The MaP of Opportunitites - How to Create Value in the Older Machine Segment

Abstract: MC, Machine Corporation, although historically successful is facing challenges as the industry in which they operate is matured. They thus need to find new ways of generating revenues. The service and parts market penetration rate decreases in the Danish market as the machine ages, but the need of service and parts increase why we argue that there is a market potential not being exploited as of today. Based on the declining market penetration, we believe that MC does not create enough value for the older machine customer. With this as a starting point, three research questions are formulated. 1. Who is the older machine customer? 2. What drives value for the older machine customer? 3. How well does MC’s offering address what is considered value driving? When mapping the structure of the Danish older machine customer we found the customer to have smaller and mixed fleets, to act local, to endure volatility in demand, to have short planning horizon, to handle insensitive goods, they often have their own workshops and one individual represent many responsibility areas. Depending on what the customers find important and how well it is satisfied by MC, different service levels are identified. The identified value drivers are concluded under- or overserved, thereby defined as opportunities and appropriately served. Solidarity, responsiveness, image, trust (price) and flexibility in service are underserved beneficial value drivers. Product quality, technical competence and reliability are overserved while product flexibility and trust (time) are appropriately served. Among the sacrificial value drivers, price is underserved and time, effort and energy is overserved. The identified opportunities are somewhat contradictory to MC’s current differentiated strategy, why a discussion influenced by additional theories is performed. This concludes that MC has a strategic decision to make whether or not the older machine segment is suitable in the today’s business.