On June 2010, the U.S. Census Bureau released the latest retail sales figures. It shows that retail sales have been declining since March this year. But the figures were up compared with the same period 2009. This mixed picture is in line with weak consumer price index, indicating that consumer spending, which account for 70% of the economy, is yet to enter the positive spiral to drive a sustainable economic growth. Consequently, stock market has been extraordinarily volatile since we forecasted that the Dow Jones Industry Average will approach 6,500 a few weeks ago. The upcoming trough of the DJIA will be around 9,300.
STRATEGY & MARKETING
Targeting Different Markets with Different Products: Starbucks Rebranded Seattle's Best Coffee
Prudent marketers understand that customers have diverse needs and wants and, therefore, products have to be positioned to target selected customer segment(s). What if a business wants to take market share beyond its target segment(s)? Starbucks has saturated the market that it currently occupies, showing stagnant demand. In an attempt to drive future growth, the company is brewing a fresh image for Seattle’s Best Coffee, a specialty brand it acquired in 2003. The coffee giant last month kicked off a rebranding effort, which includes a simpler, more contemporary logo and design. It hopes to grow Seattle’s Best into a billion-dollar business by expanding it to fast-food channels, convenience stores, drive-through restaurants and even vending machines this fall. Rebranded Seattle’s Best Coffee is positioned as a premium set of products, which will be complementary to and not competing against the low-cost coffee products currently carried by those marketing channels…
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Know Your Target Customers: Subaru Thrives with Great Profit in Great Recession
Positioning a product to target certain market requires a great deal of diligence. A marketer starts by selecting a market as her target, taking into consideration of the company’s vision, product fit, competitive landscape and its winning roadmap. Once the target market is decided, the marketer examines the needs, wants and demands of the target customers at multiple dimensions and decides how it creates, communicates and delivers value to its target customers. By courting financially solid buyers with a taste for the quirky, tiny Subaru of America sped through 2009, logging record sales and market share along the way. Last year Subaru became the 11th most popular U.S. auto brand, up from No. 19 just a year earlier. Record sales in cities like Los Angeles, Atlanta, Dallas, and Orlando helped make Subaru the fastest-growing mass-market car brand in the U.S. for the last two years. It's the growth leader again so far in 2010 — up 41 percent through April. For the first time, its unit sales exceed those of such better-known brands as BMW, Lexus, Mazda, and Volkswagen…
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Product Renewal: Apple’s Jobs Unveils New IPhone to Dial Back Android Rivalry
Product lifecycle management is one of the key elements of marketing. As technology evolves rapidly today, tech products’ lifecycles become increasingly short and, therefore, renewal of product vitality becomes critically important. Apple inc.’s Steve Jobs has been extremely successful in bringing into the market very cool products such as iPhone and iPad. Marketers have a lot to gain by following his product lifecycle management strategies, with one being tapping into the enormous resources of third party applications developers and the other being introducing to the market the new versions of the products. The company now has more than 225,000 tools, games and other applications available for downloading. That compares with about 50,000 for Android. Recent research shows that more than 5 billion programs have been downloaded from Apple’s App Store. On the other hand, Steve Jobs showed to the market ra week ago a thinner iPhone with a sharper screen and video-chat features, delivering a refashioned chassis and 100 new features…
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INNOVATION IN BUSINESS & TECHNOLOGY
What Chief Executive Really Want? Creativity as the Most Important Leadership Competency
A survey from IBM's Institute for Business Value shows that CEOs value one leadership competency above all others. Can you guess what it is? What do chief executive officers really want? The answer bears important consequences for management as well as companies' customers and shareholders. The qualities that a CEO values most in the company team set a standard that affects everything from product development and sales to the long-term success of an enterprise. There is compelling new evidence that CEOs' priorities in this area are changing in important ways. According to a new survey of 1,500 chief executives conducted by IBM's Institute for Business Value (IBM), CEOs identify "creativity" as the most important leadership competency for the successful enterprise of the future…
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Idea Generation: Individual and Group Contemplation
In a wide variety of organizational settings, teams generate a number of possible solutions to a problem, and then select a few for further investigation. Researchers at Wharton examines the effectiveness of two creative problem solving processes for such tasks— one, where the group works together as a team (the team process), and the other where individuals first work alone and then work together (the hybrid process). The effectiveness of the approaches is defined as the quality of the best ideas identified by the group and the theory relates group behavior to four different variables that characterize the creative problem solving process: (1) the average quality of ideas generated, (2) the number of ideas generated, (3) the variance in the quality of ideas generated, and (4) the ability of the group to discern the quality of the ideas. Prior research defines effectiveness as the quality of the average idea, ignoring any differences in variance and in the ability to discern the best ideas. In an experimental set-up, the researchers find that groups employing the hybrid process are able to generate more ideas, to generate better ideas, and to better discern their best ideas compared to teams that rely purely on group work. Moreover, they find that the frequently recommended brainstorming technique of building on each other’s ideas is counter-productive: teams exhibiting such build-up neither create more ideas nor are the ideas that build on previous ideas better…
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The Power of Innovation: The Seed Makers Who Don't Pray for Rain
Global warming does not only cause higher temperature that could result in sea-level rise and coastal flooding, but also drive weather in roller coaster fashion – flood and draught. Scientists have been working very hard to stay ahead of the game. Market leaders such as DuPont, Monsanto and Syngenta has come up with drought-tolerant corn, allowing farmers like Lance Russell in Hays, Kan. to grow corn in the areas, which are traditionally considered too dry and hot for corn. The technology could change the economics of farming by reducing the need for irrigation, lowering crop insurance premiums, and boosting land values in water-starved regions. With agriculture accounting for 70% of global freshwater use, "The biggest single issue in farming going forward is...water availability," says Monsanto CEO Hugh Grant…
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LEADERSHIP & ORGANIZATION
Learning to Use Regret: Studies in the Negative Emotions and How to Use Them
Researchers at Kellogg examine the so called negative emotions: anger, anxiety, boredom, disappointment, fear, guilt, jealousy, and sadness. They wanted to find out whether people believed the negative emotions were beneficial, damaging, or somewhere in between. The team found that regret, like several other negative emotions, was viewed both favorably and unfavorably. People rated regret more favorably than unfavorably. Only jealousy was considered unambiguously negative. Their work shows that regret is a powerful force in human life. Far from being negative, regret is actually recognized by human brains as a positive influence on future behavior. Regret’s important messages can be applied in everything from marketing to decision-making for the future. The respondents stated that regret helped them make future decisions more than other negative emotions. Regret scored the highest of all negative emotions in the five functions of emotion—to help in making sense of the world, avoid future behaviors, gain insight, achieve social harmony, and improve approach. The team examined eleven other studies regarding regret, in which people ranked the parts of life they regret the most. Education was the biggest inducer of regret, followed by career, romance, parenting, the self, and leisure. The rankings turned out to be remarkably consistent across studies of people in different age groups and locations…
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Is Your Company As Customer-Focused As You Think?
Many executives are frustrated by the fact that their products’ market performance keeps falling below their competitors’, even though they have a great talent pool and enormous resources that make them the envy of their industries. Things can go wrong in more than one area in the process of creating, communicating and delivering value, calling a systematic approach to dealing with the issue. Researchers at MIT Sloan School of Management suggest that executives should make sure that they get the following five key questions answered: (1) Can middle managers accurately describe your customer promise? (2) Can all members of your senior executive team name the three things that most undermine trust among your existing customers? (3) Is your brand really the best option for customers? Will it continue to be next month and next year? (4) Have you embraced any novel ideas that have produced significant innovations beyond the familiar during the past year? (5) Have front-line staff posed any uncomfortable questions or suggested any important improvements to your offering during the last three months?
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Organization Change Case Study: Bringing Lloyd’s of London into the 21st Century
Visionary executives see areas for major improvement before others do. But getting colleagues and subordinates to change their long-entrenched ways may not be so easy. You often hear this: “Don’t fix it if it’s not broken.” As Richard Ward took over the job of CEO at Lloyd’s of London, he realized that the company had a problem with its claims processing, which was still stuck, in a sense, in the 17th century. To get started without clash with those who resisted the change, Ward sought out those member companies which were dissatisfied with the status quo. Together they worked out a system that would allow the electronic processing of claims that were held in a central repository. By getting internal movers and shakers on board early, Ward was able to get about 30% of claims processed electronically. He then switched gears, developing a "naming and praising" exercise in which he made a list of the top 10 performers in terms of using the new system. It worked: more took the challenge and came on board. In addition to carrots, Ward used sticks, too. Those who were slow to use the high-tech system were asked to invest more capital to cover their underwriting risks. Finally, he launched a communication campaign that had him visiting the CEOs of all the member companies. He knew that becoming personally involved and explaining the benefits to hesitant member-company leaders would help him meet his goals. They had to know it would "assist them in their business…rather than be a threat to them," Ward says…
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