•Provide an overview of critical relationship preconditions for seven TOC market segmentation approaches.
•Illustrate TOC market segment implementations used by actual TOC companies.
•Illustrate negative branches pitfalls of several market seg mentation approaches used by actual non-TOC companies.
MARKETING AND PRODUCTION
Often, the initial root core problem in a company's current reality analysis (CRA) will involve the business critical systems of marketing and/or sales. If this does not occur in the initial CRA, the implementation of TOC strategic solutions in synchronized manufacturing, logistics and distribution, or project management/engineering will assuredly increase operational throughput with such magnitude that the company is faced with a reality of possessing more capacity than they have market to fill. There are two possible strategies that such companies engage in to enhance the bottom line. These are reengineering to downsize or reengineering to increase global throughput. Of course, the first is the cost-world solution while the second is the throughput-world solution. All successful TOC applications will find themselves thrust into the necessity of developing and implementing a throughput world strategic plan for their business within the first two years of an appropriately coached TOC implementation.
Each company's strategy will be based upon four aspects of their current reality: the company's goal, the customer interface, their competitive environment, and their internal operational capability. Since any company's market and sales can be enhanced at any time, it is important to first ensure that marketing or sales is the root core problem area. That is, we should check to see if the "long arrow" relationships shown in figure 1 exist.
If any of these exist, the negative branches attendant with strategic marketing or sales interventions would put our company in worse condition. That is, if we sell more products that we can't deliver, we would decrease rather than increase customer satisfaction and result in lowering of market share. Although our company would have the UDEs of declining market share and sales, fixing these first would be treating symptoms and not the root cause. We would simply be making our incompetence more obvious to the customer base. The TOC solutions appropriate here are synchronized manufacturing, distribution, or project management/engineering. However, once we have assured ourselves that these critical relationships don't exist, we can proceed to dig deeper into the four aspects of our current reality to determine the appropriateness of each of the seven known TOC marketing and sales solutions. Depending upon the mix of critical relationships of these factors in their current reality, there are several alternative marketing or sales strategic injections that may be used to propel the company forward on its throughput journey.
The seven known TOC segmentation strategies are alternative market, benefit, customer results selling, horizontal features, vertical features, dominant edge, and relationships. Four of these strategies were touched on in the books The Goal and It's Not Luck. These have been enhanced by TOC practitioners and supplemented with three additional solutions. All of these solutions are ways of segmenting the market. However, a term providing more clarity for our purposes is market differentiation. Segmentation implies a separation, and often connotes a "we are into that customer base, but not into this other one" attitude. Differentiation implies more inclusiveness of multiple customer bases through catering to individual needs/wants in different portions of the customer base. Since the name of the game is differentiation, this paper will expose the seven market differentiation approaches starting
with the most commonly visible approach.
To Be Continued
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