Distribution – supply chain strategies

Peter Drucker (1998) talks about the supply chains as a differentiator, competition advantage due to the well coordination between provider (Tier1, Tier2 etc), company and customer. We are moving towards a competition between chains instead of company-competitors.

The supply chain is an important factor in the operation of the product or services. The planning of the full supply chain has to be aligned with the marketing plan and the financial plan. A badly organized supply chain can impact on the total experience of the product of services. Example, McDonalds works only with local providers, has a process on how long you wait for a hamburger etc. The supply chain is based on the what the product is expected to do. Ferrari works with quality, exclusivity.

If you work with a product that is low-cost, your supply chain has to work with those parameters (e.g. IKEA, their products are innovated taking into consideration the space they take in the packages for transportation – weight and volume).

You must find a balance between cost and service level. You need to measure this in order to know if you have lived up to what you promised.

Characteristics of Supply Chain Management

  1. production (what, how, when produce)
  2. Stock (how much)
  3. Transport (how to do it. Depending on what you are looking for, you need to identify what transportation you need)
  4. Location (where will you locate yourself)
  5. System (that handle the management of the supply chain)

The buying department is very important in the decision-making of the development of a product and cost of transportation. Therefore, the relationship with providers is very important. It is a mirror of your relationship with your customers.

  • Combat-relationship (fight for price)
  • Cooperative-relationship (looks for good cooperation)
  • Associated relationship (partnership. A win-win situation where you go as a block towards the market)

For a successful operations (supply chain management) the most important factor is to work in a team.

bullwhip effect

A “small” demand has the impact of generating a psychological expectation that results in stock”back in the chain”, based on estimation of the supply chain of how much the actual sales is. If you inform about the “real” demand and sales in order to reduce the speculation and generate supply back in the chain a correct production, reducing stock of products. WallMart discovered this effect and worked on generating the correct information about the demand in order to reduce unnecessary stock.

 

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Positioning

When we talk about positioning, we have to be aware of the fact that you position related to something (a competitor, a product etc).

In order to understand “positioning” you have to understand the areas of Marketing.

There are 3 types of areas in marketing

  1. The era of the product: the demand is more important than the product (no competition)
  2. The era of the image (some competition)
  3. The era of the positioning (a lot of competition). The struggle her is to “mean something” for your customers.

The consumer has more possibilities than ever in their selection but less time to select.

What is positioning?

Position a product, a brand, a company, yourself an idea in the minds of the consumer. It’s all about to utilize what already is in the mind of the consumer and “reorder” the connections already existing.

Example: If you can’t stat that you are number, one make clear that you are number 2. AVIS: “As we are no 2 we make more effort”. It’s about looking for the strengths of the others and find the weaknesses of their leadership (a war strategy).

In Marketing, the important thing is the perception (may not always be the reality of the product). You have to focus on the way you are “perceived”. It’s a war about perception of the concept, not about the product. Example iphone 5 versus other smart phones that are better in quality, but the perception is what counts.

How to position

It is done in 2 phases:

  1. Identify what is your brands (the synthesis of the brand)
  2. Identify strategies in communication

How to identify the brand values

1)    Brand identity

  1. Core brand value (essential value/benefits)
  2. Extended value (product + organization +personality+ symbols)

2)    what offers the brand

  1. functional benefits
  2. emotional
  3. projective

3)    The positioning: is the mix between brand identity and what the brand offers

Identify which word is “your word”. That is your core (and in relation to others).

The positioning of the brand is the key benefit expressed in one word and you must make sure that the differentiator is included.

Identify strategies in communication

  1. Work through the “identity map” (placing all the words that you relate to your brand) you need to look at what the strengths and weaknesses are of your competition
  2. Develop the “word/line” to position

It is important to be the first (nobody remembers whom was the second on the moon, the second pilot to cross the Atlantic, the second longest river etc…). The main brand removes in the minds of the consumers all information about the second brand. There is little space for 2nd and 3rd.

The first brand, idea, company that has gained the position in the minds of the consumers, it is hard to change. To get the first position you must be sure to:

  1. Have a perfect concept AND
  2. Have an excellent execution (it is common that the second one executes better takes the no 1 position in the minds of the consumer). I.e. LCI of Nestlé versus Actimel of Danone.

You must position something in a mind you need a mind that does not have an already positioning idea; the hard thing is to enter a mind where there is always a predefined idea.

The slogan

You must be able to take away the brand and just by the rest you should understand what brand you are talking about. E.g. “XX, takes care of your cloths like your mother”. It has to be right on target to your main target word. A word that is differentiating you from your competition. It could be emotional, it could be related to a benefit you get or just a “concept”.

It is very important to set a word that people relates to the brand. Positioning is to create a new category. A category that affect the mental stairs.

About mental stairs

  1. You create your own reference maps.
  2. The mind has learned to order the ideas in mental stairs.

The goal is to get the highest position in that stairs.

There 4 characteristics of a “category”

  1. There is a  need to be satisfied
  2. There must be users
  3. There must be user-situations
  4. The product or service must satisfy these needs

How to create a new category (example of category Safe Cars)

You should have as an objective to take the first position within that category. The interest is to be the leader of “things”. If you are second in a category it’s very often better to create a new category, but of course, to create a new category you must work hard to create it.

What is a category: e.g. “safe cars”. 

You target must be VERY specific. If you just target that kind of people you should target that type of people. If you start to try to focus on other targets, you will not be able to strengthen your brand (with the values you have given it or the positioning you are holding).

First you ask yourself:

  1. what is the use you try to reach
  2. what is the audience that have this need
  3. what is the need you try to cover

Based on this, you develop a product/service that meets that need

How to know if a “category” is working?

The two magic R, is “repetition” and “recommendation”. This is a way to know if your category is working.

Due to this you need to start with a specific target, you can not try to target them all at the same time. When you are strong within one user, you can target others (e.g. Nintendo. First for children, l when it was strong, the Brain training was invented).

The category is “if you want for example refreshing drinking you order Coca-Cola”, if you want an energetic drink you order Red-Bull”. If the benefit you are satisfying is what you are, it is perfect.

Types of positioning

There are different types of positioning. These are some of them

    • The second. If you can’t be number 1, make it clear that you are number 2

 

  • The “without”. Make sure that you do something “without” something
  • By “size”. If everybody goes for big, you go for small. E.g.
  • By “price”.
  • High price (If you say that you are “the most expensive” you give the image of having the best quality)
  • Low price (You position your brand for being the cheapest e.g. DIA)
  • By gender. E.g. Malboro
  • By age. E.g. Cola-Cao = young, Nesquick = the youngster (pepsi for the young)
  • By the authentic, the genuine (“the real thing”)

 

You have to think “to be something to somebody”. You have to take a position. You must focus on one use, one user and one need.

How to reposition a brand

8000 words are what a student has in its mind. 12 000 brands is what a supermarket has in terms of brand. There is no space for these brands. What you need to do, is to “kick out” an existing brand to take that position. You have to find “the true”, “the differentiation” “the why not the others but this one”.

Putting a name to the brand

It should help you to position your brand. Therefore, you must think about the name in relation to what it is that you want to say with your brand. 

One way to create a positioning and brand could be to associate to an already existing known brand or knowledge.

What is your experience of positioning?

Internal analysis -how to identify your competitive advantage

The purpose of the internal analysis is to identify your strengths as a company and your weaknesses. Those would be turned into opportunities or threats when compared with your competitors.

Analysing your internal situation to identify your competitive advantages

The analysis should focus on analyzing the following:

  1. Financials
  2. Resources
  3. Product Quality
  4. Organizational Structure
  5. Market structure
  6. Customer perception

By doing a “checklist” of what values are strong/week related to these bullets, you get a good picture of your companies / products / services situation. Once haven done this step you would be able to identify your strengths and what you project in terms of messages to the market.

What is a strength

What differs you from the others on the market. What are your advantages? What is the market perceiving as your strengths? What do you do better than others? Do you have access to low cost material that would give you advantages?

WHAT IS A weakness

Characteristics of your company that will be a hinder in competition with others. It is important to have in mind that these are internal problems, that should be eliminated in the long run or turned into strengths.

How to work with the swot

A SWOT is not a list of “make up” strengths and weaknesses, its a real analysis of what really are your strengths and weaknesses. Once the brainstorming has been done, you need to be able to categorize it in order of value and use these in your value argumentation. Therefore, the normal situation is that you have about 1-3 strengths and a longer list of weaknesses (that you would work on eliminating over time).

understanding competition

It is important to understand that there are 3 types of main strategies to consider which would depend on what product or service you are offering an on what market.

  1. Leader (in cost)
  2. differentiation
  3. Segmentation

If you have a product that is:

  • Targeting the whole market and positioned on low-cost = Cost Leadership
  • Targeting the whole market and positioned as exclusive  = differentiation
  • Targeting segments and positioned on low-cost  = Cost focus
  • Targeting segments and positioned as exclusive  = differentiation and concentration

 understanding COMPETITIVE ADVANTAGES

The competitive advantages MUST answer the question: Why should you buy from me?

The first step is to identify if my value is in one of this area. Its easier to market a value that is tangible (less expensive) than a value that is intangible.

If my competitive advantage is tangible I have to concentrate on (in order of importance)

  1. Product (not only the product as such, is the service etc surrounding it)
  2. Distribution (e.g. oranges Lola, you can only buy on internet, milk via vending machine, the first and only one)
  3. Price

If you have no tangible advantages in these areas, you must focus on

Intangible values

  1. Communication (Heiniken, think in green. Is the only competitive advantage. There are others that are green, but they are the only ones that have said that). If there is nothing that differentiate you – the communication has to be very creative.

Once you have managed to identify what you have that is a competitive advantage, you have to “put it nice” via a slogan.

It is important that you take the value you want to “take” and make it yours (even if others may stand for it, the importance is to make it yours).

Once the slogan is in place it has to live up to:

  1. it’s a clear message and concrete?
  2. Based in primary attribute. Not in 5
  3. that it goes along with the mind of the consumer
  4. that it brings value to the customer
  5. something that is an attribute you can stand for (you can not lie)
  6. differentiate, that what you say is not taken by others
  7. sustainable and “defendable” (that it can work in time)

You need to translate this to all your communication, your product, your customer care. Your competitive advantage is the nod, the key, the core of any action you take.

The competitive advantage is equal to the added value.

Once you have the competitive advantage – defend it!

In conclusion, your competitive advantage is not something you can switch out in a year. Therefore, the slogan (if well set) is not changed unless the market has forced you to change you differentiator.

All this is the final positioning of your products.

What are your thoughts about internal analysis? Share your thoughts here. 

If you like this post you probably like this about analysing the market as part of the external analysis as well.

The best present ever was delivered in Mataró

What is needed to generate innovation? Last week, I visited a concept I strongly believe in at TecnoCampus in Mataró (Catalunya): Innolab and realized I had witnessed the best New Year present any student, teacher or company can get – at 30 minutes from Barcelona in Mataró. A concept not even Barcelona Universities have (as far as I have learned).

The idea of creating a space, a work area, an environment that inspires innovation, entrepreneurship and new business is a good trigger to empower students, companies and teachers to co-create. This is the idea behind Innolab – a space to foster exactly that: innovation, new business and fruitful cooperation work.

This post is dedicated to all students, companies and teachers that have been “given” this area to drive innovation. This post is a “heads up” for those that may not be aware of what they have in-between their hands. This pos is a humble “don’t miss this opportunity and enjoy what you have that very few have”.

Innolab – a space to be proud of

There are many ways to trigger innovation but few that are so visual as creating a physical space where the full essence of it is to inspire new thinking. Innolab has been designed to support that: to turn ideas into reality. With is “house-like” environment, like if you were sitting in your own living room, with the easy access to a kitchen inspiring the teamwork in cooking, the right to take a coffee while you work and the ability to work at any time, the “green area” where you can stretch out on the floor to relax, meditate and take the time you need when your body and mind requires it, the flexible furniture that can be set up in any order thanks to tables with wheels and the colorful design, the whiteboards, the drawings can’t be anything else than  just that – inspiring.

I’m not sure though, that the students, teachers and companies that are thought as target for this area, are aware of what a “luxurious” tool this is to have in their nearby. I’m not sure they are aware of what a powerful resource this area is in a country screaming for innovation, new businesses and employment. Honestly, I’m not sure they profit this area as it should be profited. Lack of knowledge about its existence? Fear for being seen as “different or strange”? Low maturity in terms of innovative spirit? Whatever the reason is, I hope students, teachers and surrounding companies very soon fill these walls with inspiring projects, successful business ideas and new thinking. Because Innolab is the future and it’s a step away from those haven given the right to use it.

Alexandra E.Rodriguez M  and here team, the drivers of making this space an inspiring environment, have done a fantastic job in setting up the tools and resources that are needed for brainstorming, co-working, thinking, relaxing and everything in-between. Every corner has been utilized to its best, every color has a meaning and every wall has a thought behind. It is thanks to them and everybody involved this foundation is in place and now its time for those surrounding it to take advantage of it, to really step forward and utilize its potential. I fear that the risk is that “if not” – this space will be taken away from them and when asked for in the future, it will be too late.

It is up to those that have been given this present (free access to this inspiring area), to really take advantage of it. It is the receiver of this space that needs to “concur” this area, have the courage to pick up the phone and invite those key players needed to make a dream project a reality.

It is very seldom the present itself that “makes itself useful” – that task is always in the hands of the one that gets the present to make something out of it. Innolab is a challenge the students and teachers at TecnoCampus must take-on because, in my opinion, it’s the future. And the companies can’t miss the opportunity to meet their present or future customers or employers to identify needs, test products or drive innovation by engaging in Innolab. They just can’t afford do miss out on such opportunity.

I really hope this is not forgotten in the day-to-day rush, because then another opportunity would be lost, another present forgotten in the drawer and another good idea not empowered.

I wish Innolab all my best. And I really, really, really mean it.

Have you been to Innolab? If yes! let me know what you think! If no, would you like to have such space to boost innovation?

Introduction to the External and Internal Analysis of your Strategic Marketing Plan

Getting started with the Analytical Phase of a Strategic Marketing Plan

In many companies the VP Marketing is the one that should drive the planning of the strategies related to product-market. Who would know better what the market wants, who the audience is and when to launch what? This role is the one that should know what products should be produced by the production department and sold by the sales department, based on his or her in-depth analysis of the market, the audience, the history of the company and the internal environment. In a Strategic Plan, you define which business is the one to focus on and in the Strategic Marketing Plan you focus on what products within that business you should focus on for what market, what segmentation strategies to apply, position on the market. Information vital in order to set the marketing mix – the action plan for implementing the defined strategies.

The analytical phase is composed by two mayor areas, the external and the internal analysis. The idea with applying these two analysis is to have a good base for making the diagnose of the situation: which are the opportunities, what threats should we be aware of, which strengths should we empower and which are the weaknesses this company or offering will meet on the studied market.

Working through the Market Analysis

The aim of the analysis is to know the historical evolution of the company, the marketclients and the providers in order to identify what opportunities and threats this market presence.

Naturally, you start with the External analysis – (includes the market analysis, the analysis of the customer, the providers and the competitors) but work in parallell with the internal analysis because you have to study the external side to understand what your internal strengths and weaknesses are. In next post I go through the external analysis and steps to take within that area.

What experiences would you like to share on the analytical phase of your Strategic Marketing Plan?

Creating a Strategic Marketing Plan from scratch

It is time to refresh some knowledge, pick up the books, study some new stuff and apply what you learn, in reality. I’m talking about the phenomena: study. A high percentage of my time-off-work will be spent on a Master in Marketing for the coming months  and my plan is to reflect the steps I’m will be taking, but applied on my project www.teterum.com to make it more “down-to-earth”.

For every step taken in this process I will add a link to the post here:

Steps to take when setting up a Marketing Plan 

Three different phases will take us through these steps 

PHASE 1

1) Analysis of the External environment (see intro)
2) Analysis of the Internal environment (see intro)
3) Diagnostic of the situation (SWOT etc)

PHASE 2

4) Taking strategic decisions
–          Setting mission, vision, values, corporate culture
–          Corporate strategies
Defining the business
Defining the portfolio of products or services
Defining competitive strategies
Defining strategies for growth
–          Functional strategies

PHASE 3

5) Taking operational decisions
–          Action plans
–          Prioritization of activities
–          Budgeting and financials

The project

The project I have chosen is the one I launched with Ivan Ruiz Sevilla in September. We are still making changes and listening a lot to our customers for the pilot market – Spain –  we decided to go for.

This is the perfect project to work with as it’s a Start-Up project based on a MVP (Minimum Viable Product) strategy with a limited time of test time to detect the market demand.

Have you worked with a Marketing Plan lately that you would like to share? More than happy to share experiences