Analysis 18: Positive Volatility by Position

PURPOSE: This analysis quantifies the percentage unit volatility during a period of time for each position on the size/role customer segmentation matrix.

APPROACH: This analysis is the result of work done on the sample of customers analyzed by the company. The company quantifies the amount of volume that change suppliers in each position on the size/role matrix during the period under study. The company then divides this volatile volume by the total volume purchased in the position during the period to arrive at the percentage volatility figure.

Volatility Examples >>

Return to Diagnose Segments: Industry Volatility

Analyses:

• Analysis 16: Positive Volatility Across the Industry

• Analysis 17: Share Shift Across the Customer Size and Role Segmentation Matrix

• Analysis 19: Positive Volatility Index by Position

• Analysis 20: Win and Fail Definitions

• Analysis 21: The Cause of Volatility

• Analysis 22: Likelihood of Share Gain from Lower Position When Higher Position Fails

• Analysis 23: Competitor Share Change

• Analysis 24: Competitive Vulnerability

• Analysis 25: The Expected Gain Index

Symptoms and Implications: Symptoms developing in the market that would suggest the need for this analysis.

• The market structure is changing as shares shift in the channels of distribution

• Large customers are getting higher discounts

• Medium sized customers are under pressure from both their larger and smaller peers

• Distribution channels are undergoing a shakeout

• Customers are making significant changes in their supplier arrangements

• Competition is beginning to focus resources on market segments as market growth slows

• While still growing some competitors are losing share

Perspectives: Conclusions we have reached as a result of our long-term study and observations.

• "Building On Customer Volatility": In one crucial respect, hostile markets are actually more stable then non-hostile markets. During market hostility, share shift slows. (1995)

• "Finding the Open Door": Volatility is the movement of volume from one supplier to another. A company can not gain volume unless customers are willing to make a change in suppliers. Volatility has special rules in hostile markets. (1995)

• "The Big Slice of the Pie": The head of one industry leader explains his company's insistence on being a key supplier to each of his customers: "The guy with the big slice of the pie doesn't go hungry." The workings of the typical hostile market provide solid support for this philosophy. (1995)

• "The Rust Belt Revival": The revival of the U.S. Rust Belt in the late 1980's holds lessons for companies who would prosper in hostile market places. (1988)