New ways of thinking and acting globally

The Internet has resulted in a completely different world where all of us are or rather can be if we wish so connected in the cyberspace and we are totally integrated on all fronts; the social, the business, the financials, the educational, the geographical the Internet is a new universe with no limits in time and space. Since I am in the business world, I will try to paint a small picture of how I have forced myself to get some insight in the digital new universe with many new rules, a cascade of new IT technical terms in the modern management language. Terms we have to understand completely, we need to identify the implications of the new management tools. However, some of them are just old wines in new bottles.

Today owners, top executives and daily management have to face the numerous challenges posed by globalization, the demands of the market, product development, and level of service delivery, business development, innovation, financial management, human resources development, and adaptability.

We need to understand and accept the new rules for International Business, the Internet forces companies to completely do a rethinking of their marketing strategy and renew all previous business models. In a certain way, we have all become partners in the intranet and extranet age. The Internet forces us to pay much more attention to rapid adjustments of strategies and tactics. In order to keep up with the competition we need to have fast access to all kinds of information needed to produce a new Business Design. A company needs to capitalize on the new opportunities offered by the increasing global integration. I use the term Business Design because I see the necessity for CEOs to establish a new business platform taking advantage of the possibilities to form a network of expertise that work globally.

You may have a producer in the Far East who wishes to penetrate new markets. The company I talk about is a great producer with a lot of solid business within South East Asia but now wanting to expand the business.  Previously it was costly and time-consuming to get complete and reliable market analysis and the changes in the markets took place over a longer period. Today the markets move fast. For many products and services they move so fast that often the time 8.o’clock AM for some is 3 weeks in the past for others. It is imperative to understand that marketing today is the key engine driving the business forwards based on vision, mission and strategies. The marketing function is more important than ever and consequently needs very qualified management. At the same time, it has become less expensive, much more efficient to obtain reliable market information and on top very fast.

In order to move swift the producer in the Far East may now considers some new avenues to meet the present challenges or in other words implement a new set of concepts. The key words are profitable global strategy and execution of it. The implementation of the new concepts necessitates alterations of the basic instruments for marketing management.

No strategy can be determined without a proper homework so to make it simple we will all work in a building of three storeys by the name of Knowledge Warehouse

The ground floor accommodates a team of expertise focusing on Customer Insight and Understanding in short CIU. Services compiling data and information from selected markets with all relevant details by using an advanced market research plan.

The second floor hosts a team of experts in analyzing and evaluating all data and information from the ground floor and present results, suggestions and alternatives for a global strategy to the Marketing Executive Team. I call the second floor team in short AAE.

The third floor accommodates a team of top qualified persons, responsible for the final decision on profitable strategies, but much more importantly overall responsibility for the execution of marketing strategies. I call the third floor team in short EMS.

A fact that can cause some concern is the negligence of the importance of the reliability and quality of step one. Do not try to make quick moves in order to save time or money. Do not make decisions based on impulses or a high degree of uncertainty. Today it is more important than ever to have a deep insight and understanding of the components in the decision process.  The need for qualified collection of relevant and reliable data is exceptionally high and the process will be time demanding since we work across borders and cross functionally. It is imperative with stringent working disciplines and an advanced market research plan. If the tasks on level 1 are not carried out in the best professional manner the result will be inadequate analysis and recommendations for the decision of a marketing strategy and then consequently a catastrophic execution as well as bad image, waste of time and money.

We often talk about ROI and that is understandable. We should focus more on the highest possible return of investments in activities from staff and services from networks as well. We all need to add value to our capabilities and work constantly to improve them. Other facts are that the introduction of the Internet has changed completely the sales and marketing parameters from “the good old days” since the transparency of the Net has made the consumers the kings of the game. A few years back when EU introduced rules to protect the consumers by laws of forcing companies to disclose relevant and important information about their products, the concept aimed at enabling consumers to compare products based on facts.

The speed by which the Internet moves has surpassed the set of regulations as mentioned making it possible for consumers to know from where the products are coming, who is the producer and what is the content of the product. So a few years back a consumer would have to pull down a product from the shelf then another one, compare the two, and then make the decision. Today he will get any kind of information of almost all products he is looking for and then decide. He does not need to move, he just sits behind the monitor and all he is looking for is just a click away.

In order to introduce advanced working methods we will take the 3-storey building a step further. We of course still need the same management tools, but we use a circular concept. We take advantage of The Round Table inspiration, let the 3 teams meet with regular intervals face to face and invite the customer to be the center, the guest of honor. We place him in the center, so we all can focus on him; he is the only one who can tell us about the benefits he is looking for and he plus the ones looking for same benefits form the market. The huge advantage by having a round table conference is that the decision makers are not sitting on the top of the building far away from the reality, the market place where all what the executive management is looking for is present. It is not on the top floor of the building.

This new world makes it increasingly difficult to maintain “old style business”. Previously products should have a long lifetime in order to cover high innovation costs for the producers. Here in 2009, close to 2010, we know that these rules have changed. Innovation must be fast because the consumer patterns and behaviors focus on updated features, some products like mobile phones have a very short lifetime because the markets require brand new advanced communication tools with sophisticated gadgets.

The producers act in a smart way. They will develop a basis model that covers the whole range of various consumer needs and then sell in maybe 50 different models each with specific benefits to meet market demands. In this way, the innovation costs are distributed on a massive amount of products and make the products pricewise competitive.

The producers must understand the consumers and the markets making Consumer Insight an extremely important discipline to manage. The modern consumer buys benefits and is less concerned about the product itself. Consequently, the use of advanced marketing tools is more necessary than ever making marketing management a primary managerial tool.

Chonburi 23rd October 2009

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Some observations about marketing and its effects on consumers and social structures.

INTRODUCTION

The concept of MARKETING is a very interesting subject. It is a tool having a tremendous influence on all of us, which do not always realize. There are two sides to this argument; we use the positive elements when looking for a product to cover a specific need and we are at the same time victims of marketing campaigns. I divide these campaigns into two groups, the first one consisting of factual and honest information about a product or service I need for an explicit purpose, the second group I have named unscrupulous manipulation unfortunately used to day by some companies, organizations, churches and governments.

The full study of the marketing field is comprehensive as it involves economics related to private businesses as well as the execution of public policies. Marketing is integrated in our lives used by our communities as well as by companies producing or selling merchandise or services we need. In exchange we today pay for products with money and for the social services we pay with either money or contribute with other means to the development of the social structure.

In order to form an opinion you need to know just a little about the history and I find this very motivating to look at since the development from the early days until now in 2009 in itself is a topic with an unlimited number of angels, viewpoints and methods used for both groups as mentioned above. It is actually an academic field that did not become perceptible worth studying before many years after the Second World War.

DEFINITION OF MARKETING

There are many definitions and they have changed in tune with the development. One I like is this one: Marketing is the total of activities involved in the transfer of goods or services from the producer or seller to the consumer or buyer, including advertising, shipping, storing, and selling. So far so good. But when did it actually begin? It is of course not possible to determine an accurate point of time, so let me just stroll through the various scenes as I see them.

SHORT REMARKS ABOUT THE HISTORY OF MARKETING

Did it actually start with Eve and Adam? Eve had the apple, Adam was hungry, so Eve was able to deliver him a product he needed. Rule number one; you can only supply what the market needs. The question is of course, how did Adam pay for the apple? Or had he already done that by giving one of his ribs? All right I know I am not correct and I do not intent to offend anybody with this remark.

However for centuries to come marketing took place as an exchange of either goods or services and when the process was systematized the business took place on local markets to start with, then when the infrastructure improved the markets started to exchange on a much broader scale first locally later internationally. Often products were exchanged for products maybe better known as barter and money was considered a commodity much later to become the recognized parameter for value of commodities, products and services.

In summing up above remarks the previous ways of trading on markets offered excellent personal contact, fast and solid information from the customer (you faced him), so no need for sophisticated market analysis, he would tell you right away what he thought about your product. So at that time it was easy to realize rule number one, you can only sell, what the market needs and two you can only get the price for your product the customer is willing to/or can afford to pay.

MARKETING TODAY

Today the human contact is replaced with the INTERNET that has become the biggest marketplace in the World and products are made in huge quantities and moved from one end of the World to the other with limited problems. The Marketing Tree has become a forum for top educated scientists in mathematics, statistics, business economies, national economies, physiology, sociology and finally communication.

So today I see MARKETING as an old tree, a huge trunk with a lot of branches each one representing a specific marketing tool to be used in the whole marketing process. But the branches have all twigs. So I give a name to each branch and twig and since I work much with modern communication tools I will shortly list up some important steps: Gutenberg, magazines, advertising in magazines and newspapers, billboards, trademarks, radio and television, telemarketing, E-commerce, guerilla marketing and the dot.com fever.

Information is the keyword since information equals know-how and knowledge equals power. Information has always represented a power base first used by priests to control the herd, influencing the social environment and is still today used by all religions. So how did we get from the information flow supplied by the priest on the pulpit to the Vatican using the Internet? The business world has also taken advantage of the technical development in the communication tools.

The significant change in the development is due to the consequences of the industrial revolution. The marketing process became the link between the producers and the users. This is logical and understandable, but what I do not appreciate is the methods used in modern marketing through which now many organizations and companies manipulate with people. Modern science forms part of the new methods, which are influencing persons, their core values  and more importantly trying to change consumers views on what they really need resulting in different consumer behavior. I often have this picture in my head: We are objects living in a house with windows all over and being studied from the outside by super-engineers, who feed the Internet Robots with sophisticated music and we all dance as they like. I am the opinion that Maslow is very accurate in his description of our needs. And I get annoyed when some try to convince me that they with help of the Internet can “create” needs. That is pure manipulation to which I strongly object. In another article I shall give my views on some companies’ manipulations with kids watching TV. Adults can make observations and protect themselves kids cannot and are easy victims. Any marketing operation must be fair and not violate moral and ethical codes.

PROFITABLE MARKETING

OK I do acknowledge the fact that if used in the approved manner Marketing can make wonders. It can help an IDEA to be realized, no need to give examples of that. I also acknowledge the fact that for many products the total marketing costs are often more than 50% of the selling price, so marketing has a tremendous influence on any country’s GNP. Per se marketing forms a vital part of the modern society; it keeps the consumer spending “running” and as a consequence a high production both of equal importance to the turning of the financial wheels.   So marketing is essential, it costs a lot but executed in proper manners it will result in a good ROI.

If you wish you can read more about me here

CHONBURI

October 12th 2009

I refer to my previous article THE MOMENT OF TRUTH about some experiences during my 2 years employment by INTERNATIONAL HARVESTER COMPANY (USA), Regional HQ for Scandinavia based in Copenhagen Denmark. We are back to the years 1960 – 1962. This is the period where the golden years started for I-H as it was called. In order to get the whole picture let us just look at the overall situation in Europe after the end of WW II. Following the long war of 5 years Europe was in need of almost anything opening an endless variety of markets. One important one was the markets for agricultural equipment, construction machines, vans, pickups and trucks and I-H decided to move in on the new possibilities. In the USA a major part the whole production apparatus shifted from producing materials for the war to new products for businesses and private consumption. Accordingly there was a change of management style. The new CEOs were more concentrated on marketing replacing the focus on maximum production paid for by the government regardless of the costs. Marketing equaled profitable sales and the powers of the free market economy started to show some muscles. In the early years after the war ended almost everything produced could be sold, but slowly the picture changed and more attention was paid to the possibilities of capturing markets in Europe.

In my article I will then concentrate on one market only, the Danish one for agricultural machines. The war had left many open wounds one being a weak economy especially for the farmers including the many in Denmark. USA had the products needed badly by the agrarians in shortage of cash. Then the USA Secretary of State Marshall came up with a brilliant idea that was presented at the Harvard University on September 22^nd. 1947. It was a plan to offer favorable loans to some selected European countries in order to get back on their feet by investments in new production facilities. I do know of course that the real idea behind the plan was to ensure that the Soviet would not take over some strategic well situated European countries, but leave that aside. The final outcome was the MARSHALL PLAN and it was determined that a major part of the financial injections was to be given as a gift, amounts not be paid back and the gifts to focus on agriculture in order to speed up the supplies of food.  Consequently the USA producers of farm equipment queued up and as far as I recall FERGUSON TRACTOR was one of the first ones seeing the opportunities to “sell” its tractors model TE 20 that were made in England. 80 % of the Marshall loans were a gift, so why not use this opportunity to overflow the market with the grey tractors (see picture) and within a short time most of the progressive Danish farmers had a grey FERGUSON and we look at the years 1949 – and up to 1960. The landscape was almost grey.

When the first tractors arrived in Denmark, farmers had beforehand queued up at the window at the Farmers Association Office. And on the window you could read this: “Hand over your application here please” and once approved and convinced that the farmer could pay back his 20 % he got his tractor. It was not selling it was 100 % distribution of gifts from the USA. I have no idea how many tractors were supplied to the market but it was a lot and the USA factories had reason to celebrate.

Thus in the sales scenario 1 everything was easy, sweet and many involved in the supply chain made a bunch of money, including the farm equipment dealers, who also made profits on services and sales of spare parts. Taken as a whole the dealers of agricultural equipment had golden days from 1949 to 1960. The needs were enormous and the big players were eager to supply.

But now to scenario number 2: Tractors get old and worn out and at a certain point in time replacement had to take place and now my story will now focus on the financial effects of rapid alterations of the market conditions. So let me explain it in this way:

We are now in the year 1960. A farmer has a FERGUSON tractor may 8 years old and he needs a new one. He will go to some dealers of tractors (many brands available now) and buy a new tractor, not entirely based on all the USPs of the new model, but more importantly how much he can get for his old tractor and the game starts.

The dealer is up against the wall. In order to sell a new tractor he needs to offer the highest price to the farmer for the old tractor even if he knows he moves into a difficult world. He used to sell new tractors only, but now when he sells a new model, he has to buy an old one from the farmer. The financial effects could look like this. (Please bear with me that I cannot remember the price structures from that time, so I use some figures just to illustrate my example). New tractor sells for 2.000 $, profit 20 %. He now buys an old tractor from the farmer as a partial payment for 1.000 $. Before he can sell that it needs an overhaul. Subsequently his repair shop will do the job and the bill for working hours and spare parts amounts to 300 $ so the stock value of the old tractor is now 1.300 $. He puts it up for sale, gets his 1.300 $ and must take another older tractor as partial payment maybe at 600 $. It requires repair in order to be sold and he needs to give a guarantee for maybe 6 months otherwise nobody will buy it. The bill from the work shop is 250 $ only so his stock price is 850 $. Now the game could continue, but let us assume that he sells for 700 $ net without having to “buy” another old tractor. The P/L picture looks like this: Total income (2.000+1.300+700) is 4.000 $. Expenses (1.600+1.000+300+600+250) are 3.750 so the total profit is then 250 $ on the total sale or just 6.25 %. OK he will make some profit on the spare parts, but ne needs to give guarantees on the sales of old tractors and service the new models and on top he must find financing. This dealer ends up with a slim profit and in general terms the industry only survived thanks to sales of additional farm equipment.

Let us now move to the next scenario 3; In 1960 I-H introduced a new series of tractors and since the production of tractors was the lifeblood of the company all sales and marketing tools were essential and new and very aggressive methods were implemented. Very sadly both first succeeded and then failed. I will concentrate on the sales/marketing issues. I-H subsidiaries including our Denmark Office got instructions from the HQ; “Increase sales we do not care how, just do it”. In order to start the new and forceful marketing strategy I-H invited dealers from all over the world to come to the USA to see the new models (6 cylinder engine) and they looked great and all the USPs were on top of the strong competition. As I recall more than 10.000 were invited from more than 20 countries. The show was a big success and the dealers were over the moon by getting the possibility to get “over there”.

However everything comes at a price and soon the dealers felt the pressure as I-H told them that in order to keep the I-H dealership they needed to buy a specific minimum of tractors and the figures per dealer were based on last year’s sales and to this 25 % was added. In a market that was about to be saturated and under a pressure due to the change from an agricultural country to be industrialized,  that was in no way possible for most of the dealers. I-H put a lot of thumbs on them and used new sales methods very unacceptable to Danes. The most significant was this; I-H asked the dealers to approach the farmers, who had bought tractors from them the years before and offer them a very good price for their old tractor provided they would buy the new 600 series. But the aggressive sales policies dictated the dealers approaching almost all farmers, using other brands, within a dealer’s district in order to maximize sales. On top to make all efforts to persuade trendsetting and very large farm estates that used tractors of competitive brands like FORD and MASSEY FERGUSON to shift to I-H. That was a very expensive PR stunt.

The dealers, who accepted the new strategy soon found themselves in financial problems. Now the supply was larger than the demand resulting in the situation where the dealers were forced to invest in the “purchase” of used tractors bought at prices exceeding the actual market value and very difficult to sell because of a decreasing demand. I-H was hard-pressed to assist with the financing of the “over sales”, and within a few years a major part of the assets on the Balance Sheets for many dealerships consisted of hundreds of used tractors not saleable at the “purchase price”. On top the new series of 660 tractors suffered tremendous technical problems involving extra costs and a blow to the I-H image making it even more difficult to sell. The result, for many dealers with whom I worked, was record high sales but a negative profit. The Americans were fast to introduce a new policy; increase the prices for spare parts and ensure that almost all parts of a tractor cannot be replaced by non-original parts. Fortunately for I-H they were not the only ones using this policy, the competition followed suit.

I have used the I-H product group tractors for this example. You may now add the other I-H products like many sorts of agricultural equipment, construction machines, vans, pickups and trucks. Some dealers were involved in more than one product group and based on the same sales policy the negative financial effects were higher than Mount Everest. The price level for construction equipment and trucks were more than 10 times higher than for a tractor. In the end due to the negative effects from all the obstacles I have described, many dealers went bankrupt and I-H’s problems grew by the speed of the light and later the company had to give up.

Indeed a depressing example of aggressive marketing not properly planned and executed. Old style management and a non professional board of directors in the USA Company added to the increasing problems. My 2 years in I-H were marked by a lot of personal development and gave me a deep insight in the American way of thinking, an experience that later became useful when I worked in Asia with highly qualified experts from Harvard University and Michigan State University from whom I picked up a lot.

However I-H did learn a few lessons in Europe and changed the top executives for its subsidiaries to be Europeans with local insight and knowhow. Sadly for many this strategy came too late.

CHONBURI THAILAND

July 2009

In the early sixties I got my first job as personal assistant to the Director of Finance, who was an American and the name of the company was International Harvester Company Ltd. Branch Office in Copenhagen, Denmark that was in charge of IHC’s operations in Scandinavia. At that time IHC was a very dominant player on worldwide markets selling agricultural equipment, construction machines, pickups, vans and trucks. I joined the company at a time when it started to face some problems. Throughout the 1960s despite good sales, IHC’s profit margins remained slim. The continual adding of unrelated business lines created a somewhat unwieldy corporate organization, and the company found it difficult to focus on a primary business, be it Ag equipment, construction equipment, or truck production. An overly conservative management, combined with a rigid policy of in-house promotions tended to stifle new management strategies as well as technical innovation. These facts are well known today but at that time not properly recognized. I have not been able to get the exact figure of the number of employees all over the World, but we were more than 100.000 as far as I recall. I remember however that IHC had more than 10.000 dealers selling tractors only in more than 20 countries.

In Copenhagen we responsible for the Overall Busines Areas the most important of course sales of all above mentioned products mainly through regional dealers and our own I-H sales outlets and service centers. We were organized in at that time the typical pattern for USA based companies in Europe: American CEO, ditto CFO but Danish sales and marketing management. The total of all IHC European operations was headed by a European IHC HQ in London.  So with the IHC HQ in USA, the European in London and the various subsidiaries in Europe including Denmark the chain of command was very long, communication often complicated and on top the usual cultural “conflicts”.

My job was to assist the American CFO and we had the main focus on financial burdens increasing heavily in the early 60ties and the liquidity picture represented a serious threat and the reasons were many, but mainly due to the fact that IHC had to provide the expansive dealerships with IHC products. The dealers were of course divided into groups, some selling agricultural machines only, some trucks etc. But they all had one thing in common IHC was to supply them with products on the condition that payment are first due, when the product is sold. So in consequence IHC had to finance a pile of businesses and it was one of my duties to pay visits to dealers in order to teach them financial management and keep proper accounts so IHC DK could maintain track all the products put at their disposal on a consignment basis. Without a reasonable display of IHC products in the dealer’s showrooms, how could they sell?

As mentioned above in the 60ties in spite of a rapid growing economy in Europe IHC started to get into troubles, but they did not realize it. The management was old fashioned and had the view that only Americans could hold the top executive positions in Europe even if they had no clue about European culture and relevant marketing management. On top came that the new series of tractors introduced on the market in 1959 (the models with a high powered engine) faced tremendous problems and caused additional financial burdens and resulted in very low sales. So one morning I was summoned by my American boss, who showed me a memo from our CEO. The content related to the fact that our liquidity was strained and the solution was to increase sales at almost all costs never mind the consequences. Let us just say that the focus was on sales of I-H trucks.  We all knew that our trucks were extremely good and we knew all the USPs by heart:

• US quality
• Optimal performance
• Best service
• Economical/Low mileage costs
• Strongest truck on the market
• Safe and comfortable
• Best value for money

And so the list went on. All catalogues in color and praising the trucks up to the sky, we advertised in all professional magazines and paid 50 % of all advertisements by the dealers and in spite of those active efforts the sales dropped and started to worry the top CEO of IHC and of course the BIG Chairman in USA. Now the next picture is purely from my imagination but this is what I discussed with my boss and I used the picture as an illustration for him to understand the many pitfalls on the way from USA to the final point, where the sales person meets the potential buyer the moment of truth.

In the IHC USA HQ the board has a meeting and with an agenda of course. The board is rather large, composed of experts and of course at a certain point during the meeting the President in charge of the Division Sales/Trucks/Worldwide is asked to present the results for the last quarter. Since the figures (my guess) comprised of the totals from the worldwide operation it was a short presentation; Expected sales say 100 million $, actual sales only 81 million$, result not satisfactorily, actions will be taken, the forecast for the coming quarter looks better. The words are marked by caution and selected very carefully and in appropriate board meeting traditions; “The prevailing market circumstances worldwide, in view of the facts that, the company to undertake strong actions in order to recapture a profitable market share etc”.  The texting is nice, professional and the board is protecting is ass. A statement is mailed to the Stock Exchange in order to ensure the shareholders that everything is under control. Within one hour after the board meeting the President of the Truck Division calls his secretary and dictates a memo to all executive VPs and the words are just a little bit different from the words he used in his presentation to the board. The VP in charge of Sales in Europe receives the message from the USA and  then dictates a memo to his secretary addressed to the CEO in London responsible for all European activities and now the wording of the memo changes, the tone is sharper:   “In view of the fact that sales have dropped significantly over the last months I strongly urge you to come up with a plan within one week of how you intent to ensure our company that you are capable of running the European operation”  Within a split of a second the London based CEO is producing a memo to all European CEOs and now the text becomes even sharper and again changes when the local CEO calls his Sales and Marketing Manager:”Bob what the hell is going on, what are you guys doing, look at this shit from London”.  The SMM then calls an urgent meeting with all regional sales staff (this is way before modern means of communication). The message is loud and clear: “ Starting from now and one month ahead this rule applies; all sales staff who cannot meet the target we set at the beginning of this year can start to look for another job”. The regional sales manager will then go to the dealer and urge him to sell more trucks and if that could be done yesterday please? “Otherwise this shitty boss of mine in Copenhagen may start to look for another dealership in your district”.

That was almost the end of my explanation to my boss, who looked at me and asked what now and I answered; “You come with me tomorrow, we will visit a dealer/trucks near to Copenhagen. I will find a dealer, who tomorrow will do a sales presentation to a truck owner, who is interested in buying a new I-H super truck”. So I did and in the morning we drove to a dealer and were allowed to participate in his presentation to a potential buyer (truck owner) of all the USPs an I-H truck had compared to the competition.  The superlatives were all over in the air, and even my Boss and I were almost on the verge of buying one. When the dealer had finished his presentation and asked the truck owner if he had any questions, he simply came up with this one” How much will you pay me for my old Volvo truck?”  That was the moment of truth, when the fine and carefully selected words from the board meeting in USA, passing a long communication line should result in higher sales. The truck owner did not care about all the USPs; he only paid attention to the price any truck dealer would pay him for his used truck.

This was back in 1962, today in 2009 in Thailand, where I live now I saw a few days ago this message in the local Business News: “The sale of TOYOTA vans will depend on the coming harvest of rice, the quantity, amount and the kilo price for the farmers”. TOYOTA is a high quality product with a range of USPs but the sales will depend on the value of the harvest not the exceptional quality of the product.

What happened to all the modern and fancy expressions we learned about Marketing Management? The key issue of my message is, that the focus on the second when seller meets buyer and the importance of understanding each other has always existed. Back in tthe 1960ties we called it common sense today it is called CUSTOMER INSIGHT.

However we all learned from that lesson back in 1962. The example was evidence of the changes in the market situation and not only IHC but all manufacturers of the products mentioned had to face a new challenge that took not only IHC but many other similar companies to the sad end.

I shall explain more about why in my next article: ” SAD RESULTS OF AGRESSIVE MARKETING”

CHONBURI THAILAND

July 2009

Business advices fall into many categories: General Management, Organizational Changes, Development of Coaching, and Implementation of new Technologies or Operational Improvements, just to mention examples from a broad selection of relevant issues, all of equal importance to all business regardless of size.

Business (or Company/Organization/Enterprise) is legally defined as a vehicle providing goods or services to customers/clients with the clear goal to make a profit or in other words to receive a financial reward in return for working and for taking risks.

As you may see from my website www.occo.asia I have a fair amount of experience in consulting over the years and have chosen to function as a so-called Boutique Operation aka a Niche Operation focused on small and medium sized Industries. But maybe more importantly I have hold positions as CFO or CEO in large international companies, which add to the quality of my consulting since I have many years of practical Business Experience. On top I have a theoretical background on MBA level.

Based theoretical education plus experiences from 20+ countries, and from various industries, I have developed some excellent management tools among them a Simulation Program (in cooperation with KPGM) that enables me to calculate the financial consequences of various tactics/scenarios before they are implemented as part of the Over All Strategy. So today this is then what I can offer:

Provide advices in order to help senior management and or owners to improve effectiveness by the help of a workable strategy, process or operation by accessing the realistic needs, reviewing the existing business plans, functions and directions, furthermore to add values to your Business.

I am 100% independent and work today based on simple methods developed over the years and consisting of 3 important steps; Step 1 all historical data related to the present state of affairs, Step 3 a scenario of how the management sees the company’s position on the market place in 2 to 3 years. Steps 1 and 3 are fairly easy to generate, but step number 2 is the most difficult because it has to provide the answer to this important question: How do I get from step 1 to step 3? This is also called an Integrated Business Solution. I describe it as how to build the bridge between Visions and Reality.

The answer is in general terms to be found in the term STRATEGY. The definition is clear; Strategy is the direction/scope a company takes in order to over a period of time to gain advantage over the competition or to meet the market needs and to fulfil the financial expectations of the shareholders. The name of the game is like playing chess one needs to make accurate and well considered choic

To produce all the answers in Step 2 is not easy and involves analyzes of many important elements that normally structure the complete Business Plan. Some small companies especially if owned and operated by entrepreneurs do not care too much about plans, before it is too late, and sometimes produce their plans by looking into a crystal ball like a fortune teller.

It would be nice if that was possible, but unfortunately it does not work that way and I am grateful for that for had it been the case I would be out of business. So again Step 2 involves taking a closer look into these areas: In which markets should we operate, with which products, allocating the necessary resources (organizational, financial, technical competences, facilities and relationships), the competition, the USPs for your products and same for the competitors USPs, how strong are you compared to the competition, where are your weakness? (SWOT analysis). These are just some areas that need being cautiously studied and you can add many more.

A clear STRATEGY is a must for any business. It is the planning and execution of the actions you need to take in order to achieve your goal. Strategy must be combined with a careful resource allocation, intelligence, logical thinking and leverage. However it is important to realize that all goals should be determined based on down to earth visions. After the Over All Strategy has been defined next steps are to work out the tactics. To participate in the battle for maintaining or improving the bottom line is like play in a soccer game, you must put together a team that wants to win. If the team does not win the Coach is fired most likely because he did not choose the right tactics. These must be integrated with the Over All Strategy.

My Business and Management services are targeted at companies (small is beautiful) that show some of these signs:

•    In need of Restructuring
•    Have an unacceptable profit situation
•    Underperforming activities
•    Leadership that is not focused on the profitability

So in concluding my comments: I can assist you building the Bridge between Visions and Realities. My favourite Management Guru is Peter F. Drucker who once stated that:  “It is not the question of doing things the right way, it is the question of doing the right things “.

On the personal note: I work based on solid and proven business principles adjusted by modern thinking. I keep my head high but my visions and expectations are down to earth. I never lose focus, I work hard and dedicated and never give up before I have delivered what I have promised and I always aim at delivering more than expected.

I am a strong believer in quality rather than quantity and I am a student of Ayn Rand thus strongly believing in Science and Philosophy. In all modesty I think that the combination of strong ethics and future oriented business scenarios shape the services, which I offer you, that will contribute to establish a workable Strategy resulting in a greatly improved situation for your company.

JULY 2008

INTRODUCTION

The concept of MARKETING is a very interesting subject. It is a tool having a tremendous influence on all of us, which do not always realize. There are two sides to this argument; we use the positive elements when looking for a product to cover a specific need and we are at the same time victims of marketing campaigns. I divide these campaigns into two groups, the first one consisting of factual and honest information about a product or service I need for an explicit purpose, the second group I have named unscrupulous manipulation unfortunately used to day by some companies, organizations, churches and governments.

The full study of the marketing field is comprehensive as it involves economics related to private businesses as well as the execution of public policies. Marketing is integrated in our lives used by our communities as well as by companies producing or selling merchandise or services we need. In exchange we today pay for products with money and for the social services we pay with either money or contribute with other means to the development of the social structure.

In order to form an opinion you need to know just a little about the history and I find this very motivating to look at since the development from the early days until now in 2009 in itself is a topic with an unlimited number of angels, viewpoints and methods used for both groups as mentioned above. It is actually an academic field that did not become perceptible worth studying before many years after the Second World War.

DEFINITION OF MARKETING
There are many definitions and they have changed in tune with the development. One I like is this one: Marketing is the total of activities involved in the transfer of goods or services from the producer or seller to the consumer or buyer, including advertising, shipping, storing, and selling. So far so good. But when did it actually begin? It is of course not possible to determine an accurate point of time, so let me just stroll through the various scenes as I see them.

SHORT REMARKS ABOUT THE HISTORY OF MARKETING
Did it actually start with Eve and Adam? Eve had the apple, Adam was hungry, so Eve was able to deliver him a product he needed. Rule number one; you can only supply what the market needs. The question is of course, how did Adam pay for the apple? Or had he already done that by giving one of his ribs? All right I know I am not correct and I do not intent to offend anybody with this remark.

However for centuries to come marketing took place as an exchange of either goods or services and when the process was systematized the business took place on local markets to start with, then when the infrastructure improved the markets started to exchange on a much broader scale first locally later internationally. Often products were exchanged for products maybe better known as barter and money was considered a commodity much later to become the recognized parameter for value of commodities, products and services.

In summing up above remarks the previous ways of trading on markets offered excellent personal contact, fast and solid information from the customer (you faced him), so no need for sophisticated market analysis, he would tell you right away what he thought about your product. So at that time it was easy to realize rule number one, you can only sell, what the market needs and two you can only get the price for your product the customer is willing to/or can afford to pay.

MARKETING TODAY
Today the human contact is replaced with the INTERNET that has become the biggest marketplace in the World and products are made in huge quantities and moved from one end of the World to the other with limited problems. The Marketing Tree has become a forum for top educated scientists in mathematics, statistics, business economies, national economies, physiology, sociology and finally communication.

So today I see MARKETING as an old tree, a huge trunk with a lot of branches each one representing a specific marketing tool to be used in the whole marketing process. But the branches have all twigs. So I give a name to each branch and twig and since I work much with modern communication tools I will shortly list up some important steps: Gutenberg, magazines, advertising in magazines and newspapers, billboards, trademarks, radio and television, telemarketing, E-commerce, guerilla marketing and the dot.com fever.

Information is the keyword since information equals know-how and knowledge equals power. Information has always represented a power base first used by priests to control the herd, influencing the social environment and is still today used by all religions. So how did we get from the information flow supplied by the priest on the pulpit to the Vatican using the Internet? The business world has also taken advantage of the technical development in the communication tools.
The significant change in the development is due to the consequences of the industrial revolution. The marketing process became the link between the producers and the users. This is logical and understandable, but what I do not appreciate is the methods used in modern marketing through which now many organizations and companies manipulate with people. Modern science forms part of the new methods, which are influencing persons, their core values  and more importantly trying to change consumers views on what they really need resulting in different consumer behavior. I often have this picture in my head:We are objects living in a house with windows all over and being studied from the outside by super-engineers, who feed the Internet Robots with sophisticated music and we all dance as they like. I am the opinion that Maslow is very accurate in his description of our needs. And I get annoyed when some try to convince me that they with help of the Internet can “create” needs. That is pure manipulation to which I strongly object. In another article I shall give my views on some companies’ manipulations with kids watching TV. Adults can make observations and protect themselves kids cannot and are easy victims. Any marketing operation must be fair and not violate moral and ethical codes.

PROFITABLE MARKETING
OK I do acknowledge the fact that if used in the approved manner Marketing can make wonders. It can help an IDEA to be realized, no need to give examples of that. I also acknowledge the fact that for many products the total marketing costs are often more than 50% of the selling price, so marketing has a tremendous influence on any country’s GNP. Per se marketing forms a vital part of the modern society; it keeps the consumer spending “running” and as a consequence a high production both of equal importance to the turning of the financial wheels.   So marketing is essential, it costs a lot but executed in proper manners it will result in a good ROI.