Making the Most of News in an Imperfect Market…
(See 12 tools hot-linked below)
By Brian Moore, Global retail consultant and CEO EMR-NAMNEWS, mailbox@namnews.com

Given the sheer volume and rate of decay of even the most up-to-date-news, it is important to avoid delay in applying a systematic approach to news-application in order to gain and maintain competitive edge over those who take longer…

Realistic ROCE, historical and potential
Starting with a ‘cross-check’ that the customer still qualifies as a trade-partner (see qualities of a good trade partner) it is important to identify customer need.  This means getting past the buyer’s expression of ‘wants’ and taking a view on what might be an optimum and realistic ROCE for a customer at its stage of evolution, taking into account its latest and historical performance (see Namnews archives) and reflecting the aspirations indicated in its mission statement (see Annual Report, chairman’s statement).

ROCE drivers
ROCE is driven by a combination of margin and capital rotation, in turn driven by Sales off shelf (see branding, category management, shopper-profile/brand-profile congruence, trade funding, EDLP/Hi-Lo positioning in Kamwords) combined with cost control to achieve a margin that is appropriate for format and trade sector.  Capital-rotation is driven by a combination of sales achieved (see Compound Annual Growth Rate) and minimum stock levels (see Cost of Stockholding), sales per square foot, and credit achieved from vendors (see Cost of Trade Credit)

Establishing a competitive context
Given that the customer is operating within a competitive environment with other retailers globally, regionally and by branch, and to a lesser extent with alternative routes to consumer, it is important to place their potential ROCE in a competitive context by conducting a retailer Buying Mix Analysis, assessing the retailer vs. other players, from the perspective of their target shopper (see Buying Mix Analysis).

Meeting need in the decision-making-process
A realistic assessment of potential ROCE will allow the KAM to identify key roles and relationships affecting the decision-making-process (see Effective Trade Finance).  This combination of Users, Gatekeepers, Influencers, Deciders, Buyers and Vetoers help the KAM to identify the key jobs involved and their functional or job needs (anything which makes their job easier, faster, more productive or less expensive to conduct) at every level within each function.  Given that most vendors meet most customers’ job needs, it is important to colour in this functional need assessment with reference to the emotional need-set of key players within the customer organisation.

Networking to optimise insight
Systematic use of networking tools (see Business Account Management) will enable the KAM to identify productive partners within the account (sources of Information, Action, Advocacy and Mentoring).  The KAM is then in a position to identify equivalent roles in the vendor organisation, establish their needs and rationalise any incompatibilities and potential conflict between overall needs of each organisation.

Skilled management of the vendor-customer relationship and references to latest available news affecting both organisations will help to fuse the needs of each company by helping each team to recognise and acknowledge their mutuality in joint profit achievement, and thus establish a base for productive negotiation.

Optimising concession-value
Effective news-based negotiation means heightening buyer awareness of vendor value vs. competitive offerings (see Buying Mix Analysis) and enhancing that perceived value by relating every concession being offered by the vendor to the latest competitive situation of the customer, the pressure from its shareholders and latest business problems affecting buyer and other members of the decision-making-process, all within a realistic assessment of latest trade dynamics.

Devaluing buyer moves

This sensitivity and realism, based upon informed analysis and presentation of relevant news focused upon KAM output, will then help the negotiator to devalue concessions from the buyer, with full knowledge of the downside (see Risk Analysis).  This is achieved by making a state-of-art assessment of market pressures upon the customer, its competitors, the vendor and other brands within the category.  This same knowledge-base will also help the KAM to manage impossible requests from the buyer and build a basis for achieving willing compliance.

KAM-success via speed
In the current and emerging market climate, the success of ‘news-sensitive’ KAMs will be determined by their ability to access and exploit the time-value of news, faster than a competitor KAM, cost effectively.

Namnews and Kamcity can help by supplying the news and the tools…

A full rationale for the above process follows: 

Imperfect Markets and the ‘Tin Cup’…

How to make productive use of news in a data-saturated environment
By Brian Moore, Global retail consultant and CEO EMR-NAMNEWS, mailbox@namnews.com

Theoretically, all KAMs have access to all open-domain and syndicated data on markets, customers and the competition, simultaneously, and thus operate on an equal playing field.

Fortunately, given Warren Buffet’s belief that he would be ‘a bum on the street with a tin cup’ if markets were efficient, it is reasonable to assume that not everyone accesses and absorbs relevant information as it becomes available, relates it to state-of-art data on competitor and customer, and acts effectively on the combined insight, faster than other players….

Indeed the issue is not even being as up-to-date as the competition, but rather having the ability to derive and use insight, faster and in a more focused manner than those offering competitive products.

Focus on output
Whilst others risk being engulfed in a sea of ‘unrelated data’, it is important to approach all ‘news’ and data with a single output in mind, the objective of more profitable ongoing negotiation with a given major customer…

If the KAM’s ‘reason for being’ is to optimise the ongoing and future health of the major customer as a business asset, then working backwards in the search for supportive data has to provide a useful means of selecting relevant insight from available information…

This focus enables the KAM to identify connections and inter-relationships, and thus gain and exploit competitive advantage.

Customer-need as a starting point
In effect, this means starting with customer need in terms of the job and emotional needs of each member of the decision-making-unit. But even this basic assessment is very complex when taken to a usable level, in that customer-need is ultimately a steady, predictable and acceptable ROCE.

However, at operating level it is an amalgam of the needs of different job functions, reflecting their inter-relationships, relative power and different levels in the hierarchy. This is also overlaid with emotional needs of individuals, applying different degrees of intelligent and informed thinking, and mixed with gut-reaction, in an organisation that can have varying degrees of ability to deliver what is promised by the buyer. The individuals involved operate within different and often mutually incompatible agendas, hidden and otherwise, all constantly changing with time, and often in response to competitive action and vendor persuasiveness…

Given this complexity, it is little wonder that occasionally, key individuals in the buying organisation take short-cuts via crude demands for margin enhancement in the hope that this will produce the appropriate impact upon the bottom line…Again, an assessment of the latest news available may help to explain the lack of subtlety, or at least indicate the extent of the downside….

Balancing customer and vendor needs in negotiation
Despite these distractions, the KAM has to keep in mind the ultimate need of the customer, and balance it with equivalent needs within the vendor organisation. It is then necessary to use latest news and insight to assess the company’s relative appeal vs. competitors within the category in terms of its ability to meet, and be seen to meet, customer needs more cost-effectively than alternative vendors. The KAM thus establishes a practical base for negotiating a point of settlement that satisfies both parties and ensures willing compliance.

Again, appropriate ‘news’ and insight are used to optimise return on investment by enabling up-to-the-minute adding of value to every concession made, whilst using different ‘news’ to devalue concessions made by the customer, within a realistic awareness of the latest competitive appeal of both customer and vendor.

Whilst experience can help a KAM to match and trade concessions, the use of latest news and information, faster than the competition, can help in optimising the value of each concession to the customer, and simultaneously minimise the risk of ‘over-devaluing’ concessions made by the buyer. 

Whilst informed use of yesterday’s news can help the KAM to reach workable agreements, it is the use of state-of-art news, focused on the output of the KAM role that optimises investment in the customer and ensures willing compliance.

That, we hope, makes Namnews a little different…. 

Date article published: 30/06/2005