Experience Dissatisfaction[1]

7/31/2019 Experience Dissatisfaction[1]

1/41

Experience dissatisfaction.

Experience by def involves individuals

Start from the experience-go backwards

Cell phone - feature function set

Digital technology crammed

Frus, dis-satn.- why navigate through allthe stuff that I don't need

Feature rich but experience poor


2/41

Answer Customer,adjective to noun

Value is created in the intersection of thefirm and the consumer

The exchange- POE to MOT to POS

Why involve ???

Ford

CDMA v/s GSMTelevision and Cellular ind. USA


3/41

Why involve???

product development risks- I/P from Cus.

companies increase their V.C opport.

consumers create more value forthemselves due to unique experience

Music Industry- Cos.unilaterally define

choice for the consumer, Napsterno mechanism to sample the music

Apples strategic blunder


4/41

Why involve???

Do I listen to a million prospects before Iinnovate

Liability v/s resouce

M. soft- 600 000 cus. Tested beta versionXP NT , 600 mn $ R & D

Peter Jackson Lord of the rings, GordonPatterson,


5/41

Seek to understand

Before brand innovations, understandmarkets and the BCG positioning

M. leader, follower, challenger

Each has essentially an offensive and adefensive strategy that is different

Branding-highly strategic, hence in line


6/41

Market leaders branding strategy

Defensive:Fast follower

Not a pioneer

IBM (Bell labs), Microsoft (best labs in voicerecognition)

Use capital side and not the brain side

Apple v/s IBM

DNR- development first, n then research


7/41


8/41


OffensiveGrow the pie

Understand topography- cellular India

BSNL(2003), huge market accessMature markets- Attract for newer markets

Attract newer customers

Rural marketing-eliminate class differentials

Packaging- the fifth P


9/41


Offensive

Non consumers to consumers

Maruti-800 expansion mode,

TATA Motors

Reliance

Rural markets


10/41

The challenger

Defensive

Coexist with no. 1

Imitate no. 1(Berger King, Pepsi)

India- most markets are coexisting.

Banking, Airways,

Clone- follow- defensive-attack-offensive

Quietly defend first, attack later

Offensive- challenge, but beware


11/41

Follower

Defensive Segment within segment Luggage Cos., Canteen contract, Jeep Car makers suppliers- pseudo specialists

Attack - innovation, Create radical change Chrysler

automotive transmission, Convertible designs, cap forward design, Minivan Manufacturing rebate Legitimacy financial plus marketing


12/41

Follower

Limitedlimited express,

Catalogue company- Victoria secrets

Galion

Lane Bryant

Tata Automobile

Sprint Price point innovation,

10 cents per minute Show business personality a spokesperson

Sears, JC Penny toys, Cola.


13/41

Finance drives branding

Market share concentration depends onthe extent to which fixed costs dominatefinancial structure

Aerospace, Auto

Semiconductor,

Intel v/s AMD v/s Motorola

SoftwareIntel-70 % m. share, 70 % fixed cost intensive

Wall-scope and scale of investments


14/41

Unity is strength

Solutions-attack in consortiums

IBM- assembler, micro processor andmachine language- 7 dwarfs + B.L=UNIX

Boeing v/s Mcodonalds, Airbus

Microsoft monopoly- Linux+ IBM+Oracle

Economies of scale and scope inmanufacturing + procurement = effectivebranding


15/41

Seek to understand

Market follower Small, niche, margin driven

Market leaders- Large, full line, volume driven


16/41

Seek to understand

M. Leader Follower

Size and speed

(reaction)

Selectivity and service

Increased fixed costs Increased variable costs

Full line of products Limited products

Network and alliances Vertically integrate

strong CEO

leadership


17/41

Seek to understand

Never shall meet

NBC, CBS, ABC, FOX

Cultural issuesNeiman Marcus v/sWalmart

For a volume driven market leader-

common corporate overhead, integrateoperations, share fixed costs, distribution,plants, corporate functions


18/41

Branding for M. leaders

Have a corporate brand

Common brands and common distribution

M. cap: revenue GM / ToyotaChevrolet, Optra, Buick, Oldsmobile

Internal fight among dealers


19/41

Seek to understand

Umbrella brand a byproduct of economiesof scale, lest Brand proliferation

Line extensions

Corporate v/s non corporate- costefficiency

GM- 10 different brands


20/41

Managing the brand Acquisions

Brand managers- investment banking

Acquisition-

one stop shop??? OR

part of your growth strategy???

Flair v/s discliplineHard edged finance legal experts

Continuously skeptical

Relationship building, strategies issues to look

Deal makers, Strategists, org. and cul. issues


21/41

Flair v/s Discipline

Growing through acquisitions can itself

be a branding process and PLC

Bias towards acquisitions, supported byexpertsThrill of the chase may blind you

1997- $ 3.7 mn ton psydol plant

ISPATpre acquision discussion and

debate to post acquisition integration


22/41

Need identification

Non-profitable growth, leveraged cash

65 years old

DivestmentDecisiveness and lightning speed

Electrolux


23/41

Stage 3- Intergration

Do you jump into it ???

Strategically understand

How to integrateAcquisition integration


24/41

Integration stage 1

Remove the top

Develop their infrastructure,simultaneously optimally utilize existing

Invest and build their competence, brands

Operationally clean, strategically sound

Linkage between ur and their managers


25/41

Again- finance drives marketing

Yes, it is financial, but that does not meanit is only financial

Stop the bleeding

Stage-2

Efficiency of operational processes

Quality of productsCustomer satisfaction indices


26/41

Integration Stage 3

Strategic planning

Employee commitment

Product development


27/41

Services marketing

Service industry Growth rate

1982-1996

Growth rate

1996-2006

Finance and

insurance

30 % 20 %

Wholesaletrade

27 % 13 %

Retail trade 22 % 32 %

Transportationutilities

40 % 22%


28/41

Franchiser - advantages

Expansion- at low cost or expansionwithout expenditure.

Capital enhancement by franchising feesand royalty.

Both the corporate brands as well asmerchandise get exposed.

Fastest way to expand.

Getting local knowledge.


29/41

Franchiser dis-advantages

The brand rides the wave of fame andsuccess with the franchisee

You part with know-how in a quest forgeographical expansion over cost;creating room for franchisee monster

You need share to profits and prosperity.

Cut off from customers.


30/41

Franchiser dis-advantages

Difficult to drive home a uniformcorporate responsibility.

People and organizational processes

Every one may not have sameorientation- knowledge processors.

In service sponsored franchisee, difficultto establish uniform service encounter.


31/41

Service encounter

when you call to make a reservation to take aflight,

when you arrive at the airport and check yourbags curbside,

when you go inside and pick up your ticket at theticket counter,

when you are greeted at the gate,

when you are taken care of by the flightattendants onboard the aircraft, and

when you are greeted at your destination


32/41

Franchisee advantages

Gets to choose successful partners.

Low establishment time

Low risk in Business- established experiences

Problems regarding I/O are lessoperational, accounting know-how from thefranchiser.

Bank guarantee (trusted and time tested

brand).No mass communication but localcommunication.


33/41

Franchisee dis-advantages

Conformity v/s Individuality: He has toconform to franchisers rules; stringent

norms of conformity.

No Identity of Franchise.

Multi brand outlets.

Under same agreement you cant have

multi brand outlets.

If franchisers brand fails, you also fail.


34/41

Need identification

ISPATpre acquisition discussion and

debate to post acquisition integration

Non-profitable growth, leveraged cash65 years old

Divestment

Decisiveness and lightning speedElectrolux


35/41

Need identification

Effective market research

Assess financial needs of the seller

Urgency of the sellerSpeedElectrolux

ISPAT

N.Piramal

Discipline v/s flair.


36/41

Stage 3- Integration

Do you jump into it ???

Strategically understand

How to integrateAcquisition integration


37/41

Integration stages

Stage 1:

Remove the top

Develop their infrastructure,simultaneously optimally utilize existing

Invest and build their competence, brands

Operationally clean, strategically soundLinkage between ur and their managers


38/41

Again- economics drives markets

Yes, it is financial, but that does not meanit is only financial

Stop the bleeding

Stage-2

Efficiency of operational processes

Quality of productsCustomer satisfaction indices


39/41

Integration Stage 3

Strategic planning

Employee commitment

Product development

Simple


40/41

Sample

1988- textiles to pharmacy

Acquisitions, organic growth and strategicalliances

Mutually exclusive???

Acquisitions Nicolas labs- 1988,

Indian operations of Hoffmal La Roche

Hoechsts R & D facility

Lacto Calamines R & DBoeringer Mannheim Germany


41/41

Experience Dissatisfaction[1]

Documents

Transcript of Experience Dissatisfaction[1]