1. Selling value….. ….Market Mode
ValueMathics
Selling value…..
….Market Mode

2. Market entry options
There are several options to enter a market. We call these options : market modes
The choice depends on the outcome of the SWAT analysis i.e. what are the strong points –unique value proposition- of the company
The options highlight the capabilities of a company in the five main activities in its value chain:
TECHNOLOGY
PRODUCTION
LOGISTICS
MARKETING
SUPPORT
In some sectors, the market modes have specific names, like “maquila” or “CMT” in the garments sector
In this presentation, we highlight the market modes in the sector “Manufactures”

3. Contract farming ++ +++ ++ - + Variety +++ +++ - ++ ++
TECHNOLOGY PRODUCTION LOGISTICS MARKETING SUPPORT
AGRICULTURE
Outgrowing
Contract farming
Variety
Brand/variety
GARMENTS
CMT/Maquila
FOB
Sourcing
Brand/variety
INDUSTRIAL
Contract manufacturing Subcontracting
License manufacturing
Private label manufact
Brand manufacturing
SERVICES
BPO/Call center
KPO/ITO/Engineering
IP/Own content
Brand
TOURISM
Tour
Tour handler/transport
Tour operator/packages Brand

4. 1. Contract manufacturing
TECHNOLOGY
Seller concentrates on production or execution and leaves technology, design, marketing to buyer -low value adding. Typical trade partners are A-brands, companies with simple after sales requirements
PRODUCTION
LOGISTICS
COST
MARKETING
SUPPORT
SELLER
BUYER
CONSUMER

5. Example: CMT/Maquila TECHNOLOGY PRODUCTION LOGISTICS COST MARKETING
SUPPORT
SELLER
CONSUMER

6. 2. Sub-contracting TECHNOLOGY TECHNOLOGY PRODUCTION LOGISTICS COST
Seller produces under specifications of buyer,sources all materials. Buyer concentates on logistics, marketing and after sales. Typical trade partners are large retail chains, T1/ OEM’s, firms with more complex after sales requirements.
TECHNOLOGY
TECHNOLOGY
PRODUCTION
LOGISTICS
COST
MARKETING
SUPPORT
SELLER
BUYER
CONSUMER

7. Example: Cosmetics - sprayers
TECHNOLOGY
TECHNOLOGY
PRODUCTION
LOGISTICS
COST
MARKETING
SUPPORT
SPRAYER LTD.
“CHANEL”
CONSUMER

8. Example: Automotive – T2
Tier 2 –piston manufacturer
Tier 1 – engine manufacturer
OEM – truck manufacturer

9. 3. License manufacturing
Seller has captive (regional) markets, but lacks the technology or design capacity. Sources technology from third parties and concentrates on marketing. Typical alliances are with enineering firms, design studios, laboratories
TECHNOLOGY
PRODUCTION
LOGISTICS
COST
MARKETING
SUPPORT
SELLER
BUYER
CONSUMER

10. 3. License manufacturing – 2 options
“License and buy back” :
Buyer provides the design, drafts, formulation of product, often trough a design studio
Buyer provides sometimes a “secret component”
Seller takes care of production
Other modes :
Seller takes care of marketing, sometimes under own label, sometimes under licensor’s brand
Seller takes care of outgoing logistics
Suitable for regional markets, beware of marketing restrictions from licensor

11. 3. License manufacturing
FREE MARKETS
BLOCKED MARKETS
LICENSOR
LICENSEE

12. Example: Food processing
TECHNOLOGY
TECHNOLOGY
PRODUCTION
LOGISTICS
COST
MARKETING
SUPPORT
BOTTLER
COCA COLA
CONSUMER

13. 4. Private label manufacturing
Seller has a unique technology or design, production or execution facilities, but lacks/does not want to get involved in marketing after sales. Typical trade partners are retail stores, B-brands, OEM’s.
TECHNOLOGY
PRODUCTION
LOGISTICS
LOGISTICS
COST
MARKETING
SUPPORT
SELLER
BUYER
CONSUMER

14. Example: Automotive – car assembly
TECHNOLOGY
PRODUCTION
LOGISTICS
LOGISTICS
COST
MARKETING
SUPPORT
MAGNA STEYR
CHRYSLER
CONSUMER

15. Example: Oil industry TECHNOLOGY PRODUCTION LOGISTICS LOGISTICS COST
MARKETING
SUPPORT
SHELL
CONSUMER

16. Example: Food processing
TECHNOLOGY
PRODUCTION
LOGISTICS
LOGISTICS
COST
MARKETING
SUPPORT
SELLER
MORNING FRESH
CONSUMER

17. Example: The supermarket shelf
FIGHTING BRAND
HOUSE BRAND
A -BRAND

18. Example: Accessories – sourcing
TECHNOLOGY
PRODUCTION
LOGISTICS
LOGISTICS
COST
MARKETING
SUPPORT
UMBRALLA MNF.
VODAFONE
CONSUMER

19. 5. Brand manufacturing TECHNOLOGY
Seller has own technology, content or design, markets its products or service under own brand through trade channels or on the web. Typical trade partners are distributors, retail, -or direct sales
PRODUCTION
LOGISTICS
COST
MARKETING
SUPPORT
SELLER
BUYER
CONSUMER

20. Example: Garments - brand
TECHNOLOGY
PRODUCTION
LOGISTICS
COST
MARKETING
SUPPORT
CLEVER MODA S.A.
RETAIL
CONSUMER

21. Example: Food processing - brand
TECHNOLOGY
PRODUCTION
LOGISTICS
COST
MARKETING
SUPPORT
BUYER
CONSUMER