 60 80 100%
Sector as per cent of UK market

Typical Process Tricks & Tips

• Create Excel table formatted as follows : - • Tip : use only absolute measure of
one segment by column - size (ie £), not market shares or
rank segments by decreasing size other relative measures / ratios
- each sub-segment of a given segment in
the successive rows of the relevant • For clarity of reading segments of
column size inferior to 5% of total market
- rank sub-segments by decreasing size size should be grouped into an
“other” segment
• Open “Mekko Maker”
• Likewise, all sub-segments of size
• Copy Excel table into “Mekko Maker” inferior to 3% of total size of a
given segment should be grouped
into an “other” sub-segment

• Use shading & patterns

Training Modules

Market-I & II 16
Tools Book Value Chain

Key Question

Where do our core competencies reside ?

Tool Description

The Value Chain model helps you highlight for different competitors within a given industries
the competencies each one has developed to succeed. Works better on a theoretical level rather
than with lots of data

Typical Output Format

Value chain

Finance
HR
Technology
Logistics

Purchasing Manuf’ing Marketin Sales

g

Typical Process Tricks & Tips

• Identify the main competencies in the • Do not hesitate to alter the arrow
industry above

• Create generic industry arrow with
support functions and operating
functions
• Gather from desk research (annual
reports, articles, etc) and one-off
interviews the area of the value chain
where each competitor chooses to focus
(“core competencies”)
• Only principle to follow for visual :
- horizontal division separate
“support” functions from
operating ones
- key operating processes are
split vertically
• This principle will justify treating
different functions differently by
industry (e.g. technology is a
support competency in most
industries, but a key operating one
for a software company)

• Tip : an organisation chart is often a

good starting point to understand
emphasis attached to the
competency

Training Modules

Competitor-I 17
Tools Book Weighted Column Maker

Key Question

Which are the most profitable competitors in absolute terms ?

Tool Description

A Weighted Column chart is a simple tool that helps you display at once both competitor
profitability level and overall industry profits. It requires a special input tool; the “Weighted
Column Maker”

Typical Output Format

Industry profitability, Industry X, 1995-98

20%
ROS
(last 3 15
years,%) Weighted Average = 10.0%
10

5
Comp 1 Comp 2 Etc
0
0 20 40 60 80 100%
-5

-10%
Share of Market, by Competitor

Typical Process Tricks & Tips

• Define list of competitors to be included, • Order annual reports in advance : 2

and order annual reports weeks lead-time for foreign
companies
• Create Excel table with last year’s sales +
last 3 years’ profits • Don’t forget 3 years average for ROS

• Plot • Start plotting data you have : partial is

• Annotate competitors with incomplete
and / or misguiding data, such as less
than 3 years of profits; latest year of sales
is not last year; finer data available
includes other divisions, not just sales
and profits of relevant segments, etc
better than nothing
• Do not hesitate to call competitor
directly - after clearance from case
team manager - to gain idea of
segment profitability (ie “higher than
average of company”, etc)

• Strip down competitor sales to relevant • Plot Weighted Average industry

segments profitability line based on information
you have, but indicate what total % of
• Estimate comparative profitability of industry sales you have profitability
remaining segments data for

Training Modules

Competitor-I & II 18
Tools Book Share Gain Line

Key Question

Who has been gaining market share ?

Tool Description

The Share Gain Line is a visually simple tool - if a bit difficult to grasp at first - that helps you
display relative share performance of competitors in the market context. It requires an Excel table
and the Bubble function in the Chart Menu. The “Zero-gain” line needs be added afterwards

Typical Output Format

Share movements by competitor, Music, Cards & Video retail, UK, 1995-1999

60% Competitors
Competitors Blockbuster
Growth (% gaining share
50%
over 4
years) 40% Paperchase WH Smith

30% Disney Store

Disney Store
20% Our Price Boots Woolworths
WH Smith J. Menzies
10% Woolworths Competitors
J. Menzies losing share
0%
-10% 0% 10% 20% 30% 40% 50% 60%
-10% WH Smith
Music Cards Video
Total Market Growth

Typical Process Tricks & Tips

• Gather historical market data and • Always write meaning of bisecting

compile market growth for each market line on the chart:
above line = gaining share
• Define list of competitors to be included below line = losing share
by market
• Tip : for multi-segments on one
• Gather historical competitors sales data graph all the bubbles in a given
and compile competitors sales growth market should be on the same
vertical line
• Create excel table with market size Year
Zero (Yo), market size now (Yn),
competitors sales Yo and competitor
sales Yn

• Plot

• Draw line bisecting the two axes

Training Modules

Competitor-I & II 19
Tools Book KPC Combs

Key Question

What are the main purchasing criteria, and how do we fare ?

Tool Description

The KPC Combs is a visually simple tool - if a bit difficult to grasp at first - that helps you display
jointly both the importance of customer purchasing criteria and the ranking of competitors against
those criteria. It requires an Excel table and the Bar + Line function in the Chart Menu

Typical Output Format

Key purchase criteria (KPC) comb, Industry X, Germany, 1999

10
Score 9
(1 to 10)
8
7
Criteria
6 Comp 1
Comp 2
5 Comp 3
Client
4
3
2
1
Criteria 1 Criteria 2 Criteria 3 Criteria 4 Criteria 5 Criteria 6

Key Purchasing Criteria

Typical Process Tricks & Tips

• Create Excel table with outcome of
customer interview programme : average
score given to each criteria and score of
each competitor against the criteria
• Plot
• You can plot both the Criteria and
competitors score using the same
scale : draw chart as a Line chart,
select the Criteria line; go into
Chart Options and select a Bar
• Do not forget to set minimum and
maximum of Y axis to values of the
range offered (eg from 1 to 10, not 0
to 10)

• Tip : for a large interview

programme, the dispersion of the
average scores will be minimal.
You can increase visibility of
differences by setting Y values
more finely on either side of the
average (eg display from 3 to 8, or 4
to 7, instead of from 1 to 10)

Training Modules

Customer-I & II 20
Tools Book Harvey Balls

Key Question

What is the best way to display “soft” quantitative data ?

Tool Description

Harvey Balls are a technique that helps you summarise the results of a benchmarking exercise
where the item benchmarked obey different metrics. It needs to be hand drawn. Can work as
well on a preliminary, data-less level

Typical Output Format

Competitor benchmark summary table, Mixed retailers, UK, 1999

Competitors
WH John
Boots Woolworths etc
KPI Smith Menzies

Supply chain
efficiency

Customer
retention level

Staff utilisation
level

Etc ...

Typical Process Tricks & Tips

• Select dimensions to be included in table
• Write down a code for each dimension
(ie what score justifies a full ball, what
deserve half, what is a quarter, what is
zero)
• Tip : Write code before filling the
table, as filling a Harvey Ball table
usually throws open at least one
implication that wasn’t foreseen
with just the base data

• If wanting a “Total” row, give a

weighting to each dimension and
calculate total for each column

• Hand-draw

Training Modules

Competitor-I 21
Tools Book Quotes

Key Question

What is the best way to display qualitative data ?

Tool Description

Quotes are a systematically under-used technique for displaying qualitative data in a powerful
way.

Typical Output Format

“ There has bee a trend away from sport shoes and towards “work” boots worn
as streetwear. This has been going on at the rate of 2-3% p.a. over the last 3
years, is getting stronger now, and is no longer just a teenage fashion”
- J. Swartz, CEO, Timberland

“Consumer shift towards good value and cheaper shoes, together with the
availability of imports from the Far East and economically weaker countries
have intensified price pressure and competition in the market”
- Euromonitor

“Camel is the best selling boot in Germany, with in excess of 5% market share”
- Marketing Director, Camel UK

Typical Process Tricks & Tips

• Create on an on-going basis a database / • Format all quotes in a consistent

binder of comments with good quote
value
• Write comprehensive notes during one-
off interviews
• Manage a good filing system when
carrying outlit. search
manner, preferably as above
• Try and get a number in every
other quote, ie :
– select the quotes on the basis of
their number content (ex-post)
– force interviewee to quantify
qualitative statements (ex-ante)

• Quote value rests in the nature of

comment heard or read and / or in the
authority of the source

Training Modules

Customer-I 22
Tools Book Lollipops

Key Question

Can I come up with creative data displays of my own ?

Tool Description

Lollipops are a technique that helps you display in one sole slide a large number of detailed
information across a large selection of objects (competitors, products, etc). It requires an Excel
table and the Bubble function in the Chart Menu

Typical Output Format

Plant sizes & total capacity by competitor, Storage products industry, Europe, 1998

70k
Plant size
60 E
(k tonnes),
50 UK
60k
D tonnes
40 D

30 UK D
B
20 S
N
SF UK B D
E
10 NL
UK
D
NL D
0
Total Capacity
(k tonnes)
xi t
n
Sc or

ow
x
r

a
eta

ex

sa
r

Ar ro

tec
r
lco

a
al

efe

lle

se
Competitor
en
a lu

ist
co
xi o
yp

em
d
ct

Ap
Ti

bi
ra

au
M

St
Ga

hy
ag
m
ed
ha
tru

ec
De
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Ar
Fe
Po

M
Es

M
N

av
M
ns

Tr
Co

Typical Process Tricks & Tips

• Create Excel table with all the data • Tip1 : always try creative solution
required : one object / criteria per row on paper before launching into big
(eg competitor) and one measure per box Excel manipulation
vertically (eg plant capacity of
competitors plant) • Tip2 : remember that a nicely laid
out Excel table is always a more
• Plot powerful visual than a cumbersome
graph ...
• A Lollipop chart is simply a creative
answer to a regular problem : how to
display a large number of data points,
the detail of which is necessary but less
important that the overall picture it
paints

• A “Mekko” is another creative way to

solve the problem described above

• Any solution you may come up with that

solves your display issue has got to be a
good one !

Training Modules

N/A 23
Tools Book Channel Maps

Key Question

What is the relative importance of various routes to market ?

Tool Description

Channel Maps are a technique that helps you display the complexity of various routes to market
whilst quantifying their relative importance. There isn’t a software available to generate them :
they need to be hand drawn

Typical Output Format

Channel map, Construction materials, UK, 1999

Products Construction Materials Additional
£22.3bn Products*
Manufacturers/Importers

£15.3bn Distributors/Stockists
£3.2bn
Channels
Direct £4.4bn
£7.0bn
Specialist Merchants/ Builders DIY Stores, Superstores and
Factors Wholesalers Merchants Hardware shops, Garden Centres etc

£4.6bn £6.3bn £7.6bn

£0.8bn £0.5bn
End- Builders/Contractors Home Customers
Customers
£18.2bn £7.3bn

Typical Process Tricks & Tips

• Gather on one page all the data you have • Be sure to use the same units
about the industry sales (manufacturer throughout, £100 of manufacturer
sales, retail sales, wholesale sales), and sales can be exactly the same as
organise data into 3 tiers : products (or £200 of retailer sales if RSP (retail
manufacturers), channels, and end- selling price) = 2xMSP
customers (or retailers) (manufacturer selling price) in thi
industry ..
• Firstly, draw the product and end-
customer horizontal bars • Tip : when possible volumes are a
better measure than values (as stay
• Secondly, draw the “direct” flow the same throughout the flow -
between these 2 bars (on the left of the normally…)
above map), and infer from this a MSP to
RSP ratio

• Thirdly, split this ratio in two to “body

double” the MSP to WSP and WSP to
RSP ratios, and “convert” your whole
data set in the relevant unit you are
using

• Finally, draw a first map, and iterate...

Training Modules

Market-I 24
Tools Book Conceptual Maps

Key Question

How can I simply structure a set of data before analysing it ?

Tool Description

Conceptual Maps are basic techniques that help you breakdown complex issues into sub-sets so
as to better either lay out the thinking, plan the research or map the results. They do not require
intricate softwares; just a ruler, a pencil, and an eraser ...

Typical Output Format

Key conceptual maps

“2x2” Matrix Conceptual Cross

Dimension 1 Dimension 3

High

Dimension 4
Low

Low High
Dimension 2

Typical Process Tricks & Tips

• Conceptual Maps come in various
shapes. The mother of all conceptual is
the “2 x 2” Matrix, where various objects
are plotted in 4 boxes : dimensions 1 & 2
with sub-sets “low” and “high”
• A Conceptual Cross provides another
way to think about how objects can be
classified against 2 other dimensions
• The 2x2 Matrix is the most useful
consulting tool ever …
• The Conceptual Cross is marginally
less helpful. It can come handy
when you find that the objects you
have plotted in a matrix all fall on
the diagonal line : a 45° rotation of
Matrix dimensions gives you a
Cross map

Training Modules

Customer-I 25
Tools Book Forces at Work

Key Question

What are the forces at work ?

Tool Description

The Forces at Work visual is simple version of Porter’s model . It highlights complexity rather
than simplify / organise it in the way Porter and the SWOT box do.

Typical Output Format

Clothing manufacturing
Convergence in shifting production
national tastes overseas Clothing manufacturers
across Europe shifting production from
West to East and South
Europe
Customers demanding
shorter lead times
Improvements in the
speed and cost of
Threat of logistics across Europe
cheap imports
from Asia
Growth of Shortening product life
international Price convergence cycles in fashion
customers, e.g. between markets
Nike & Benetton driven by the
Euro

Typical Process Tricks & Tips

• Self-explanatory • Do it either at the beginning of a

case - or at the end to illustrate
complexity of forces at work

• During case work, try and organise

these forces either in Porter’s 5
Forces model, or in SWOT box

Training Modules

N/A 26
Tools Book Crocodile Chart

Key Question

Can I come up with creative data displays of my own too ?

Tool Description

Crocodile Charts are a technique that helps you display in one sole slide how the issue you are
studying narrows down to your specific area of focus. It requires an Excel table and the Bubble
function in the Chart Menu

Typical Output Format

Crocodile chart, Oil reserves, 1995

100%
90% Sea
80% North
70%

60%
50% Land
UK
40%
South
30%
Europe
20%

10%
0%
Global Continental National Regional

Typical Process Tricks & Tips

• Create Excel table with all the data • Tip : it is easier to add lines across
required all bars and delete unnecessary one
upon finalising the chart than the
• Plot 4 bars other way round

• Add connecting lines

Training Modules

N/A 27
Tools Book Parfait

Key Question

What is the easiest way to display market growth ?

Tool Description

A Parfait is a visually simple tool that helps you display jointly both the relative size of market
segments and their relative growth. It requires an Excel table and the Area function in the Chart
Menu

Typical Output Format

UK Clothing Market 1994-98

3 000

Annual Growth
2 500
Market size 3%
Childrenswear
(1998, £m)
2 000 10%
Sportswear

1 500
Menswear 2%
1 000

500 Womenswear 2%

1994 1995 1996 1997 1998

Typical Process Tricks & Tips

• Create Excel table with all the data • Do not forget to add growth data to
required the right of the chart

• Plot

Training Modules

N/A 28
Tools Book Table of Contents

Key Question

Tool Description

Typical Output Format

3. Analysis Techniques

Typical Process Tricks & Tips

Training Modules

29
Tools Book Logic Tree

Key Question

How does one organise the research ?

Tool Description

One half of Structured Thinking, the Logic Tree turns the initial client brief into a set of discrete
questions. Each Logic Tree has a “twin” in the shape of the Research Tree. Once the key questions
have been established it is usually clear which research method is the most appropriate

Typical Output Format

Logic Tree Research Tree

I can find a solution I gather data to inform

to my sockless state the applicability
of each option

I can I can get I can Research Research Inquire about

find another an entirely compensate for inside the flat outside the flat socklessness
sock in the flat new pair what I don’t have

I can I can I can I can I can I can Check Ask Check Check Check Ask for
trace trace buy a have alter justify my room flatmates there are who is with a good joke
the another new one clothing sockless (under Check sock coming partner Think
other pair pair sent to hide ness the bed, laundry shops Call to that of how to
sock in time sockless other room on the get them socks are turn it into
ness drawers) way to bring needed a statement
one

Typical Process Tricks & Tips

• Write “top of tree” as a positive • A positive statement is more

statement answering the client question difficult than a negative statement,
and thus gives client more
• Create sub-branches by splitting the top confidence on strength of our
of the tree into its natural components answer
(writing a good Logic Tree is an art and a
technique that one acquires with • Tip : some first level “split” of the
experience) logic tree occur rather regularly.
Typical first level branches are :
• The sub-branches should obey the MECE
method (Mutually Exclusive Completely - Sales, Margins and Costs
Exhaustive), i.e.all the sub-branches
taken together must exhaustively - Customers, Competitors and Cost
support the branch above, and each sub-
branch must deal with something • Tip : do the research tree only once
different from the other sub-branches finished with logic tree (on 80:20
basis). Indeed some research
• The MECE methods implies that branches can address several
- if one of the sub-branches is false then branch of the logic tree at once
the top of the tree must be false
- if all the sub-branches are true then the
top of the tree must be true

Training Modules

N/A 30
Tools Book Process Maps

Key Question

What are the key steps ?

Tool Description

Process Maps are a technique that helps you group a set of research and/or action points into
broad sequential steps

Typical Output Format

Bidding, Exit
Deal Negotiation (Trade Sale
Origination Owning
& Closing or
Flotation)

• Strategy
• Target • Market Study / strategic • Business plan
development
identification due diligence preparation
• Post-acquisition
• Assessment of - External validation • Market study for
disputes
potential post- - Ammunition for potential prospectus
deal synergies negotiations • ‘Outside in’ view for
- ‘Black holes’ check potential buyers’
• Resolve competition and - Synergy valuation
regulatory issues for negotiations
• Valuation analysis

Typical Process Tricks & Tips

• Self-explanatory • Try to aim for 4 to 7 steps to keep

the process map useful

Training Modules

N/A 31
Tools Book Sanity Checks

Key Question

Does this number make sense ?

Tool Description

Sanity Checks are basic techniques that help you assess the viability of a data point obtained through desk
research or one-off interviews. This do not require anything else than careful consideration ...

Typical Output Format

Main data sanity checks

Confidence Feel Right Materiality Impact Body

Ranging Test Test Criticality Doubling
Test

Narrowing a Connecting data Putting in Establish whether Choosing one

variety of N° from obtained on esoteric perspective the the different unique data point
different sources issues to more differences estimates obtained as the estimate
down to a range easily between the lead to the same you will go with
within which you understandable various estimates outcome with pending further
are fairly confident dimensions and obtained typically regard to the information
the true answer is assessing by expressing question
to be found credibility biggest delta as % you are really
(“confidence of implication of average value addressing
interval”)

Typical Process Tricks & Tips

• See above & Generic Research • Most important test is materiality

test, i.e. how different are the
various estimates obtained ?

• Tip : choose a different color - red

for examples - for the body doubles
in an Excel worksheet

Training Modules

Generic Research 32
Tools Book Top - Down Estimation

Key Question

How can I estimate a sub-set ?

Tool Description

The Top-Down estimation is a method that consists in shaving off parts of something you know
(eg. market size) until you are left with the rump (eg. a segment size) that you were trying to
estimate in the first place

Typical Output Format

Own-label, non-ready meals, frozen fish market top down estimate,1998

2 000
Market
value 1 800
Food Canned
(£m, RSP, 1 600 service
1998)
1 400
1 200
Fresh
1 000
800 Ready Meals
Chilled
600 Branded
Retail
400 Coated
Frozen Own
200
Natural Label
0
Total Fish Share of Share of Share of Share of Our Market
Market Retail Frozen non- Own
Ready Label
Meals

Typical Process Tricks & Tips

• Gather all the available data on the • The outcome of a top-down

market you try to estimate as well as estimation is visually complex to
data on broader market sets illustrate

• Make a list of the “cuts” for which you
have data (eg. you have data by channel
and by products but not by channel &
product)
• Split the starting object into sub-set by
applying the cut for which you have
least data (eg. you know market share
of products in retail but not in
wholesale, thus share by channel before
you share by product)
• The best method is to create a set of
100% vertical bars and one by one
turn to “no border & no area” the
boxes that you don’t want to see
appearing
• Think Rubik’s cube: you will
probably have to try 2 or 3 different
sequencing of the cuts before you
arrive at a satisfactory outcome

Training Modules

Generic Research 33
Tools Book One-Off Interviews

Key Question

What are the main issues with one-off interviews ?

Tool Description

Check-list for One-Off Interviews. Use framework below before proceeding with interviews

Typical Output Format

One-off Interviews Check-list

Anticipation Contact & Interpretation

Preparation Execution Wrapping Up
of Answers Persuasion of Results

• Be clear exactly • Define your • Be polite, • Prioritise • Be flexible but • Be prompt in

which questions objectives for especially to questions focused on the delivering high
need to be the meeting up secretaries answer quality
answered front • Be prepared for feedback
• Be rigorous in obstructive
• Choose the • Ensure you using secretaries remarks from • Remember
appropriate come out with where possible interviewees who has paid
method the specific the bill!
answers you • Write a • Write clear and
• Contact the require professional but comprehensive
correct people deferential fax meeting notes

• Do not lie !!

Typical Process Tricks & Tips

• See above & Generic Research module • Go through the check-list again &
again !

• Tip : always keep in mind the

ANSWERS you are expecting and
particularly the different SO
WHAT that different answers will
point to

Training Modules

Generic Research 34
Tools Book Interview Programmes

Key Question

What are the main issues with interview programmes ?

Tool Description

Check-list for Interview Programmes. Use framework below before proceeding with interviews

Typical Output Format

Interview Programme Check-List

Anticipation Contact & Interpretation

Preparation Execution Wrapping Up
of Answers Persuasion of Results

• Choose the • Create a • Ensure • Ensure process • Only • Keep paper

appropriate questionnaire interviewers is managed appropriate copies of
method which is are fully effectively analysis is questionnaires
- on the phone focused on briefed carried out at hand !
- in the street testing the • Set-up database (80 : 20)
- mix hypothesis • Pilot and maintain it
- correct questionnaire throughout
• Select the best questions and re-draft
sample - questions ineffective • Temp
- suitable asked questions performance
proportion in the correct monitored and
of market way data inputed as
- hit rate rapidly as possible

Typical Process Tricks & Tips

• See above & Customer-I module • Go through the check-list again &
again !

• Tip : always keep in mind the

ANSWERS you are expecting and
particularly the different SO
WHAT that different answers will
point to

Training Modules

Customer-I 35
Tools Book Focus Groups

Key Question

What are the main issues with organising focus groups ?

Tool Description

Check-list for Focus Group. Use framework below before proceeding with organising groups

Typical Output Format

• Organising the day Focussing • Venue and travel

• Managing the debate Logistics arrangements
debate
• Agreeing the plan
with the client
Getting the
• Maintaining records
right people
• What to take
• (equipment, props,
• etc...)
• Selecting candidates
• Invitations
• Hit rate
• Incentives

Typical Process Tricks & Tips

• See Tricks & Tips • If possible, pre-select to ensure

representative cross section by
asking key questions on the phone
• Confirm details in writing (by fax
for speed)
• Invite up to double the candidates
you want unless they are motivated
to come - offer cash/other incentive
as appropriate as sanctioned by the
project manager Think through the
timing
• Draft issues for debate of key
questions beforehand
• Stick to the agenda
• Use flip charts to document
contributions
• Keep travel to a minimum
• Ensure venue is appropriately
comfortable
• Keep database as for interview
programmes
• Be prepared!

Training Modules

Customer-I 36
Tools Book Clustering

Key Question

How can I group people by preferences ?

Tool Description

Clusturing is a complex technique that helps you group object (eg customers) according to their
similarity of preference between a set of dimensions (eg customer purchasing criteria). It
requires an Excel spreadsheet and a conjoint analysis software, such as SPSS

Typical Output Format

Cluster analysis, Storage product industry, 1998

Speed of service
Cluster
A lot Y

Average
Cluster

All-round support
X Little Average A lot

Average Z
Cluster

A lot
Exclusivity of operations

Typical Process Tricks & Tips

• Create Excel table with detail of • Spend 3 or 4 hours reading the

customer interview programme : score
given to each criteria by each customer
(one customer per row, one criteria per
column)
• Import dataset into conjoint analysis
software (SPSS or other)
• Run Classify \ Cluster function in
Statistics menu of conjoint analysis
software
• Write down N° of rows that fall in each
cluster
conjoint analysis software manual,
and practicing on fictitious dataset !
• A Cluster analysis will start by
giving you X clusters for your X
customers (fair enough each one is
different …). It will then start
grouping the two customers with
the most similar preferences into a
single cluster, leaving you with X-1
clusters, etc, until all is one big
cluster. The real N° of clusters in
the population is usually obtained
by trial and error, thus …

• Go back to Excel spreadsheet, create • Tip : Never erase the content of a

Cluster N° column to tag each row
according to relevant cluster
• Calculate average criteria score by
cluster
given Cluster N° column when
tagging rows in Excel … a
discarded solution usually turns
out to be the correct one in the end !

Training Modules

Customer-I & II 37
Tools Book Factorial Analysis

Key Question

How can I group people’s preferences in broader sets ?

Tool Description

Factorial Analysis is a complex technique that helps you group a large number of dimensions of
choice (eg 14 customer purchasing criteria) into the relevant, fewer factors that underpin clusters’
preferences. It requires an Excel spreadsheet and a conjoint analysis software, such as SPSS

Typical Output Format

Factorial analysis, Storage product industry, 1998

Key Purchasing Criteria Factors

•1. Speedy quotations turnaround time Factor 1

•2. Distributor brand Speed of service
•3. Choice of payment terms
•4. Technical support & design assistance
•5. Speedy & reliable delivery
•6. Literature with distributor brand/name
•7. No competing direct sales force Factor 3
•8. Complete territorial exclusivity All-round support
•9. Choice of pricing structures
Factor 2
•10. Full technical & design digest
Exclusivity of operations
•11. Free contract management facility
•12. Choice of stock holding policy
•13. Free & regular training programmes Factor 1 = KPC 1 & 5
•14. Dedicated account manager Factor 2 = KPC 2, 7 & 8
Factor 3 = KPC 3, 4, 6, 9, 10, 11, 12, 13 & 14

Typical Process Tricks & Tips

• Create Excel table with detail of • Spend 3 or 4 hours reading the

customer interview programme : score
given to each criteria by each customer
(one customer per row, one criteria per
column)
• Import dataset into conjoint analysis
software (SPSS or other)
• Run Data Reduction \Factor function in
Statistics menu of conjoint analysis
software
• Check resulting plot, and iterate if need
be
conjoint analysis software manual,
and practicing on fictitious dataset !
• A good dataset will always give
you a reduction of your X criteria
into X/3 or X/4 factors. Trying to
fathom what these factors represent
can be a notoriously difficult
exercise. Ask for help
• Tip : it is usually easier to
understand a factor after having
carried out a Cluster analysis (see
previous page)

Training Modules

Customer-I 38
Tools Book Table of Contents

Key Question

Tool Description

Typical Output Format

4. Sources

Typical Process Tricks & Tips

Training Modules

39
Tools Book Desk Sources

Key Question

Where can I find secondary data ?

Tool Description

Check-list for Desk Sources. Use framework below and create your own portfolio of regular &
favourite sources

Typical Output Format

Desk research avenues of enquiry

Search Search Search Search Procure Go to

CD-ROM the AABC business documents various
or on-line Net knowledge sources libraries
databases base

Eg. - Profound - FT.com - Global - trade - annual reports - City business

- Datastar - search Best publications - brokers reports library
- Reuters engines Practices - government - market reports - MBS library
- Worldscope - etc database statistics - etc - etc
- etc - etc - etc

Pure electronic Mix Pure paper

Typical Process Tricks & Tips

• Spend 10 minutes laying out the nature
and type of the data you are after
• Spend 10 minutes writing down the
sources where you are likely to
encounter each required data
• Tip : when procuring documents
there is always a trade-off between
immediacy of availability and cost
… a well planned research is one
that leaves more $ in the case-team
dinner pot !

• Start chasing ! • Tip2 : it is uncanny how the

document you need on D day is the
one you thew away on day D-1.
Never throw, always file away.

• Tip3 : other team members will

randomly access your file. Do
develop a filing system that is
easily understandable by all ...

Training Modules

Generic Research 40
Tools Book Usual AABC Sources (1)

Key Question

Tool Description

News Research
Typical Output Format

Reuters Business Briefing Research Bank CD (Investext) Lexis Nexis

News articles, regulatory Company and industry reports, General business news and legal
news announcements (e.g. merger info etc information database, e.g. EC
latest interims, directors (FREE unless printing, then $9 per directives, particular cases etc.
shareholdings etc) page) ($1-4 per article)
Competitor listings
Descriptions of business I-Plus Direct Datastar + Dialog
Disclosure tearsheets (one On-line version of Research Bank CD Host system for databases.
page share performance No free viewing, but can be useful for Particularly strong on medical,
and financial summary) text searching (reports available one pharmaceuticals, chemicals,
Reuters industry briefings weeks after published date) intellectual property and patents.
(useful snapshot) (European bias for Datastar, US for
(£25 per hour) Profound Dialog)
Market research reports and briefing (Charge per article)
FT Profile reports (UK, USA, Japan, France &
Similar to Reuters but Germany) Consumers association on the web
refined searching method (£200+ per report, can do individual Search back copies of “which”
(words in the first sections for £2) (FREE)
paragraph of an article,
Typical Process Tricks & Tips
within one sentence / Anbar Marketsearch online
paragraph and using Management and academic journals Global sources of published market
truncation (£6 per article – next day delivery) research and market reports
more FT articles (FREE)
Mintel (market research Oxford Economic Forecasting
reports) on the web WARC
(4p or more for every line Global forecast for industries, World Advertising Research Centre
viewed including consumer prices etc. Source of advertising information
headlines) (FREE) including “Admap” – main
advertising journal not avail
Dow Jones Interactive UMI- Proquest elsewhere
Similar to FT but US focus Management and academic journals (FREE)
(Approx £2 per article) (can download info)
(Approx. $4 per article)

Training Modules

41
Tools Book Usual AABC Sources (2)

Key Question

Tool Description

Financial Information Information Alliances

Typical Output Format

One Source Web & CD All of the below offer us research and information
Reports or custom tables on historical financials resources/ book loans , research helpline and
(weblinks – news stories) library access
Web = UK companies + current year
CD = Global + last 10 years
(FREE) • Chartered Institute of Marketing
• Chartered Institute of Accountants
Worldscope + Amadeus • Electricity Council
Condensed financial information on quoted • Institute of Management
companies worldwide. Amadeus = Europe • Industrial Society
(including non listed, but have to be of certain • IPD - Institute of personnel development.
size) • London Business School Library
(FREE) Free access to all staff
• Institute of Logistics
ICC Juniper • Cranfield Material Handling Centre
100% coverage of UK companies including info on (Logistics issues)
dissolved companies • Anglo American Chamber
(£9 for annual reports and accounts on private • London Chamber of Commerce
co.s) • Institute of Directors
Typical Process Tricks & Tips
• Financial Times Business Information Services
Hoovers • Disclosure First Contact
US company profiles, including history, • British Library Document Supply Centre.
competitors, management structure – useful for
large US private companies
(Reuters or FREE on web)

Dun & Bradstreet Direct Access Proposed / On Trial

World-wide company reports including credit
score. Useful for US companies that are not listed
or small UK companies • Xls. – Gateway to Information providers
(£20-70 per report) • Euromonitor – Global Marketing data &
statistics on- line
Disclosure - Global Access • Datamonitor Statistics extracts
Annual reports, etc of almost all listed companies • FT journals online – Media/ Energy
globally • Primark Extel Company Analysis
(£22 annual report) • Analysys – telecoms information
• Lafferty online – Direct
Kompass On-line • EIU – direct
Identifying companies within a particular industry • Mintel Market Research
worldwide
(£1.15 per minute + 15 – 75p per article)

Training Modules

42