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October 31, 2005
Communication woes
In a discovery that I made while researching how companies cascase communication, I ran across the following little snippet:
In a recent survey of 1,103 employees
86% of employees reported that their bosses thought they were great communicators
But only 17% felt their bosses actually communicated effectively! Clearly a lot of room for improvement.
For more info, have a look at Boyd Clark's book The Leader’s Voice (Select books, 2002)
Posted by Rita at 12:34 PM | Comments (0) | TrackBack
Kraft learns pro-activity
Today's Wall Street Journal contains a fascinating story about how Kraft General Foods is planning to pull back on its marketing of 'less healthy' food to young children(heaven forbid the company would declare any food to not be good for you). Among the most interesting things to me about the story are 1) they have explicitly recognized the threat to their business from changing social norms regarding food companies' responsibility for consumer health; 2) they have learned deep lessons from their sister company, Philip Morris (of Marlboro fame); and 3) they are potentially moving on a front that will deeply disadvantage competition.
You can think of this in several ways, but defiitely the move counts as a way to end-run what is likely to be a permanently changed social and institutional environment for big packaged food companies. By moving early, Kraft can get ahead of laggards, some of whom are banging away on the old marketing tools, particularly for products like breakfast cereals (think sugar, sugar, sugar). On another front, Kraft's adoption of a whole line of healthier foods co-branded with the South Beach Diet people signals a big shift in the product portfolio. Let's watch and see what happens.
Posted by Rita at 12:28 PM | Comments (0) | TrackBack
October 30, 2005
Enticing Competition - 2nd order
I recently traveled to London for 2 days of business. Round trip airfare in business class? Over $8,000! Couldn't believe it - I think the airlines made more per hour than I did.
Golden rule of strategy: any attractive niche will attract competition. So while Virgin Atlantic and BA are knocking themselves out adding in perks for business class types, two new startups have decided that the market is just too yummy to leave alone.
Eos, an all-business class airline started flying between New York and London on October 18. It's planes have just 48 seats allowing for lots of space per passenger, and it flies to Stansted airport, not horrible Heathrow. It's still not cheap, but at $6,500 per round trip flight it's an improvement. Another new entrant, MAX jet, is taking a different tack. Although it's not nearly as luxurious as any of the others, it promises to charge only $1,558 roundtrip for a pretty standard business class experience. That's cheaper than full-fare coach on this route.
So it remains to be seen whether either of these will last in a business sense, but my clients and I are sure going to be grateful for some real competition (and more realistic pricing) for a flight that lasts only 5-7 hours.
Posted by Rita at 12:13 PM | Comments (0) | TrackBack
Japan bets on - gasp - women??
So things are getting desperate in Japan. All those years of recession have resulted in deep cuts in the available workforce just as it's roaring economy is expanding demand. So what are the second-order effects likely to be? One is to enhance legal immigration. Japanese officials are really wierd about this. For instance, entertaining a huge debate about 100 visas for Filipino nurses, while permitting without question 98,000 so called entertainment vias for Asian women (many of whom work in the sex trade) (Business Week - Nov 7, 2005, p. 55)
But perhaps the biggest opportunity for women (and for Japan) will be to get more women into the workforce. At the moment, when you get married, your career in Japan is just about over in many companies, leading many of Japan's brightest women to politely decline the whole marriage concept, leading to fewer families being formed, fewer births, and a vicious cycle of population decline. Japan's women work at a far lower rate than those in say the US. 55% in Japan work at some kind of job while 62% do so in the US. And once they are working, who knows what other changes they might stir up? You might even get women enthusiastic about starting families again.
Posted by Rita at 11:48 AM | Comments (0) | TrackBack
Great segmentation-Coach
Coach has been on a real tear lately. From a stodgy brand that I used to buy in the bow-tie, Annie Hall 80's, they have reinvented the brand, making it a must-have for the fashion conscious. But I recently ran across a story that highlights just how smart they've been.
Turns out that Coach not only knows how to appeal to the fashionistas in its City locations, but is also making a killing at the factory outlet. Cleverly, though, it manages the brand to avoid any confusion -- the outlet stores handle only older merchandise or stuff that is made specifically for them. They are located at least 60 miles away from the regular stores. And the buyers, while still loyal to the brand, are looking for different things. The latest and trendiest in the regular stores, good value and design in the outlet stores. And here's the piece of data that blew me away - while full price shoppers spend an average of $1,100 on Coach items, the discount shoppers still spend a whopping $770 a year (according to Business Week Nov 7 2005 p. 60).
The lesson: Smart segmentatation can pay off.
Posted by Rita at 11:43 AM | Comments (0) | TrackBack
October 28, 2005
Blade madness
This comment was in response to a reporter's inquiry about Gillette and the 5-bladed razor
The blade madness in my opinion has to do with the longstanding competition between the major players in the industry. For years, BIC (a French company specializing in cheap, plastic stuff) has been trying to persuade men that shaving is a commodity and that 19 and a half cents should just about do it, while Gillette has poured millions, if not billions, into persuading guys that more blades are better.
I mean if 2 blades are better than 1 blade, and 3 blades are better than 2 blades then 4 blades must be better than 3. Imagine the shock on the part of Gillette when they were beaten to the market by typical also-ran Schick who were able to offer a Four (count em, Four) bladed product ahead of Gillettes launch. It had an interesting effect of turning Gillettes own branding and advertising investments against them.
Gillette responded by pushing their own 4 blader to market ahead of schedule and then racing forward with a five-bladed offering. They also consented to be acquired by Proctor and Gamble, which to me signals that they kind of hit the end of that particular strategy.
Where will this end? I dunno. I imagine we will someday have tiny little tanks crawling across gents faces. Actually, a more realistic disruption in shaving will come from new materials. Imagine a blade made out of super tough ceramics that you never need to replace, or hair dissolving shaving cream that means you can shave quickly without any blades at all, and only a couple of times a week.
As to guys being better off? Shaving is still shaving, and for most men it is not fun, no matter how you modify the experience.
Posted by Rita at 02:18 PM | Comments (0) | TrackBack
October 21, 2005
Simplicity Simplicity
The more I read, the more I am coming to believe that those who can master simplicity are going to get a major edge over those who force their customers to struggle with their offerings. A recent Fast Company story on Google also features other companies - Intuit and Phillips among them, who have started to get simplicity right.
As I reflect on it, dozens of ordinary things could use the simplicity treatment - cell phones, TV remotes, and most software would be tops on my list. It is fascinating, too, to watch the companies I work with (such as Nokia and Microsoft) struggle to get an authentic experience of the way their products drive their customers crazy. After all, most of the people designing those products are so technically talented that they DO seem simple.
I'm taking the simplicity plunge in another area myself - I just ordered a copy of Intuit's "Simple start" accounting software. Ironically, I spent over $500 on Intuit's Quickbooks, a more complicated version of the product and am finding it is just too complex for what I need - and I'm too impatient to bother fighting with the thing. Maybe Simple Start will do the trick - just enough to free me from spreadsheets and keep the tax people happy, and that's all I want.
Posted by Rita at 03:26 PM | Comments (0) | TrackBack
October 13, 2005
Money from a nuisance
How is this for making money out of a nuisance? Like many of you, I am really bugged by junk faxes that arrive in my office all hours of the day and night. Experts estimate that an average fax costs the recipient between 7 and 12 cents a piece, once you factor in consumables and paper. I probably get 20 of them a week - and I'm probably not a major victim. Junk faxing is illegal, and when prosecuted can result in a fine
The dilemma is that to bring the people who send junk faxes to account, one has to undergo a complex legal process and for a single individual it isn't worth it.
Fascinatingly, though, an entire cottage industry has now sprung up around helping individuals combat junk faxes. One service, http://www.faxrecoverysystems.com aggregates junk faxes from individuals to identify the biggest generators of junk. It then goes after them through legal channels for fee penalties. If you provide a fax that results in a collection, they send you $100 (although the award could be much more than that). They keep everything over the hundred in compensation for their time and effort. It offers benefits for the recipients of junk faxes, in that their volume of junk is often reduced (and they sometimes get a nice check). More importantly for me, it provides an easy, legal way to fight back against these parasites selling $199 trips to Bermuda, mortgages and hot stock tips.
As I checked out this service, I found a number of other services that do something similar, betting on the fact that the law underlying junk fax issues is hard for individuals to enforce. And the 'do not call' registry seems to have no effect on junk faxers.
And a tip -- don't call back the fax people with a request to remove your fax number. Apparently all they do is rejoice at having found an actual fax machine, and sell the number to other junk faxers.
It just drives me crazy that someone can use my equipment, time, ink and paper to send me ads without my permission. So I signed up right away. Will let you know how this goes.
Posted by Rita at 09:22 PM | Comments (0) | TrackBack
October 07, 2005
Competing with Wal-Mart
I was recently asked by a reporter how grocery stores could compete with Wal-Mart. Here are some ideas.
To compete against the 'everyday low price' theme of Wal-Mart, supermarkets have to find some way of differentiating themselves -- they can't rely on the old approach of luring in customers by price promotions or loyalty cards. Stores that can't figure this out -- with Albertson's decision to seek to be acquired being a recent example -- will find they have no choice but to sell out or shut their doors.
One approach is to offer products that appeal to customers with a different sensibility than your typical Wal-Mart shopper. Costco, for instance, has deliberately targeted small business owners as its key segment - people who might be open to buying a bottle of champagne, but appreciate getting it for a good price. They've kept Wal-Mart's Sam's Club at bay for years with this strategy.
Trader Vic's is another example of a store that has differentiated on the basis of fun and interesting products. OOps - as a comment points out, I meant Trader Joe's, not trader Vic's (which I believe is a beloved bar at the old Plaza Hotel in New York).
The Dollar Store can actually offer even lower prices than Wal-Mart, by starting with low-priced selloff goods and not stocking anything that is acquired through first-run channels.
Some supermarkets have started to differentiate on the basis of the quality of what they stock, rather than a commodity item for a low price. One of the fastest growing grocery segments is that for organic foods. Whole Foods Market has taken tremendous advantage of this approach by appealing to customers who wouldn't dream of buying mass-produced beef or veggies at a gigantic Wal-Mart store.
There will always be customers who just plain don't like the Wal-Mart shopping experience - the crowds, the lines and the mess. By creating clean, nice spaces, a market can compete.
Some groceries also compete effectively by really understanding their clients. One of my contacts in the business found that his clients behaved differently according to the time of the week! Monday to Friday, they were all about in and out, convenience, and no fuss. Come Friday night, all of a sudden they turn into galloping gourmets who need 47 flavors of vinegar and fresh lemon grass for their weekend culinary creations. What he used to do was re-set two aisles of his store every Friday afternoon (dubbing it the 'gourmet experience' section) and set them back again on Sunday night. That kind of tailoring is hard for a Wal-Mart to pull off.
Posted by Rita at 12:21 AM | Comments (2) | TrackBack
October 05, 2005
Municipal Wi-Fi - Pros & Cons?
I was recently asked by a reporter to comment on the pros and cons of municipal Wi-Fi networks (which could also extend to Wi-Fi networks based in libraries and public schools, not to mention your local Starbucks. Here's my response:
The premise behind most Municipal Wi-Fi proposals is that by having low-cost or free Wi-Fi networks available economic development will be facilitated, the 'digital divide' between haves and have-nots will be narrowed and that local business communities will grow up around the networks.
The downsides of such a municipal wi-fi plan are considerable as well, unfortunately.
One downside of such systems is that by providing network access for free, municipalities are undercutting the role of private enterprise in establishing and maintaining communication networks. This could have the negative effect of reducing returns from private investments, in turn reducing the incentives for further research and development in the Wi-Fi area. Companies that have invested in alternative networks, likewise, will see revenue streams cut off once wireless-for-free becomes widely available.
The richochet effects are likely to spill into other segments, such as telephony, in which voice over IP (VOIP) threatens the local phone companies' monopoly over access to the home.
Another downside of municipal wi-fi systems is that they provide open access to all kinds of nasty software. On standalone machines, the spread of viruses and spyware from one to another can be slowed with firewalls and preventive measures. On a network, the integrity of the network is as powerful as the weakest computer on it. With a municipal network, who is going to take responsibility for its functioning?
Posted by Rita at 02:11 AM | Comments (1) | TrackBack
October 04, 2005
Coinstar continues to develop
We had a delightful note from Gretchen J. Marks of Coinstar, letting us know what one of the companies featured in MarketBusters has been up to. Here it is:
Rita and Ian,
Thank you for including Coinstar in your book and considering it an example of "reconstructing the consumption chain". We are proud of the change we have brought by introducing convenient self service coin counting.
You might be interested to learn that we have just introduced a new "consumption chain" changing service at our machines-- the ability for consumers to take coin or bills and turn it into online shopping at Amazon.com, or a gift card from other major retailers. Until now, the only way to shop online was with a credit card or prepaid cash card. Our new service lets those who choose to transact in cash have the same fun as those who use plastic. And the best part, it is free to consumers, (there's no coin counting fee). We hope that this new program will be the next revolution in coin counting
Posted by Rita at 12:40 PM | Comments (0) | TrackBack
