BCG - The Boston Consulting Group

Situation

The client is a global ERP software company. Although a market leader, it had met with only limited success in its efforts to sell to China’s small- and medium-sized enterprises (SMEs). The company had extensive experience selling to large organizations (multinationals, and big Chinese companies), but needed a strategy for selling to smaller ones. It wanted BCG’s help in learning how to adapt its products for the SME segment; it wanted to know which sales channels to establish and how to manage those channels in order to effectively reach this target market.

Approach

After conducting significant qualitative and quantitative research, our BCG team undertook a methodical process of segmenting the SME market according to its characteristics and needs. It soon became clear that different sub-segments had to be addressed in very different ways. Based on our analysis, we were able to uncover why our client had achieved limited success, and to determine which segments the company should focus on in the future. We found, for example, that although a significant number of SMEs wanted to implement modern management systems in China, many IT vendors’ products and services were too complex. It would be necessary to adapt products for local markets. In addition, we realized that no single channel could cover the vast array of SMEs in China; the client had to start working with a multitude of different channels and partners in order to reach the thousands of SMEs in this marketplace.

Impact and value created

We developed a well structured action plan for our client that outlined which segments within China’s SME market it should target, with which products, and through which sales channels. We also developed appropriate business plans to assist the company in reaching these markets, with our focus on maximizing profits.

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