Customer Manufacturing Update )
Creating Competitive Advantage Through Marketing/Sales Process Improvement

January 2010
in this issue
  • Web-based Marketing
  • Sales People Want New Products to Sell and Other Myths
  • Culture vs. Strategy
  • The limitations of a brand
  • Closing Thoughts
  • Dear Mitchell,

    Here is your January Customer Manufacturing Update. Happy New Year. We're kicking off the new year by looking at Web-based Marketing. This is a combination of marketing and web technology to systematically and practically drive business. It is a constantly evolving field. No matter your business, it is highly relevant to everyone, and this month's paper looks at how you can use it to your advantage.

    If you have friends or colleagues who would appreciate receiving this Update, feel free to forward a copy to them using the "Forward e-mail" link at the bottom of the page.

    Web-based Marketing

    As the world evolves, the Web plays an ever-increasing part in how all companies go to market. The on-going evolution of the tools available to effectively use the Web in its various incarnations is tough to stay on top of. This paper provides an overview of current thinking in the use of Web-based Marketing, and can be followed-up with a free resource guide mentioned at the end of the paper.

    Sales People Want New Products to Sell and Other Myths

    In our experience if you ask sales people what they need to increase their sales they answer with one (or more) of these three items:

    1. Lower prices
    2. More leads (or floor traffic or its equivalent)
    3. New products or services

    When companies introduce new products they are often surprised at the resistance they get from sales people at selling these new products, especially if they are truly new. Herman Miller is finding that out. Their CEO, Brian Walker, believes in innovation ... even in a downturn. We commend him for this thinking. However, one of their key innovations involves a high tech wiring system call Convia which "... allows owners of office buildings, restaurants, and stores to radically save on their electric bills." The product is apparently very cool and it really works ... as it was designed to work.

    Despite this the Herman Miller sales force "... accustomed to pitching Space Age desks and Japanese-inspired stools, is struggling to further penetrate the construction market. Buyers see the company as a furniture maker, not an electrical supplier." This conundrum comes from two fundamental issues:

    First, as stated, Herman Miller is not positioned as an electrical supplier. They do not have the credibility in this market and, they positioning as a furniture company might well be a negative. Second, most sales people are not comfortable selling new to the market products. Why this is true will be the topic of another post or a white paper (depends how long it turns out to be).

    How is Herman Miller working to solve these problems? They partnered with French electrical distributor Legrand which is going to put the Convia "brains" inside their wiring systems. Great first step.

    Culture vs. Strategy

    It was reported late last year that Republic Airways had "won" the right to buy Frontier Airlines despite the fact they had submitted a lower bid than Southwest Airlines. Both companies had valid strategic reasons to buy Frontier, and Southwest's larger size allowed them to bid more ... and yet they still lost. Why?

    Culture trumps strategic opportunity at Southwest. They learned a long time ago that people are key to strategic execution and without the support of their people, the merger and resultant execution would look a lot like, well, American and TWA, USAir and America West, etc.

    What was the key culture issue? Pilot integration. Southwest made it clear their bid was contingent on prior agreement between the two pilot's unions on how the pilots would integrate seniority (a key issue in airline employee benefits, shifts, layoffs, etc.). As you might expect, the Southwest pilots proposed Frontier pilots go to the bottom of the seniority list as they were new to Southwest, would be getting a raise and the opportunity to work for a more stable airline. The Frontier pilots suggested (not surprisingly) they be integrated into the list based on their time with Frontier compared to Southwest pilot's time with Southwest.

    The two unions could not come to a resolution so Republic wins; the Frontier shareholders and creditors come out a bit worse off; Southwest misses a strategic opportunity, but does not have to try to force an employee integration that has misfired with most other airline mergers. Republic, on the other hand, grows and time will tell if this is a good opportunity for them or not.

    The limitations of a brand

    Mitch walked the sea wall at Stanley Park in Vancouver, BC a few months ago (when it was warmer). It is one of the most famous urban parks in North America. It is also very different from Central Park in NY or Forest Park in St. Louis. While there he learned that Stanley Park is named for Lord Stanley a former Governor of Canada.

    No big deal you say. But did you connect that this is the same Lord Stanley for whom the Stanley Cup is named? Maybe our Canadian readers know this, but we suspect that most of the rest of us never connected Stanley Park and the Stanley Cup as being named for the same person.

    Brands have limited positioning in our minds. Remember this when trying to extend the positioning of your personal or product/service brands. Reis and Trout taught us this concept over 30 years ago. Valuable lesson, not to be forgotten.

    Closing Thoughts

    We appreciate any feedback you can provide to help us make sure these Updates give you value each month. Feel free to respond to this e-mail with any comments or suggestions for future topics or ways we can make these Customer Manufacturing Updates more valuable to you.

    Thank you for your interest, and if we can provide any additional assistance in sales, marketing, strategy, or innovation to help you increase your sales, let us know.

    Our mission is to help you improve the performance of your System to Manufacture Customers®.

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