– revenue opportunity – cost to serve – strategic fit
5. What product/service/channel offering will meet the target segment’s needs? 6. What price will maximize long term profits?
bc
3C’s
Author: Laird Reed Reviewers: Scott Wells,
Karen Hellmich
March 1998
Copyright© 1998 Bain & Company, Inc.
3 C’s
Agenda
•The 3C’s framework •Tools and strategic questions answered •Takeaway slides
3 C’s
Costs
Customers
Competitors
Customers
Capabilities
Customer-Related Bain Tools
1. Customer Segmentation
2. Purchase Criteria Rating (Importance Analysis)
8. Is the company’s overhead an efficient use of resources?
9. What is the fixed/variable split of the company’s costs?
10. How much of the company’s costs are directly, vs. not directly, associated with the production of a product?
5. Value Chain Analysis 6. Profit Hunt 7. Product Line Profitability/
Cost Allocation/Activity Based Costing 8. Overhead Analysis 9. Fixed/Variable Analysis 10. Direct/Indirect Analysis
9. How can we acquire profitable customers?
3 C’s
Costs
Customers
Competitors
Competitors
Capabilities
Competitor-Related Bain Tools
1. Market Overview
2. Company Overview
Strategic Questions Answered
1. What are the appropriate customer segments? How can each segment be described?
2. What is important to each segment when they purchase a product or service?
3. SWOT 4. Porter’s 5 Forces Analysis
5. Benchmarking 6. Scenario Analysis 7. Mergers and Acquisitions
8. Growth/Share Matrix
9. Growth/Growth Matrix 10. ROS/RMS
3 C’s
Costs
Customers
Competitors
Capabilities
Capabilities
Capabilities-Related Bain Tools
1. Core Competencies
Strategic Questions Answered
1. What special skills or technologies does the company have that create differentiable customer value? How can a company leverage its core competencies? What investments in technology and people will help build unique capabilities?
3. Company Positioning (Effectiveness Analysis)
4. Attractiveness Analysis
5. Value Proposition Development 6. Pricing Strategy 7. Distribution Channel Analysis 8. Customer Retention and Loyalty 9. Customer Acquisition
10. What is a company’s relative market share and what is its return on sales? Where is the industry’s normative band?
11. Who are the major owners of the company? How experienced is the management team?
7. What are the appropriate channels for each product/service? What are the economics of each channel?
8. How can we increase our retention of our best customers? How much of an impact will increasing retention by X% have on our bottom line?
3. How well positioned is the company with each segment?
4. Which segments are most attractive from both a financial and an implementation perspective?
3. Are there any opportunities to share costs within the company? What are the potential savings from cost sharing?
4. What are the best internal and external practices? To what extent are they transferable? What will be the impact of implementing them more broadly?
Capabilities
• To determine the
strategies that fit best with a company’s core competencies
3 C’s
Agenda
•The 3C’s framework •Tools and strategic questions answered •Takeaway slides
5. How can we optimize are the cost drivers at each step?
6. What are the quick hit operating improvements? What is the savings potential? 7. How do we allocate costs to each business/product/customer segment?
the industry?
5. How is each competitor performing on key measures? 6. How do we expect each competitor to act/react in different situations?
7. Which companies are potential targets? How can we realize value from mergers and acquisitions?
2. What is the company’s revenue and profit by product, channel, and geography? What is its financial performance?
3. What are each competitor’s strengths, weaknesses, opportunities, and threats? 4. How attractive is the industry? What are the competitive dynamics of
Costs
Strategic Purpose:
• To determine a
company’s strategic cost position relative to competitors
• To identify cost
reduction opportunities
Customers
Competitors
8. How can we describe a company’s portfolio of businesses in terms of market share and growth potential?