The Internet and Buying Center: are you making product information easy to share?

The Internet is affecting business in numerous ways and in B2B buying it is affecting the Buying Center as well. The Buying Center is one of the most critical B2B concepts in that it is never a single buyer who can unilaterally decide to buy a new product or service from a new vendor. In other words an individual organizational buyer can only be expected to order or re-order the same stuff from the same vendor. Think of how families discuss the cell phone and wireless provider each time a new iPhone comes out (like today!) and the buying center is sort of a similar concept. Except that the user who initiated the requirement might be only a marginal player in the decision process of which vendor gets the opportunity at what price and what terms. For B2B marketers, it is always a challenge to figure out who the members of the buying center are, and how they might at least learn about all the features and benefits of the vendor's offering that specifically applies to needs and situation of the buying organization.

Just as the B2B marketer is interested in making a sale, the Buying Center members are most interested in finding the best solution to their needs and problems. The more the marketer is clearly able to articulate and communicate with the Buying Center members- the more effective will be the B2B deal and eventual B2B relationship.

Fortunately, the Internet can help the B2B marketer given the changing behavior of buying center members. Here are two tips for B2B marketers:

  • Ask the supply management/procurement person about the users and show interest in trying to meet the user. A machine operator might be the user for your machine part and if you take the time to understand the real problem the person has with your category of supplies you might be able to develop or at least articulate some solutions to these real problems. A good word from a machine operator to the production manager about the genuine solution oriented interest of a prospective supplier can do wonders for the B2B marketer.  Try to articulate the general nature of the solution you have devised into a web page and share with the technical members of the client's buying center. Placing the link of this web-page on your email allows for more effective sharing than an attached PDF file. In contrast, in the pre-Internet age vendors would send multiple copies of specifications and designs that would get misplaced and not reach key buying center members.
  • Do the same on the financial terms. For example, if you can afford a longer payment period and the buyer's finance folks are having working capital problems just by meeting folks halfway and building support between accounts payable/finance and the supply members of the buying center can give you that extra commercial push within the buying center. Again emails mentioning any financial flexibility that you can offer can be an easy way to build support within the buying center. In fact, if your item is a potential  P-Card item of say less than $1000/- and you are on the approved supplier list, offering the same on your website, and letting buying center members know can help a great deal.

To summarize, the Buying Center is very much alive and well and explicitly addressing their concerns on your website and sharing the same via email and social media updates can help in building support in several prospective client organizations. Contact StratoServe.

How the Internet affects business: top of the sales funnel and an instant reference- “value” check

Most organizations that are not pure-play internet (like
Amazon.com) do not seem fully understand how the Internet affects their business. The  top of the sales funnel and an instant reference- “value” check are two ways the internet affects your business:

  • Internet can fill top
    of the sales funnel    : And this can be huge. Between search marketing (also
    Search Engine Optimization – SEO) and pay per click (PPC) advertising like
    Google AdWords you can bump up the traffic to your business website and to your
    business. At a fraction of the cost of traditional media including direct mail,
    print or broadcast media the Internet can drive traffic to your website and
    business.  In case you have e-commerce,
    you can also expect the visitor to buy. For first time buyers if you see your
    Google Analytics data (see under conversionsà
    multi-channel funnels) you’ll be surprised to see that folks might visit your
    website  ten or more times over a few days  before starting on your online shopping cart.
    They might have come directly, via Facebook, through search and so on. Can you
    go to any physical store ten times     before picking up a physical
    shopping basket?  Not really, unless you want to be
    declared “suspicious” by the store-owner!
  • Internet is an instant reference and “value” check:
    There are previous
    posts     on this aspect and is one of the least addressed issues by organizations-large
    and small- whether they are for profit, non-profits or government. Consumers do
    compare prices in things like airfares and hotels as do businesses in B2B
    situations. In B2B and high value consumer decisions (like cars) it’s really
    important to go beyond the print brochures material. For example, there is no
    point in mentioning the mileage of an hybrid version  of an auto but remaining silent about the gas
    version's mileage. A serious buyer can and should be expected to Google it and
    get what best they can from a discussion board or auto website. Think of your
    business category and you can expect serious B2B customers to do the same
    thing. In other words, its probably far better to clearly explain FAQ’s on the
    official website rather than allowing unofficial versions to take the lead, by
    default.

Thinking about how the top of your  web funnel is working and what can you add to your website is a good way to capitalize on the opportunities the Internet offers your business.  Contact StratoServe.

Innovation and US jobs: two types of opportunity- of iPhones and frozen yogurt

Given the substantial interest in previous posts about how innovation creates jobs here are some more thoughts on exactly how these jobs can happen. But first about innovation which is at its most basic level is: doing something new. The newness can be huge like when the iPhone was introduced or can be just opening the first frozen yogurt shop in your town. Let us think about the kinds of job opportunities both these create:

  • The Hi-Tech iPhone involved a great deal of design and technology at the back end. It simply created a global consumer following bordering on frenzy with every new model. The consumer demand is what created all the jobs in its supply chain including many overseas jobs. The high paid jobs in the US are in design, software but not so much in manufacturing. But when you think of the iPhone marketing related jobs you think of the huge boost AT&T got from its exclusive arrangement in distributing the iPhone in the US. Don't forget those little kiosks in the mall that sell iPhone cases and screen covers and the person who is happy to neatly paste a screen cover for $5 on to your iPhone or smart phone. In fact, the employment effects just continue to competing products like Samsung despite the controversy surrounding patent infringements. An amazing spillover of the iPhone and an Apple store in an US mall is estimated at a 12% rise in sales per square foot according to a Time magazine article. In other words, it is not just Apple that becomes hugely profitable but there is a whole bunch of jobs that is created in the supply chain, distribution channel and the telecom service providers. You can be sure that telecom equipment makers like wireless tower makers also got additional business due to the huge consumer adoption of the iPhone. The majority  of the retail and customer service jobs associated with the iPhone are low pay but do require the individual to be interested in technology to be able to service the customer. The so called steady well paid manufacturing jobs are mainly in China but are not well paid by US standards. And the comparatively few high paying design and software jobs at Apple involve a great deal of education and expertise.
  • Comparatively  Low-Tech Frozen Yogurt is catching on in the US and retail stores are popping up given the increased health consciousness. Here the dairy farm is US based and the Yogurt factory is local as are the employees of the store who need to be present to serve customers from an assortment of flavors and toppings. The selling price, margins and sales volumes are decent but much more modest compared to an Apple store. As a result the associated jobs in the supply chain, distribution channel are also more modest. In fact, if a customer had an Yogurt the neighboring sandwich shop might actually lose business ! Nevertheless, the Frozen Yogurt business does create jobs and with global marketing like Apple might create a great deal of opportunity for US entrepreneurs.

To summarize, while lifetime traditional manufacturing jobs seem to be disappearing new opportunities are opening up in global marketing at both ends of the technology spectrum. Contact StratoServe.

When Leverage becomes Bottleneck items in the Kraljic Risk-Value Matrix: don’t forget the service

The Kraljic Risk-Value Matrix is a great way of thinking about the B2B buying (i.e. supply management, procurement) and B2B marketing process. And its really important to remember to remember the service elements of the both leverage and bottleneck items.Why? Because the Kraljic model came about at a time where manufacturing and products was all you were thinking about and lot of work was done by full time employees with organizations. To illustrate, think about a bottleneck item like a particular type of stainless steel pneumatic valve in a food processing plant in developed country markets that becomes a leverage item for new factories or plants in overseas growth markets.

As a leverage item: The valve marketers are very interested in selling volumes of valves and can only find large volumes in new markets where many valves are needed for new factories. In those new factories that may be in global growth markets the valves are leverage items in terms of the Kraljic Matrix. Accordingly, there would be an RFP and bidding process and a lot of B2B sales effort would be needed with possibilities of a big payoff with booking the large order. The RFP might be just for the valves because there might be a separate contract for setting up the plant and equipment that goes to a different installer/service provider.

As a bottleneck item: The very same valve becomes a bottleneck item for existing factories in developed country markets. The valve is not very expensive compared to the equipment but production would stop if the valve failed hence B2B supply folks would consider keeping a few spare valves just so that there is no crisis.The valve marketers are happy to ship a few valves and might have higher pricing for small orders. In this transaction, the skill and service required to replace the valve might not be available among employees in the running plant because maintenance may be outsourced to a contractor to save labor cost on full time plant maintenance folks.

B2B buyers and marketers should thus think explicitly about how the valve will be installed in (a) the leverage new plant situations and (b) the bottleneck old factory situations.For the valve without proper installation will not deliver the solution it is supposed to deliver.

A similar logic applies to software and technology solutions but more on those in a later post.

To summarize, whether you are a B2B buyer or marketer even though you might just be buying or selling a “product,” don’t forget to figure out the service parts of your offering. For you are not selling or buying a product or service but a solution to a problem. About StratoServe.

Best Buy turnaround: CEO Hubert Joly is managing supplier relations and understanding store psychology

The news report that Best Buy CEO Hubert Joly will be working as a salesperson in a Minnesota Best Buy is great news just ahead of the holiday season as is the idea of managing supplier relations for competitive offerings. For Best Buy is in serious trouble with declining same store sales in eight of the last nine quarters.

Best Buy has become like a free showroom for Amazon where customers go to touch, feel and understand products from highly knowledgeable salespeople- and then buy online from Amazon or other online retailers or warehouse stores like Costco.  If Hubert Joly can figure out the success model for a brick retailer like Best Buy – he'll do great service to a whole bunch of brick based customer interaction organizations. These include brick retailers, banks, education and yes healthcare. Why? Because think of any business "brick" building where a customer interacts with an expert (the Best Buy sales people are experts -comparatively speaking) which allows really understanding stuff that builds the customers basic 101 knowledge in terms of say product features like why should you care about the  Random Access Memory (RAM) in a computer? After gathering this knowledge the customer is really free to shop on line. More so in the US where competition and going for the best "value" is seen as doing the right moral thing rather than paying a higher price just for the great experience and advice at Best Buy.

Based on news reports Best Buy and Hubert Joly's game-plan seems to be:

  • Supplier Relations: If suppliers provide exclusive products, deals including bundles exclusively to Best Buy , it could be a huge plus. Think of an exclusive look HP laptop computer that comes with a printer at only Best Buy. The trouble is that when the customer goes checking online Amazon will automatically suggest printers. Enter the Geek Squad , particularly for those who are less tech savvy and do not wish to be bothered with the entire DIY effort. Will Best Buy be able to cleanly target customers who can afford and really value the Best Buy expertise and shopping experience? Also make sure that suppliers treat their supplies to Best Buy as truly exclusive in that – similar models are not available at online or other stores.
  • Store Psychology: The Best Buy shopping experience is a great one for the customer and CEO Hubert Joly's idea of working as a salesperson should help the top leadership understand exactly how the sales force is organized, recognized and compensated. By sharply focusing on customer segments that are likely to buy from Best Buy (values experience, less DIY) and getting the promotions, merchandizing, sales force and service Geek Squad to work together, might just do the trick. For example, every salesperson across all stores should be able to articulate exactly why a particular product  can only be found at Best Buy to a prospective customer. 

Retail sales at Best Buy for the 2012 holiday season will be carefully watched by everyone interested in bricks vs. clicks business models. Contact StratoServe.

Qualitative Goals in the Product Innovation Charter (PIC) are vital

Qualitative Goals in the Product Innovation Charter (PIC) are vital and more important than quantitative goals in the PIC.

Let’s consider a PIC that has the qualitative innovation  goals of “attractiveness” and “affordability.” Here is how the innovation process becomes easier when  the PIC goals are clear:

  • A Sense of Purpose: Qualitative Goals provide a sense of purpose and vitality to the New Product Development (NPD) team. Think about developing an “affordable” product in these tough economic times without sacrificing “attractiveness.”It is the kind of reason the NPD team gets motivated and charged up in the morning  to achieve the quantitative objectives of the PIC. In fact the qualitative goals provide the “spirit” to the team to achieve quantitative reasons.
  • Ongoing feel for success in design: Does a design feel “attractive”? If attractive is mentioned among the qualitative goals then the innovation team does the first call on devising what constitutes attractiveness in their market. By narrowing down alternative concepts at the drawing board the concepts that get to concept testing with consumers are already high on “attractiveness” as far as the NPD team is concerned.
  • Choice of materials: Depending on the category staying with the “attractive” and adding the “affordability” immediately allows decisions for types of materials.
  • Supplier Relations:  The supply manager in the innovation team can make the two qualitative PIC goals clear to prospective suppliers and can be hugely helpful in guiding their efforts.
  • Easier Concept Testing: If you have the PIC goals of attractiveness and affordability, it is much easier to do concept testing. And it becomes better if you have a prototype and then ask sample prospective consumers if they think the product is attractive and (estimate a price) affordable. At this time the innovation team might realize that consumers have different notions of attractiveness and affordability than what they had assumed.So some more probing about what are the indicators of attractiveness might be worthwhile as the concept is narrowed down and refined. For example, doing a focus group with a prototype might reveal that “attractiveness”depends on how many of your Facebook  friends “like” the photo of the  new product you just bought.
  • Easier Launch and Marketing Decisions: If you have “affordability” in the PIC you will be looking at getting into affordable Wal-Mart than the premium Nordstrom. The point being that each piece of the launch and initial marketing can be guided by the qualitative goals in a well thought out PIC.

To summarize, just like qualitative research helps get a feel of the domain, qualitative goals allow the innovation team to get a “feel” of the goal of innovation. Finally, he qualitative goals of the PIC should be as closely aligned to the company’s overall mission as possible. About StratoServe.

Product deletion decisions: Lexmark quits Inkjet business

Product deletion decisions are tough calls to make for CEO's but Lexmark CEO Paul Rooke had to do exactly that with the Lexmark inkjet business.  Lexington, Kentucky will lose 550 jobs and global job losses will be 1700 including workers in their Philippines plant. Lexmark will also sell 1000 inkjet related patents.

The Lexmark share price went up by 20% today because investors liked the move by Lexmark to leave a business where 90% of the inkjet  market is controlled by HP, Canon and Epson. In addition,  store brand inkjet refills and  increasingly affordable laser jet  printers has squeezed margins and added pressure.  The decision by Lexmark to focus on imaging solutions, software was also appreciated and will fit well with user behavior that is increasingly going away from printing as people take to mobile devices like iPads and collaborate through the cloud.

So why are product deletion decisions so difficult? Because calling it "quits" is the most difficult thing to do in new product development and innovation – particularly if the product is already in the market.  Sort of like Newton's first law of a body in motion staying in motion. There are workers,managers,suppliers,distributors and the entire supply chain that are in motion and  work… only not so profitably because of changed markets,technology or competition.

Once a product deletion decision is made managers tend to go back and try to think of ways to revitalize the product. According to research on product deletion there are three options delete immediately, do a phased deletion by winding down or sell off. Lexmark will probably arrange to continue to supply the ink for its jet printers in the market as the inkjet market continues to rationalize. It's likely that the dominant inkjet players like  HP,Canon and Epson will face increasing pressure from store brand ink-jet cartridges like Staples and Costco and we might see further exits in this industry. Contact StratoServe.

Apple vs Samsung: the link between innovation,intellectual property and US jobs

Innovation is hard, it needs fanatical dedication and focused innovators like Steve Jobs to come up with blockbuster product ideas like the iPad and iPhone. And although there was one Steve Jobs, he inspired thousands if not millions to try their own stuff.

Capturing value from your innovation efforts depends on protection of intellectual property and the recent award of $1.05 Billion to Apple was decisive and quick action by jurors in San Jose,California. Velvin Hogan the Jury Foreman probably knew how hard it is to come up with intellectual property because Hogan has a patent of his own.

American innovation works because courts move quickly and jurors understand the importance of giving credit for innovation to the innovator by recognizing intellectual property. When firms innovate, prices do go up as Samsung says in the video alongside from CNET. However,you do get products like Lipitor , the cholesterol blockbuster drug from Pfizer, now out of patent and available much cheaper. American innovation leads to American jobs.

In most emerging markets intellectual property law is weak. As is the enforcement and it does not appear likely that things will improve soon enough for accelerating American innovation for global markets and more American jobs. Contact StratoServe.

Campbell’s Soup focuses on millennials with Moroccan Style Chicken Soup

Sounds like Chicken Soup for the soul– but this time the 140 year old Campbell's Soup is trying to reach millennials for whom mere Chicken Soup is not enough. Leading the transformation at Campbell Soup is CEO, Denise Morrisson who had spoken at the Yale Conference last year. Millennials  (Gen Y)  are far more open minded than the Gen X and the Baby Boomers and celebrate diversity – not merely tolerate it.  Hence Morroccan soup is perfectly fine. And Campbell's Soup does expect to sell a lot of soup to the millenials.

Consider that, just ten years ago, an upmarket New England neighborhood of graduate school educated  baby boomers had only heard vaguely of Morrocco and most folks had not even tried Indian food,let alone the exotic Morroccan Chicken Soup that does seem to have some Indian spices. That today Campbell's soup is actually coming out with the Morroccan soup reflects the growing up of the millenials who will  try exotic foods and are likely to remain loyal consumers.Here is why:

  • The Campbell's brand  was familiar terrain for the millennial parents or baby boomers who grew up liking  tomato soup or the New England clam chowder.With lesser taste buds Baby Boomers like stronger flavors. But being relatively less open to exotic flavors perhaps adoption will be driven by the children.
  • Millenials are however,far more connected to their parents than previous generations and are likely to follow their parents' brands than previous generations and their parents.
  • It is this great insight into the openness and diversity of the millenials outlook, that Campbell's Soup has been able to tap into in their line-up of new products. The millenials are far more likely to try but also adopt and advocate soup flavors considered exotic by the older generations.

There is also a huge merchandizing push for these millenial flavors and you can be sure that mothers with kids in college or working away from home will mention the new flavors as they see them merchandized and promoted at their local grocery store. Just to ensure that kids, although now grown up, are getting nutrition via the 140 year old Campbell's brand.Does feel like some real chicken soup for the soul – in the making. Contact StratoServe.

Paypal mobile payments for McDonald’s France can open up vast Indian retail opportunities

Paypal is testing mobile app payments for McDonald's in 30 restaurants in France. If it works, then there might be a roll-out to over 30,000 McDonald's worldwide. The number 30,000 sounded really small so here is a reality check. How many Starbucks are there in the world? Under 17,000 worldwide ,or just over half the number of McDonald's. And here are the top food chains in the US with Subway leading and approaching 24,000.

The Indian retail universe is a massive 14 million. OK only 4% or about half million are over 500 square feet and the rest are tiny.And there are about 700 million  mobile phone users. And all those mobile users are very high on tech adoption. Not because everyone is a tech whiz but because if you can avoid crowded  lines, difficult infrastructure and petty corruption you'd rather transact online. And since the Internet and computers have affordability issues it is a direct leap to mobile commerce.

Just how huge the mobile revolution is in India is indicated in the research by Reuben Abraham who found that fishermen would call in to the fish market on shore and decide whether to return the fish to sea if prices on shore were too low. For without refrigeration the poor fishermen had very little negotiating power with the fish traders.

The opportunities for mobile payments in an economy that has 700 million phones and at least half million retailers who have some form of refrigeration and a fairly wide range of grocery products indicate huge possibilities for mobile apps that help transactions. And if you include restaurants, clothing stores and other small businesses that transact B2C…. the possibilities are just enormous.

The economy though is a cash economy, and while you can order by phone against say a newspaper ad,  the supplier will send a person with the delivery and collect cash payment. The human system does work based on trust – but with all incoming mobile phone calls free- there is constant coordination that helps keep business relations on track. 

Whether the payment industry will be able to leapfrog to mobile payments without the stages of credit card,debit card in markets like India will be interesting to observe. If they succeed even in capturing a fraction of transactions on mobile – the numbers of transactions will far outstrip the numbers that one can imagine in developed markets. Contact StratoServe.