3c-model

3C Analysis Business Model In A Nutshell

The 3C Analysis Business Model was developed by Japanese business strategist Kenichi Ohmae. The 3C Model is a marketing tool that focuses on customers, competitors, and the company. At the intersection of these three variables lies an effective marketing strategy to gain a potential competitive advantage and build a lasting company.

Understanding the 3C Analysis Business Model

The 3C Analysis Business Model was developed by Japanese business strategist Kenichi Ohmae.

Ohmae argued that at the intersection of a company’s strengths, a customer’s needs, and a competitor’s offering, there was an opportunity for competitive advantage.

Let’s look at each in more detail.

Customers

Customers are perhaps the most important of the three variables, for without customers there can be no company nor any way to gain competitive advantage.

Businesses must know their customers intimately so that their marketing strategies resonate with them on a meaningful level. This starts with research and a few questions such as:

  • What is the demographic of the target audience? In other words, who are the customers that a business wants to target? 
  • Why do they make buying decisions? Are they motivated by value, economy, or status? What other problems might they be trying to solve?
  • What are the different segments of a target audience and how might be they marketed to effectively? For example, a consumer who drinks coffee to stay awake will need a different strategy than one who drinks it socially in cafes. 

Competitors

A business must know where it stands in relation to its competitors. Is it bigger? Smaller? Is the competition trying to take market share from the business, or is the opposite true?

According to Ohmae, competitor-based marketing strategies involve looking for a point of difference in purchasing, engineering, sales, or servicing. 

This can be achieved in several ways:

  • Investing in brand image. Ohmae noted that companies such as Sony and Honda were able to sell more than their competitors in the Japanese market because of heavy investment in advertising and consumer relations.
  • Hito-kane-mono – Japanese business planners believe in the concept of hito-kane-mono, loosely translating to people, money, and things (assets). As a point of competitive differentiation, businesses can ensure these three resources are in balance without waste or surplus. For example, managers who are given money over and above what they can competently spend tend to waste that money unnecessarily. In this case, Ohmae argues that managers should first define their ideas and then adapt a budget to suit.
  • Profit and cost-structure differences. Different sources of profit can be also be exploited, such as the profit seen in new product sales or value-adding services. Large companies with lower fixed-cost ratios can also lower their prices in a stagnant market to gain market share.

Company

The company itself must also look inwardly to design strategies aimed at maximizing strengths relative to the competition. This involves a combination of short and long-term strategies, including:

  • Specialization. A business should always identify one or two areas of expertise, instead of trying to specialize in everything.
  • Produce or procure. In terms of manufacturing, a business has two options. It can take advantage of backward integration, taking control over its supply chain in the process. Or, it can outsource non-value-adding activities to a third party.
  • Cost-effectiveness. This is a relatively simple way of gaining a competitive advantage. Businesses can reduce basic operating costs by focusing on processes that have the highest potential for automation or streamlining. Longer term, businesses can combine resources and knowledge with others in their industry to develop a competitive advantage.

Key takeaways:

  • The 3C Analysis Busines Model suggests a business focuses on three key factors for success – company, customer, and the competition.
  • The strengths of the 3C Analysis Busines Model lie in its simplicity, practicality, and emphasis on efficiency to reduce wastage.
  • Customers are crucial to the success of the 3C Analysis Business Model, dictating the strategies formulated for competitors and company.

Other strategy frameworks

More resources:

Published by

Gennaro Cuofano

Gennaro is the creator of FourWeekMBA which target is to reach over two million business students, executives, and aspiring entrepreneurs in 2020 alone | He is also Head of Business Development for a high-tech startup, which he helped grow at double-digit rate | Gennaro earned an International MBA with emphasis on Corporate Finance and Business Strategy | Visit The FourWeekMBA BizSchool | Or Get in touch with Gennaro here