【正文】 ducts are substitutes.Product utility analysis Crosselasticity analysis?Do products offer similar value along nonprice attributes (., scissors and knives cut cloth well)??Is product bundled with other products (., razors and blades)??How much does share change between the two products as relative prices change?–If scissor prices go up will customers buy knives as a substitute?28CU7121997ECAbcBOS Copyright169。 however, what customers perceive can often conflict with the economic boundaries. Perceptual barriersLow HighCustomers’ view : Examples:Products are similarProducts serve different functionsWooden canoes and aluminum canoesWomen’s fragrances and men’s aftershave31CU7121997ECAbcBOS Copyright169。 1998 Bain Company, Inc. Business DefinitionAgenda ?The business definition concept?Applications?Business definition steps?Client examples–Bunker Hill Door Systems–JJR Industrial Coatings?Key takeaways35CU7121997ECAbcBOS Copyright169。 1998 Bain Company, Inc. Business DefinitionBunker Hill Experience Transfer Using entry doors as a baseline, the Bain team found limited opportunities for experience transfer. Garage Door Garage Door OpenersManufacturingR DDistributionProcurementCostsCustomersCompet itorsLowMediumHighExperience transfer potential with entry doorsSource: Management Manufacturing Interviews 39CU7121997ECAbcBOS Copyright169。 1998 Bain Company, Inc. Business DefinitionBunker Hill Competitor Acid Test ?Bunker Hill?Chamberlain?Overhead door?WayneDalton?Clopay?Castlegate/Premdor?Peachtree?Pease?ThermaTruA petitor acid test validated the team’s findings. Bunker Hill is the only player who participates in all three segments. All other players make and sell only entry doors or only garage doors and garage door openers.Company Garage Door Openers Garage Doors Entry DoorsCostsCustomersCompet itorsSource: Competitor Annual Reports and Web Sites 43CU7121997ECAbcBOS Copyright169。 1998 Bain Company, Inc. Business DefinitionJJR Coatings Products Description UsesSolventbased (SB):Waterbased (WB):Ultra violet cure (UV):Electracoat (Ecoat):Powder:? Most mon sprayon industrial paint? Used by OEMs? Highly toxic? Common OEM sprayon paint? Environmentally friendly? Specialized application for curing or drying final clear coat? Dries under UV light for better appearance? Anticorrosive primer coat? Items are dipped into tanks? Electric current passes through paint tank to apply color? Limited colors? Newer, more environmentally friendly? Applied in spray booth? Easy to collect excess and recycle? Paint on tractors, cars, metal office furniture, toys, etc.? Clear coat on hardwood floors, food cartons and containers(., orange juice cartons)? Antirust undercoating on cars? Similar to solvent basedThere are five types of industrial coatings: solventbased, waterbased, ultra violet cure, Ecoat, and powder. 47CU7121997ECAbcBOS Copyright169。 . Census。 1998 Bain Company, Inc. Business DefinitionJJR Experience Transfer In analyzing the value chain steps, the Bain team found that the opportunities for experience transfer between Ecoat and nonEcoat were low.CostsCustomersCompetitorsSolventPigmentResinAdditiveResin RDCoating RDRaw mat’l QCRaw mat’l handlingResin prodPrebatch QCGrindingBlending/ mixingPostbatch QCPackingFinished mat’l handlingSellingField ApplicationEcoat vs. non ecoat leveragabilityHighMediumLow50CU7121997ECAbcBOS Copyright169。 1998 Bain Company, Inc. Business DefinitionJJR Business Definition Summary Rationale: ?High cost sharing between SB and WB?High customer sharing and high degree of product substitution between SB and WB?Moderate cost 。 1998 Bain Company, Inc. Business DefinitionJJR Customer Sharing The team found little customer sharing between Ecoat and other technologies.Customer overlap52CU7121997ECAbcBOS Copyright169。 Bain Analysis$403 $206$209 $149 $170$52$164$42$284$91$257$36$57$201$47$193$67Total sales = $2,578MMJJR Coatings UsageThe usage of the five coating types varies significantly across the enduse segments. 48CU7121997ECAbcBOS Copyright169。 Frost Sullivan。 1998 Bain Company, Inc. Business DefinitionAgenda ?The business definition concept?Applications?Business definition steps?Client examples–Bunker Hill Door Systems–JJR Industrial Coatings?Key takeaways45CU7121997ECAbcBOS Copyright169。 1998 Bain Company, Inc. Business DefinitionSource: Door Systems Customer InterviewsMost Bunker Hill customers bought openers when they bought Bunker Hill doors.CostsCustomersCompet itorsBunker Hill GD and GDO Customer Sharing41CU7121997ECAbcBOS Copyright169。 1998 Bain Company, Inc. Business DefinitionBunker Hill Direct Cost Sharing ()Source: Bunker Hill FinancialsThe Bain team found that materials accounted for a substantial proportion of Bunker Hill’s costs in all three business segments.CostsCustomersCompet itors37CU7121997ECAbcBOS Copyright169。 1998 Bain Company, Inc. Business DefinitionCompetitor Acid Tests ?Does business profitability correlate with market share as implied by the business definition hypothesis??What impact do decisions made in one business have on another?–pricing–investment?What products do individual petitors offer??Which customers/channels do petitors service?Consistency Profit explanation Independent actionsTo validate our business definition hypothesis, we use three petitor acid tests.33CU7121997ECAbcBOS Copyright169。 1998 Bain Company, Inc. Business Definiti