The Harvard Business School Publishing case study article by the Design Management Institute Illustrates Gillette's acquisition/merger of Braun AG Corporation. However, a much recent initiative is the merger/acquisition of Duracell by Gillette. This merger has helped Gillette achieve numerous economies of scale and a sustainable competitive advantage that supports the core competencies of the Gillette razor/toothbrush category industry with combined qualities and values of Duracell batteries. In the United States we are fortunate to be able to question ourselves as to What If? How Come? and So What? if mergers and acquisitions take place.
A brief to the facts history of Gillette and Duracell will give readers a straightforward perspective as the last blog of IsmailsInsidersInsights for my Marketing 442 Product Management course with Professor Dr. Paul Dwyer.
Gillette has introduced a number of new razor shaving systems during the last 30 years, beginning with the Trac II shaving system in 1971 and followed by a new system in 1977 known as the Gillette Atra. Between 1977 and 1988, new disposable razors with pivoting heads are twin blades were introduced along with an updated version of the original Trac II razor. Then, in 1990, the company introduced the Sensor shaving system and followed its release several years later with the Sensor Excel and the Sensor for Women. In 1998, Gillette brought another new shaving system to the market: the Mach3 razor. In 2001, the Mach3 and the Sensor were the top two shaving systems in the United States. At the beginning of 2001 is when the Gillette company finally diversified its businesses to in include more than razors. The business segments included but not limited to: personal-grooming products, small appliances, oral care products and portable power.
Duracell, on the other hand, and before its acquisition by Gillette, had been the leading producer of alkaline batteries in the United States. Between 1991 and 1996, the company had experienced consistent growth in revenues of about eight per cent per year and had increased total revenues by 46 percent during that time frame. The company also increased operating margins by more than 75 percent. At the time, 20 percent of Duracell's sales were outside of the United States.
The Gillette and Duracell merger came into existence because of two separate distinct divided categories of batteries that probably seemed attractive for Gillette to pursue. Batteries can generally be divided into two separate categories: primary and secondary. It is important to note that these categorizations do not necessarily refer to a battery's use in a device. Instead, they mainly refer to the battery's ability to be recharged. Primary batteries could not easily be recharged so they were made for one-time use; once the battery had discharged its energy, it was discarded. One the other hand, secondary batteries were those that could be recharged multiple times over the course of their life. Primary and secondary batteries each offered their own advantages and disadvantages. Primary batteries tended to hold their charge for longer amounts of time and were less expensive than secondary batteries. However, secondary batteries had a higher energy density and were more usable in extreme temperatures. The difference between these batteries often came down to their applications.
Primary batteries mainly consisted of alkaline and zinc-carbon cells. Companies such as Duracell concentrated on the disposable market because they believed that consumers were more apt to want a convenient, no hassle, portable power source.
Secondary batteries consisted of lead acid, nickel-containing (NiCd and NiMH), and lithium-ion batteries. Lead-acid batteries were most commonly found in automobiles and other transportation uses. Nickel-containing and lithium-ion batteries were used in electronic consumer products that utilized a rechargeable battery. Lithium batteries have increased in popularity for high drain devices such as laptop computers and cellular phones due to their energy density and weight. However, most other rechargeable consumer products used a nickel-containing secondary battery.
By acquiring Duracell, the future seems bright for Gillete (with its previous acquirement of Braun AG and Oral-B). Strategic alliances with the above mentioned brand names has and will continue to develop and nourish a strong foothold for Gillette Corporation with the razor, toothbrush, and batteries consumers markets with a globalized international awareness.
Friday, April 11, 2008
Volumetric Conjoint Analysis!
The Volumetric Conjoint Analysis research case study article by co-authors Jaehwan Kim of The Leeds School of Business at The University of Colorado at Boulder; Greg M. Allenby of The Fisher College of Business at The Ohio State University; and Peter E. Rossi of The Graduate School of Business at The University of Chicago illustrates artistically that Conjoint Analysis by definition states that it is a statistical technique used in market research to determine how people value different features that make up an individual product or service. With this in mind, why cannot there be a Volumetric Conjoint Analysis? The quantity of any good demanded by consumers is dependent on the attributes and benefits of an offering, the rate at which marginal utility of the offering decreases, and the availability of substitutes.
Traditional conjoint models are designed to make market share predictions and are difficult to adapt to modeling volume data. Recently, a new demand model is proposed in which product attributes are related to satiation parameters, allowing for volume predictions and identification of product line configurations that maximize profits.
In order to estimate quantity demanded for various product configurations, rather than simply market shares, volumetric data are collected in some conjoint surveys. However, while (laten) linear models provide accurate estimates of marginal utility part-worths for ratings and choice data, their use with volumetric data is problematic. Volumetric data reflects the expected demand for the alternative product under investigation, often expressed in terms of multiple purchases.
For discussion purposes, consider, for example the consumption of soft drinks. Even though if a particular household is brand loyal, demand is often reported in terms of multiple container types and volumes for a specific time period (e.g. two liter bottles and three six-packs). On the contrary, another approach to modeling volume data collected in a conjoint survey would be to use a count regression model such as a Poisson regression. A separate Poisson regression could be fit to the quantity responses for each product configuration presented. The difficulty with this approach is that the linear Pisson regression function does not accomodate satiation effects and the assumption of independent Poisson regression limit substitution possibilities.
In summary, the eventual goal of a volumetric conjoint analysis is to make optimal policy recommendations which are difficult to justify using an ad hoc statistical specification.
Traditional conjoint models are designed to make market share predictions and are difficult to adapt to modeling volume data. Recently, a new demand model is proposed in which product attributes are related to satiation parameters, allowing for volume predictions and identification of product line configurations that maximize profits.
In order to estimate quantity demanded for various product configurations, rather than simply market shares, volumetric data are collected in some conjoint surveys. However, while (laten) linear models provide accurate estimates of marginal utility part-worths for ratings and choice data, their use with volumetric data is problematic. Volumetric data reflects the expected demand for the alternative product under investigation, often expressed in terms of multiple purchases.
For discussion purposes, consider, for example the consumption of soft drinks. Even though if a particular household is brand loyal, demand is often reported in terms of multiple container types and volumes for a specific time period (e.g. two liter bottles and three six-packs). On the contrary, another approach to modeling volume data collected in a conjoint survey would be to use a count regression model such as a Poisson regression. A separate Poisson regression could be fit to the quantity responses for each product configuration presented. The difficulty with this approach is that the linear Pisson regression function does not accomodate satiation effects and the assumption of independent Poisson regression limit substitution possibilities.
In summary, the eventual goal of a volumetric conjoint analysis is to make optimal policy recommendations which are difficult to justify using an ad hoc statistical specification.
Saturday, April 5, 2008
New Airport Security RFID Techology!
The Richard Ivey School of Business at The University of Western Ontario case study article by Sohail Lalani in c/o Professor Robin Ritchie illustrates Dexit Inc.'s invention of an electronic payment system consisting of Radio Frequency Identification Technology (RFID) appealing to the Canadian payment system market. Similar and previous innovations with payment system ease of use and convenience led by Exxon-Mobil through their own RFID technology U.S. initiative of the so-called "Speedpass" system has led to current innovations with biometrics and smart card technology consisting of using RFID technology.
Recent examples of the users of biometric technologies are The International Airport of Mexico City, Dubai International Airport and Municipality, and The Federal Aviation Administrations (FAA) who already use the technology capabilities to increase the security threat level at their respective airports.
The International Airport of Mexico City utilizes the biometrics technology in order for significant authentication capabilities needed at the credential level, scalable credential issuance procedure for future expansion, and the biometric solution allows precise access control to restricted areas, virtually eliminating the possibility of counterfeiting. In addition, biometrics and RFID technology combined provides size and complexity, multi-factor authentication, secure credentials, and scalable solutions with the latest technology for Mexico City's airport.
The Dubai International Airport utilizes the BITAQUE ID management system which provides a smart card technology at new so-called "electronic gates" (eGates) at the Dubai airport. This system is designed to reduce delays and enable registered passengers automated entry or exit through the airport. With air travel on the increase in the Middle East and a heightened need for security at all airports, The Dubai Naturalization and Residency Department acknowledged/recognized the need to introduce electronic gates to speed up access through Dubai International Airport.
The Federal Aviation Administration (FAA) has begun a pilot test program at the John F. Kennedy Airport in New York (JFK), Washinton-Dulles International Airport, and others etc., will work with biometric and security systems provider SECURCOM International to test a biometric program, BIOPASS. Under the program, select frequent fliers will bypass security hassles by using their boarding pass and a smart card that contains their fingerprints.
This type of research, evidence, and credibility provides a clear and straightforward credible forecast of a so-called "prediction" of the future of the airline industries and airports around the United States that an organized RFID development systems integrated with feasibility, accessibility, and usability can account for accurate credibility, validity, and authentication with reasonable severe security.
A possible endeavor for America's airports can be somewhat of an "EZ-Tag" toll system for airport security. The differentiating factor can indeed be segmentation of passengers who do and do not require further checks or interrogation to whiz by security checkpoints through the use of a sensor-installed prototype device that can be deposited into bins at the departure gate before boarding the flight. Also, for international flights a quick express- "RFID sensored device" checkout can be installed at customs and immigration checkpoints where inquiries are not required for potential U.S. Citizens and various Civilians and/or Military Personnel.
We rest our hopes and desires at the hands of the inner Marketing Demon!!!
Saturday, March 29, 2008
THE NEW BUSINESS DEVELOPMENT GROUPS (NBDG)
The Richard Ivey School of Business at The University of Western Ontario in London, Ontario case study article by authors Rein Neiland, Inge Leuverink, Femke van Hoven, and Marijke van Wely illustrates the innovative New Business Development (NBD) of DSM-NBD in the Netherlands.
Through the "stage-gate" process of a 1. New Business Creation and 2. Business Evaluation Project the company was responsible for the evolution of Stamypor, the so-called brain child of DSM-NBD. As research suggests, KonicaMinolta has followed the leadership at DSM-NBD.
Through its core technologies, which provide economies of scale and core competencies such as optical, nano, image processing, and material technologies KonoicaMinolta is better able to leverage and sustain a competitive advantage through a conglomerate. A great example that probably started this recent venture can be credited towards Montell. By merging Himont as the original plastics and resin company together with Shell Oil company created the eventual existence to be of Montell.
Himont contributed with their knowledge in plastics complementing Shell Oil's knowledge with petroleum and chemicals. Therefore, Montell was able to achieve their unique market niche of economies of scale and sustainability in the plastics-chemical industry creating new and nurturing existing plastics materials of polyproplene, polyethlene, and polyolefins. As recent as the turn of the millenia, Shell has once again merged with BASF to form Basell as a chemicals-energy strategic initiative for future endeavors for oil and natural gas.
As evidence and research suggests, leaders like DSM-NBD and KonicaMinolta are forecasted to pave the path for current and recent initiatives such as by Mr. Richard Branson and his initiative endeavor for space exploration through his Virgin Atlantic group of New Business Development projects (Virgin Atlantic Airlines, Virgin Mobile, Virgin Music). The Virgin Atlantic space expedition may just land the next Texas A&M University Satellite campus at either planet of The United States of Mars or The United States of Pluto. It shall be envigorating and fascinating for history in the making.
Through the "stage-gate" process of a 1. New Business Creation and 2. Business Evaluation Project the company was responsible for the evolution of Stamypor, the so-called brain child of DSM-NBD. As research suggests, KonicaMinolta has followed the leadership at DSM-NBD.
Through its core technologies, which provide economies of scale and core competencies such as optical, nano, image processing, and material technologies KonoicaMinolta is better able to leverage and sustain a competitive advantage through a conglomerate. A great example that probably started this recent venture can be credited towards Montell. By merging Himont as the original plastics and resin company together with Shell Oil company created the eventual existence to be of Montell.
Himont contributed with their knowledge in plastics complementing Shell Oil's knowledge with petroleum and chemicals. Therefore, Montell was able to achieve their unique market niche of economies of scale and sustainability in the plastics-chemical industry creating new and nurturing existing plastics materials of polyproplene, polyethlene, and polyolefins. As recent as the turn of the millenia, Shell has once again merged with BASF to form Basell as a chemicals-energy strategic initiative for future endeavors for oil and natural gas.
As evidence and research suggests, leaders like DSM-NBD and KonicaMinolta are forecasted to pave the path for current and recent initiatives such as by Mr. Richard Branson and his initiative endeavor for space exploration through his Virgin Atlantic group of New Business Development projects (Virgin Atlantic Airlines, Virgin Mobile, Virgin Music). The Virgin Atlantic space expedition may just land the next Texas A&M University Satellite campus at either planet of The United States of Mars or The United States of Pluto. It shall be envigorating and fascinating for history in the making.
Friday, March 7, 2008
THE INNOVATIVE BUSINESS MODEL!
The Harvard Business Review case study article dated March 2003: Finding Your Innovation Sweet Spot by Jacob Goldenberg, Roni Horowitz, Amnov Levav, and David Mazursky details five innovation patterns so-called "templates of innovation" consisting of subtraction, multiplication, division, task unification, and attribute dependency change. On the contrary, why can't marketers vision innovations from "points of view" rather than just through patterns.
For example, let's assume business models are not just created in regards to how the potential business portrays itself from their perspective. Hans-Dieter Zimmerman at the MCM Institute for Media and Communication at the University of St. Gallen in Switzerland does an excellent task of presenting elements of a new approach to develop innovative business models for electronic markets. Han's design model framework consists of four view perspectives taking into account and consideration "Views" such as: the business, the process, the transaction, and the infrastructure.
The business view defines the relevant business community and its underlying, basic business model on a normative and strategic level. The process view defines the inter-organizational business procedures and processes along the value creation process of the respective business community. The transaction view is where generic services have to be defined that enable the realization of the defined business processes. The infrastructure view defines the necessary network services and other technical components to realize the settlement of the transaction from a technical point of view.
The methodology of applying the concept of innovation towards a business model and other futuristic endeavors then leads us to raise the question of "Why just innovation for products and nothing else?" Han's innovative business model design strategy can lead to perhaps more innovative manufacturing methods with ease and feasible packaging for products and also innovative agricultural methods for livestock grazing and feeding on farms.
This idea and design of innovation is not just limited to the above mentioned but it also can create improved and much better innovative brainstormers/brainstorming and innovative organizations/corporations. The outcomes shall be fascinating.
Friday, February 29, 2008
SPARKING INNOVATION THROUGH EMPATHIC DESIGN!
The Harvard Business Review case study article "Spark Innovation Through Empathic Design" emphasizes creating products and services that emphatize with customers in relation to their moods, emotions, needs, wants, and desires.
A current industry trend towards clothing has been the love and fad for stonewashed and prewashed jeans. The major player sporting these kind of styles is GAP INC. (consisting of Old Navy (low-tier), GAP (mid-tier), and Banana Republic (upper-tier). GAP INC. has captured a market niche with regards to trendy "antique-type" clothing. The concept of the design of the jeans is to portray a hip and trendy casual wear primarily aimed at the younger crowd. The jeans are designed to seem as the denim is faded through many wash cycles which gives it the chic distinguised characteristic with loose and visible incomplete stitching and "wear and tear" on the pockets to make it seem that the jeans are so-called "beat-up" that give it a vintage look from the 1960's-1970's.
However, the jeans do have their acclaimed critics who are either opposed or in favor of the jeans. As for the defiant, it seems as they are offended by the image of the jeans as class-less and intended to be "dirty." It portrays a image of a potential homeless "pauper" who has bought the jeans through either a thrift shop or Goodwill. Since they are perceived as badly beaten due to their fadedness nature by being washed over and over again abusively and having open holes with loose stitching through the knee-cap area.
The opposers are also outraged and furious and outraged at the "price-tag" of these jeans that run about $60-$70. There main argument is why should we feel like paying this erroneous amount for piece of so-called "thrash" that will degrade us and make a "fool" out of ourselves.
Fortunately, the folks for the jeans are fanatics with this phenomenon. The jeans have become somewhat of a "nostalgic" memory that they go back and relate to their childhood back in the 1960's-1970's where everything was so trendy with the "hippie" culture that emphasized it was "cool" to have long shaggy hair with fuzzy beards complimenting a carefree and innocent environment. The fans feel rejuvenated and enlightened to race to the shelves and crank out $60-$70 for a pair of these jeans. It's a rebellious revoution of the denim jean. The jeans for the in favor of are ment to be cool and relaxed at the same time conveying a person's individualistic freedom of self-expression.
The spark of innovation through empathic design in regards to authentic vintage jeans is not so much emphatical with respects to the opposing critics than with the in favor of crowd. However, the jeans strike an equal balance between the new and old with different perspectives of the varying views at stake. The futurists might be suggesting to cross-over this trendy design for the love of classical and vintage automobiles and once again rebirthing the love for the original television format in black and white. Only time and taste will reveal what's next to come.
A current industry trend towards clothing has been the love and fad for stonewashed and prewashed jeans. The major player sporting these kind of styles is GAP INC. (consisting of Old Navy (low-tier), GAP (mid-tier), and Banana Republic (upper-tier). GAP INC. has captured a market niche with regards to trendy "antique-type" clothing. The concept of the design of the jeans is to portray a hip and trendy casual wear primarily aimed at the younger crowd. The jeans are designed to seem as the denim is faded through many wash cycles which gives it the chic distinguised characteristic with loose and visible incomplete stitching and "wear and tear" on the pockets to make it seem that the jeans are so-called "beat-up" that give it a vintage look from the 1960's-1970's.
However, the jeans do have their acclaimed critics who are either opposed or in favor of the jeans. As for the defiant, it seems as they are offended by the image of the jeans as class-less and intended to be "dirty." It portrays a image of a potential homeless "pauper" who has bought the jeans through either a thrift shop or Goodwill. Since they are perceived as badly beaten due to their fadedness nature by being washed over and over again abusively and having open holes with loose stitching through the knee-cap area.
The opposers are also outraged and furious and outraged at the "price-tag" of these jeans that run about $60-$70. There main argument is why should we feel like paying this erroneous amount for piece of so-called "thrash" that will degrade us and make a "fool" out of ourselves.
Fortunately, the folks for the jeans are fanatics with this phenomenon. The jeans have become somewhat of a "nostalgic" memory that they go back and relate to their childhood back in the 1960's-1970's where everything was so trendy with the "hippie" culture that emphasized it was "cool" to have long shaggy hair with fuzzy beards complimenting a carefree and innocent environment. The fans feel rejuvenated and enlightened to race to the shelves and crank out $60-$70 for a pair of these jeans. It's a rebellious revoution of the denim jean. The jeans for the in favor of are ment to be cool and relaxed at the same time conveying a person's individualistic freedom of self-expression.
The spark of innovation through empathic design in regards to authentic vintage jeans is not so much emphatical with respects to the opposing critics than with the in favor of crowd. However, the jeans strike an equal balance between the new and old with different perspectives of the varying views at stake. The futurists might be suggesting to cross-over this trendy design for the love of classical and vintage automobiles and once again rebirthing the love for the original television format in black and white. Only time and taste will reveal what's next to come.
Friday, February 22, 2008
PEPSI WITH YUM?
The Harvard Business School article dated February 20, 2007: iPOD vs. Cell Phone: A Mobile Music Revolution illustrates the recent contractual partnerships between cell phone carriers and PC-based companies such as Apple and Microsoft to embed digital mobile music on cell phone headsets. Apple's combination with Motorola and Cingular to come out with the ROKR has paved the way for soft drink giants like Pepsi to enter into similar contractual "combination" partnerships.
Aiming towards the fast food industry, Pepsi has been highly successful with establishing economies of scale and at the same time achieving sustainable competitive advantage through the sort of concept of "multibranded" conjoined megaplex restaurants that carry exclusively Pepsi products and soft drinks.
For example, a recent surge of development including 3-in-1 restaurants consisting of Pizza Hut, Taco Bell, and Kentucky Fried Chicken are appearing around major metropolitan cities which provide a taste for the pizza lovers, chicken lovers, and Mexican food lovers.
These restaurant deals are emerging under the company brand name of YUM which "supposedly contracts with Pepsi. The standard has been set worldwide and not just in the United States that any customer visiting any of the above mentioned restaurants will solely only come across Pepsi products as their choice of/for beverage. However, note to be taken, these combination restaurants are under individual franchise "parent" names in their respective countries of origin.
This concept of Pepsi trying to gain economies of scale is already in effect in countries such as the United Kingdom, Mexico, Australia, South Korea, Germany, Indonesia, and the United Arab Emirates (U.A.E) (Dubai) just to name a few. The strategy reflects Apple's endeavor with its iTunes concept to be solely and exclusively installed and used with the Motorola ROKR phone which, unfortunately, failed and did not get a chance to be used to its potential due to cost inefficiencies for Apple's customers.
The future prediction and direction for such markets seems to be on a bright outlook as more individual companies who are solo on their own try to contract with other "like-minded" counterparts possibly in the retail and hospitality industries. Only time shall reveal.
Aiming towards the fast food industry, Pepsi has been highly successful with establishing economies of scale and at the same time achieving sustainable competitive advantage through the sort of concept of "multibranded" conjoined megaplex restaurants that carry exclusively Pepsi products and soft drinks.
For example, a recent surge of development including 3-in-1 restaurants consisting of Pizza Hut, Taco Bell, and Kentucky Fried Chicken are appearing around major metropolitan cities which provide a taste for the pizza lovers, chicken lovers, and Mexican food lovers.
These restaurant deals are emerging under the company brand name of YUM which "supposedly contracts with Pepsi. The standard has been set worldwide and not just in the United States that any customer visiting any of the above mentioned restaurants will solely only come across Pepsi products as their choice of/for beverage. However, note to be taken, these combination restaurants are under individual franchise "parent" names in their respective countries of origin.
This concept of Pepsi trying to gain economies of scale is already in effect in countries such as the United Kingdom, Mexico, Australia, South Korea, Germany, Indonesia, and the United Arab Emirates (U.A.E) (Dubai) just to name a few. The strategy reflects Apple's endeavor with its iTunes concept to be solely and exclusively installed and used with the Motorola ROKR phone which, unfortunately, failed and did not get a chance to be used to its potential due to cost inefficiencies for Apple's customers.
The future prediction and direction for such markets seems to be on a bright outlook as more individual companies who are solo on their own try to contract with other "like-minded" counterparts possibly in the retail and hospitality industries. Only time shall reveal.
Friday, February 15, 2008
IN-HOUSE AT PITNEY BOWES AND MCDONALD'S
The Harvard Business School case study article of December 4, 2006: Pitney Bowe Inc. discusses quite well how a company within the postage stamp industry manufacturing postage stamp meters also at the same time simultaneously provides management and consulting services for its customers/clients.
An illustrative and intellectual argument can be debated with a reputably established brand within the fast-food industry which is well-known and identified with its customers.
The ever-great McDonald's chain of restaurants has taken their condiments as a matter on their own terms. As recently to date, everything from soft drink cups to ketchup is either exclusively made by McDonald's or for MacDonald's. In the earlier days of the restaurant's history all its condiments were either partnered or contracted through Heinz Corporation or Hunt's Corporation. In latter years and until recently all condiment packaging for McDonald's states that it is made for or by McDonald's at their headquarters in Bloomington, Illinois. Thus, if an individual were to ever take notice the ketchup packaging then it would mention McDonald's "Fancy Ketchup" and no such signs of either brand of Hunt's or Heinz as ketchup distributors is visible.
This argument along with Pitney Bowes' similar so-called "in-house" management practice of their supply, unfortunately, takes away the competitive advantage of the individual/independent service providers like the United States Postal Service and Mailboxes Etc. who are also in business for the management of postal services for their clients. With the case of McDonald's, Hunt's or Heinz ketchup distributors are snatched away from competing for their piece of the pie from McDonald's and it international market for substantial revenue and profits.
On the other hand, both McDonald's and Pitney Bowes benefit from economies of scale efficiencies due to cost-reductions because of in-house production which would enable them to use there own materials, labor, and supplies at a fraction or even half of the cost, whereas, the direct distributors would maybe charge double the amount or even triple (with regards to hidden costs) to produce the same/similar ketchup recipe or mail services that either company can produce in the same way or maybe better.
In closing, let's not be surprised if either Pitney Bowes or McDonald's (perhaps a ketchup making factory) outsource their management services overseas internationally to places like China or India for more economic cost benefits in the long-run. This is the sign of the times.
An illustrative and intellectual argument can be debated with a reputably established brand within the fast-food industry which is well-known and identified with its customers.
The ever-great McDonald's chain of restaurants has taken their condiments as a matter on their own terms. As recently to date, everything from soft drink cups to ketchup is either exclusively made by McDonald's or for MacDonald's. In the earlier days of the restaurant's history all its condiments were either partnered or contracted through Heinz Corporation or Hunt's Corporation. In latter years and until recently all condiment packaging for McDonald's states that it is made for or by McDonald's at their headquarters in Bloomington, Illinois. Thus, if an individual were to ever take notice the ketchup packaging then it would mention McDonald's "Fancy Ketchup" and no such signs of either brand of Hunt's or Heinz as ketchup distributors is visible.
This argument along with Pitney Bowes' similar so-called "in-house" management practice of their supply, unfortunately, takes away the competitive advantage of the individual/independent service providers like the United States Postal Service and Mailboxes Etc. who are also in business for the management of postal services for their clients. With the case of McDonald's, Hunt's or Heinz ketchup distributors are snatched away from competing for their piece of the pie from McDonald's and it international market for substantial revenue and profits.
On the other hand, both McDonald's and Pitney Bowes benefit from economies of scale efficiencies due to cost-reductions because of in-house production which would enable them to use there own materials, labor, and supplies at a fraction or even half of the cost, whereas, the direct distributors would maybe charge double the amount or even triple (with regards to hidden costs) to produce the same/similar ketchup recipe or mail services that either company can produce in the same way or maybe better.
In closing, let's not be surprised if either Pitney Bowes or McDonald's (perhaps a ketchup making factory) outsource their management services overseas internationally to places like China or India for more economic cost benefits in the long-run. This is the sign of the times.
Saturday, February 9, 2008
THE IDEO PRODUCT DEVELOPMENT PROCESS
The Harvard Business School case study article of April 26, 2007: IDEO Product Development discusses the product development process through "so-called" phases of innovation process consisting: Phase 0, Phase I, Phase II, Phase III, and Phase IV.
The Phase O stage emphasizes understanding and observing the client's needs and the current products already existing for the client to build upon new services or extensions of product lines.
Next, Phase I is considered the actual "beginning" phase which emphasizes visualization and realization. In this stage of the product development phase examples, samples, and prototypes of potentially considered products are chosen for further study and research. The product design team would also have a sense of "realization" of what the actual expectations of the clients are through coordination and feedback.
Phase II of the product development process focuses on evaluating and refining the prototypes that are in place for consideration as potential new product ideas or designs. The phase reinforces and reviews the sample product for any predictable future technical issues that might confuse and confront an average user of the specified product and corrects the deficiencies. By the end of phase II's completion, the revised product design most often and probably turns out to be the prototype that will become the actual product on the market for the end user.
The product development process of phase III deals with detailed engineering implementation. This phase consists of mock trial and error and market testing with consumers before the product is finalized to be mass-produced by machines on the assembly lines. Possible suitable prospective vendors through whom the new service or product will be distributed are evaluated and selected.
Last but not least, phase IV of the product development process also deals with implementation, however, it consists of a manufacturing liaison. This phase is strictly to ensure a smooth product release from the manufacturing department. During the trail/beginning days of the product in existence, the product development team still makes sure to supervise the production of tooling, regulatory approvals, and construction of pilot runs of the manufacturing line while in the sensitive early stages.
The product development process of phases at IDEO can be illustrated, for example, to show the new G2 Gatorade drink just recently released during Super Bowl Sunday. G2 is supposedly a Gatorade drink with fewer lower calories and replinishes your thirst and body fluids muck quicker and sooner than regular Gatorade. The Gatorade G2 production design team may just have used a similar development method (such as at IDEO) for the creation of their new Gatorade product line extension drink.
The Phase O stage emphasizes understanding and observing the client's needs and the current products already existing for the client to build upon new services or extensions of product lines.
Next, Phase I is considered the actual "beginning" phase which emphasizes visualization and realization. In this stage of the product development phase examples, samples, and prototypes of potentially considered products are chosen for further study and research. The product design team would also have a sense of "realization" of what the actual expectations of the clients are through coordination and feedback.
Phase II of the product development process focuses on evaluating and refining the prototypes that are in place for consideration as potential new product ideas or designs. The phase reinforces and reviews the sample product for any predictable future technical issues that might confuse and confront an average user of the specified product and corrects the deficiencies. By the end of phase II's completion, the revised product design most often and probably turns out to be the prototype that will become the actual product on the market for the end user.
The product development process of phase III deals with detailed engineering implementation. This phase consists of mock trial and error and market testing with consumers before the product is finalized to be mass-produced by machines on the assembly lines. Possible suitable prospective vendors through whom the new service or product will be distributed are evaluated and selected.
Last but not least, phase IV of the product development process also deals with implementation, however, it consists of a manufacturing liaison. This phase is strictly to ensure a smooth product release from the manufacturing department. During the trail/beginning days of the product in existence, the product development team still makes sure to supervise the production of tooling, regulatory approvals, and construction of pilot runs of the manufacturing line while in the sensitive early stages.
The product development process of phases at IDEO can be illustrated, for example, to show the new G2 Gatorade drink just recently released during Super Bowl Sunday. G2 is supposedly a Gatorade drink with fewer lower calories and replinishes your thirst and body fluids muck quicker and sooner than regular Gatorade. The Gatorade G2 production design team may just have used a similar development method (such as at IDEO) for the creation of their new Gatorade product line extension drink.
Friday, February 1, 2008
IS IKEA INVADING AMERICA?
The Harvard Business School Case article of September 14, 2004: IKEA Invades America by YoungMe Moon discusses a Swedish Scandanavian company called IKEA. This is the first furniture retail company to establish an all-in-one concept of a childcare center, restaurant, and a bank for the convenience of its shoppers. The concept has captured the retail furniture market like never before.
IKEA's successful business model emphasizes a "self-service" attitude for its customers. This concept of "do-it-yourself" encourages customers to assemble the bought furniture from Ikea (as all the furniture is unassembled and consists of many parts). At the same time, due to elimination of overhead costs and absence of assembly labor, IKEA passes on the savings to the customer as bargains.
The brainstorming process at IKEA is of great importance as the company recruits internally for the design and implementation of any new style or fashion of furniture design. At the same time, it fosters healthy and productive competition within the engineers and designers for potential bids. Also, with regards to the work environment, there is no rule of formalities, therefore, all the employees from the CEO to lower-level executives/personnel are addressed by their first name. Everyone is encouraged to provide their insights and recommendations for the betterment of the company.
The innovations by Ikea can and do have a "trickle-down" effect on the already established companies in corporate America. For example, some companies have captured their own market niche such as: USAA, Southwest Airlines, and Costco Wholesale.
At USAA a culture similar to IKEA exists. USAA provides childcare services for its employees where they can drop of their kids at the day care center before reporting to work.
Southwest Airlines corporate culture instills an environment for its flight attendants to dress as casual and comfortable as possible without requiring the employees to wear "official" Southwest Airline uniforms. One may not be surprised to come across a male flight attendant wearing shorts and a Polo Ralph Lauren t-shirt (as their uniform) on flights originating from Texas where the weather is crucibly untolerable during the summer months. Southwest also provides a comfortable atmosphere for its passengers with unassigned random seating and all the seats consist of leather material for more comfort during your flight.
Last but not least, Costco Wholesale's business strategy model is similar (from a wholesale store prespective) to IKEA that it usually has multiple items of the same kind of items bundled together. For example, by bundling two boxes of Cheerios cereal instead of one, it can provide the item at more bargain prices. The wholesale atmosphere is more geared towards large groups, businesses, and most importantly families. Also, by charging a club membership, Costco is able to cater more efficiently to its customer's by providing "member's only" prices and since it does not deal with third-parties or middlemen, it is able to cut costs and pass along the overhead savings to the consumer. Costco's 100% Satisfaction Guarantee on its warehouse club membership and online at Costco.com also refunds back the complete shipping and handling charges as its "unconditional, no questions asked" money back guarantee.
The unique comepetitive advantage that Costco has is that it also caters to "non-members" of Costco for a small surcharge on any purchase.
IKEA's successful business model emphasizes a "self-service" attitude for its customers. This concept of "do-it-yourself" encourages customers to assemble the bought furniture from Ikea (as all the furniture is unassembled and consists of many parts). At the same time, due to elimination of overhead costs and absence of assembly labor, IKEA passes on the savings to the customer as bargains.
The brainstorming process at IKEA is of great importance as the company recruits internally for the design and implementation of any new style or fashion of furniture design. At the same time, it fosters healthy and productive competition within the engineers and designers for potential bids. Also, with regards to the work environment, there is no rule of formalities, therefore, all the employees from the CEO to lower-level executives/personnel are addressed by their first name. Everyone is encouraged to provide their insights and recommendations for the betterment of the company.
The innovations by Ikea can and do have a "trickle-down" effect on the already established companies in corporate America. For example, some companies have captured their own market niche such as: USAA, Southwest Airlines, and Costco Wholesale.
At USAA a culture similar to IKEA exists. USAA provides childcare services for its employees where they can drop of their kids at the day care center before reporting to work.
Southwest Airlines corporate culture instills an environment for its flight attendants to dress as casual and comfortable as possible without requiring the employees to wear "official" Southwest Airline uniforms. One may not be surprised to come across a male flight attendant wearing shorts and a Polo Ralph Lauren t-shirt (as their uniform) on flights originating from Texas where the weather is crucibly untolerable during the summer months. Southwest also provides a comfortable atmosphere for its passengers with unassigned random seating and all the seats consist of leather material for more comfort during your flight.
Last but not least, Costco Wholesale's business strategy model is similar (from a wholesale store prespective) to IKEA that it usually has multiple items of the same kind of items bundled together. For example, by bundling two boxes of Cheerios cereal instead of one, it can provide the item at more bargain prices. The wholesale atmosphere is more geared towards large groups, businesses, and most importantly families. Also, by charging a club membership, Costco is able to cater more efficiently to its customer's by providing "member's only" prices and since it does not deal with third-parties or middlemen, it is able to cut costs and pass along the overhead savings to the consumer. Costco's 100% Satisfaction Guarantee on its warehouse club membership and online at Costco.com also refunds back the complete shipping and handling charges as its "unconditional, no questions asked" money back guarantee.
The unique comepetitive advantage that Costco has is that it also caters to "non-members" of Costco for a small surcharge on any purchase.
WHAT'S STIFLING THE CREATIVITY AT COOLBURST?
The Harvard Business Review case article of September-October 1997: What's Stifling the Creativity at CoolBurst portrays an Miami-based fruit-juice company established in schools and restaurants around the states of Florida, Georgia, Alabama, and South Carolina. Unfortunately, the obstacle and challenge for the company to overcome was the inability of the CEO of CoolBurst Mr. Garth LaRoue to embrace change and innovation. Mr. LaRoue was vulnerable to the concept of change and had a "if aint broke, don't fix it" as is mentality. However, this atmosphere at CoolBurst led Sam Jenkins, a former employee at CoolBurst, to deviate from CoolBurst and form his own company and also create a rival product called Thirst Smasher. Jenkin's thrist for innovation and risk led to a successful counter product against CoolBurst. The employees of CoolBurst would also always be discouraged from innovating even though many had inspirational ideas. They just viewed themselves as a simple fruit juice company and nothing more. In summary, if the CEO of CoolBurst attempted to embrace risk and innovation then his company would not be at a crossroads with a creation of a rival product such as Thirst Smasher developed by Sam Jenkins. Overall, if change had been accepted by Mr. LaRoue then there might have been a possibility that Sam Jenkins would have not left CoolBurst.
Friday, January 25, 2008
NEW CENTURY BREWING: MOONSHOT CAFFEINATED BEER
The Northeastern University case article dated 2005: New Century Brewing: Moonshot Caffeinated Beer is regarding a specialty craft beer industry who is struggling to survive with the current market trends and competition. The relaunch of Moonshot was brought about due to the few imitating brands on the market. The company's strategy was to change the packaging and labeling and at the same time appeal to the younger crowd hanging around in bars and nightclubs. Moonshot was similar to the Austrian energy drink Red Bull but with addition of Beer in the mix. Ironically, this article can relate to Pepsi's revolution in the 90's when it also started to change its can labeling to appeal to "today's youth" (generation X). In more recent times in order to compete with its market share, Hershey's has also developed its Reese's brand as a whipped peanut butter chocolate bar. Seemingly, this design is likely in response to probably the Three Musketeers whipped bar. The Hershey's recent Reese's creation can be related to a energy drink market, however, instead of a energy drink it is within the peanut butter flavor market with a mixture of chocolate instead of beer. In summary, New Century Brewing company's strategy in relaunching Moonshot to appeal to the younger demographics and the relabeling and repackaging of Moonshot defines significant improvement in the research and development department of New Century Brewing to tackle its competition and competitors.
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