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Customer Manufacturing Update |  |
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Dear Mitchell,
Welcome to the October 2005 Customer
Manufacturing Update. We certainly touched
some "nerves" last month with our article on Six
Sigma. If you didn't see it, click on the link at the
bottom of this email to read last month's newsletter.
The Six Sigma article is included in the e-zine itself
and does not require an additional download. If you have friends or colleagues who would appreciate receiving this e-zine, feel free to forward a copy to them using the "Forward e-mail" link at the bottom of the e-zine.
The Value Priced position has come to mean a low priced offering of "pretty good" products or services. Why is the term "value priced" defined this way? Does this really make sense? What if you are not value priced? What are you then, high priced, over-priced, cheap? This month's white paper explores an alternative definition for value priced.
Depending on your age, you may have heard the marketing adage about the market opportunity in China couched in terms of selling just one apple to everyone in China. Well, what if you are De Beers and you want to sell diamond rings to everyone in China? What are the obstacles (because the opportunity is huge)?
While De Beers may have a larger budget than many
of you, it is much smaller than you might think. And
after only 10 years, 51%
of the brides in the top 25 cities receive a
diamond ring. This is up from approximately 0%.
Could you achieve a 50% market share from nothing
in your target markets with any budget? And De
Beers only has a $9M ad budget. First, they tapped into a growing trend among younger people in China to discover the trappings of a middle-class life. Their ads focused on the enjoyment of that lifestyle. But advertising alone (especially with only a $9M budget) could not do what they needed done. They convinced TV producers to weave diamonds into the plots of their programs (product placement hits Chinese TV). The state run television network featured at least two programs with prominent and positive placement of diamonds and well-to-do women. They have also had success changing the traditional wedding ceremony. They have worked to convince brides to dispense with the traditional red dress in favor of white. Several times each year (and usually on lucky or auspicious days) they sponsor mass weddings where couples walk under a 9-foot-high diamond solitaire ring. Their budget for the mass weddings is $13,000. Local jewelers pay the rest. Everything they do has not worked ... obviously. And this year sales may be down as this is the Year of the Rooster, which is considered an unlucky year in which to wed. So, weddings may be down. But De Beers is not worried. In 2004 they sold $1.4B in diamonds in China. This equates to about $1 per capita. In the U.S., the per capita spending on diamonds is about $100 You see, if you can sell a diamond to everyone in China... For more about De Beers marketing as an example of getting What #3 right, read Mitch Goozé's acclaimed book, It's Not Rocket Science: Using Marketing To Build A Sustainable Business. If you don't know what we mean by What #3, you should read our white paper, Building A Customer-Oriented Business.
Jamie Flinchbaugh wrote an interesting article on Lean Thinking that included the following eye-opening "process" caused by good intentions. A new employee comes to you with a problem that he/she doesn't know how to solve. You, full of good intentions, tell the employee to try again so that he/she can learn. The problem is solved but the learning process included "learning" to exhaust all possible opportunities before coming to you with the problem. One time, the problem is so critical that it can cost the company millions of dollars if not solved. However, based on prior learning the employee tries everything before coming to you. This time it is too late and despite the good intentions you both had, a catastrophe and the resulting attention (for both of you) ensue.
So, the employee learns the next lesson, which is to
sweep big problems under the rug to make sure no
attention is drawn. Not only does the problem not
get timely attention, it gets none, all because of the
intention being misplaced.
As you already know, we are focused on process, especially as it applies to the demand (marketing/sales) side of your business. We recently ran across an interview with Peter Drucker from Fortune in 2004. Here is a brief excerpt: "Information technology forces you to organize your processes more logically. ... It's not the computerization that's important, then; it's the discipline you have to bring to your processes. You have to do your thinking before you computerize it or else the computer simply goes on strike." Our long time readers will recognize a mantra of ours about the deployment of CRM systems. Most implementations fail because they automate a bad process, or one without any discipline. Drucker went on to say: "You have to take the assumptions out of the mind of the decision-maker and put them explicitly into the process, along with a method to check them, and only then can a computer help you manage it. Older executives find it excruciating to have to be that explicit, because they just don't want to be. Besides, as we all know, many decisions are ultimately made by the hydrostatic pressure in the boss's bladder."
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.
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