Strategic Analysis

Tools Book

Table of Contents

Tools Book
Key Question

1. Strategy Concepts

Porters 5 Forces

SWOT

Growth Share (BCG) Matrix

Product Life Cycle

EOS : ROS RMS

EOS : Learning Curve

Typical Output Format

ROS / RONA

Value Disciplines

Happy Line

Conversion Waterfall

SWOT
Tool Description

What are the key market drivers ?

What are the top-line factors affecting the issue at hand ?
What industries or sectors should we be in ?
What stage of the product cycle are we at ?
Does size matter ?
What are the benefits of scale or experience ?
How well are we using our assets ?
What type of possible strategies are there in this market ?
Where are we over-satisfying our customers ?
Where do we lose potential customers ?
What are the top-line factors affecting the issue at hand ?

2. Key Visual Tools

Typical Process

Pareto Curve (80:20)

Value Map (Mekko)
Value Chain
Weighted Column Maker
Share Gain Line
KPC Combs
Harvey Balls
Quotes
Lollipops
Channel Maps
Conceptual Maps
Forces at Work
Crocodile Chart
Parfait

What matters ?
What are the various segments and sub-segments ?.
Where do our core competencies reside ?
Which are the most profitable competitors in absolute terms ?
Who has been gaining market share ?
What are the main purchasing criteria, and how do we fare ?
What is the best way to display soft quantitative data ?
What is the best way to display qualitative data ?
Tips data displays of my own ?
Can I come upTricks
with&creative
What is the relative importance of various routes to market ?
How can I simply structure a set of data before analysing it ?
What are the forces at work ?
Can I come up with creative data displays of my own too ?
What is the easiest way to display market growth ?

3. Analysis Techniques

Logic Tree
Process Maps
Sanity Checks
Top-down Estimation
One-Off Interviews
Interview Programmes
Focus Groups
Clustering
Factorial Analysis

How does one organise the research ?

What are the key steps ?
Does this number make sense ?
How can I estimate a sub-set ?
What are the main issues with one-off interviews ?
What are the main issues with interview programmes ?
What are the main issues with organising focus groups ?
How can I group people by preferences ?
How can I group peoples preferences in broader sets ?

4. Sources

Desk Sources
Usual AABC Sources

Where can I find secondary data ?

What are the usual AABC sources ?

Table of Contents

Tools Book
Key Question

Tool Description

Typical Output Format

1. Strategy Concepts

Typical Process

Tricks & Tips

Porters 5 Forces

Tools Book
Key Question

What are the key market drivers ?

Tool Description

Porters model is a great check list when starting to describe an industry. It helps you organise
your research and, more importantly, provides a good framework in which to present your
findings.
Typical Output Format
Porters 5 forces map
Threat of
New Entrants

Bargaining power of
Suppliers

Rivalry among
Competitors

Bargaining power of
Customers

Threat of
Substitution

Typical Process

Tricks & Tips

Keep a good balance between

words and data

Start with top-line list of the main

players in each of the 5 boxes
- key competitors
- key suppliers
- key customers
- most likely entrants
- most likely substitution

Carry out lit. search on the names

compiled above

Gather all relevant articles in one binder

lift most common comments into a

word document

Organize results into 5 boxes

Summarize

Market-I

Force quantification of words.

For example if you read customer
power is likely to continue growing
at broadly the same rate try and
find relevant data and write
customer power is likely to
continue growing, keeping price
hikes on historical level of 2%p.a.
Think about Newton and
Archimedes (every proactive force
creates its own reactive force) and
try capturing both the net effect
and the 2 opposing forces
Ground model in the analytical
process: what further research
would be required to conclude on a
given trend?

SWOT

Tools Book
Key Question

What are the top-line factors affecting the issue at hand ?

Tool Description

The SWOT box is a less formal , more intuitive version of Porters model . It provides a good
framework in which to lay out initial findings - and can be used to start a Logic Tree (see below)

Typical Output Format

SWOT analysis of Chelsea FC

Strengths

Opportunities

Typical Process

Experienced players
Key real estate location
Cultured football methods
shared across the squad
Midfield play

Attract further key

international names
Umbrella branding
(internationally recognised
name)

Little development
opportunities for the youth
teams
Old players more accident
prone
Low scoring
Inexperienced manager
Still backed by private
investors
MUFC and Arsenal keep
getting bigger
Leeds, Liverpool, etc back
in contention for N 3 spot

Weaknesses

Threats

Tricks & Tips

Self-explanatory

Many issues are both an

opportunity and a threat, or a
strength and a weakness !
Do not sit on the fence; you will
revisit this analysis in due course
but start by choosing a box for
every phenomenon observed /
anticipated

Competitor-I

Growth Share (BCG) Matrix

Tools Book
Key Question

Which industries or sectors should we be in?

Tool Description

The Share-Growth matrix is a simple matrix devised to visualise multiple investment

alternatives. It helps you compares relative attractiveness of different shares vs. growth
situations. It requires an Excel sheet and the Bubble function in the Chart Menu.
Typical Output Format
Fish food service segments, Share & growth, 1998
Segment
FORECAST
growth
(%)

Low
12,0%

High

Services

10,0%

High

Hotels

8,0%
Pubs

Restaurants

6,0%
4,0%

Fish & Chips

Health
Catering

2,0%

Low

0,0%
Clubs

-2,0%
0

Education
10

20

40

30

50

60%

Segment share (% of market)

Typical Process

Tricks & Tips

Each quadrant of the matrix

corresponds to a generic term,
describing the strategic opportunities
available to a company or division
present there:
- bottom-left quadrant, dog, small
market share of a below par growth
industry, little opportunity
- top-left , question mark, small
market share of an above par growth
industry, good opportunity
- top-right, star, big market share of
above par growth industry, great
opportunity
- bottom-right, cow, big market share
at below par growth, superb position
but little opportunity , time to milk !

Compile competitor or division market

shares in their relevant market
Gather market growth rates for each
industry or segment
Plot
Split chart in 4 quadrants : Dog;
Question Mark; Star; and Milk
Do not worry exceedingly about
accuracy of positioning of a given data
point in the matrix but focus rather on
relative positioning

Original BCG had the x-axis with

RMS (relative market share) and was
plotted with leaders on the left rather
than the right

Market-I

Product Life Cycle

Tools Book
Key Question

What stage of the cycle are we at ?

Tool Description

The Product Life Cycle is a concept devised to keep in mind that relative competitive
advantages can ebb and flow. It helps you position competitors or industries against one
another and against a time line. Works better on a theoretical level rather than with lots of data
Typical Output Format
Product life cycle curve

Measure or
phenomenon
(ie sales in ,
penetration in %,
etc)

Time line of phenomenon

(in years, or months, or days, etc)

Typical Process

Tricks & Tips

Find start date of timeline (i.e. first

recorded mention of the technology, the
product, the industry, etc)

Tip : it is usually quicker - and as

illustrative to plot 3 or 4 milestones
than it is plotting the whole line

Define a vertical axis (i.e. sales,

penetration levels, etc)
Create Excel table with measurement
records over time
Plot

Market-II

EOS : ROS - RMS

Tools Book
Key Question

Does size matter ?

Tool Description

The ROS-RMS is a simple chart displaying together relative size of competitors and profitability
levels. It requires an Excel table and the Bubble function in the Chart Menu. The parallel band
lines need be added afterwards
Typical Output Format
ROS - RMS
Industry A

ROS - RMS
Industry B

25%
ROS 20
(last 3
years, 15
%)
10

ROS
(last 3
years,
%)

5
0
-5

25%
20
15
10
5

0,01

0,10

1,00

10,00

0
-5

0,01

-10

-10

-15

-15

-20

-20

-25

RMS (log)

Typical Process

Define list of competitors to be

included, and order annual reports
Create Excel table with last years sales
+ last 3 years profits
Plot
Annotate competitors with incomplete
and / or misguiding data, such as less
than 3 years of profits; latest year of
sales is not last year; finer data
available includes other divisions, not
just sales and profits of relevant
segments, etc

-25

1,00

10,00

RMS (log)

Tricks & Tips

Order annual reports in advance : 2

weeks lead-time for foreign
companies
Dont forget 3 years average for ROS
Start plotting data you have : partial
is better than nothing
Do not hesitate to call competitor
directly - after clearance from case
team manager - to gain idea of
segment profitability (ie higher
than average of company, etc)

Strip down competitor sales to relevant

segments
Estimate comparative profitability of
remaining segments

Competitor-I & II

0,10

EOS : Learning Curve

Tools Book
Key Question

What are the benefits of scale or experience ?

Tool Description

The Learning Curve is a very simple concept: it is the trend line of a set of data where the Y axis
represents the cost/unit of the X axis. It requires an Excel table and the Scatter function in Chart
Menu
Typical Output Format
Manufacturing scale curve, Biscuits industry, 1997
1,2

Cost per Tonne

(excl. materials, 1,0
1993, k/Tonne)
0,8

Linkoping
Hatton
Durango

0,6

A 10 times increase in scale represents a

theoretical cost improvement of 275p.T.
Some of this, however, would be offset
by increased distribution and other costs

Broxburn

Lauragais

Ashby
X1

Gyor
Carlisle

Maastricht

0,4

Jyvas Hyva

0,2
0,0
1 000

10 000

X2

Dortmund
R2 = 65%

Genoa

Tyneside

100 000

Manufacturing Capacity (kTonnes, 1996, Log scale)

Typical Process

Tricks & Tips

Careful! There are 2 versions of the

learning curve. One is really about
learning, the other really about scale

Define the exact value chain dimension

whose learning curve you want to
display (manufacturing, purchasing,
etc)

In the first case, the X axis represents

the cumulative N of units produced
to date and the Y axis the cost/unit
over time (A typical example is plane
production. Few units produced per
year, and the cost of each unit keeps
coming down as assemblers get
better at it with experience)

Choose the number of data points you

need (5 will result in rather illustrative
outcome, 10 - 12 will give more
confidence)

Gather data on cost/unit from client

for relevant objects (eg: get exact
capacity and cost/tonne for client in 4
plants)

In the second case, the X axis

represents the size of a given process
(eg. plant capacity) and the Y axis
the cost/unit for this process in
various plants.

Interview competitors relevant director

for missing data using smart approach
(eg: by how much would your cost/unit
drop if you doubled size

Competitor-II

Tip: manufacturing directors are not

often approached for market
research and thus tend to talk a lot

ROS / RONA

Tools Book
Key Question

How well are we using our assets ?

Tool Description

The ROS-RONA is a simple chart displaying together asset turn and profitability of a set of
competitors. It requires an Excel table and the Bubble function in the Chart Menu. The RONA
iso-curves need be added afterwards
Typical Output Format
Major retailers ROS-RONA, UK, 1993-95
20%
ROS
(last 3
years, %)

1,8%
16%
14%

Body
Shop
M&S

12%

RONA
(%)

Boots

10%
8%

WH Smith

6%
4%

House of
Fraser

2%
0%

70%
50%
30%
10%

Kingfisher
John Menzies

Typical Process

5
6
Asset Turn

10

Tricks & Tips

Check with manager the definition of

net assets that will be used
Define list of competitors to be
included, and order annual reports
Create Excel table with last years sales
+ last 3 years profits + last 3 years net
assets
Plot, and create RONA iso-curves

Order annual reports in advance : 2

weeks lead-time for foreign
companies

Annotate competitors with incomplete

and / or misguiding data, such as
different definition of net assets, less
than 3 years of profits; finer data
available includes other divisions, not
just sales and profits of relevant
segments, etc
Strip down competitor sales to relevant
segments
Estimate comparative profitability of
remaining segments

Let manager know early if agreed

definition of net assets creates data
problem - there are many possible
definitions and another one might
make things easier for you without
affecting usefulness of information

Competitor-I & II

Dont forget 3 years average for ROS

Start plotting data you have : partial
is better than nothing

Do not hesitate to call competitor

directly - after clearance from case
team manager - to gain idea of
segment profitability (ie higher
than average of company, etc)

10

Value Disciplines

Tools Book
Key Question

What types of possible strategies are there in this market ?

Tool Description

The Value Discipline model helps you position competitors or industries against one another
according to 3 possible main generic strategies. Works better on a theoretical level rather than
with lots of data
Typical Output Format
Value disciplines, Car industry, UK, 1999

Product Leadership
BMW
Rolls
Vauxhall

Lada
Daewoo

Operational
Excellence
Typical Process

Customer
Intimacy
Tricks & Tips

If without data :

If using data :

Define list of competitors to be included

Create Excel table with score of

each competitor against each of the
3 dimensions

Position each competitor on map based

on available evidence (lit.search, annual
reports, brokers reports, gutfeel, etc)

Competitor-I

Plot data using the Radar function

in the Chart Menu

11

Customer Happy Line

Tools Book
Key Question

Where are we over-satisfying our customers ?

Tool Description

The Customer Happy Line is a complex, but powerful concept that helps illustrate the areas
where we under-deliver on customers expectations and those where we over-deliver. It requires
an Excel table and the Scatter function in the Chart Menu. The Line needs be added afterwards
Typical Output Format
Happy Line , Company X, Industy Y, 1999

10
Good
Our score
against each
KPC (1 to 10)
Average

9
8
7
6

Bad

5
4
9

8,5

Critical

7,5

6,5

Important

5,5

4,5

Secondary

KPC Score (i.e. relative importance of criteria to Customers)

Typical Process

Create Excel table with outcome of

customer interview programme :
average score given to each criteria and
score of each competitor against the
criteria
Plot client score, with X axis as criteria
score
Set X axis so that Min and Max equal the
scores of respectively the lowest and
highest ranking customer purchasing
criteria

Tricks & Tips

Tip : set Y axis by choosing a

relevant set of competitors for
which to obtain lowest and highest
scores (you do not want to
benchmark the client against nohopers in the industry)
Happy Line goes from Top left of
chart to the middle, and then
horizontally to the right

Reverse X axis so that Max is to the left

Set Y axis so that Min and Max equal
respectively the lowest and highest
scores obtained by one of the relevant
competitors against any criteria
Add Happy line

Customer-I

12

Conversion Waterfall

Tools Book
Key Question

Where do we lose potential customers ?

Tool Description

The Conversion Waterfall is a concept that helps you summarise the findings of a customer
interview programme along 6 major measures. It requires an Excel table and the Bar function in
the Chart Menu. Can work as well on a preliminary, data-less level
Typical Output Format
Conversion waterfall, Retailer X, France & Germany, 1997
% of
population

100%
90%

France
Germany

80%
70%
60%
50%
40%
30%
20%
10%
0%

Awareness Knowledge

Typical Process

Create Excel table with outcome of

customer interview programme : share
of the sample population that meets the
successive measures

Liking

Preference

Tricks & Tips

Self-explanatory

Plot

Customer-I

Visit

13

Purchase

Table of Contents

Tools Book
Key Question

Tool Description

Typical Output Format

2. Key Visual Tools

Typical Process

Tricks & Tips

14

Pareto Curve (80:20)

Tools Book
Key Question

What matters ?
Tool Description

The Pareto Curve is a simple and powerful concept : it posits that quite regularly 20% of a given
population will account for 80% of this populations actions with a third party (ie sales,
purchases, etc). It requires an Excel table and the Scatter function in the Chart Menu*
Typical Output Format
Company X, Customer Pareto, 1998
100%
Cumulative
% of Sales

80%
Pareto Rule

60%

20% of a given population accounts

for 80% of this populations actions
(eg. 20% of a customer base account
for 80% of sales)

40%
20%
0%

10

20

30
40
50
60
70
Customers (Ranked by decreasing Sales)

Typical Process

Lets assume we are drawing a Pareto of

a clients customers
Gather client total sales, and sales by
customer
Rank customers in column by decreasing
sales
Calculate weight of each customer as a %
of total clients sales
Set-up column with cumulative share of
customer sales
Plot scatter of cumulative sales column

Customer-I & II

80

90

100

Tricks & Tips

* : instead of using the scatter

function you can use the Bar
function, Select Data series, and set
Options / Gap to 0
Tip : do not despair if you only
have sales of the Top 50 customers
(or of the Top 50 suppliers) . Find
out how many customers (or
suppliers) make up the total list
and posit that each of the smaller
ones has the same - tiny - weight.
You can now draw a pseudo-Pareto
where the top right hand part of
the curve will effectively be a nearflat straight line

15

Value Maps (Mekko)

Tools Book
Key Question

What are the various segments and sub-segments ?

Tool Description

A Mekko is a visually simple but analytically complex tool that helps you display in one sole
slide 2 successive cuts at a data set (eg market size by product category and by product, industry
sales by sector and by competitor, etc). It requires a special input tool; the Mekko Maker
Typical Output Format
General insurance market, UK, 1998

100%
Personal vs
commercial
split for
sector

Property
8.2bn

Accident Pecuniary
& Health
Loss
2.7bn
2.3bn

Motor
6.8bn

Private Non-Comprehensive

Other

60

Personal Property

Extended
Warranty

Public/
General
Liability

= PI

Personal
Payment
Protection

40
20

Total Market = 21.9bn

Domestic
Mortgage

80
Private Comprehensive

Liability
1.9bn

Commercial Property

Commercial Vehicles

Corp
orate

20

40

60

Sector as per cent of UK market

Typical Process

Create Excel table formatted as follows :

- one segment by column
- rank segments by decreasing size
- each sub-segment of a given segment in
the successive rows of the relevant
column
- rank sub-segments by decreasing size
Open Mekko Maker
Copy Excel table into Mekko Maker

Employers
Liability

Consequential
Loss

Fleet

Other

80

100%

Tricks & Tips

Tip : use only absolute measure of

size (ie ), not market shares or
other relative measures / ratios
For clarity of reading segments of
size inferior to 5% of total market
size should be grouped into an
other segment
Likewise, all sub-segments of size
inferior to 3% of total size of a
given segment should be grouped
into an other sub-segment
Use shading & patterns

Market-I & II

16

Value Chain

Tools Book
Key Question

Where do our core competencies reside ?

Tool Description

The Value Chain model helps you highlight for different competitors within a given industries
the competencies each one has developed to succeed. Works better on a theoretical level rather
than with lots of data
Typical Output Format
Value chain

Finance
HR
Technology
Logistics

Purchasing

Manufing

Typical Process

Marketing

Sales

Tricks & Tips

Identify the main competencies in the

industry

Do not hesitate to alter the arrow

above

Create generic industry arrow with

support functions and operating
functions

Only principle to follow for visual :

- horizontal division separate
support functions from
operating ones
- key operating processes are
split vertically

Gather from desk research (annual

reports, articles, etc) and one-off
interviews the area of the value chain
where each competitor chooses to focus
(core competencies)

This principle will justify treating

different functions differently by
industry (e.g. technology is a
support competency in most
industries, but a key operating one
for a software company)
Tip : an organisation chart is often a
good starting point to understand
emphasis attached to the
competency

Competitor-I

17

Weighted Column Maker

Tools Book
Key Question

Which are the most profitable competitors in absolute terms ?

Tool Description

A Weighted Column chart is a simple tool that helps you display at once both competitor
profitability level and overall industry profits. It requires a special input tool; the Weighted
Column Maker
Typical Output Format
Industry profitability, Industry X, 1995-98

20%
ROS
(last 3
15
years,%)

Weighted Average = 10.0%

10
5

Comp 1

Comp 2

Etc

0
0

20

40

60

80

100%

-5
-10%
Share of Market, by Competitor

Typical Process

Define list of competitors to be included,

and order annual reports
Create Excel table with last years sales +
last 3 years profits
Plot
Annotate competitors with incomplete
and / or misguiding data, such as less
than 3 years of profits; latest year of sales
is not last year; finer data available
includes other divisions, not just sales
and profits of relevant segments, etc
Strip down competitor sales to relevant
segments
Estimate comparative profitability of
remaining segments

Competitor-I & II

Tricks & Tips

Order annual reports in advance : 2

weeks lead-time for foreign
companies
Dont forget 3 years average for ROS
Start plotting data you have : partial is
better than nothing
Do not hesitate to call competitor
directly - after clearance from case
team manager - to gain idea of
segment profitability (ie higher than
average of company, etc)
Plot Weighted Average industry
profitability line based on information
you have, but indicate what total % of
industry sales you have profitability
data for

18

Share Gain Line

Tools Book
Key Question

Who has been gaining market share ?

Tool Description

The Share Gain Line is a visually simple tool - if a bit difficult to grasp at first - that helps you
display relative share performance of competitors in the market context. It requires an Excel table
and the Bubble function in the Chart Menu. The Zero-gain line needs be added afterwards
Typical Output Format
Share movements by competitor, Music, Cards & Video retail, UK, 1995-1999
Competitors
Growth
(%
over
4
years)

60%

Competitors
gaining share

50%

Blockbuster
Paperchase

40%

WH Smith
Disney Store

30%
20%

Disney Store
Boots
WH Smith
Woolworths
J. Menzies

Our Price

10%

Woolworths
J. Menzies

Competitors
losing share

0%
-10%

0%
-10%

10%
WH Smith

Music

20%

30%

Cards

40%

50%

60%

Video

Total Market Growth

Typical Process

Gather historical market data and

compile market growth for each market
Define list of competitors to be
included by market
Gather historical competitors sales data
and compile competitors sales growth
Create excel table with market size Year
Zero (Yo), market size now (Yn),
competitors sales Yo and competitor
sales Yn

Tricks & Tips

Always write meaning of bisecting

line on the chart:
above line = gaining share
below line = losing share
Tip : for multi-segments on one
graph all the bubbles in a given
market should be on the same
vertical line

Plot
Draw line bisecting the two axes

Competitor-I & II

19

KPC Combs

Tools Book
Key Question

What are the main purchasing criteria, and how do we fare ?

Tool Description

The KPC Combs is a visually simple tool - if a bit difficult to grasp at first - that helps you display
jointly both the importance of customer purchasing criteria and the ranking of competitors against
those criteria. It requires an Excel table and the Bar + Line function in the Chart Menu
Typical Output Format
Key purchase criteria (KPC) comb, Industry X, Germany, 1999

10
Score
(1 to 10)

9
8
7

Criteria
Comp 1
Comp 2
Comp 3
Client

6
5
4
3
2
1

Criteria 1

Criteria 2

Criteria 3

Criteria 4

Criteria 5

Criteria 6

Key Purchasing Criteria

Typical Process

Tricks & Tips

Create Excel table with outcome of

customer interview programme :
average score given to each criteria and
score of each competitor against the
criteria

You can plot both the Criteria and

competitors score using the same
scale : draw chart as a Line chart,
select the Criteria line; go into
Chart Options and select a Bar

Plot

Do not forget to set minimum and

maximum of Y axis to values of the
range offered (eg from 1 to 10, not 0
to 10)
Tip : for a large interview
programme, the dispersion of the
average scores will be minimal.
You can increase visibility of
differences by setting Y values
more finely on either side of the
average (eg display from 3 to 8, or 4
to 7, instead of from 1 to 10)

Customer-I & II

20

Harvey Balls

Tools Book
Key Question

What is the best way to display soft quantitative data ?

Tool Description

Harvey Balls are a technique that helps you summarise the results of a benchmarking exercise
where the item benchmarked obey different metrics. It needs to be hand drawn. Can work as
well on a preliminary, data-less level
Typical Output Format
Competitor benchmark summary table, Mixed retailers, UK, 1999
Competitors
KPI

WH
Smith

John
Menzies

Boots

Woolworths

etc

Supply chain
efficiency
Customer
retention level
Staff utilisation
level
Etc ...

Typical Process

Select dimensions to be included in table

Write down a code for each dimension
(ie what score justifies a full ball, what
deserve half, what is a quarter, what is
zero)

Tricks & Tips

Tip : Write code before filling the

table, as filling a Harvey Ball table
usually throws open at least one
implication that wasnt foreseen
with just the base data

If wanting a Total row, give a

weighting to each dimension and
calculate total for each column
Hand-draw

Competitor-I

21

Quotes

Tools Book
Key Question

What is the best way to display qualitative data ?

Tool Description

Quotes are a systematically under-used technique for displaying qualitative data in a powerful
way.

Typical Output Format

There has bee a trend away from sport shoes and towards work boots worn
as streetwear. This has been going on at the rate of 2-3% p.a. over the last 3
years, is getting stronger now, and is no longer just a teenage fashion
- J. Swartz, CEO, Timberland
Consumer shift towards good value and cheaper shoes, together with the
availability of imports from the Far East and economically weaker countries
have intensified price pressure and competition in the market
- Euromonitor
Camel is the best selling boot in Germany, with in excess of 5% market share
- Marketing Director, Camel UK

Typical Process

Create on an on-going basis a database /

binder of comments with good quote
value
Write comprehensive notes during oneoff interviews
Manage a good filing system when
carrying outlit. search

Tricks & Tips

Format all quotes in a consistent

manner, preferably as above
Try and get a number in every
other quote, ie :
select the quotes on the basis of
their number content (ex-post)
force interviewee to quantify
qualitative statements (ex-ante)

Quote value rests in the nature of

comment heard or read and / or in the
authority of the source

Customer-I

22

Lollipops

Tools Book
Key Question

Can I come up with creative data displays of my own ?

Tool Description

Lollipops are a technique that helps you display in one sole slide a large number of detailed
information across a large selection of objects (competitors, products, etc). It requires an Excel
table and the Bubble function in the Chart Menu
Typical Output Format
Plant sizes & total capacity by competitor, Storage products industry, Europe, 1998
70k
Plant size
(k tonnes),

60
50

40
30

UK
B

20
10

E
NL

60k
tonnes

UK
D
D

N
SF UK
NL
D

UK

D
D

Typical Process

Create Excel table with all the data

required : one object / criteria per row
(eg competitor) and one measure per box
vertically (eg plant capacity of
competitors plant)
Plot
A Lollipop chart is simply a creative
answer to a regular problem : how to
display a large number of data points,
the detail of which is necessary but less
important that the overall picture it
paints

x
ag
ist
a
Tr
av
hy
d
Ar ro
em
sa
M
au
se
r
Ar
bi
tec

Ap
e

Tricks & Tips

Tip1 : always try creative solution

on paper before launching into big
Excel manipulation
Tip2 : remember that a nicely laid
out Excel table is always a more
powerful visual than a
cumbersome graph ...

A Mekko is another creative way to

solve the problem described above
Any solution you may come up with that
solves your display issue has got to be a
good one !

N/A

Co
n

Po
l

Competitor

yp
al
str
uc
t
S c or
ha
efe
r
De
x io
n
M
ec
alu
x
N
ed
co
n
M
eta
Fe
ra
lco
Ti
x it
Ga
ll e
r
Es
m
en
a
St
ow

Total Capacity
(k tonnes)

23

Channel Maps

Tools Book
Key Question

What is the relative importance of various routes to market ?

Tool Description

Channel Maps are a technique that helps you display the complexity of various routes to market
whilst quantifying their relative importance. There isnt a software available to generate them :
they need to be hand drawn
Typical Output Format
Channel map, Construction materials, UK, 1999
Products

15.3bn
Channels

Additional
Products*

Construction Materials
Manufacturers/Importers

22.3bn

Distributors/Stockists

Direct

3.2bn
4.4bn

7.0bn
Specialist Merchants/
Factors Wholesalers

4.6bn

Builders
Merchants

6.3bn
0.8bn

EndCustomers

Builders/Contractors

Gather on one page all the data you have

about the industry sales (manufacturer
sales, retail sales, wholesale sales), and
organise data into 3 tiers : products (or
manufacturers), channels, and endcustomers (or retailers)
Firstly, draw the product and endcustomer horizontal bars
Secondly, draw the direct flow
between these 2 bars (on the left of the
above map), and infer from this a MSP to
RSP ratio

0.5bn

7.3bn

Tricks & Tips

Be sure to use the same units

throughout, 100 of manufacturer
sales can be exactly the same as
200 of retailer sales if RSP (retail
selling price) = 2xMSP
(manufacturer selling price) in thi
industry ..
Tip : when possible volumes are a
better measure than values (as stay
the same throughout the flow normally)

Thirdly, split this ratio in two to body

double the MSP to WSP and WSP to
RSP ratios, and convert your whole
data set in the relevant unit you are
using
Finally, draw a first map, and iterate...

Market-I

7.6bn

Home Customers

18.2bn

Typical Process

DIY Stores, Superstores and

Hardware shops, Garden Centres etc

24

Conceptual Maps

Tools Book
Key Question

How can I simply structure a set of data before analysing it ?

Tool Description

Conceptual Maps are basic techniques that help you breakdown complex issues into sub-sets so
as to better either lay out the thinking, plan the research or map the results. They do not require
intricate softwares; just a ruler, a pencil, and an eraser ...
Typical Output Format
Key conceptual maps
2x2 Matrix

Conceptual Cross

Dimension 1

Dimension 3


High




Low


Low


Dimension 4

High

Dimension 2
Typical Process

Conceptual Maps come in various

shapes. The mother of all conceptual is
the 2 x 2 Matrix, where various objects
are plotted in 4 boxes : dimensions 1 & 2
with sub-sets low and high
A Conceptual Cross provides another
way to think about how objects can be
classified against 2 other dimensions

Customer-I

Tricks & Tips

The 2x2 Matrix is the most useful

consulting tool ever
The Conceptual Cross is marginally
less helpful. It can come handy
when you find that the objects you
have plotted in a matrix all fall on
the diagonal line : a 45 rotation of
Matrix dimensions gives you a
Cross map

25

Forces at Work

Tools Book
Key Question

What are the forces at work ?

Tool Description

The Forces at Work visual is simple version of Porters model . It highlights complexity rather
than simplify / organise it in the way Porter and the SWOT box do.

Typical Output Format

Convergence
Convergencein
in
national
nationaltastes
tastes
across
acrossEurope
Europe

Clothing
Clothingmanufacturing
manufacturing
shifting
shiftingproduction
production
overseas
overseas

Customers
Customersdemanding
demanding
shorter
shorterlead
leadtimes
times

Improvements
Improvementsin
inthe
the
speed
speedand
andcost
costof
of
logistics
logisticsacross
acrossEurope
Europe

Threat
Threatof
of
cheap
cheapimports
imports
from
fromAsia
Asia
Growth
Growthof
of
international
international
customers,
customers,e.g.
e.g.
Nike
Nike&
&Benetton
Benetton

Typical Process

Self-explanatory

Clothing
Clothingmanufacturers
manufacturers
shifting
shiftingproduction
productionfrom
from
West
Westto
toEast
Eastand
andSouth
South
Europe
Europe

Price
Priceconvergence
convergence
between
betweenmarkets
markets
driven
drivenby
bythe
theEuro
Euro

Shortening
Shorteningproduct
productlife
life
cycles
cyclesin
infashion
fashion

Tricks & Tips

Do it either at the beginning of a

case - or at the end to illustrate
complexity of forces at work
During case work, try and organise
these forces either in Porters 5
Forces model, or in SWOT box

N/A

26

Crocodile Chart

Tools Book
Key Question

Can I come up with creative data displays of my own too ?

Tool Description

Crocodile Charts are a technique that helps you display in one sole slide how the issue you are
studying narrows down to your specific area of focus. It requires an Excel table and the Bubble
function in the Chart Menu
Typical Output Format
Crocodile chart, Oil reserves, 1995
100%
90%

Sea

80%

North

70%
60%
50%

Land

UK

40%

South

30%

Europe

20%
10%
0%

Global

Typical Process

Create Excel table with all the data

required
Plot 4 bars

Continental

National

Tricks & Tips

Tip : it is easier to add lines across

all bars and delete unnecessary one
upon finalising the chart than the
other way round

Add connecting lines

N/A

Regional

27

Parfait

Tools Book
Key Question

What is the easiest way to display market growth ?

Tool Description

A Parfait is a visually simple tool that helps you display jointly both the relative size of market
segments and their relative growth. It requires an Excel table and the Area function in the Chart
Menu
Typical Output Format
UK Clothing Market 1994-98
3 000
Annual Growth

Market size
(1998, m)

2 500

3%

Childrenswear
2 000

10%

Sportswear

1 500
Menswear

2%

Womenswear

2%

1 000
500

1994

1995

Typical Process

Create Excel table with all the data

required

1996

1998

Tricks & Tips

Do not forget to add growth data to

the right of the chart

Plot

N/A

1997

28

Table of Contents

Tools Book
Key Question

Tool Description

Typical Output Format

3. Analysis Techniques

Typical Process

Tricks & Tips

29

Logic Tree

Tools Book
Key Question

How does one organise the research ?

Tool Description

One half of Structured Thinking, the Logic Tree turns the initial client brief into a set of discrete
questions. Each Logic Tree has a twin in the shape of the Research Tree. Once the key questions
have been established it is usually clear which research method is the most appropriate
Typical Output Format
Logic Tree

Research Tree
I gather data to inform
the applicability
of each option

I can find a solution

to my sockless state

I can
find another
sock in the flat

I can
trace
the
other
sock

I can
trace
another
pair

I can get
an entirely
new pair

I can
buy a
new
pair
in time

I can
have
one
sent

I can
compensate for
what I dont have

I can
alter
clothing
to hide
sockless
ness

I can
justify
sockless
ness

Typical Process

Write top of tree as a positive

statement answering the client question
Create sub-branches by splitting the top
of the tree into its natural components
(writing a good Logic Tree is an art and a
technique that one acquires with
experience)
The sub-branches should obey the MECE
method (Mutually Exclusive Completely
Exhaustive), i.e.all the sub-branches
taken together must exhaustively
support the branch above, and each subbranch must deal with something
different from the other sub-branches
The MECE methods implies that
- if one of the sub-branches is false then
the top of the tree must be false
- if all the sub-branches are true then the
top of the tree must be true

N/A

Research
inside the flat

Check
my room
(under
the bed,
other
drawers)

Research
outside the flat

Inquire about
socklessness

Check Check
Ask
flatmates there are who is
coming
sock
Check
Call to
laundry shops
on the get them
room
to bring
way
one

Check
with
partner
that
socks are
needed

Ask for
a good joke
Think
of how to
turn it into
a statement

Tricks & Tips

A positive statement is more

difficult than a negative statement,
and thus gives client more
confidence on strength of our
answer
Tip : some first level split of the
logic tree occur rather regularly.
Typical first level branches are :
- Sales, Margins and Costs
- Customers, Competitors and Cost
Tip : do the research tree only once
finished with logic tree (on 80:20
basis). Indeed some research
branches can address several
branch of the logic tree at once

30

Process Maps

Tools Book
Key Question

What are the key steps ?

Tool Description

Process Maps are a technique that helps you group a set of research and/or action points into
broad sequential steps

Typical Output Format

Bidding,
Negotiation
& Closing

Deal
Origination

Target
identification
Assessment of
potential postdeal synergies

Typical Process

Self-explanatory

N/A

Market Study / strategic

due diligence
External validation
Ammunition for
negotiations
Black holes check
Resolve competition and
regulatory issues
Valuation analysis

Exit
(Trade Sale
or
Flotation)

Owning

Strategy
development
Post-acquisition
disputes

Business plan
preparation
Market study for
potential prospectus
Outside in view for
potential buyers
Synergy valuation
for negotiations

Tricks & Tips

Try to aim for 4 to 7 steps to keep

the process map useful

31

Sanity Checks

Tools Book
Key Question

Does this number make sense ?

Tool Description

Sanity Checks are basic techniques that help you assess the viability of a data point obtained through desk
research or one-off interviews. This do not require anything else than careful consideration ...

Typical Output Format

Main data sanity checks

Confidence
Ranging
Narrowing a
variety of N from
different sources
down to a range
within which you
are fairly confident
the true answer is
to be found
(confidence
interval)

Feel Right
Test
Connecting data
obtained on esoteric
issues to more
easily
understandable
dimensions and
assessing
credibility
of implication

Typical Process

See above & Generic Research

Impact
Criticality
Test

Materiality
Test
Putting in
perspective the
differences
between the
various estimates
obtained typically
by expressing
biggest delta as %
of average value

Establish whether
the different
estimates obtained
lead to the same
outcome with
regard to the
question
you are really
addressing

Body
Doubling
Choosing one
unique data point
as the estimate
you will go with
pending further
information

Tricks & Tips

Most important test is materiality

test, i.e. how different are the
various estimates obtained ?
Tip : choose a different color - red
for examples - for the body doubles
in an Excel worksheet

Generic Research

32

Top - Down Estimation

Tools Book
Key Question

How can I estimate a sub-set ?

Tool Description

The Top-Down estimation is a method that consists in shaving off parts of something you know
(eg. market size) until you are left with the rump (eg. a segment size) that you were trying to
estimate in the first place
Typical Output Format

Own-label, non-ready meals, frozen fish market top down estimate,1998

Market
value
(m, RSP,
1998)

2 000
1 800

Food
service

1 600

Canned

1 400
1 200

Fresh

1 000
800

Ready Meals

Chilled

600

Branded

Retail

400

Coated

Frozen

200

Natural

0
Total Fish
Market

Share of
Retail

Share of
nonReady
Meals

Share of
Frozen

Typical Process

Own
Label

Share of
Own
Label

Our Market

Tricks & Tips

Gather all the available data on the

market you try to estimate as well as
data on broader market sets

The outcome of a top-down

estimation is visually complex to
illustrate

Make a list of the cuts for which you

have data (eg. you have data by channel
and by products but not by channel &
product)

The best method is to create a set of

100% vertical bars and one by one
turn to no border & no area the
boxes that you dont want to see
appearing

Split the starting object into sub-set by

applying the cut for which you have
least data (eg. you know market share
of products in retail but not in
wholesale, thus share by channel before
you share by product)

Generic Research

Think Rubiks cube: you will

probably have to try 2 or 3 different
sequencing of the cuts before you
arrive at a satisfactory outcome

33

One-Off Interviews

Tools Book
Key Question

What are the main issues with one-off interviews ?

Tool Description

Check-list for One-Off Interviews. Use framework below before proceeding with interviews

Typical Output Format

One-off Interviews Check-list

Preparation

Anticipation
of Answers

Contact &
Persuasion

Be polite,

Be clear exactly Define your

especially to
which questions objectives for
secretaries
the meeting up
need to be

front
answered
Be rigorous in
using secretaries
Ensure you
Choose the
where possible
come out with
appropriate
the specific
method
Write a

answers you
professional but
require
Contact the
deferential fax
correct people

Execution

Prioritise
questions
Be prepared for
obstructive
remarks from
interviewees

Interpretation
of Results
Be flexible but
focused on the
answer

Write clear and

comprehensive
meeting notes

Wrapping Up

Be prompt in
delivering high
quality
feedback
Remember
who has paid
the bill!

Do not lie !!

Typical Process

See above & Generic Research module

Tricks & Tips

Go through the check-list again &

again !
Tip : always keep in mind the
ANSWERS you are expecting and
particularly the different SO
WHAT that different answers will
point to

Generic Research

34

Interview Programmes

Tools Book
Key Question

What are the main issues with interview programmes ?

Tool Description

Check-list for Interview Programmes. Use framework below before proceeding with interviews

Typical Output Format

Interview Programme Check-List

Preparation

Choose the
appropriate
method
- on the phone
- in the street
- mix
Select the best
sample
- suitable
proportion
of market
- hit rate

Contact &
Persuasion

Anticipation
of Answers

Create a
questionnaire
which is
focused on
testing the
hypothesis
- correct
questions
- questions
asked
in the correct
way

Ensure
interviewers
are fully
briefed

Execution

Ensure process
is managed
effectively

Set-up database
Pilot
and maintain it
questionnaire
throughout
and re-draft
ineffective
Temp performance
questions
monitored and
data inputed as
rapidly as possible

Typical Process

See above & Customer-I module

Interpretation
of Results

Only
appropriate
analysis is
carried out
(80 : 20)

Wrapping Up

Keep paper
copies of
questionnaires
at hand !

Tricks & Tips

Go through the check-list again &

again !
Tip : always keep in mind the
ANSWERS you are expecting and
particularly the different SO
WHAT that different answers will
point to

Customer-I

35

Focus Groups

Tools Book
Key Question

What are the main issues with organising focus groups ?

Tool Description

Check-list for Focus Group. Use framework below before proceeding with organising groups

Typical Output Format

Organising the day

Managing the debate

Focussing
debate

Logistics

Getting the
right people

Venue and travel

arrangements
Agreeing the plan
with the client
Maintaining records
What to take
(equipment, props,
etc...)

Selecting candidates
Invitations
Hit rate
Incentives
Typical Process

See Tricks & Tips

Customer-I

Tricks & Tips

If possible, pre-select to ensure

representative cross section by
asking key questions on the phone
Confirm details in writing (by fax
for speed)
Invite up to double the candidates
you want unless they are motivated
to come - offer cash/other incentive
as appropriate as sanctioned by the
project manager Think through the
timing
Draft issues for debate of key
questions beforehand
Stick to the agenda
Use flip charts to document
contributions
Keep travel to a minimum
Ensure venue is appropriately
comfortable
Keep database as for interview
programmes
Be prepared!

36

Clustering

Tools Book
Key Question

How can I group people by preferences ?

Tool Description

Clusturing is a complex technique that helps you group object (eg customers) according to their
similarity of preference between a set of dimensions (eg customer purchasing criteria). It
requires an Excel spreadsheet and a conjoint analysis software, such as SPSS
Typical Output Format

Cluster analysis, Storage product industry, 1998

Speed of service
A lot

Cluster
Y

Average
Cluster
Little

Average
Z

Average

A lot

All-round support

Cluster

A lot
Exclusivity of operations
Typical Process

Create Excel table with detail of

customer interview programme : score
given to each criteria by each customer
(one customer per row, one criteria per
column)
Import dataset into conjoint analysis
software (SPSS or other)
Run Classify \ Cluster function in
Statistics menu of conjoint analysis
software
Write down N of rows that fall in each
cluster
Go back to Excel spreadsheet, create
Cluster N column to tag each row
according to relevant cluster
Calculate average criteria score by
cluster

Customer-I & II

Tricks & Tips

Spend 3 or 4 hours reading the

conjoint analysis software manual,
and practicing on fictitious dataset !
A Cluster analysis will start by
giving you X clusters for your X
customers (fair enough each one is
different ). It will then start
grouping the two customers with
the most similar preferences into a
single cluster, leaving you with X-1
clusters, etc, until all is one big
cluster. The real N of clusters in
the population is usually obtained
by trial and error, thus
Tip : Never erase the content of a
given Cluster N column when
tagging rows in Excel a
discarded solution usually turns
out to be the correct one in the end !

37

Factorial Analysis

Tools Book
Key Question

How can I group peoples preferences in broader sets ?

Tool Description

Factorial Analysis is a complex technique that helps you group a large number of dimensions of
choice (eg 14 customer purchasing criteria) into the relevant, fewer factors that underpin clusters
preferences. It requires an Excel spreadsheet and a conjoint analysis software, such as SPSS
Typical Output Format
Key Purchasing Criteria
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.

Factorial analysis, Storage product industry, 1998

Speedy quotations turnaround time

Distributor brand
Choice of payment terms
Technical support & design assistance
Speedy & reliable delivery
Literature with distributor brand/name
No competing direct sales force
Complete territorial exclusivity
Choice of pricing structures
Full technical & design digest
Free contract management facility
Choice of stock holding policy
Free & regular training programmes
Dedicated account manager

Typical Process

Create Excel table with detail of

customer interview programme : score
given to each criteria by each customer
(one customer per row, one criteria per
column)
Import dataset into conjoint analysis
software (SPSS or other)
Run Data Reduction \Factor function in
Statistics menu of conjoint analysis
software
Check resulting plot, and iterate if need
be

Factor 1
Speed of service

Factor 3
All-round support
Factor 2
Exclusivity of operations
Factor 1 = KPC 1 & 5
Factor 2 = KPC 2, 7 & 8
Factor 3 = KPC 3, 4, 6, 9, 10, 11, 12, 13 & 14

Tricks & Tips

Spend 3 or 4 hours reading the

conjoint analysis software manual,
and practicing on fictitious dataset !
A good dataset will always give
you a reduction of your X criteria
into X/3 or X/4 factors. Trying to
fathom what these factors represent
can be a notoriously difficult
exercise. Ask for help
Tip : it is usually easier to
understand a factor after having
carried out a Cluster analysis (see
previous page)

Training Modules

Customer-I

Factors

38

Table of Contents

Tools Book
Key Question

Tool Description

Typical Output Format

4. Sources

Typical Process

Tricks & Tips

39

Desk Sources

Tools Book
Key Question

Where can I find secondary data ?

Tool Description

Check-list for Desk Sources. Use framework below and create your own portfolio of regular &
favourite sources

Typical Output Format

Desk research avenues of enquiry

Eg.

Search
CD-ROM
or on-line
databases

Search
the
Net

Search
AABC
knowledge
base

Search
business
sources

Procure
documents

- Profound
- Datastar
- Reuters
- Worldscope
- etc

- FT.com
- search
engines
- etc

- Global
Best
Practices
database
- etc

- trade
publications
- government
statistics
- etc

- annual reports
- brokers reports
- market reports
- etc

Pure electronic
Typical Process

Spend 10 minutes laying out the nature

and type of the data you are after
Spend 10 minutes writing down the
sources where you are likely to
encounter each required data
Start chasing !

Mix

Go to
various
libraries
- City business
library
- MBS library
- etc

Pure paper
Tricks & Tips

Tip : when procuring documents

there is always a trade-off between
immediacy of availability and cost
a well planned research is one
that leaves more $ in the case-team
dinner pot !
Tip2 : it is uncanny how the
document you need on D day is the
one you thew away on day D-1.
Never throw, always file away.
Tip3 : other team members will
randomly access your file. Do
develop a filing system that is
easily understandable by all ...

Generic Research

40