8/9 of the Iceberg is below water
Most of the needs of the Consumers are below
surface
See the unseen
Turn the tide
Topple the Iceberg
Know your customer better and direct the whole organisation
towards her
Highlights
Industry ClassificationIndispensabilityProduction PressureDangers in R &D
Industry Classification
In the business of Restaurant
in the business
of feeding the
Hungry
In the petroleum industry
business of
producing usable
Energy for the
average citizen
Is it the same or different…?
Our mission is to provide customers with
an unparalleled selection of
fashion right and lifestyle product
in an environment that is enjoyable, welcoming
and that encourages customers to tap into their creativity and
explore their personal styles
Our mission is to delight customers by
providing quality innovative
clothing and related products
through an island-wide network at affordableprices whilst ensuring satisfactory returns to
our stakeholders.
CustomerCustomer
NeedsNeeds
InsightsInsights
Basic
Clothing
Accessories
Shoes
Lingerie
Hand bags
Jewelries
SportswearGift items
Designer clothes
Kids wear Women’s wear
Men’s wear
Office wear
Baby
productsHandlooms
Party w
ear
Branded
cloth
es
Cosmetics
What industry are they in?
Beyond the Obvious
Looking FashionableLooking Fashionable
• Total revenue has been on decline.
• Despite a reduction of 827 employees through a VRS at a cost of Rs.198mn Company has been continuously incurring losses.
• The accumulated loss - Rs. 646mn
• The Company's equity - negative Rs.367mn.
Classification Myopia
CustomerCustomer
NeedsNeeds
InsightsInsights
Beyond the obvious
Basic
Clothing
Accessories
Shoes
Lingerie
Hand bags
Jewelries
SportswearGift items
Designer clothes
Kids wear Women’s wear
Men’s wear
Office wear
Baby
productsHandlooms
Party w
ear
Branded
cloth
esLooking FashionableLooking Fashionable
What Industry are they in?
The Idea of Indispensability
• “My products will always sell”.
• The petroleum industry.
• The Population Myth.
• No guarantee against product obsolescence.
A Victim of MyopiaControlled 70% of the market.Reduced to less than 15% !!
• Complacent Management
• Not focusing on “Getting” & “Keeping” customers.
• Focus on production. Not marketing.
• Not foreseeing strong competition.
Success Story
• Captured a lion’s share of the market within a few years of entry (current share – 55%).
• Leads the market with Innovation.
• A “step ahead” of competition.
The Idea of Indispensability
Lost over 50% of market share
Gained a 55% share
Production Pressures
Producing goods or services?
Satisfying customer needs?
Production focus?
Market focus?
Product?Total
experience?Needs of seller?
Needs of customer?
Research – available products?
Research – customer needs?
Production Pressures: A Near Failure
• Mass production• Low cost camera• High revenue and profits from film roles
• International distribution
• Extensive advertising• Continued focus on film and hybrids
• Loss from continued business $1.32bn
• Share price drop $80 to $3• Laid off 25,000 people
Production Pressures: A Success
• Electronic manufacturer• Identified customer need• First digital camera - Sony Mavica
• Sony Cyber-shot - scene detection
• Image capture - phones, camcorders
• Images revenue up by 57%
Production Pressures: Comparison
Dangers of Research & Development
• Profit possibilities of technical R&D
• Manage what is within control
• Atmosphere of creation and delivery
• ‘Stepchild status’ for Marketing and Sales
Apple’s Pippin
• Manufactured in 1995 • Multimedia player • Both a computer and gaming console
• Not good at being either• US $599 - too expensive for a gaming console
• Competitors – Nintendo, Sony, Sega
• 42,000 units sold before quick death
Sony’s PlayStationPlayStation 1 released in 1994 PlayStation 2 - best-selling console, over 140 million units soldFocus on customer needsUser friendly, exciting, affordable, and innovativeDevelopers understand gamers’ needsGames are popular, have long term useSatisfy East and West
Marketing Myopia -Dangers of R&D
PC World Magazine's ‘25 Worst Tech
Products of all Time’
Best-Selling Gaming Console
How to Topple an Iceberg
• Industry Boundary• Customer Centric Culture
• Marketing leading Innovation
• Accommodate or die
Team
• Chatra Nakkawita• Rukshan Jayaratna• Nadee Wickramasinghe• Kesara Jayasinghe• Shameena Hanifa• Eshani Obadage• Nilushika Gunasekara
www.pik.lk – MBA 2010