The Group’s competitiveness depends on its ability to drive and respond to customer needs. As the Group gradually shifts focus to profitable growth beyond 2016, the organization will have an even stronger end-customer and market focus. The uniqueness in the breadth of the product offering will remain, however, paired with an increased focus on the differentiating factors for success in each end-customer segment, aiming to realize the full potential of market leadership by 2020.
Market leader ambition
Husqvarna Group’s main ambition for 2020 is to be the market leader. Market leadership means being the number one or number two player competing for the number one position. It also means having the ability to capture the full financial potential of such market leadership. A market leader drives industry evolution in terms of innovation, end-customer focus and operational excellence. A market leader is a value grower with the ability to outperform peers in both profitability and growth.
Six fundamental strengths for building profitable growth
Husqvarna Group has a unique set of strengths that represent a strong starting point and a valuable asset on which to build future success. The Group has leading market share positions in many segments and has a strong presence in both the dealer and retail sales channels, serving leading retailers and more than 25,000 independent dealers worldwide. In terms of brands, the portfolio consists of strong global brands complemented by important regional ones. Product and technology leadership with long-standing proven capacity for innovation, global end-customer insight-driven research and development and supply capacity as well as a 325-year-long heritage are other fundamental strengths that the Group can leverage.
• Leading market positions
• Strong distribution channel positions
• Strong brands
• Product and technology leadership
• Global R&D and supply capacity
• 325-year heritage
The overall forestry, lawn and garden industry segments in which the Group is present are attractive and demonstrate stable growth in volume and value. Average growth has been about 2 to 3 percent per year in the long term. Geographically, the market is dominated by Europe and North America that together account for around 80 percent of the global market. Husqvarna Group is well positioned with high market shares in many segments.
Profitable growth opportunities
The market offers segments of high growth as well as areas of high profitability. The attractiveness of the segments varies and selecting the right mix is important for the Group’s overall performance. The market is mature and fairly stable, but some trends are challenging the established structure. For example, battery technology is taking market share, the importance of emerging markets is growing and new buying behavior, such as online shopping, is evolving.
There are fundamental differences between the main channels to the market. The dealer channel is characterized by best-in-class products and services under strong brands. These are recognized by professionals and demanding consumers who value powerful and reliable products built for many hours of productive run-time every day. The retail channel is characterized by products that are adequate for mass consumers who in general are less demanding. Brand, scale and cost excellence are survival criteria for suppliers in the retail channel.
In general, the differences between the dealer and retail channels are expected to remain and continue to co-exist with their respective specific characteristics. Online buying, however, will impact both channels. Retailers, dealers and end-customers increasingly expect a multi-channel approach and it is up to suppliers to respond. Husqvarna Group aims to help and support channel partners to be successful in their online efforts.
End-customer segmentation is the starting point and the most important platform of Strategy 2020. Knowing which segments to target and how to serve them effectively determines success in the market, and end-customers have been put at the center to understand their needs. Interviews with more than 5,000 consumers and 1,000 professionals were conducted around the world, resulting in profiles of the specific needs and requirements of different segments. The Group’s ability to drive customer insight based development and respond to their needs is key for the Group’s competitiveness.
More efficient use of resources
Understanding different end-customer segment profiles will help the Group develop better offerings, a more balanced product mix, clear brand positioning and more targeted communication. This will also create new opportunities for developing products and solutions that will allow the Group to prioritize high value segments to make the best use of resources. The different brands play an important role here, as they are the direct link to end-customers.
Technology and innovation
Over the Group’s more than 325 years of operation, one of the key success factors has always been the understanding of end-customer needs. In Strategy 2020, the ability to leverage end-customer insight into product development to drive differentiation between customer segments, brands and channels is a key success factor. The importance of placing end-customers at center stage and quickly responding to their needs by offering the most innovative products and solutions cannot be stressed enough.
End-customer demands are constantly evolving and new business opportunities will arise as demand changes and new technology has an impact. One example is the emergence of products based on “intelligent experience” where sensor technologies, connected products and machine-to-machine interaction are leading to automated products and new markets. A robotic lawn mower can now be integrated with a watering system. Sensors detect when the lawn needs mowing or the grass needs watering, and the user monitors the system via a smartphone app. Another example is connected sensor technology installed on a fleet of commercial lawn and garden products. Collected data allows the operator to optimize run-time and service intervals, which minimizes downtime and maximizes productivity.
Breadth and focus
The brand-based organization introduced in 2015 is our solution to combine distinct focus with the breadth and strength of the Group. There is a large diversity of requirements coming from different customers, channels, products and brands. For example, successfully serving professional forestry experts requires a different focus and level of attention compared to serving urban homeowners. To reach full potential, the Group needs to focus on the differences that are essential for success in each business model. At the same time, the key scale advantages in the areas of manufacturing, sourcing, technology and belonging to a larger Group must be captured to ensure competitiveness. This is why the Group’s broad business model has been transformed into differentiated divisions to be even more focused to compete successfully.