Diamond Foods: Pringles fiasco- a farmer co-operative supply chain implodes as corporation

When Diamond Foods announced its plans to acquire Pringles from P&G it seemed like a great move to this blog. So it comes as quite a shock that the deal is off and Kellogg's is acquiring Pringles , trying to expand its snacking line for salted foods in emerging markets as  P&G , the Pringles owner continues to try and divest itself out of foods.

Delving deeper it seems that Diamond Foods was originally a walnut farmer owned co-operative as recently as 2005 in Stockton,California. A farmer co-operative is essentially about looking out for  farmer (i.e. owner) interest and marketing first tries to ensure that there is good demand and prices for the farmer produce. In the process of building a market,Diamond Foods became a great market force and brand. Everyone must have thought: why not become a listed company and change over from the co-operative and enjoy stock market capitalization?  Except now – instead of the farmer and maybe consumer as master of the organization- the leadership probably  became a slave to shareholders and stock analyst expectations. A highly leveraged buyout plan  for Pringles seemed like a great idea.

It turns  out that the farmers walnut payments were shown in different years to dress up the numbers and both the CEO and CFO had to resign after an audit committee of the Diamond Foods Board discovered the irregularities. These alleged irregularities gave P&G the chance to walk out of the Diamond Foods deal and tie the knot with Kellogg's.

While everyone seems to have their own lessons from this fiasco – this blog would like to offer the following lessons for agricultural or producer co-operatives thinking of going public and changing their organizational form:

  1. Understand that a producer co-operative tries to maximize the owners' (producers) benefits. Marketing is first about getting the product to the market and consumed. This becomes more and more important in perishables like fruits,vegetable,milk. Even walnuts need to be consumed before they start turning rancid.
  2. In the process of marketing produce, co-operatives realize that branding helps realize better margins. Profits are shared with the co-operative owners at this stage.
  3. Going public is a great idea but everything changes – the owners change from the supply chain to shareholders and it becomes all about the stock price and performance with its usual hazards. Farmers becomes just suppliers and not owners.

A better appreciation of the above might have helped the Diamond Foods business deal better with farmer payments and the Pringles episode.  Farmer co-operatives worldwide will do well to learn from Diamond Foods before they go public with the stock markets rising again. Contact StratoServe.

How and why “content is king” in search marketing: look at Google Scholar

Unless you have gone through an excruciating  Graduate thesis process including a Ph.D. -in any field -and have tried to publish scholarly stuff- it's hard to "get" how and why content is king. Frankly, only recently has this blogger really started figuring out how and why content is king. The parallel  probably has its seeds in an early paper in 1998  by Google founders Brin and Page, then Ph.D. students in computer science at Stanford.

Sooner or later every Ph.D. student gets the message – a version of which this blogger heard several years ago and here goes:

"You are merely a soldier in the scholarly army that is pursuing knowledge. You have come       after many great minds – (for starters think Aristotle and Plato) – you will contribute – and move on – other   greats will come and build upon what you have done  and so the chain will go on…."

But your work must pass academic scrutiny – first to publish and then must resonate with your peers and they must "cite" your work. The citing is just the idea of page ranks and high quality that is at the heart of search engines' ranking logic.

The Google Scholar product is for the academic and scholarly audience and has the tag-line " Stand on the shoulders of giants." Here the ranking of any document is based on scholarly citations so try  any idea in any field. The more the citations- the more influential the article and scholar. Remember there are two sets of hoops here – the first is the rigid,unforgiving and brutal academic publishing process where you need to ensure that you are adding to what the "giants" have already said! But the second is having a "hit" article that is like any other creative hit like a "hit" song or movie. Just ask the many movie makers about what it takes to produce a "hit" movie!

In exactly the same way as Google Scholar – the search engines including Google,Yahoo and Bing  try to rank the non academic stuff. Remember here the first hoop of scholarly review before publication is missing so initially links and social media shares count. However,it's hard to pretend that you really like something- when you are well – only lukewarm to that content. Hence the famous "penalizing" in rank by search engines that is the bane of SEO when fake links are posted.

And the most amazing part of the content is king thinking is that appearances do not matter to search engines. A better  or worse photo is not differentiated by search engines as the search engines are only trying to catalog and put a quality rank on your "authentic" text content. Okay your website should not put off a visitor so good web design helps that way. Also your pictures must have a text description otherwise the engines just try to guess from the adjacent text.

So I guess, if you want your "content to be king" you need to put out more of it , more regularly and try to help your reader answer her/his questions about your product or service-authentically. Contact StratoServe.

Apple: when US customers demand better treatment of Chinese workers in the global supply chain

The Nike child labor controversy surfaced in a 1996 Life magazine story and consumer outrage prompted big changes in the way Nike manages its global supply chain and all this took some time. In contrast, the New York Times story on labor practices at the Chinese supplier factories of  Apple of just two weeks ago seems to have accelerated the on-line petitions at Change.org  and Sumofus.org now totalling in excess of 250,000 in a matter of days !

CNN reports that today a group of  a dozen peaceful protesters went with boxes of printouts of these signatures and handed them over to managers of Apple stores. Apple meanwhile has put out the following statement, that is widely reported and also appears on the Apple Website: 

“provide safe working conditions, treat workers with dignity and respect, and use environmentally responsible manufacturing processes wherever Apple products are made. Our suppliers must live up to these requirements if they want to keep doing business with Apple.”

Apple Supplier ResponsibilityWhat is amazing is the rapid traction this protest could achieve in a very short time. Apple's main website  i.e. www.apple.com on the day of this post has the "Supplier Responsibility" picture  on the home page along with the usual marketing messages  and links about  iPad etc.

The Apple protest-response is among the first cases  of  the global supply chain needing to respond to customer dissatisfaction that includes moderately problematic issues (e.g. carpal tunnel syndrome) in the developing world, where employment itself is really special for those at the bottom of the pyramid. Perhaps the diffusion of these subtler human working standards globally  will be helped by this movement. Contact StratoServe.

What’s your internal organization got to do with marketing and supply chain?

What's your internal organization got to do with marketing and supply chain? Well everything…. but first some nostalgia.

This is the 500th post of this blog and happily coincides with the 200th birthday of Charles Dickens who explored perennial and timeless issues of the human condition. So too with organizations whose challenges continue despite technology ,globalization and the Internet. Let's take marketing and supply chain in turn and see how it's so important for both types of leaders to account for the  organization within.

  • Marketing is defined as " the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large". (Approved October 2007 by the American Marketing Association). Keeping up with value  is the innovation piece and a timeless organizational challenge as the world becomes flatter and supply chains are repeatedly asked to find cheaper, better sources of products and services.Meanwhile organizations continuously try to figure out what their core competence is and try to outsource everything else.
  • Supply Management is defined as"The identification, acquisition, access, positioning, management of resources and related capabilities the organization needs or potentially needs in the attainment of its strategic objectives." ( 2010 Institute for Supply Management) .

If you think about it,  strategic objectives  are ultimately about providing value to customers and other stakeholders as in the marketing definition. Without providing value, you do not have a business.

Strangely employees in most organizations do know the above definitions but are generally unaware of where they fit in into this value creation process in the organization . This off course leads to the famous employee disengagement problem where about half the employees in firms large and small are disengaged. They would do exactly as told and not an inch more despite the old industrial order crumbling around us as Seth Godin is so fond of pointing out.

There was no supply chain management in the early days of the industrial revolution because everything was done in-house. So the command and control system worked great and education and training was all geared to "putting your head down" and just doing what you were asked to do- and you had a job for life.  The trouble is that the world has suddenly changed so no matter what your structured skill – someone in a low cost location can do parts of it and you need to move up in the knowledge chain.

Marketers and Supply Chain leaders on the other hand do not address the "internal" pieces of the organizational engagement problem. So you have marketing and sales with sudden orders that puts manufacturing and supply chain in a bind. The order was cooking for a while ( remember the sales funnel?)  and the rest of the internal organization was just not able to get an early heads up, probably because the sales folks felt better talking about an order – after they got it-  just to avoid blame in case it fell through.

So where does all of this leave organizations and their leaders in marketing and supply chain?  Two thoughts:

  • Do not consider meeting with your team, on an individual basis, as a waste of time. In the age of the individual a charged up individual who understands their "purpose" in organizational value creation is really on her/his way to engagement and actually lesser stress!
  • Reach out to internal users if you are in Supply Chain and internal manufacturing,planning if you are Marketing. Go slow on the industrial age model of spending most of your time on customers because if you have your organization on the same page- customer satisfaction and referrals in an age of social media will follow.

Contact StratoServe.

At 3.5 Million $ each: How many Super Bowl 2012 Ads will go viral?

At about 3.5 Million Dollars each the Super Bowl 2012 Ads do sound expensive. many advertisers have released their ads ahead on the web and here is a partial list of Super Bowl 2012 TV Ads. The question is how many of these will go viral?

With three days to go for the Super Bowl some of the Ads have already gone viral. Honda CRV has Mathew Broderick playing himself in the 80's classic Ferris Bueller's Day Off. The YouTube video has 8.7 million views since being posted by Honda on January 26 or in just 7 days. Since YouTube views are free and anybody who sees the ad sees it completely and in a pretty focused state of mind. The Jerry Seinfeld Acura Ad is doing even better at 8.1 million views within 3 days of being uploaded on YouTube. The Volkswagen Ad is also doing well with over 1 million views in two days.

Last year's Super Bowl audience was 111 Million and to think that the successful viral YouTube commercials will get over 10 million views even before the game starts is just amazing! That works out to less than $3 a YouTube view and since these clips are long ( more than 1minute) when you think of the 3.5 Million TV cost and that compares really well to search marketing keyword costs in say Google AdWords because in contrast to just clicking through  a Google AdWords  Ad   – the YouTube viewer is likely to  watch through the entire commercial.

So the question is that if you have a viral buzz creating TV  commercial how worth is your 3.5 Million $ spend on the  Super Bowl?  Really valuable because if the commercial is popular already, it's likely that folks that have wandered off to the kitchen during commercials , would be called back by friends to watch the hit hi-buzz commercials.

Most of the commercials on Sunday will not make it to the high buzz list and this blog guesses that a few commercials may not get uploaded to YouTube at all. But those that are available on-line will gather a decent viewership on-line following a kind of advertising decay effect. People will remember something about some ad and searches will reveal the on-line version of the commercial.

So if your company has a Super Bowl Ad – get it up on YouTube right away!  Contact StratoServe.

Two Years after Super Bowl 2010 Old Spice Ad: P&G reduces TV ups Digital Marketing

Old Spice Commercial

It took two years and 39+ Million YouTube views of the Old Spice commercial of Super Bowl 2010  for  P&G to announce that it needs to cut back on traditional advertising and  focus more on digital marketing.

Marketers worldwide revere P&G simply because many of the old world marketing concepts like “Brand Management” was invented by P&G. If it took 2 years for P&G to come out and say clearly that digital marketing needs more emphasis – I guess no other organization needs to feel defensive  for their slow action on digital and social media marketing !

Here are  some thoughts on the original Old Spice Ad that went viral during the Super Bowl of 2010 -exactly  two years ago this Super Bowl week:

  • The Old Spice Ad was brilliant. It was discussed endlessly on TV  talk shows and made its due appearance in the marketing and advertising classroom.
  • It reached above 3 million views right after the launch as this CBS morning news  segment  of February 2010 suggests.
  • But the Old Spice Ad’s popularity has been mounting as we can see from the ten fold increase in two years to 39+ million views on YouTube alone. According to Chairman and CEO  Bob McDonald the impressions are 1.8 Billion for the whole campaign. And yes they are free.
  • On the sales side Old Spice has extended its product offerings to a variety of deodorants and more shelf space at Wal-Mart. Sales did pan out hugely from the Old Spice Campaign and rose 27% within six months of the campaign start.

It’ll be interesting to know how the trajectory of views of  the Old Spice 2010 commercial grew. Keep in mind that this trajectory and growth was helped by Facebook and social media also.

Obviously unless your TV ad is great it can’t become viral. However, you don’t really need to spend hugely on  broadcast TV advertising but rather on the back end creative and production to improve chances of viral social sharing.Either way ,P&G’s clear stance on digital marketing in the consumer product mass market  signals great growth of digital marketing in all categories of products and service.

About StratoServe.

WEF Davos : Capitalism and Democracy try to find balance through CSR

The World Economic Forum (WEF) at Davos has in past years been among the most powerful B2B, B2G and G2G networking meets in the world. More effective than the United Nations, according to some.

This year (2012) there seems to be a marked and discernible change in this gathering’s tone and tenor. Leaders of both Governments and Businesses seem to realize that becoming  richer and richer is probably not enough. This realization as capitalism,democracy and affluence rises worldwide , 1 billion more global middle class by 2020 according to Muhtar Kent of Coca Cola ( see accompanying video). Here is some interesting stuff to think about from happenings at Davos in 2012:

  • Just as democracy rises worldwide from Burma to the Arab world and the Euro zone mess continues, the occupy movement has showed up in igloos at Davos. They are the challenge to  the excesses of capitalism from the developed west which now has its very own bottom of the pyramid (BOP) folks who survive on food stamps and live out of a car.  The Western BOP are far  better off though, than the BOP of the world seen in aggregate, who tend to die of hunger,famine or just oppression in non-democratic societies. People would never die of famine in democracies though, as Nobel Laureate Amartya Sen pointed out. That’s because, elected politicians irrespective of caste,creed or color tend to ensure that the bottom of the pyramid’s life improves, because that’s where the votes are!
  • But it is those at the top of the pyramid who realize that in a global world – the most disenfranchised protester in the most draconian of states can put out their voice on Twitter or Facebook. Thus, Bill Gates urges Governments and Corporates to step up philanthropy to the world’s bottom of the pyramid.  Because doing so serves five  purposes:
  1. It’s good karma !
  2. Your aid or philanthropy reaches more beneficiaries because of lower costs in the poorer parts of the world. More bang for the charitable buck.
  3. When people have basic food,clothing and shelter they are less likely terrorist recruits and  next demand electricity,water and roads, education and health ….. and jobs.
  4. With the above get better skills,earn more and generate  personal consumer demand.
  5. Help the overall global economy as richer consumers. This helps sustain jobs of new kinds in the developed world.

Hopefully the 2012 World Economic Forum will see a surge in Corporate Social Responsibility (CSR) and Corporate philanthropy worldwide.

About StratoServe.

Digital marketing logjam between organization,IT,Marketing and Ad-Agency

Digital marketing has two words and the first is digital whose legacy meaning is IT or information technology. The legacy meaning of  marketing in digital marketing is about being a "peoples person", being "creative" and as this blog  mentioned in a previous post – generally in favor of  an open bar in any celebration!The IT folks are obviously more technical and math oriented and since live depends on bits ( a precise 0 or 1) precision is what this community thrives on.

Now with digital marketing set match TV spending in 2016 time has come for both the IT and Marketing/Ad Agency folks to encroach into each others traditional territory or rather traditional mindsets. Here  are  some suggestions for IT and Marketing/Ad Agency leaders:

  • Marketing and Ad Agencies: Do not be afraid of the math and analytics involved in digital marketing. Start by looking at the Google Analytics/AdWords report of your website as a routine activity. Soon you'll be watching it every day and would have something meaningful to to discuss with your client (if you are the agency), with your agency ( if you are the client) and with IT folks of the organization in case they are involved in the website ( if you are marketing or ad agency).
  • IT folks:  OK you folks were smarter in school at least in Math and Physics than the colleagues in Marketing and the Ad Agency. But who seems to be more important in the organization? (probably Marketing). So all the "creative" and a more imprecise view of the world must be doing something for your organization. And think about it – why is it that in all your ERP related work there is a whole lot of talk about "understanding the business" . You have hordes of consultants just trying to match up the business , let's say your supply chain department, to the ERP module of say SAP Supply Chain.  While ERP is all about precisely trying to tie up the internal parts of your organization the website and digital marketing is about an external audience. 

It's hard enough to get internal departments to talk and understand each other so it's much harder to gain customer insights and explain simply the offerings and value you bring to your customers. Recognizing and breaking the logjam between the organization, IT folks and the Marketing/Ad agency will help. Contact StratoServe.

Is your web-site outdated? Connecting Strategy to Execution in a Digital World

Businesses small and large seem to be having a lot of trouble in keeping their websites current.  Call it the "perfection" trap, you want to upgrade the look,feel,functionality of your website and you simply delay putting stuff up. In a world of instant Tweets,Facebook and LinkedIn updates – isn't this shyness a bit incongruous?

When you don't put up details about say a new product, or some process – say the product complaints process- you are missing a huge chance to put out the word. The word is in red because search engines first recognize and categorize the word for organic search  as well as as for your on-line advertising message ranking. For example, if you are using Google AdWords and you started advertising your new product and your website only mentions it briefly- your ad will show up lower due to a low quality score.In contrast, just having more details of your new product will help.

Except for organizations that are entirely digital in their business model ( e.g. Google, Amazon, Facebook) most other organizations have a hard time to explain their strategy in a timely fashion on the web. So you tend to not only loose out on communicating cheaply with your customers, shareholders, the community – but all stakeholders. Particularly employees.

"We have email for employees, " you might argue – but that is really for specifics within a task and  by not articulating your strategy and how you intend to execute on the web – you need more emails to explain and you get caught up in micromanaging.  If folks in your team knew what the mission of the team was and how it fit with the organization's mission – and you had it out on your website- there would be less confusion and more action.

So get your organization's  word out !

SOPA : conflict between content providers and distributors in the digital age

Distributor-Manufacturer conflict and struggle for power is not new. Only now we have media content providers and tech distributors like Google and Wikepedia in conflict over SOPA.

It's quite amazing that once a manufacturer has a great product the tendency is to believe that you don't need marketing. Notable exceptions include Apple and the retail frenzy in China with the iPhone 4S. The late Steve Jobs knew that he had a great  product – so why invest in fancy stores in in expensive malls with Apple stores ? The answer is distribution or place the most un-exciting of the 4 P's of marketing! The late Steve jobs wanted a place in the mall while Rupert Murdoch is enraged at Google for being able to earn money from advertisements based on "stolen" content. Apple retail stores in China are not able to stop the scalping by enterprising retailers just as in the US you'll get almost anything on eBay.

If you are a content producer (like TV content,movies, music,newspapers,magazines,books,blogs) that can be digitized – your distribution has zoomed in the digital age. With this the challenge of getting paid for producing content has also escalated. Revenue streams for content producers are evolving and here are the some interesting ones:

  • Amazon.com as a bookseller is far more powerful  than authors and publishing houses. The 79$ Kindle comes with advertising – another revenue stream for Amazon. Publishers and authors can't complain because they are selling more copies via  digital content.
  • iTunes is able to get some money back to the musicians,recording industry.
  • Netflix and movie studios are constantly trying to re-work the revenue model.

But it's Google and Google AdWords that annoys Rupert Murdoch. Google has figured out a way to provide the most relevant search results to the Internet searcher. Remember, all Wikipedia pages do not feature at the top of Google results – the best answers to your search queries do.

It is this ability of Google (and other search engines Yahoo,Bing)  the distributor of information who works for the consumer and not for the manufacturer that has really reversed the value chain from

Manufacturer—->Distributor—->Retailer—–>Consumer  to

Consumer—-> Search engines—-> Content (Manufacturer)

The revenue model for content producers is still evolving but throttling the Internet with SOPA is not practical in the digital age with social media. Contact StratoServe.