The supply chain is as important as a backbone of businesses and the global economy, connecting raw material sources to the end consumer by managing the flow of goods and information, ensuring efficiency, quality, and timely delivery. This intricate system is crucial for providing products, boosting economic activity, modifying risks like disasters and geopolitical events, fostering innovation, and creating a competitive advantage for businesses.

Supply chain risks can cause big problems for firms. These risks come in many forms. Natural disasters, cyber-attacks, and supplier issues can all disrupt the flow of goods. The COVID-19 pandemic showed how fragile supply chains can be. Many companies struggled to get parts and materials. This led to empty shelves and angry customers. To cope, firms need to build supply chain resilience. This means having backup plans and suppliers. It also means using tech to spot problems early. Smart firms keep extra stock of key items too.

The bullwhip effect is a phenomenon in supply chain management where small changes in consumer demand create increasingly enlarged and distorted order quantities as they move up the supply chain from retailers to wholesalers to manufacturers. This exaggeration of demand leads to excess or insufficient inventory, higher costs, and reduced efficiency. It occurs because each stage in the supply chain lacks perfect information about actual consumer demand and tends to overreact to perceived changes, creating a ripple effect like a whip’s increasing motion.

The term “Bullwhip Effect” was first coined by Procter & Gamble researchers in the early 1990s. It described the phenomenon they observed in the supply chain for their Pampers brand diapers. They noticed that small changes amplified consumer demand as they moved up the supply chain, leading to significant inefficiencies and increased costs.

The bullwhip effect in a supply chain is when small changes in final consumer demand are magnified into increasingly larger fluctuations in orders as they move upstream to distributors, wholesalers, and manufacturers. This distortion causes parties to overcompensate for perceived changes in demand, leading to inefficient overproduction, excess inventory, stockouts, increased costs, and supply chain disruptions.

P&G experienced though the demand for their best-selling Pampers diapers was stable, the orders placed by retailers, distributors, and their own suppliers showed progressively larger fluctuations, leading to inefficiencies like excess inventory and increased costs. P&G coined the term to highlight this phenomenon, which they and other companies recognized as a major cause of inefficiencies in their supply chains. 

Common supply chain problems include material and labor shortages, logistics challenges like port congestion and rising transport costs, demand and supply imbalances, lack of visibility, geopolitical instability, and cybersecurity threats. These issues can lead to increased costs, operational disruptions, delays in delivery, and negative impacts on customer satisfaction. Some common problems for bullwhip are as follows: 

Demand Change at the Customer Level

A minor shift in consumer purchases occurs. A change in customer-level demand can disrupt a supply chain by creating sudden imbalances, leading to stockouts or excess inventory and increasing costs for businesses. This happens because the supply chain, which amplifies demand variability, struggles to react quickly enough to unexpected shifts, whether they are sudden surges or unexpected drops in demand.

Retailer Overreaction

The retailer, lacking full visibility into demand, overreacts to the perceived trend by increasing or decreasing their orders to the distributor by a larger margin. When retailers overreact to market conditions, they can cause supply chain disruptions through sudden spikes in demand (leading to shortages) or sudden drops in demand (leading to excess inventory). Overreactions, such as stockpiling or sudden order cuts, disrupt the flow of goods, causing higher costs, production halts, and potential loss of supplier and customer confidence. Effective supply chain management requires real-time visibility and intelligent demand forecasting to avoid these disruptions and ensure a smooth flow of products.

Amplified Orders Upstream

The wholesaler, receiving distorted information from multiple retailers, further inflates its own orders to the manufacturer. Where small fluctuations in customer demand become increasingly amplified as they move upstream from the retailer to the wholesaler, distributor, and manufacturer. This distortion leads to inefficiencies like excess inventory or shortages, increased costs, and operational instability, as each supply chain stage.

Magnified Demand Fluctuation

The manufacturer, with even less direct information about customer demand, drastically adjusts its production and orders from suppliers, creating the largest and most erratic swing.

Complex Supply Chain

The number of intermediaries between the manufacturer and the ultimate customer grows with a complex supply chain. Each intermediary may make assumptions about demand in a complex supply chain and place orders accordingly. Due to the sheer number of interconnected and interdependent entities, the vast amount of information and material flows involved, the global reach and multiple geographic locations of these entities, and the constant dynamic changes and disruptions that occur, making cause-and-effect relationships often unclear. These factors create a system with many moving parts that require significant coordination and can lead to cascading effects when problems arise.

Batch Orders

Batch order is a common practice in supply chain management where orders are placed in bulk at set intervals. The supplier and the retailer or distributor agree on a schedule for placing orders rather than placing orders as demand occurs. Batch ordering creates a distorted view of actual demand. This distortion of information leads to an excess inventory, which causes a stock-out or increase in holding costs. It can also lead to the bullwhip effect by creating a delay in the flow of information. This delay causes suppliers to react to changes in demand too late, leading to an oversupply or stock-out.

Consumer Pressure

Consumer pressure can cause the bullwhip effect by creating demand fluctuations that are difficult for suppliers to predict and address. It happens when consumers pressure retailers to stock a wide range of products and always have those products available. Consumer pressure leads to an overestimated demand and an increase in inventory levels. When consumers pressure retailers to stock a wide range of products, retailers place large orders to ensure they have enough supply to meet consumer demands.

Bad Communication

Distorted communication directly causes supply chain disruption by creating misaligned expectations, increasing operational costs, and leading to poor decision-making, which results in delays, shortages, and damaged relationships. This breakdown in information flow, especially in global networks, can be due to incompatible systems, data silos, security issues like cyber-attacks, or a general lack of real-time, transparent information exchange, hindering agile responses to unexpected events. It creates a lack of visibility and coordination among supply chain partners. It makes it difficult for suppliers to accurately predict demand and make informed inventory management and production levels decisions. Poor communication can lead to an overestimated demand and an increase in inventory levels, causing the bullwhip effect.

Price Volatility

Price volatility refers to the degree of price variations of a product or commodity over time. It measures how much the price of a product or commodity changes in each period.  Price volatility causes the bullwhip effect by creating uncertainty and unpredictability for suppliers. The rapid fluctuation in the price of a product or commodity makes it hard for suppliers to forecast future prices. This volatility causes them to overestimate demand, leading to an increase in inventory levels and the bullwhip effect in supply.

Lead Times Issues

Lead time is the time it takes for order fulfilment, from placing an order until the goods are received. Long lead times create delays in the flow of information between supply chain partners. This delay makes it difficult for suppliers to accurately predict demand and make informed inventory and production levels decisions. For example, if a supplier has long lead times, a retailer may place large safety stock orders to ensure they have enough inventory.

Incorrect Forecasts

Suppliers, retailers, and distributors often use historical data to make future forecasts. However, when there are significant changes in demand, it may cause them to base their projections on incorrect information. This wrong projection can lead to an overestimated demand and an increase in inventory levels. Incorrect supply chain forecasts create a vicious cycle of overstocking and stockouts, leading to increased costs, reduced profitability, and damaged customer satisfaction. This inaccuracy also triggers the bullwhip effect, amplifying small errors up the supply chain into significant demand and supply imbalances.

In globalized markets successful innovation has become a key driver for revenue growth, competitive margins and, in some cases, even for survival of the business. The ability to bring innovation to market swiftly, efficiently and ahead of competitors is becoming ever more significant. An efficient product launch requires incorporating great workable strategies and coordination among multiple functional areas, including product design, procurement, planning, manufacturing process, sales and marketing. In addition, as organizations increasingly leverage core capabilities of other companies, innovation has to be delivered through virtual networks, working with partners in a collaborative environment to bring product and services to market faster, smarter and cheaper. Today’s markets are swiftly altering leaving no room to even think. Cannibalization is a glaring reality and it’s better to accept and survive with it. The CEO of Apple Inc, Tim Cook says “Better to eat your own than have your own eaten by others”. That’s Apple’s philosophy on product cannibalization.

Market cannibalization refers to a situation where a new product “eats” up the sales and demand of an existing product. This can negatively affect both the sales volume and market share of the existing product. Market cannibalization occurs when a new product encroaches on the existing market for the older product, rather than expanding the company’s market base. Rather than attracting a new segment of the market and increasing market share, the new product appeals to the company’s current market, resulting in reduced sales and market share for the existing product.

Creative destruction cannot be avoided. When Joseph Schumpeter coined this term in 1942, he was damn sure that the future is all about impatient, over competitive ‘destructive creation’.  Though, Schumpeter’s idea of creative destruction was as the renewing of society through cycle of innovations, which would lead into higher levels of economic development and welfare. He also mentioned then that creative destruction would create discomfort and loss to the existing players while newcomers would benefit and increase value creation for broader society.

Organizations now not only need to integrate internally, but also externally with suppliers and customers, creating end-to-end supply chain processes and capabilities which differentiate on product and customer requirements. Successful innovation is of tremendous benefit to the organization while launching a new product. If the company can launch the product early in the market, it leads to the chance to acquire greater market share in introduction and growing phase of product life cycle management. Product launching time is also very important for success of product. Customer psychologies, customer need, number of competitors in the market, price driven by the market are most critical and important parameters for success of products. And, cannibalization is however accepted by organizations either internally or externally.

Market cannibalization can have a negative effect on a company’s bottom line, forcing an existing product’s life to end prematurely because sales shifted to the new product, rather than tapping into a new market as intended. At times, market cannibalism is used as a strategy if the company wants to increase its market share, and hopes that the introduction of the new product will harm its competitors more than it will harm itself; for example, when Apple introduced the more feature-rich iPhone and iPods that ate up sales for its lower-end iPods, including the Nano, Shuffle and Classic series. In marketing strategy, cannibalization refers to a decrease in sales volume, sales revenue, or market share of one product as a result of the introduction of a new product by the same producer. While this may seem innately negative, in the context of a carefully planned strategy, it can be effective, by ultimately growing the market share, or to please the consumers by meeting their demands. Cannibalization is a key consideration in product portfolio analysis. For example, when Apple introduced the iPad, it killed the market of the original Macintosh.

Another instance of cannibalization is when a retailer discounts a particular product. The tendency of consumers is to buy the discounted product rather than competing products with higher prices. When the promotion event is over and prices return to normal, however, the effect will tend to disappear. This temporary change in consumer behavior can be described as cannibalization. Though, in business this concept is known by different names in sales and marketing. What is happening in e-commerce? Some companies intentionally cannibalize their retail sales through lower prices on their online product offerings. More consumers than usual may buy the discounted products, especially if they’d previously been secured to the retail prices. Even though their in-store sales might decline, the company may see overall gains. The game of ‘volume’ leads to increase in sales with help of e-commerce.

Cannibalization happens even when companies – particularly retail companies, open shops too close to each other, in effect, competing for the same customers; e.g Nike or Bata having many outlets in an area for shoe markets. Cannibalization becomes an important issue in marketing strategy when an organization aims to carry out brand extension. Hindustan Lever’s Lifebuoy soap’s brand extensions are Lifebuoy Plus, Lifebuoy liquid and Lifebuoy Gold, since these brands have been positioned at different segments. Similarly, Amul butter, Amul ghee, Amul cheese, Amul chas and Amul chocolates are various brand extensions of regular Amul Brand. Companies make brand extensions in the anticipation that they can earn on the equity of the successful brands. Normally, when a brand extension is carried out from one sub-category; e.g. Marlboro Gold cigarette to another sub-category such as Marlboro Light, there is a possible occurrence of a part of the former’s sales being taken away by the latter. However, the strategic intent of such an extension is to capture a larger market share of a different market segments.

Kodak is best known for photographic film products. Its famous USP is “Kodak moment”. During most of the 20th century Kodak held a dominant position in photographic film, and in 1976, had a 90% market share of photographic film sales in the United States. Kodak was synonymous with the film. Do you know that Kodak had to struggle financially in the late 90s, as a result of the steady decline in sales of photographic film due to market transitioning to digital photography? But, despite having invented the core technology in film, as a turnaround strategy, Kodak focused on digital photography and digital printing. The lesson is that cannibalizing one’s own products can be a good thing, if it allows a business to prevent competitors from doing so. A good business is the one which can take flexible decisions and flexibly spin.

Marketing is all about reaching out to customer the maxim “When you are in Rome, speak Roman” describes fact of marketing. Despite having multiple laundry brands such as Cheer, Daz, Dreft and Tip,  P&G successfully introduced a custom laundry brand in India called Tide Naturals. It’s a unique product that suits the needs in the Indian market. P&G makes sure that when they enter a market, they adopt marketing approach that suits the local’s taste and tradition. They adopt appropriate yet diverse strategies. They realize that if they use the same marketing vehicles and distribution arms it’s hard to bring new benefits to different customers. By introducing Tide Naturals they cannibalized their existing laundry product’s market share.

The fact is companies must come to grasp with their cannibalization concerns, because getting overly defensive can restrain powerful growth strategies. If an opportunity is large enough, somebody is going to find a way to grab it; it is therefore a smart move to seize the opportunity than the competitor does. In the long run, survival matters.

While many developing nations in world are adopting strategies of growth and fast forwarding their cultural and business philosophies they are not even aware that a major demographic shift is about to convert their societies and their businesses drastically.  And, they are not ready for such a colossal change. The statistics are undeniable. In most developed economies in world, the workforce is progressively aging. Do you know the declining birth rates and the aging of the baby boom generation (workforce between the ages of 55 and 64), are growing faster than any other age group? The desertion of this experienced, talented and mature workforce is challenging organizations to fill their critical leadership positions.

Almost 65% of organizations in the developing countries are struggling to fill the top positions, which include positions in research & development, sales, marketing, HR, IT, logistics, law and finance. In fact, one in three organizations world-wide is struggling to fill key positions.

According to Manpower Group, India, MD Sanjay Pandit, “Businesses need to adopt a long-term approach to ensure they have the talent they need to achieve their objectives.”

The skill gaps for the higher positions are large and wide. Because most oganizations have become terribly focused on growth they have ignored the future leadership crisis. Organizations are lacking the ability or let me put it this way: organizations are ignoring investment in training and developing the future – the next generation of executives. According to Booz & Company’s (the publisher of strategy+business) recent report based on in-depth analysis of India’s top 500 companies, by 2017, 15 to 18 percent of leadership positions in some big companies will be vacant. The fact is they might be filled by people who are unfit for those jobs. This implies that companies will be missing almost one of every five leaders they need. In the absence of proper leadership, those companies can go off track and might lose out on several growth opportunities.

The Tata Group is giving its flagship leadership programme, TAS, a makeover. The group has started focusing on ’employee life cycle’ which studies the employee’s progression in the organization from joining date. The group now centers on developing, mentoring and managing the career of every manager listed under the programme. At Hindustan Unilever, the FMCG giant, the managers at all levels are occupied in identifying talent among their subordinates.

At Vodafone, sensing the need to develop talent for senior roles, the firm has extended its cross-functional induction program to 45 days which earlier was shorter. Across India Inc, companies are waking up to the need of developing leadership pipeline; they are building and harnessing in-house talent for critical roles. While organizations like Hindustan Unilever and the Tata Group have long been cited as models of good internal grooming, those like Sapient, Vodafone and HCL been known for their exuberant HR policies for leadership development are tweaking existing strategies to make their internal processes more vigorous. Some dynamic companies are waking up to the forthcoming disaster of leadership crisis. It’s becoming need of the hour for business organizations for building internal talent for significant roles.

Job rotation is a method adopted by many successful organizations in the world, as technique of developing skills of employees in a variety of jobs. When employees perform the same job functions every day without any change, they experience a feeling of fatigue, lethargy, monotony, and carelessness. They get a feeling of burnout, which decrease their productivity, increases absenteeism, and the bored employees start looking out for new jobs. This all leads to organizational dysfunction. However, when employees rotate across different positions regularly, they experience freshness in their employment.

This gives a change to the employees by helping them to learn new skills. It allows the employees to work closely with new departmental heads, peers and subordinates. By job rotation both the organization and employees can find their “fit” in a particular position; a person might be just the appropriate candidate for a position, which is not known because of his wrong posting. Often organizations have found the right candidate for various positions by adopting job ration policy. Organizations have experienced better understanding and cooperation among the employees by rotating individuals between dissimilar or contrasting business units. Increased movement helps to break down hierarchical perplexity and misinterpretations if any; this in turn reduces grapevine and politics besides talent hoarding by some business units. For example, when a sales worker is relocated in purchasing department, he understand implications and problems faced by the purchasing department staff, the guidelines under which they need to work, also how the quality of purchases influence the final product which the sales person is required to sell.

It is difficult to retain the anxious and hasty generation Y workforce in organizations. They want novelty and challenge in their job profiles and they want the best from the jobs immediately compared to their older counterparts. The new generation is in search of an “ideal” profile, fatter pay packets and quick promotions. They don’t mind changing jobs often. Many organizations are therefore experiencing challenges in employee retention.

Some leading organizations like IBM, P&G and HUL use job rotation policy moderately for retaining a mix pool of experienced along with freshly recruited talent pool. Some seasoned employees who are well versed with the company’s policies and culture befall useful to replace personnel who may leave or move up in the organization. The existing employee’s strengths and weaknesses are known and therefore, staffing becomes easier.

For a good number of years, organizations across sectors have neglected the scouting process of leadership either due to a poor practice of succession planning or insecurity among the senior leadership. According to a KPMG report, nearly a fourth of organizations have filled less than 25% of critical roles with candidates who are not fully prepared for the role. Majority of companies are most worried about having an insufficient pipeline of young leaders and a lack depth of internal candidates for critical roles. And, some companies are not even sure about the efficacy of their leadership pipeline-building mechanisms. Organizations are having a tough time to the constantly led talent fight. Post the global financial crisis, companies have been focusing on their survival rather than talent management. This critical matter might bounce back any moment.

But this is where company like HUL stands apart. Managers in the junior and mid-stages of their careers have gone on to assume leadership positions across sales, media, IT, finance and infrastructure. Under its ‘post graduate scheme’, young professionals are trained over 15 months in different functions like customer development, finance, marketing and supply chain. HUL believes in the job rotation in its global MBA recruitment channel. The job rotation gives a feel about the candidates; each exposure tests the capability of the candidates in each functional area.

In its cross-function induction, Vodafone has included elements like market visits, peer investigation, cultural assimilation and select classroom sessions. At HCL, one of the talent harnessing programs is designed around Dr Michael Watkin’s ‘First 90 days’ principle. During the five-month programme, called ‘HCL Certified Leader’, leaders learn to diagnose situations and apply skills developed through real-time experiences. Their ‘Top Gun’ programme enables high performers to work on real business situations with the senior leadership team. Through such innovative programs HCL has over 1,000 positions with a named list of potential successors across all levels of responsibility. Now, that’s really noticeable move!

Smaller companies are also working on improving leadership processes. Over the past few years, there has been a big shift in how the company looks at talent reviews and succession planning. To conclude, organizations must understand the reality; that is – there are no “ideal” candidates and there is a highly limited supply overall. They can adopt “boomerang” hiring. Former employees who left the organization can be invited back. They will bring fresh viewpoints back into the business which might give a push to the expansion. They may have left as mid-level managers but they can return at senior-level.

It’s better to set the basic requirements for senior positions, what minimum standards are and what “nice to have elements” the company is looking for. I think organizations can compromise a bit. They need to determine how important qualifications are. They must resist the haste of defining ‘qualified candidate’ made without careful inputs and without taking the business environment into account. Most importantly, if organizations refuse to adapt to reality the challenge of shortage of talent will blow out of proportion.

]]> https://drvidyahattangadi.com/close-those-talent-shortage-gaps/feed/ 0 https://drvidyahattangadi.com/marketing-myopia/ https://drvidyahattangadi.com/marketing-myopia/#respond Mon, 06 Oct 2014 04:19:15 +0000 http://drvidyahattangadi.com/?p=1564 Marketing Myopia

The term Marketing Myopia was coined by Theodore Levitt in his research paper published in 1960 in Harvard Business Review (HBR) which suggested that businesses will succeed only if they give the customers what they want. The businesses should meet the customer’s needs, to succeed in market.  A business live and dies by its customers and marketers don’t have a whole lot of room for errors to take care of them.

Levitt appealed the marketers through his paper to have a broader view of market. He called the narrow view of marketers of not giving consideration to customer’s likes and dislikes Marketing Myopia. According to Levitt, narrow-mindedness of marketers leads to failure only. Complacency in terms of a product orientation – wherein marketers are more concerned with product quality, product precision and uniqueness of product and when all efforts go in making the product with distinct benefits, the customer direction is often lost. When marketers are infatuated with consistent product improvement and they typically believe that an ideal product will sell itself shows their shortsightedness.

Similarly, when marketers concentrate on the manufacturing process keenly to make operational efficiencies and production optimization they tend to lose the customer focus; their key objective centers on production improvement processes. This orientation was prominent during the industrial era and in the capitalism period of the 1950s.

In the 1930’s, competition had increased to a great extent; the marketer’s basic focus remained on production precision and in many segments the demand remained unfulfilled. Automatically, firms started adopting sales orientation. When marketing idea rests only on the selling of goods or services which means when marketers concentrate only on pushing sales without really bothering to offer the products and services as per customer’s requirement the marketing focus is lost.

Levitt presented his viewpoints very accurately in his famous paper titled “Marketing Myopia” that contentment of the marketers in terms of product, production and sales is a pure illusion which can cause their failure in market. In my opinion Theodore Levitt was the original Marketing Guru; because this famous paper of Levitt marked the beginning of the modern marketing movement 54 years back. The concept is based on pragmatism. The paper was based on primary data collected from the oil companies. Levitt had redefined the oil companies business as “energy business” than just petroleum selling companies. The CEO’s of oil companies then started concentrating on vision and mission with a new spectrum.

One reason for the shortsightedness is due to unpredictability of the future. While this is a justifiable concern; in spite of a whole range of sales prediction techniques available in the market, the sales cannot be forecasted precisely.  But, the other view point is that when the market changes, it offers more opportunities to marketers; though it is not easy to win the market by creating an entirely new product category. Therefore, concentrating on the offering as per the customer’s need in the initial stage is a must.

In 2007, when Microsoft launched Windows Vista, the media and the public had high expectations. So did the company, which allotted $500 million for marketing research and predicted that 50% of users would run the premium edition within two years. But the software had so many compatibility and presentation problems that even Microsoft’s most loyal customers revolted. Vista flopped, and Apple’s Mac OS X desktop operating system clicked, causing many consumers to believe that Vista had even more problems than it did. Apple’s entry at the right time when market revolted against Vista gave it advantage of prohibiting Microsoft’s monopoly to a great extent.

The elements of a product such as core of the product – the ingredients, shape, size, color, design of product, the pricing and the packing of product matters.  As the business moves through the stages of product development, in the initial stage itself an understanding of the product development strategy helps. Making a good or even superior product cannot ensure that anyone will buy it. But, understanding of market, and the understanding of what consumers want does help in positioning of the product on the right plank.

Two strong reasons for marketing myopia:

Lack of depth in understanding the target market:  Marketers must know what makes their consumers buy their product. Which problems of their consumers need to be solved? Understanding the perceptions of the consumers helps in designing the products.  This is not an easy task with most products. When products fail, it is difficult to pinpoint which customers’ i.e which segment caused its failure. It implies ‘everyone’, which in fact means no-one. ‘Everyone’ includes the entire distribution approach, promotional strategy and the after sales service strategy. For example, if the product is a medical product, then the chain includes the channel partner who sells the product, the hospital that buys it, the doctors who uses it and the patients who benefit from it. All of them are involved in failing the product. They are all involved, but each must be considered independently while deciding the strategy. All of these players have different needs. Each player’s need requires to be understood. A detailed dialogue with each one and a detailed observation of each one will make the job easy.

Often marketing research is skewed when questions are not asked pin pointedly. When questionnaire is administered with blurred objectives the intent gets misunderstood. New products can take on a life of their own within an organization, becoming so hyped that there’s no turning back. Coca-Cola’s C2 (diet Coke) brand was a failure because of the fact that C2’s benefits weren’t distinctive enough. Coca-Cola identified a new market: 20 to 40 years old men who liked the taste of Coke excluding its calories and carbs and liked the no-calorie aspect of Diet Coke but they did not like its feminine image. C2, which had half the calories and carbs and all the taste of original Coke, was introduced in 2004 with a whooping $50 million advertising campaign. But, the product failed miserably due to skewed understanding of what customers really wanted. The budget couldn’t overcome rejection of the hybrid drink; the customers wanted full flavor with no calories or carbs, not half the calories and carbs. Friends, but the low-carb trend was short-lived. Positioning a product to leverage a fad is most common mistake made by marketers.

Absence of value proposition in pricing: The exercise on pricing process by which a company adds value to a product or service includes designing of product, production, distribution, marketing, and the provision of after-sales service. The pricing is also based on how each participant is going to make money from the product and what precision each of them is going to lend in making the product valuable for the final consumer.  This should be a formal process with a spreadsheet that quantifies the value proposition and commercial model. In 2004 P&G launched a scent “player” that looked like a CD player and emitted scents (contained on $5.99 discs with names like “Relaxing in the Hammock”) every 30 minutes. The company hired the singer Shania Twain for its launch commercials. This confused consumers, many of whom thought the device involved both music and scents, and the ambiguity caused failure of the product.

P&G lost heavily even because of its ambiguous pricing: hiring the celebrity singer, the advertisement campaign, the channel partner’s cost everything.  When a product is truly revolutionary, it requires a special handling. A strong educational campaign of how to use the product perhaps would have helped in boosting the sales of the product. The pricing of the product was randomly misunderstood by the consumers.

There are umpteen cases of product failures and product success; the fact remains that an organization needs to select and develop a product as per its target market’s taste, determine right price, select the ideal distribution channel to reach the place and develop and implement the right promotional strategy.

Organizations can avoid becoming myopic by listening to what the customers are saying; never stop evolving. Be mindful of new trends and remember those trends may live for long or die shortly. Keep adding new products to portfolio – practice self cannibalization, by doing so, they can enjoy bigger market share by gaining fresh frontiers. Listen to experts – be updated about new trends, new development on Internet – websites, blogs, micro blogs and industry analysis.

Corporate communication plays a key role in how investors, suppliers, employees, competitors, government and the general public perceive a company. The corporate communication department often reports directly to a company’s chief executive officer, while serving as advisers in managing a company’s reputation. They help firm’s leaders prepare for media interviews, develop messages to deliver to investors and employees and suggest new initiatives to keep a company ahead, to make its existence prominent and keeping its communication up-to-date and progressive with its stakeholders. Corporate communication is a management function or department, like finance, operations, logistics or marketing dedicated to the distribution of information to key constituencies, and the implementation of corporate strategy as well as the development of information for a variety of purposes for the organization.

It consists of both Internal and external communication. Internal communication is the process of exchanging information among the people of different level or internal participants within the organization. It is directly linked to the process of human resources. It connects the employees with the company’s larger picture; reminding them on regular intervals regarding the company’s goals & objectives; letting the employees know about the company’s achievements, advising on corporate strategy, talent management, employee engagement, business strategies, change management, business development, CSR, motivating & empowering employees through various developmental schemes. Further letting the employees learn about the new initiatives taken by the company, training and development of the employees, mentoring and business reviewing etc.

And, external communication is the process of keeping the external participants informed about organization’s well being and how the organization wants the external participants to get involved with their business.

Both internal and external communication mediates heavily on business and its positive influence for furthering the organization. It also holds an important spot in the organization structure. If effectively used, corporate communication can certainly help the organization in overcoming some choppy issues and curtailing the bad media effect. The leaders need to understand and appreciate this and should make use of this level-playing strategic tool for utmost benefit. It helps reducing and ignoring mundane and typecasted messages by reducing the uncomfortable gaps with its stakeholders. It’s no longer a mere ornamental corporate mouthpiece.

Corporate communication consists of some complex responsibilities, such as:

Rapport with media: Corporate communication managers are friendly with the media at large. It involves write-ups on various happening in the organization such as appointment of new CEO, new products being introduced by the organization, CSR initiatives taken, diversification opted if any, association of the firms with various bodies etc, etc. This department responds to the media’s queries. Corporate communication department watches over planning for news conferences, including selecting the site for an event, arranging for banners and other graphics to be displayed at the event, preparing folders of information to distribute to the media and preparing executives to speak at news conferences.  It assists the spokes person with relevant data and organizes the spokes person’s interviews in various media vehicles such as radio, TV, newspapers, websites etc. In short, this department is well associated with the media by devising strategies to do away with any sort of wrong propaganda.

Public Relation: The department is responsible to maintain healthy and sociable relationships with customers by responding to inquiries from them. This task involves producing newsletters, brochures and other printed materials designed for the general public. It also manages the company’s website and social media presence, which includes monitoring what customers and clients are saying about the company on social networking websites and responding to imprecise posts if any. The department is extremely alert to wade off any defaming posts on social media. They respond directly to calls and emails from citizens and customers with questions about a company’s plans or activities. They arrange for speakers from the company to make presentations to local community groups and may facilitate group tours to the company’s works.

We can no longer take social media lightly. It isn’t just an online space for posting holiday snaps, pseudo-philosophical opinions or pictures of pets, friends and family functions.  Since the use of online social networks like LinkedIn, Facebook, Twitter and YouTube have become widespread, businesses have to incorporate these communication channels into their marketing mix else,  they might get left behind. It has become an important tool to increase brand awareness, to promote products or services, to educate, entertain, recruit and collect data about current and prospective clients.

These days corporate blogging has evolved its presence much more than ever imagined. It isfar beyond the idea of personal journaling.  Corporate are using blogging as a flexible tool to connect with stakeholders at large. The websites of organizations are supported by multiple blogs subtly discussing the organization’s mottos, goals, and philosophies. Blogs display the products and services of the organization in more than pink health.  You may be surprised at the diversity of blogs in these examples; Caterpillar, Starbucks, Marriot, General Electric, Sony, Lever, P&G all of these and many more companies are making best use of blogs.

Look at the blog of Fiskars and you will be amazed to see how in the world you create passion for scissors!!  Fiskars has done it in one of the most creative blogs in the corporate world. The company took help from four scrapbook fanatics who demonstrate their love of crafting with scissors. It’s beyond imagination, that some such idea would work wonders. I tell you friends, marketing is all about imagination. This blog is one of the greatest marketing wonders I have ever seen.

Similarly, Southwest Airlines has used blogging very well. It is one of the world’s best-known corporate blogs. It’s also one of the most honest blogs. It carries good, bad, ugly experiences of people with airlines. The blog talks about travel and the people who make it happen. This is the anti-corporate-press-release blog. Southwest has wisely used its blog to connect with its employees regarding what passengers want from the airline, what their expectations are.

I have to mention here how Mastercard and Paypal have leveraged social media in innovative, creative way that has shored up their businesses. So coming back to corporate communication departments – they are responsible for using social media in their favor.

Communication in adversity: In anyevent which threaten public safety or a company’s reputation, corporate communicators need to swoon in as guards. They need to immediately advise CEOs and senior leaders how to manage the crisis. Candidates specially trained in the issues unique to crisis communication helps corporate communicators prepare for events such as chemical spills, blasts, violence in the workplace, an accidental death on the job, murder, layoff announcements and allegations against company’s wrongdoing. They closely guard the company’s reputation by keeping a friendly rapport with the employees to understand their pulse and develop crisis communication plans before disaster such as strikes or layoffs. The corporate communication department needs to work with attorneys, government, regulators, politicians, police, and magistrates. In case any accidents take place they need to respond immediately by rushing the injured employee to the hospitals, getting the aid of insurance etc.

Thus the department works friendly with the in-house people, external stakeholders, government, police, hospitals, insurance companies, entertainment agencies and media, NGOs so on and so forth. With the increase in importance of communication in business, the status of Public Relations (PR) has changed fundamentally. PR has transformed itself and has rechristened as Corporate Communication. It has become one of the pivotal functions in the management. It is required for a cohesive and joint purpose and direction. In the big, bad world putting the right foot forward is a must for any organization. Communication today binds the company with the outside as well as inside stakeholders. The world economy has opened its doors to the global market. This demands an organization strong in foundation, leadership, clear business focus with strategies, motivated skill-sets and adaptable management.

If you are good in written, oral communication; if you like connecting with people, if you are a go-getter and are alert, quick thinker please take corporate communication/PR as your career. It has very bright future.

A group of closely related products constitutes a Product Line. Managing supple product lines involves more than just complementing resources for existing products.  Product managers must help maintain a full pipeline of new products and product enhancements. For Product managers managing various product lines and the overall product mix of the company requires resourcefulness and watchful market intelligence. Product management raises complex issues and to solve those issues the product managers need to juggle the product portfolio wisely.

Hindustan Unilever (HUL) the leader of consumer care products juggles its detergent product line. To elude competition for its premium brand ‘Surf’ from brands like Ghari, Sasa, Point etc HUL has down stretched its detergent line downwards with low priced detergents such as Wheel.  For many companies, this part of the process is driven internally, while focusing purely on allocating resources, concentrating on ROI, and risk/return.  Juggling with product mix needs constant thinking, re-thinking and a lot of market information. Companies need to strategies their product offerings while internally shifting their efforts on product positioning.

One of the many reasons Google consistently brings novel, world-changing products to market is because of their collaborative efforts in Product Management. They are constantly focusing on the future and their team works closely with creative and industrious technicians and engineers to design and develop technologies that improve access to the enormous world information. Google takes the responsibility of guiding its customers right from educating them. Google believes that innovation comes from anywhere; it can come from the top down as well as bottom up, and in the places you least expect. The focus is always on the user.  To give another example of how Google keeps inventing – its engineers came up with the idea of driverless cars after seeing that millions of traffic deaths come from human error. Google already had all the building blocks in place to build a self-driving car – Google Maps, Google Earth, and Street View cars. Working with an artificial intelligence team at Stanford University, Google engineers have produced experimental cars that now have travelled to Lake Tahoe and back to the Bay Area and have given the blind more independence by driving them to shop and carry out errands.

Appraisal of each product line is non-stop process in progressive organizations.  These organizations are high on market intelligence. A constant monitoring of the product line helps organizations   in line stretching, line pruning, line filling, brand/line extensions, brand rejuvenations, brand re-launches, portfolio restructuring, product quality up-gradation, packaging innovation etc.

All said and done, when managing ideas for building an expandable portfolio project and products, it’s difficult to know which opportunities show true promise and which don’t. That’s why it’s imperative that product portfolio management be integral with the tools that product development teams use to collaboratively create products and execute the project plan.

One of the major challenges Indian pharma companies are facing today is of handling diverse product lines; the reason why they are unable to handle flexibility  in diverse product lines is that their profit margins do not reflect the constantly increasing investment in drug development. Frost & Sullivan the famous market research company reports that the low returns on investment coupled with various regulatory issues account for the declining focus on research and innovation in the pharmaceutical industry in India.

Since product line involves a collection of related products, sometimes, it may so happen that a particular product line adversely affect the sales of a product in the line, instead of being complimentary to it. HUL controls about 60 per cent of the soaps in the Indian market with brands including Lifebuoy, Lux, Rexona, Breeze, Jai, Moti, Hamam, Liril, Breeze, Dove, and Pears. These brands compete with one another on the shelves creating brand cannibalization. Many of these take thrashing from their sibling brands.

Line filling

In today’s markets, various products ranged from tires to clothes are becoming increasingly value centered. More and more buyers are turning from status and luxury to lower-cost brands that deliver satisfactory quality and features. To fight this trend or to take advantage of it, firms are offering minor versions of their traditional brand-product package. Firms like HUL, P&G, Dabur, and Godrej everybody is forced to offer differently priced products – so their product lines are filled with products that suits peach pocket in each segment.

Cannibalization starts as soon as the consumer exhibits brand switching behavior or even before that. It starts manifesting itself when the manufacturer asks the retailer to stock the new product. The new product launch gets a priority and is at times stocked even at the expense of other brands. But, companies need to take balanced view on cannibalization while line filling.

Firms like Videocon have done line filling fruitfully to plug certain gaps in a range. The intention of the firm was to be seen as ‘full line’ company and customers find a full basket of the products under one roof. In its product line of room air conditioners Videocon initially had just two or three models. But within two year of entry, Videocon introduced a dozen of models. The offers included three models in split ACs, two models in window ACs with rotary compressor and six models in split ACs with reciprocity compressor. By doing this Videocon rapidly improved its market standing and rose from the position of new entrant to a company offering relatively full line products.

Line pruning

Global marketer P&G feels it is better to get rid of complexities and maintain simpler lines. The company firmly believes that whenever it can apply an existing product formula, or package to a new market, it can save a lot of resources and can also move faster. It is famous that this company in 1990s slashed the number of items to almost half: fewer shapes, fewer sizes and package formulae. P&G had thirty one versions of Head & Shoulder shampoo and fifty two versions of Crest tooth paste. The Head & Shoulder brand was pruned to less than half, to 15 variants. It went ahead and pruned its famous Crest toothpaste brand also substantially.

 In Japan, P&G cut the number of Max Factor brand of mascara and foundation items from 1,385 was slashed to 828; the cut took place within just one year, but the sales went up by 6%. P&G also withdrew brands from the market in which it could not be leaders.  In the product line of soaps and cleaning materials, it withdrew 11 brands, like Lest Household cleaner and Lava soap. P&G’s pruning exercise is an excellent example of harmonizing the product lines.

 Stretching down the line

I want explain this conceptby giving a brilliant example of TTK Group. Sometimes,when a company initially takes its position in the high price-slot segment stretches its product line downwards by offering lower-priced products in the same line for lower markets.  For the TTK group, pressure cookers are one of its major product lines their brand ‘Prestige’ is one of the leading pressure cookers in the market. Prestige enjoyed 26% market share in the 1990s. Its major competitor being Hawkins, TTK decided to expand the reach of Prestige to the lower end markets also. The company launched Prestige Popular. It was designed as an economy model and offered to the price sensitive segment. Through this down stretching Prestige increased its market share sizably.

 One more example of stretching down the line is of Parker pens. It was operating in the high price slot of the pen market for several decades. To reach the mass market Parker pens decided to down stretch its line by offering low priced models of pens which the masses could afford. This strategy worked wonders for the pen company it has now become a house-hold name.

 Stretching up the line

This happenswhen acompany is initially positioned in the lower-end of markets and decides to pull its product line by offering high-priced products for top slots. This is called stretching up. The firm moves up its original posture and makes higher priced offers from its basket. Earlier, Philips was synonymous with low-priced two-in-ones, with its wide offers in the Rs.1, 000-2,000 price range. The company soon found that to become worthwhile player in the market it had to stretch up its line for the richer customers. Philips stretched up the line by bringing its powerhouserange in 1991 which ranged between Rs.6,000 – Rs.9,000. In 1993, Philips also climbed the ladder by offering power play range to cater to the top and middle ends of the market. The Power Play priced from Rs.15,000 – Rs.25,000 Philips doubled its profits by stretching up the line and became a household name for the higher end markets too.     

Companies should rationally position and re-position product conflicts within the product line. The marketing strategy of a firm
can place products in a product line in such a way that the products can co-exist, grow, complimenting the streak. A company can add new brands, prune some brands, and rejuvenate some brands by stretching the product line upwards or downwards. A marketing savvy organization can come up with new parallel lines.   The results of efficient product lines depend on formulating elastic lines depending on internal and external environment conditions. The parameters of the product line such as the length, width and depth speaks a lot about the firm’s business policy. Just a piece of advice that the leaner the line the better it is to handle in crisis. To conclude, successful organizations are customer-sensitive and flexible to change.

Despite a growing global population, different branches of education, increased numbers of professional institutions, higher education being adopted as important agenda by governments, all over the world the availability of skilled workers is actually shrinking. This is because less importance is given to analytical skills, strategy designs, conceptualization, sensitization to real time issues and contemporary issues. The dynamics of demographic gaps in developing world related to age and sex are drastically bizarre. Birthrates are still high, and population is growing. While the younger population is growing in numbers, the older population’s longevity due to innovations in healthcare is increasing.  Over the next few decades, many countries will experience what David Bloom, chair of the department of global health and population at Harvard’s School of Public Health, has called a “demographic dividend”: a rising proportion of young people entering the workforce, driving productivity and economic growth.

An estimated 31% of organizations worldwide find it difficult to fill positions because of talent shortages in their markets, reports the 2012 Talent Shortage Survey from ‘Manpower’, an international employment agency. When it comes to attracting employees with critical skills, the task becomes even more difficult. Today, 65% of global companies and more than 80% of companies in fast-growth economies are having problems finding employees with the skills they need, reports Towers Watson, an HR consultancy. This fact is despite the growing ranks of college-educated workers and the high unemployment in some of the best-educated markets.

Charles Handy, the Ireland born writer and management philosopher is well-known all over the world for his work on organizational structures and designs. Handy told the world that the perennial shortage faced by the business world for the skilled manpower will be solved by the Shamrock kind of organization. The shamrock leaf shape is a symbolic representation of an organization with three types of workforce, having a main body of core workers with connected lobes of part-time/temporary workers and freelance workers. According to him, this structure of workforce symbolizes the Shamrock ( each leaf symbolizing one structure of workforce). The 3-leafed clover or shamrock was supposedly used by St Patrick to illustrate the Christian doctrine of the Holy Trinity. This says that God exists in three forms – as God the Father, as God the Son (ie Jesus Christ) and as God the Holy Spirit. Handy describes the Shamrock model as the network model of organizations. A network-based structure manages the diverse, complex, and dynamic relationships among multiple organizations or units.

The first leaf consists of core workers in the organization. They are qualified professional technicians and managers. They are essential to the continuity of the organization, and have detailed knowledge of the organizational work culture, processes, objectives and practices. They are on the roll of the organization. The core workers adhere to the organizational rules and regulations framework.

The second leaf consists of operational outsourcing of the company. The second group consists of contracted specialists such as the advertising firms, R&D, computing, security and the catering and courier services. They operate with the organization’s existential culture and are rewarded with fees rather than with salaries or wages. Their contribution to the organization is measured in output rather than in hours, in firm results rather than in how much time is spent by them.

The third leaf of Handy’s shamrock consists of a flexible labor force, discharging part time, temporary and seasonal roles. They too operate within the organization’s culture. Handy says though they may be employed on a informal and relaxed basis they must be managed systematically and not casually. Their worth should be measured in terms of their output. They usually consist of part time employees in production, sales, IT, R&D and other processes. Sometimes they work from their homes and are electronically linked with the organization.

The best example of Shamrock organization is various SBU units of Rank Xerox, the UK based company.  In the early nineties when Rank Xerox experienced that their business processes were not sufficiently documented and this was causing many hurdles in their system they went in for business area analysis (BAA).  They identified 145 distinct business processes and 80 data entities. Through a process called “affinity analysis”, these two inputs were used to form a 145 x 80 matrix. Affinity analysis allowed Rank Xerox to identify clusters of processes and data relationships. 17 business processes were identified, which matched the functional areas reasonably well. Feeling that 17 distinct areas were too many to redesign at one time, senior management prioritized these into seven main areas. They were customer order life cycle, customer satisfaction, installed equipment management, integrated planning & processes, logistics, financial management, personnel management. Without skilled and experienced manpower the business integration was not possible. Xerox adopted the Shamrock pattern, besides their core employees they hired operational outsourced labor and a mix of flexible part-time labor force; thus growing in the Shamrock way.

In the present scenario not only business organizations but even governments of many countries have started operating in the Shamrock way. The Brazilian government has proposed a new outsourcing commission, an organization that would be able to define and enforce new laws that affect buyers and sellers of outsourced services. The first point to note is that the commission is aiming to respond to new corporate structures that have long been common in the US and Europe. It has been common for companies to explore the outsourcing of non-core processes. The commission aims at helping bring in the Brazilian employment law into an age where companies are not single bodies, but collectives of different legal entities, individual contractors, and occasional collaborators. If you analyze closely there are specific areas where Brazilian employment law is quite uncommon compared to other nations.

Handy has gone on record stating that more and more individuals will opt out of formal organizations as the work culture restricts their creativity and freedom. The breed of intelligent and artistic workers prefers selling their services at a pace and at a price which suit them. We already are seeing some dynamic organizations taking real advantage of Shamrock style. Handy argues, nevertheless, that organizations can do a lot more to help the individuals channelize their creativity and innovativeness and by doing so rich profits can be reaped.  We are witnessing far-reaching cultural styles in business operations today. In an ever clambering world of business organizations like LG, Samsung, GE, P&G, HP, Timberland etc are already using principles of Shamrock organization. These organizations have realized that innovations are fostered with its adaptation.

The Japanese are ahead of the rest of the world. In Japan, the most talented people move around from experience to experience as quickly as possible which ensures their talents can be tested in different situations, with different organizational cultures and different managers. When you are exposed to drastically different work cultures, you realize different facts and perspectives. This ensures in one discovering what he is good at. The Shamrock culture works brilliantly in Japan.

Handy’s deliberation has given the world ideas on work-life balance. Many people have opted for serving an organization from outside which helps them manage their career and life both optimally. Handy has an exciting revelation of predicting future trends and changes in organizational structures and workplace practices. He envisages that in 21^st century most men and women will experience a mix of paid work, voluntary activities, higher studies, and personal life. Most having two or more paid sources of work. Coining the phrase ‘portfolio worker’ to describe this phenomenon he has also anticipated the downfall of large hierarchical organizations. He says that those large hierarchical organizations will be replaced with more loosely structured federated global enterprises.

Great days ahead for Shamrock organizations!!!