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 all
the stuff that I don't need
Feature rich but experience poor
Answer Customer,adjective to noun
Value is created in the intersection of the
firm and the consumer
The exchange- POE to MOT to POS
Why involve ???
Ford
CDMA v/s GSM
Television and Cellular ind. USA
 Why involve???
product development risks- I/P from Cus.
companies increase their V.C opport.
consumers create more value for
themselves due to unique experience
Music Industry- Cos.unilaterally define
choice for the consumer, Napster
no mechanism to sample the music
Apple’s strategic blunder
 Why involve???
Do I listen to a million prospects before I
innovate
Liability v/s resouce
M. soft- 600 000 cus. Tested beta version
XP NT , 600 mn $ R & D
Peter Jackson Lord of the rings, Gordon
Patterson,
 Seek to understand
Before brand innovations, understand
markets and the BCG positioning
M. leader, follower, challenger
Each has essentially an offensive and a
defensive strategy that is different
Branding-highly strategic, hence in line
Market leader’s branding strategy
Defensive:
Fast follower
Not a pioneer
IBM (Bell labs), Microsoft (best labs in voice
recognition)
Use capital side and not the brain side
Apple v/s IBM
DNR- development first, n then research
Market leader’s branding strategy
Offensive
Grow the pie
Understand topography- cellular India
BSNL(2003), huge market access
Mature markets- Attract for newer markets
Attract newer customers
Rural marketing-eliminate class differentials
Packaging- the fifth P
Market leader’s branding strategy
Offensive
– Non consumers to consumers
– Maruti-800 expansion mode,
– TATA Motors
– Reliance
– Rural markets
 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
 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
 Follower
– Limited
limited 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.
 Finance drives branding
Market share concentration depends on
the extent to which fixed costs dominate
financial structure
Aerospace, Auto
Semiconductor,
Intel v/s AMD v/s Motorola
Software
Intel-70 % m. share, 70 % fixed cost intensive
Wall-scope and scale of investments
 Unity is strength
Solutions-attack in consortiums
IBM- assembler, micro processor and
machine language- 7 dwarfs + B.L=UNIX
Boeing v/s Mcodonalds, Airbus
Microsoft monopoly- Linux+ IBM+Oracle
Economies of scale and scope in
manufacturing + procurement = effective
branding
 Seek to understand

Market follower
– Small, niche, margin driven

Market leaders-
– Large, full line, volume driven
 Seek to understand
M. Leader Follower

Size and speed Selectivity and service

(reaction)
Increased fixed costs Increased variable costs

Full line of products Limited products

Network and alliances Vertically integrate

strong CEO
leadership
 Seek to understand
Never shall meet
NBC, CBS, ABC, FOX
Cultural issues –Neiman Marcus v/s
Walmart
For a volume driven market leader-
common corporate overhead, integrate
operations, share fixed costs, distribution,
plants, corporate functions
 Branding for M. leaders
Have a corporate brand
Common brands and common distribution
M. cap: revenue GM / Toyota
Chevrolet, Optra, Buick, Oldsmobile…
Internal fight among dealers
 Seek to understand
Umbrella brand a byproduct of economies
of scale, lest Brand proliferation
– Line extensions

Corporate v/s non corporate- cost

efficiency
GM- 10 different brands
Managing the brand “Acquisions”
Brand managers- investment banking
Acquisition-
– one stop shop??? OR
– part of your growth strategy???
Flair v/s disclipline
Hard edged finance legal experts
Continuously skeptical
Relationship building, strategies issues to look
Deal makers, Strategists, org. and cul. issues
 Flair v/s Discipline
Growing through acquisitions can itself
be a branding process and PLC
Bias towards acquisitions, supported by
experts
Thrill of the chase may blind you
1997- $ 3.7 mn ton psydol plant
ISPAT
pre acquision discussion and
debate to post acquisition integration
 Need identification
Non-profitable growth, leveraged cash
65 years old
Divestment
Decisiveness and lightning speed
Electrolux
 Stage 3- Intergration
Do you jump into it ???
Strategically understand
How to integrate
Acquisition integration
 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
Again- finance drives marketing
Yes, it is financial, but that does not mean
it is only financial
Stop the bleeding
Stage-2
Efficiency of operational processes
Quality of products
Customer satisfaction indices
 Integration Stage 3
Strategic planning
Employee commitment
Product development
 Services marketing
Service industry Growth rate Growth rate
1982-1996 1996-2006
Finance and 30 % 20 %
insurance
Wholesale 27 % 13 %
trade
Retail trade 22 % 32 %

Transportation 40 % 22%
utilities
 Franchiser - advantages
Expansion- at low cost or expansion
without expenditure.
Capital enhancement by franchising fees
and royalty.
Both the corporate brands as well as
merchandise get exposed.
Fastest way to expand.
Getting local knowledge.
Franchiser – dis-advantages
The brand rides the wave of fame and
success with the franchisee
You part with know-how in a quest for
geographical expansion over cost;
creating room for franchisee monster
You need share to profits and prosperity.
Cut off from customers.
Franchiser – dis-advantages
Difficult to drive home a uniform
corporate responsibility.
People and organizational processes
Every one may not have same
orientation- knowledge processors.
In service sponsored franchisee, difficult
to establish uniform service encounter.
 Service encounter

when you call to make a reservation to take a

flight,
when you arrive at the airport and check your
bags curbside,
when you go inside and pick up your ticket at the
ticket counter,
when you are greeted at the gate,
when you are taken care of by the flight
attendants onboard the aircraft, and
when you are greeted at your destination
 Franchisee – advantages
Gets to choose successful partners.
Low establishment time
Low risk in Business- established experiences
Problems regarding I/O are less
operational, accounting know-how from the
franchiser.
Bank guarantee (trusted and time tested
brand).
No mass communication but local
communication.
Franchisee – dis-advantages
Conformity v/s Individuality: He has to
conform to franchiser’s rules; stringent
norms of conformity.
No Identity of Franchise.
Multi brand outlets.
Under same agreement you can’t have
multi brand outlets.
If franchiser’s brand fails, you also fail.
 Need identification
ISPAT
pre acquisition discussion and
debate to post acquisition integration
Non-profitable growth, leveraged cash
65 years old
Divestment
Decisiveness and lightning speed
Electrolux
 Need identification
Effective market research
Assess financial needs of the seller
Urgency of the seller
Speed
Electrolux
ISPAT
N.Piramal
Discipline v/s flair.
 Stage 3- Integration
Do you jump into it ???
Strategically understand
How to integrate
Acquisition integration
 Integration stages
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
Again- economics drives markets
Yes, it is financial, but that does not mean
it is only financial
Stop the bleeding
Stage-2
Efficiency of operational processes
Quality of products
Customer satisfaction indices
 Integration Stage 3
Strategic planning
Employee commitment
Product development

Simple
 Sample
1988- textiles to pharmacy
Acquisitions, organic growth and strategic
alliances
Mutually exclusive???
Acquisitions
– Nicolas labs- 1988,
– Indian operations of Hoffmal La Roche
– Hoechst’s R & D facility
– Lacto Calamine’s R & DBoeringer Mannheim Germany