【正文】 iness, Bain uses an iterative approach that is both qualitative and quantitative and relies heavily upon data external to the client. The process starts with an hypothesis that is tested along three dimensions.Degree of emphasisLessimportantMoreimportant?Is there substantial cost sharing??Is there substantial customer sharing??Does business definition pass the petitor acid tests?Cost sharingCustomer sharingCompetitor acidtests19CU7121997ECAbcBOS Copyright169。 1998 Bain Company, Inc. Business DefinitionCustomer Base Overlap Customer base overlap can be determined by paring purchasers or decision makers for the two products. Common Customer Base Overlap Criteria?Used by same anization or customers?Purchased by same individual or group?Purchase decision made by sameindividual or groupLimited customer base overlap27CU7121997ECAbcBOS Copyright169。 1998 Bain Company, Inc. Is there substantial customer sharing?? How great is the degree of functional substitution?? How great is the degree of customer base overlap?? How high are customers’ perceptual barriers?Is there substantial cost sharing?? Is there substantial direct cost sharing?? Are there substantial opportunities for experience transfer?Does business definition pass the petitor acid tests?? Do petitors offer similar products and serve similar customer/channels? ? Does profitability correlate with the definition of market share?? Do decisions a petitor makes in one business affect the decisions that a petitor makes in another business?Degree of emphasisLess importantMoreimportantCost sharingCustomer sharingCompetitor acidtestsBusiness DefinitionBusiness Definition Steps Summary 34CU7121997ECAbcBOS Copyright169。 1998 Bain Company, Inc. Business DefinitionBunker Hill Perceptual Barriers Garage doors and entry doorsEntry doors and garage door openersLow HighPerceptual Barriers“Garage doors need to be made of steel and be strong. Entry doors should be well crafted and be attractive.”Garage door customer“Garage door openers should be bought from a reputable electronics type pany.”Garage door opener customer“I like to buy my garage door and the opener from the same manufacturer. It’s the same as with TVs. I wouldn’t buy the remote control from one pany and the TV from another.”Garage door customerCustomer feedback revealed low barriers between garage doors and openers. However, customers viewed entry doors as separate from garage doors and openers. Garage doors and garage door openersSource: Customer InterviewsCostsCustomersCompet itors42CU7121997ECAbcBOS Copyright169。 Freedonia。 1998 Bain Company, Inc. Business DefinitionJJR Competitor Acid Test JJR’s was the only petitor to pete in Ecoat to a significant degree. This helped to explain its above average profitability.CostsCustomersCompetitorsPercentage of revenue from Ecoat: 55% 35% 10% 0% 5% 5% 0% 0%53CU7121997ECAbcBOS Copyright169。 1998 Bain Company, Inc. Business DefinitionJJR Direct Cost SharingUsing SB as a baseline, the team used limited cost data along with qualitative assessments from manufacturing and industry experts to determine that the only significant direct cost sharing was between solventbased and waterbased. CostsCustomersCompetitorsWaterbased Powder Ultraviolet ElectracoatOverlap with SBHighMediumLow(raw materials)COGS(other)49CU7121997ECAbcBOS Copyright169。 1998 Bain Company, Inc. Business DefinitionJJR* . Industrial Coatings Market*Disguised client caseSource: Skeist, . Census, Frost Sullivan, Freedonia, Literature Searches, Industry Interviews$14,433MM $5,380MM $4,297MMJJR defined its business as the 13 enduse segments of the nonauto industrial coatings market. Many clients will define their business in this way.46CU7121997ECAbcBOS Copyright169。 1998 Bain Company, Inc. Business DefinitionBunker Hill Direct Cost Sharing ()*Includes gates and electronicsSource: Purchase Price Variance ReportHowever, in peeling the onion, the team discovered very little material cost sharing, suggesting that on a cost basis there were 3 separate businesses.CostsCustomersCompet itors38CU7121997ECAbcBOS Copyright169。 1998 Bain Company, Inc. Business DefinitionPerceptual Barriers Customer’s perceptions can be indicators of business definition。 1998 Bain Company, Inc. Business DefinitionExperience Transfer Product A Product BLessons learned from product A can improve manufacture of product BProcessor CFeGrindPaintDistributor YCustomersSupplier AProcessor DFe GrindPaintDistributor ZCustomersSupplier B(Raw materials)(Semifinished product)(Finished product)Firms can benefit from experience transfer when two products share similar high volume, valueadded processes. 23CU7121997ECAbcBOS Copyright169。 1998 Bain Company, Inc. Business DefinitionExamples of Changes in Business Definition There are several examples of panies that have gained significant petitive advantage by changing the definition of a business.?Federal Express revolutionized the package delivery business by introducing an overnight delivery service?Charles Schwab dramatically altered the mutual funds business by introducing a nofee service whereby customers could purchase many panies’ mutual funds through Schwab?Calyx Corolla transformed the flower distribution business by using information technology to cut out traditional distributors and ship flowers directly from growers to customers?Starbucks redefined the coffee shop business from providing coffee to providing a social experience?The Body Shop revolutionized the cosmetics business by merging the ideas of beauty