Trends and innovative Marketing in international...

Trends and innovative Marketing in international industrial Markets | 20. April 2006 | K 1www.hilti.com

Trends and innovative Marketing in international industrial Markets

Prof. Dr. Pius BascheraCEO Hilti Corporation


Idee des Marketings:

Ausrichtung aller unternehmerischen Tätigkeiten auf die Befriedigung von Kundenbedürfnissen, und zwar im Einklang mit dem langfristigen

Erreichen von Rentabilitätszielen.


Hilti hat basierend auf der Strategie Champion 3C profitables Wachstum erreicht

2'000

2'500

3'000

3'500

4'000

96 97 98 99 00 01 02 03 04 05

Umsatz (Mio CHF)

CAGR: 5.7%

10'00011'00012'00013'00014'00015'00016'00017'000

96 97 98 99 00 01 02 03 04 05

Mitarbeitende

CAGR: 3.7%

147 141

214247 255 262 241

273 295324

8.8%8.9%9.1%8.1%8.4%8.1%

6.6%5.5%

8.1%8.8%

96 97 98 99 00 01 02 03 04 05

op. profit return on sales

Betriebsergebnis und Umsatzrendite

CAGR: 9.2%

Weltweiter Baumarkt (Index)

100

110

120

96 97 98 99 00 01 02 03 04 05

CAGR: 1.5%


The Hilti Business Model: Our base for sustainable, profitable growth


Our Purpose

We passionately create enthusiastic customers and build a better future!

We live our values

The foundation of our culture is integrity, courage, teamwork and commitment.

Purpose and Values


Enthusiastic customers

We create success for our customers by identifying their needs and providing innovative and value-adding solutions.

Purpose and Values


Build a better future

We foster a company climate in which every team member is valued and able to grow.

We develop win-win relationships with our partners and suppliers.

We embrace our responsibility towards society and environment.

We aim to achieve significant and sustainable, profitable growth, thus securing our freedom of action.

Purpose and Values


Our Values

The way we do things at Hilti is based on living strong values. We act with integrity in all we do, we demonstrate courage to go beyond the circle of habits, we outperform through teamwork, and we have commitment to personal and company growth.


Corporate Culture as main driver of our success –and the result of hard work

We want team members that show initiative and take self-responsibility in their doing

Pre-requisite: clear alignment with purpose and values – all employees up to the Board of Directors! Our Culture Journey ‘team camps’support the change management process

Key factors:• Culture is not a program, it is

integrated into daily business• Commitment of the Leadership

team (EB, EMT) • 100% disciplined execution


Monthly „Gipfeltreffen“


The „Red Thread“ – people development at Hilti

Getting things done

Working with others

Functional expertise

Understanding the businessOur Culture Journey

Core Purpose & Values

Understanding and defining

what needs to be done

Developing yourself and

others


The Hilti business model: Our base for sustainable, profitable growth


Champion 3C Strategy

Customer:We want to be our customers’ best partner. Their requirements drive our actions.

Competency:We are committed to excellence in innovation, total quality, direct customer relationships and effective marketing.

Concentration:We focus on products and markets where we can achieve and sustain leadership positions.


Ongoing strategic initiatives strengthen HILTI’s competitiveness

Product leadership

Concentration on selected product lines• Market leadership• Innovation potential• Added value

Implementation of application know-how

Operational excellence Market reach

Segmented go to market• Data-based SMP• Segmented org.

Targeted channel shift

New channel approaches

Effective CRM

Worldwide harmonized business processes• Efficiency• Customer satisfaction

Optimized production network

Cont. improvement

• Supply restructuring

• Global processes (GPD/H2)

• New breakthrough products (e.g. DX Gas, adhesives)

• Light duty tool family

• Asian dealer strategy

• Fleet Management

• ProShop


We offer system solutions instead of stand-alone products

Drilling & demolition systems,Diamond systemsOpen

Execute workCutting, grinding

Fasten

Direct fastening

Screw fastening

Anchoring

Installation systems

CloseFoams, firestop

MeasureMeasuring systems


We use several methods to ensure successful product innovationsSource for innovation ideas Methods

• Competition radar

• Trusted customers

• Lead-user-principle

• Work studies

• Idea-management

• Patent-search

• Technology radar

• Collaboration with universities

Customers

TechnologyOrganization

Understanding our customers „hidden“ needs is key

http://www.hilti.ch/holch/modules/editorial/edit_singlepage.jsp?contentOID=50456


We understand our customers - Example "Measuring"

Low-techLittle competition

Large potential for improvement (15-20% of total time)

Installation of cable runs

Measure 28%

Drill 17%

Set anchors 10%

Install hangers 10%

Mount brackets 14%

Install cable runs 21%

High-techMajor competition

Limited potential forimprovement (4-8% of total time)


We provide innovative solutions – Example “Measuring”

PD 30: the smallest laser distance meter in construction


Customers are closely integrated into our development process

G1Definition-

Phase G2Concept-

Phase G3Design-Phase G4

Launch-Preparation

Phase G5Market-

introductionPhase

5G6

Opportunity

Task

Targets:- Application/ solution- Cost- Revenues- Timing

Tested

FinalProduct Money

Analysis of customer problem and definition of relevant criteria for customer satisfaction

Concept testwith customers to select best solution and of several alternatives

Customer acceptance test to determine fulfilment of customer expectations

Pilot to confirm functionality and product quality in praxis

Customer feedback for first improvement measures


Customer segmentation is key – MO example

F&D market by trade and size (in mio €)

0%

20%

40%

60%

80%

100%

Mini/Small Medium Large/MegaSource: MO fact base 2004

BC CES&MWoodIF SCM E

127 12141621 331 22


Some segments are more attractive than others –MO example

BC IF SM M E Civil

2.

Ease of market entry / risk

15%

Weighting

Trade potential

5. 6.

30%

Trade profitability

30%

Buying behavior 15%

Product portfolio 10%

Ranking 1. 3. 4.

Rather unfavorableVery favorable


We know where the potential is – MO example

Total potentialABC customersInterior Finishing

in Germany

Coverage and penetration

Interior Finishingin Germany


Our direct sales model is based on five direct sales channels

• Independent stationary sales outlets

• HILTI products only• Service center

• National call centers• Personal relationships

with customers• Inbound and outbound

• HILTI’s traditional channel• Outstanding technical/application competence

as key differentiator

• Stationary sales outlets• Within partner distributor

• Global internet platform• Personalized

online order forms


The different channels target different customer segments

BC CES&MWoodIF SCM E

3

0%

20%

40%

60%

80%

100%

Mini/Small Medium Large/Mega

127 1214162131 22

Key Account

Segmentated sales force

ProShop

E-business andCustomer Service

Source: MO fact base 2004


ProShop: Direct selling at traffic points

Hosts• Generalists or trade specialists• Only market leaders (e.g. Home Depot,

St. Gobain, Danske Traelast, Wolseley)• Self service store concepts• > 70% pro customers

Hilti ProShop• 25 – 30 sqm of display area• Hilti store managers full-time• Hilti owns stock, sets price, knows

customer• Partner gets commission on sales


Multi-channel customers buy more – MO example

0

5'000

10'000

15'000

20'000

25'000

1 2 3 4

Sales / customer (CHF)

# of channels used

#channels

Avrg. order size

1 300 CHF

2 330 CHF

3 410 CHF

4 430 CHF


Local market organizations have driven innovations in market reach approach – MO examples

The idea

• Provide cost efficient coverage to small customers

• Capitalize on existing traffic to dealers• Don’t loose advantages from direct sales

approach

ProShop (France)

• Remind customers to order on a regular base from Hilti

• Avoid existing customers to “slip” into becoming dormant customers

Outbound calling (HNA)

• Capitalize on preference of tradesmen in Italy to visit stores (getting together…)

• Get people into the store through personal relationships developed through TS

HC with territory (IT)


The Hilti Business Model : Our base for sustainable, profitable growth


Our value proposition consists of much more than product and price – trade example

Customer needsRelevant customer group

Large ↔ SmallHilti offer

Personal relationship, reliability, trust Direct sales force, "personal" TS

"Understands my business" Segmented specialists, innovations

Durable, performing tools High quality, high performance tools

Pride, acknowledgement Brand, red tool box, design of tools

Repair service Full service, fleet mgmt.

Availability, fast delivery of consumables 24h delivery, stock in HC/PS

Technical support for fastening solutions Application expertise, fast/flexible solutions

Consumables at market price level “No frills” consumables at market price

Convenient ordering Five channels: HC, CS, HC, PS, E-Bus.


Pricing is an important topic for us

Hilti customers are willing to pay more due to our approach• Direct customer contact• Demos• Engineering support

But, there are increasing demands from customers regarding pricing• Pricing should be fair, based on potential• Prices should be consistent across channels• Large key accounts demand international pricing

In response, several Hilti pricing initiatives are on their way, e.g.• Structured pricing within MO’s• GAM (global account management)


Brand strength empirically correlates with price premium and market share

Price premium

RSQ= 0.61

Brand strength

Market share

Source: European companies / GfK


The Hilti brand is top of mind

Base: Total sample/ Responses in %

1): Which brands of fastening products and power tools do you know? (first and other mentions)

2): Have you ever heard of…?

4

4

11

12

17

27

1

13

22

18

18

36

31

12

23

19

57

67

59

65

46

39

88

77

79

26

7

12

5

3

1

1

Spontaneous first mention1) Spontaneous other mentionsAided awareness2) Unaware of brand

Competitor A

Competitor B

Competitor C

Competitor D

Competitor E

Competitor F

Competitor G

Competitor H


The Hilti Business Model : Our base for sustainable, profitable growth


Corporate culture is the driver of our success

Value-conforming management

behavior

employeesatisfaction and

morale

customer satisfaction and

loyalty

Commercial success:

Sustainable profitable

growth

drives

drives

drives

drives


Marketing is not an isolated activity – it is about the entire business model

“Marketing is not a specialised business activity….it is the whole enterprise seen from the customer’s point of view.”

Peter Drucker, The Practice of Management, 1954


Summary: Key messages

Segmentation and a solid fact base are key

Product and channel innovation need to be based on (hidden) customer needs

Multi channel customers will buy more

The overall value proposition must be right – this does not necessarily mean low prices

A strong brand will help, but requires continuous investment

The right culture and motivated employees will make things happen

Marketing is about the entire business model

Trends and innovative Marketing in international...

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