Tag Archive for Harvard Business Publishing

02 Jul 2010
Economic News

Waste, Signal of Economic Growth?

The Harvard Business Review highlighted a story from Bloomberg about the number of US rail cars filled with waste as an indicator of economic growth.

The stories stated that the number of cars jumped to 79,044 in April and May 2010, an increase of 45% from a year earlier, according to the Association of American Railroads. That’s the biggest such increase since at least 1994. The cargo consisted of iron and steel (42%), municipal waste and demolition products (32%), paper (11%), ashes (5%), nonferrous metals (4%), miscellaneous (4%), and chemical waste (1%).

This is an unusual statistic and source of optimism about the economy, but something that has not gone up since 1994 got our attention.

| No comments | Tags: ,
01 Jun 2010
Direct Mail

88% Response Rates

The U.S. Census is still advertising, urging people to complete and mail back census forms. The Harvard Business Review’s Daily Stat forwarded some information from the Pew Research Center anticipating that 12% of Americans would not fill out the form.

What does that mean? A form mailed to Americans generated an 88% response rate. 88% is a very big number! The information published by the Pew Center goes into more depth with characteristics and found that the likely non-respondents were younger and had less education.

Many so called gurus and experts are not suggesting that businesses use mail right now, they aren’t promoting mail as a fabulous tool to let people know that you and your products are great. The problem is that most of what businesses are doing to market themselves and create revenue right now, search optimization, pay per click, e-mail and many other of the “latest, greatest marketing methods” are not working.

The Internet is a great and wonderful universe. It has taken the place of phone books, reference books, and perhaps some newspapers in our lives and businesses. What do you do as you decide how to market your products and services? You need to be found. If people are looking for solutions to problems and you can solve them, be there at the top of the search results with your solution. If you are trying to stimulate curiosity, interest, excitement, demand and revenue, you might need to look at other ways to create that for your products, services and brand.

| No comments | Tags: , ,
10 May 2010
Business • Marketing Strategy

Mission Statement in One Sentence?

BNET posted an article about clarifying your corporate mission based on a post from a Harvard Business Review blog.

The idea began with a story about Clare Booth Luce, the playwright, journalist, and Republican Member of Congress. In 1962, Luce met with President Kennedy, who was, at the time, pursuing an ambitious agenda domestically and overseas. She worried about his diffuse priorities. “A great man,” she advised him, “is one sentence.” President Lincoln’s sentence was obvious: “He preserved the union and freed the slaves.” So was FDR’s: “He lifted us out of a great depression and helped us win a world war.” What, Luce challenged the young, impatient president, was to be his sentence?

Here are some examples of simple clear corporate sentences:

Google: “We organize the word’s information and make it universally accessible and useful.”

NASA: “To understand and protect our home planet, to explore the Universe and search for life, and to inspire the next generation of explorers.”

National Geographic Society: “Increase and diffuse geographic knowledge while promoting the conservation of the world’s cultural, historical and natural resources.”

Virgin Atlantic: “To grow a profitable airline where people love to fly and where people love to work.”

Toyota North America, pledges: “To attract and attain customers with high-valued products and services and the most satisfying ownership experience in America.”

This statement says nothing about what the company actually sells — cars and trucks — but puts customer satisfaction at the heart of everything it does. Time will tell if this pulls Toyota through its current troubles.

The ideas are simple, is it enough to be pretty good at everything? You have to be the most of something: the most elegant, the most colorful, the most responsive, the most focused. This is a potent thought, should you test your own company’s mission against it?

Dean’s Mailing & List Services: To help organizations save every tenth of a cent on marketing costs with our experience and expertise because we care about people.

How would you express your company’s mission, values and aspirations — in one sentence? Talk to us, we are great at asking the right questions that lead to answers and new solutions.

| 4 comments | Tags:
26 Apr 2010
Business • Marketing Strategy

Competitive Forces That Shape Strategy

This is classic business strategy information. We thought you would appreciate an opportunity to think about competition and profitability in different ways.

The Harvard Business Review is selling an article by Michael E. Porter that updates a 1979 article.

The article suggests that to sustain long-term profitability you must respond strategically to competition. Naturally you keep tabs on your established rivals. But as you scan the competitive arena, are you also looking beyond your direct competitors? Four additional competitive forces can hurt your prospective profits.

  • Savvy customers can force down prices by playing you and your rivals against one another.
  • Powerful suppliers may constrain your profits if they charge higher prices.
  • Aspiring entrants, armed with new capacity and hungry for market share, can ratchet up the investment required for you to stay in the game.
  • Substitute offerings can lure customers away.

Commercial aviation is one of the least profitable industries because all of the about forces are strong. Established rivals compete intensely on price. Customers are fickle, searching for the best deal regardless of carrier. Suppliers—plane and engine manufacturers, along with unionized labor forces—bargain away the lion’s share of airlines’ profits. New players enter the industry in a constant stream. And substitutes are readily available—such as train or car travel.

By analyzing these competitive forces, you can gain a picture of what’s influencing profitability in your industry. You identify game-changing trends early, so you can swiftly exploit them. And you spot ways to work around constraints on profitability—or even reshape the forces in your favor.

By understanding how these competitive forces influence profitability in your industry, you can develop a strategy for enhancing your company’s long-term profits. Porter suggests the following:

Position Your Company Where the Forces Are Weakest

Example: In the heavy-truck industry, many buyers operate large fleets and are highly motivated to drive down truck prices. Trucks are built to regulated standards and offer similar features, so price competition is stiff; unions exercise considerable supplier power; and buyers can use substitutes such as cargo delivery by rail. To create and sustain long-term profitability within this industry, heavy-truck maker Paccar chose to focus on one customer group where competitive forces are weakest: individual drivers who own their trucks and contract directly with suppliers. These operators have limited clout as buyers and are less price sensitive because of their emotional ties to and economic dependence on their own trucks. For these customers, Paccar has developed such features as luxurious sleeper cabins, plush leather seats, and sleek exterior styling. Buyers can select from thousands of options to put their personal signature on these built-to-order trucks. Customers pay Paccar a 10% premium, and the company has been profitable for 68 straight years and earned a long-run return on equity above 20%.

Exploit Changes in the Forces

Example: With the advent of the Internet and digital distribution of music, unauthorized downloading created an illegal but potent substitute for record companies’ services. The record companies tried to develop technical platforms for digital distribution themselves, but major labels didn’t want to sell their music through a platform owned by a rival. Into this vacuum stepped Apple, with its iTunes music store supporting its iPod music player. The birth of this powerful new gatekeeper has whittled down the number of major labels from six in 1997 to four today.

Reshape the Forces in Your Favor

Use tactics designed specifically to reduce the share of profits leaking to other players. For example:

  • To neutralize supplier power, standardize specifications for parts so your company can switch more easily among vendors.
  • To counter customer power, expand your services so it’s harder for customers to leave you for a rival.
  • To temper price wars initiated by established rivals, invest more heavily in products that differ significantly from competitors’ offerings.
  • To scare off new entrants, elevate the fixed costs of competing; for instance, by escalating your R&D expenditures.
  • To limit the threat of substitutes, offer better value through wider product accessibility.

Soft-drink producers did this by introducing vending machines and convenience store channels, which dramatically improved the availability of soft drinks relative to other beverages.

Does this information inspire you to craft a new marketing message? Can we help you reach some customers with Direct Mail?

| One comment | Tags: ,
21 Apr 2010
List

Do You Need All That Data?

Just in case we get lost in over-analyzing everything, including customer data, Ron Ashkenas suggested that we step back and think about what is really useful in a post for the Harvard Business Review.

Organizations love data: numbers, reports, trend lines, graphs, spreadsheets — the more the better. And, as a result, many organizations have a substantial internal factory that churns out data on a regular basis, as well as external resources on call that produce data for onetime studies and questions. But what’s the evidence that all of this data is worth the cost and indeed leads to better business decisions? Is some amount of data collection unnecessary, perhaps even damaging by creating complexity and confusion?

For many years the CEO of a premier consumer products company insisted on a monthly business review process that was highly data-intensive. At its core was a “book” that contained cost and sales data for every product sold in the company, broken down by business unit, channel, geography, and consumer segment. This book (available electronically but always printed by the executive team) was several inches thick. It was produced each month by many hundreds of finance, product management, and information technology people who spent thousands of hours collecting, assessing, analyzing, reconciling, and sorting the data.

Since this was the CEO’s way of running the business, no one really questioned whether all of this activity really was worth it, although many complained about the time required. When a new CEO came on the scene a he decided that the business would do just fine with quarterly reviews and exception-only reporting. Suddenly the entire data-production industry of this company was reduced substantially — and the company didn’t miss a beat.

Obviously different CEO’s have different needs for data. Some want their decisions to be based on as much hard data as possible; others want just enough data to either reinforce or challenge their intuition; and still others may prefer a combination of hard, analytical data with anecdotal and qualitative input. These preferences at the top of the company often influence the “data culture” that is created. In all cases, though, managers would do well to ask themselves four questions about their data process as a way of improving the return on what is often a substantial (but not always visible) investment:

  1. Are we asking the right questions? Many companies collect the data that is available, rather than the data that is needed to help make decisions and run the business. So the starting point for simplifying and improving data processes is to be clear about a limited number of key questions that you want the data to help you answer — and then focus the data collection around those rather than everything else that is possible.
  2. Does our data tell a story? Most data comes in fragments. To be useful, these individual bits of information need to be put together into a coherent explanation of the business situation, which means integrating data into a “story”. While “enterprise data systems” have been useful in driving consistent data definitions so that things can be added and compared, they don’t automatically create the story. Instead, managers should consider in advance what data is needed to convey the story that they will be required to tell.
  3. Does our data help us look ahead rather than behind? Most of the data that is collected in companies tells managers how they performed in a past period — but is less effective in predicting future performance. Therefore it is important to ask what data, at what time frames, will help us get ahead of the curve instead of just reacting.
  4. Do we have a good mix of quantitative and qualitative data? Neither quantitative nor qualitative data tells the whole story. For example, to make good product and pricing decisions, we need to know not only what is being sold to whom, but also why some products are selling more than others.

Clearly business data and its analysis are critical for organizations to succeed — which is underscored by the fact that companies like IBM are investing billions of dollars in acquisitions in the business intelligence and analytics space. But even the best automated tools won’t be effective unless managers are clear about the questions raised above.

What’s your assessment of data in your company? Is there anything we can do to help you make sense of what you have?

| No comments | Tags: ,
15 Mar 2010
Buying Behavior • Marketing Strategy

Feature the Flaw

Scott Anthony recently wrote a post for the Harvard Business Review on disruptive innovation.

Turning a flaw into a feature is a time honored tradition in the software industry. “It’s not a bug, it’s a feature” dates back at least to the mid-’80s. Turning bugs into features is also a critical skill of the would-be disruptive innovator.

The heart of disruptive innovation is the intentional trade-off — sacrificing raw performance in the name of simplicity, convenience, or affordability. The trick is finding the customer who embraces this trade-off because they consider existing solutions to be too expensive or too complicated.

In other words, disruption is almost always a strategic choice. Companies with a would-be disruption on their hands have to carefully consider their target customer.

Consider, for example, what would have happened if Procter & Gamble had tried to sell its Swiffer line of quick cleaning products to people obsessed with deep cleaning. Those consumers would have looked at a product designed to clean without sweating as inferior. In fact, Swiffer initially struggled in markets like Italy where consumers considered sweating an integral part of the cleaning process!

Instead, P&G sought customers who embraced simplicity, because often their choice wasn’t a deep clean or a quick clean, it was a quick clean or no clean at all. The “flaw” of light cleaning was a “feature” to the simplicity seekers.

Featuring the flaw often requires looking at markets in new ways and finding seemingly invisible customers. Some simple questions to use to guide thinking include:

  • What are the competitive alternatives to your idea?
  • Where are you better?
  • Where are you worse?
  • Are there people who consider existing alternatives out of reach?
  • Are there circumstances where using existing alternatives problematic?

The next time someone tells you to a fix a potential flaw in your idea, flip the problem on its head by seeking a customer that would consider the flaw a feature. Does this spark any ideas for your marketing? Is there something about your product or service that you can turn into a great feature?

| No comments | Tags: , , , ,
08 Mar 2010
Business • Buying Behavior

More For Less For More

In an interesting Harvard Business Review post by Navi Radjou, Jaideep Prabhu, and Simone Ahuja, the authors discuss an emerging trend. More for Less for More (M4L4M) is a strategy that places an emphasis on delivering more value for less cost for more people.

More for More, the current approach taken by many Western firms, charges customers a hefty premium for often over-engineered products. Less for More is China’s low-cost strategy of creating stripped down products that cost less and manufacturing them on a large scale for global markets. Unlike these two approaches, M4L4M offers firms a new way to reconcile multiple, seemingly contradictory financial equations: deliver more experiential value to customers while simultaneously reducing the cost and delivering that value to a greater number of people.

Entrepreneurs are learning to extract more value from limited resources. They are embracing creative mindsets practiced by resource-constraints to invent affordable and sustainable solutions that deliver more value to more people at less cost. As a forward-thinking business leader, what can you redesign within your organization to deliver more value at less cost for more customers? What are you doing to meet the needs of increasingly frugal but demanding customers in a world of scarcity?

How about marketing? Are there new ways to communicate more for less for more? This is another time to consider direct mail.

| No comments | Tags: , ,
02 Mar 2010
Buying Behavior

Brand Experience Matters to Consumers More Than Loyalty Clubs

In a recent message from the Harvard Business Review’s Daily Stat, some 52% of people in a survey said their memberships in loyalty clubs (from credit cards, banks, and other companies) influence their buying decisions; but 54% said they’d give up their memberships if they had a negative product or service experience with a brand, according to the Chief Marketing Officer Council. The average U.S. household is enrolled in 14 loyalty and rewards programs.

Can we help you strengthen your ties with your customers? Is there a way that we can help you strengthen your brand?

| 8 comments | Tags: , , ,
26 Feb 2010
Buying Behavior

The Three Minute Rule

Harvard Business Review recently posted an article by Anthony Tjan, CEO, Managing Partner and Founder of the venture capital firm Cue Ball.

He suggested that one way to know and understand customers better is by studying the broader context in which your customers use your product or service. To do this, ask what your customer is doing three minutes immediately before and three minutes after he uses your product or service.

The examples included Thomson, a media and information provider, asking the questions about products provided to investment analysts with financial earnings data. Immediately after getting the data, a large number of analysts were painstakingly importing it into Excel and reformatting it. This observation led to developing a more seamless Excel plug-in feature. The result was an almost immediate and very significant uplift in sales.

In a study of female drug store shoppers, a significant number of women picked up a disposable camera after putting newborn diapers into their shopping carts. Follow-up interviews confirmed that snap-happy moms were often new moms. Placing disposable diapers close to inexpensive disposable cameras furthered this purchase pattern and would not have otherwise been an intuitive merchandising or cross-selling strategy.

In the book, Why We Buy, author Paco Underhill describes how shoppers who do not have a shopping basket or shopping cart go quickly to the checkout when their arms get full. A casual observer says that is obvious. A savvier approach might be to interview people in a checkout line with an armful of goods to ask where they were three minutes earlier and if they would have considered buying anything else if it hadn’t been so difficult to carry so many items. Underhill concludes that more establishments should consider putting shopping baskets in the middle of the store to keep customers in shopping mode longer (since research showed that few would go back to the front of the store to get a cart once engaged with shopping).

These situations illustrate how easy it is to fall prey to narrow thinking. In the Thomson example, they thought of themselves as a data provider, though they were really part of a broader workflow solution. In the cross-selling and shopping-basket examples, the three-minute rule reminds us that rearranging the context of a shopping experience to better meet customer patterns can be extremely effective. Customers seek solutions, but it is likely that your offering is only part of one. The three-minute rule is a mechanism to see the bigger picture and adjacent opportunities.

Are you thinking of what your customers are doing? Is there a way we can help you provide a more complete solution?

| No comments | Tags: , , ,
18 Feb 2010
Buying Behavior • Saving Money

Back to Basics

According to an article extracted from McKinsey Quarterly by Harvard Business Publishing, purchasers of consumer electronics have greater interest in products offering core benefits at attractive prices than in products with unused bells and whistles.

Consumer Attitudes Toward Products

Consumer Electronics Get Back to Basics

Part of marketing is product design, but I wonder do we need to embrace these trends in other areas too?

| 4 comments | Tags: , ,
« Older Entries   Recent Entries »