“My analysis” beats “i think”
Every problem-solving process needs to get through two phases, the first one is “I think”, and the second one is “My analysis shows”.
“I think” is a phase which our subjective understanding leads the roles. However, empiricism does not always work. For instance, in “Lieber’s case”, most of people came up with the decision “decrease the price “to save Lieber’s market share, just like the economics theory showing when price going down people’s demand increase. However, it is two different cases. As the data shows, 20% decrease in price needs twice units to cover the cost. The numbers seem ironic, but it is the truth. So then we get to know, Lieber cannot win on price.
The first step we have to do is to figure out what the issue is. Then we should collect information on any aspects which may connect with the issue. Analysis should mostly be based on data which you collect. Moreover, the analysis should be divided into two parts “accounting analysis” and “marketing analysis”.
We always start with the “accounting analysis”, we should figure out basically what are fixed cost and variable cost. At the same time, calculate the break even units. Secondly, we should consider the economy situation and customer feedback as the “marketing analysis”.
After the analysis, we can come out some practical alternative suggestions and recommendation for the company.
Back to the Lieber’s case, because the company cannot win on price, we have to concentrate on customer service part. There is a location advantage Lieber can take. They can come up with some features on transportation or make it specialize on immediate supply, which can attract companies who needs the product right away. Moreover, Lieber can also put some effort in quality improvement, so that they can build the good reputation among the customers to get their loyalty.