May 2009 Archives

Many tabloids in the country have been operating for a long time on a formula of scandalous attention-grabbing headlines and photos of sexy girls on the front page. One tabloid, Inquirer Libre, decided to take a different route. Using market-driving strategies, Inquirer Libre presented its product differently while targeting a new market. As explained by marketing guru Josiah Go of Mansmith and Fielders, Inc., market-driving strategies, the latest buzzword in market orientation, call for a breaking of the rules and changing the value proposition or business system or both to grow profit and demand from new and marginal customers. (See previous post here.) Inquirer Libre is a morning tabloid featuring short news and feature articles that can be read in 15 minutes. However, Go points out that unlike the other tabloids, it is given for free at MRT stations. There are no photos of naked women; the total package is wholesome. The target market consists of office people in their 20s and 30s on their way to work. “Instead of tapping the traditional newspaper dealers, Libre’s new channel is in the various train stations. This means no dealer trade margin and no sales returns,” says Go. Inquirer Libre also has a classified ads page that runs every Thursday, a new reason for the target market to read it. As a result of the market-driving strategies (give it out for free, go wholesome, go direct to the market at train stations, offer classifieds), Inquirer Libre is the leading free tabloid in Metro Manila and hit its ROI fast. Are you looking for a way to survive the cut-throat competition? Market-driving strategies may be the answer.

IT USED to be that company executives adopted a sales-driven market orientation--focus was on bringing in more sales so the factory had to churn out enough units to meet market demand. Then came the market-driven market orientation in the 80s. The customer is key in a market-driven orientation. The marketing objective is to retain customers and be better. This was followed by the customer-driven market orientation wherein customization is the key to reach niche markets. And now there is the market-driving market orientation, which Dr. Philip Kotler, the father of modern marketing, identifies as the fourth major market orientation. It focuses on playing a different game, of breaking the rules, rather than just being better. It was first brought up by Prof. Greg Carpenter of Kellogg Graduate School of Business in the ‘90s. “Market-driving strategies define how a firm will embrace innovative changes in the industry logic and business system to grow its profit and industry’s demand from marginal and non-customers,” explains Josiah L. Go, chairman and chief marketing strategist of Mansmith and Fielders, Inc., in his seminar called “Market-Driving Strategies: Executive Workout 1.0” held earlier this month at the Renaissance Hotel in Makati. Simply put, market-driving strategies are “game-changing innovation to create and conquer new market space while reinventing the business system.” Go adds that Blue Ocean strategy is a subset of market-driving strategies. Go further says that whereas market-driven strategies go for customer retention and loyalty, market-driving strategies pursue customer acquisition. Whereas the former’s performance is gauged on market shares gained, the latter’s performance is gauged on market penetration and acceptance. The target market of a market-driven market orientation is the customer or served market, while that of the market-driving market orientation are the non-customers and marginal customers—the unserved market. According to Go, market-driving strategies have three levels: first, those that involve changing the value proposition (the reason consumers buy your product or service); second, those that involve changing the business system; and third, those that involve changing both the value proposition and the business system. You first gauge where you are now, assess where you want to be, and plot how to get there using marketing analytical tools such as those developed by Mansmith and Fielders. One of the interesting case studies presented by Go to illustrate market-driving strategies is the case of Belle de Jour Power Planner. The idea of making a planner for women came to then 24-year-old Darlyn Ty who could not find a nice planner geared toward fashion-conscious women who also need to organize their schedules. Belle de Jour changed its value proposition by offering more than just a ho-hum planner: discount coupons, special women’s pages, time management tools and helpful tips in a visually appealing planner that does not look boring at all. It was also treated as a book instead of a magazine, thus giving higher trade margins to retailers. Because of this market-driving strategy, Belle de Jour planners have always been sold out since 2006 and total volume went up from 1,500 copies in 2006 to 50,000 copies in 2008. What is the impact of market-driving strategies on industries and economies? Go cites four: 1. Lots of efforts will be created in satisfying needs not yet satisfied 2. Better profits for companies instead of cutthroat competition 3. Better opportunities for employees to grow 4. All simplistic branding strategies will be red-flagged “Market-driving strategies can be applied to all businesses except when you are in a business where you have nothing to supply anymore—for instance, if a manufacturing facility is full or there is a lack of raw materials,” says Go. He also says these can be applied to small businesses but not to sari-sari stores in terms of the discipline in using analytical tools—in that case, one just has to look around and see what it needs to offer. "Market-driving strategies address the challenges of tomorrow's business," says Go.

IT is impossible for anyone who has been to Angeles City in Pampanga at one time or another to miss the Nepo Mall or Holy Angel University, or not use up electricity from the Angeles Electric Corporation (AEC), which supplies power to Angeles City as well as parts of the Clark Special Economic Zone. There is one family behind all these: the Nepomucenos. A well-researched book by UST professor Erlita P. Mendoza called A Cofradia of Two: Oral History on the Family Life and Lay Religiosity of Juan D. Nepomuceno and Teresa G. Nepomuceno of Angeles, Pampanga reveals the story of how that family changed the face of Angeles. Juan was a lawyer while Teresa, although having finished only third grade due to poor health, had business acumen. They had 12 children. The couple started an ice plant, the Angeles Ice Plant (later renamed Teresa Ice Plant), in 1921 at a time when hardly anyone owned a refrigerator. When Teresa saw that there was unused space in the ice-making machine, she made ice drops and sold them in strawberry and grape flavors. The empty milk cans (milk was used for making ice drops) were recycled and Teresa put them in baskets and sold them in the market. Wanting to provide electricity to the church, the couple established a power plant, later renamed Angeles Electric Corporation, using P500 borrowed from Teresa’s mother to start the business. This was in 1923 and P500 was already a fortune that time. In 1928, they started a soft drinks plant, making their own “Reina” and “Aurora” soft drinks, and also made burlap sacks which were then sold to sugar and rice producers. Holy Angel Academy (now Holy Angel University) was put up in 1933 by Juan and a parish priest to provide quality affordable education to Kapampangans. The war and a fire after Liberation affected their businesses, but the couple bounced back. Although the soft drinks plant was not revived, the power plant was rebuilt, and the school was reopened. In 1965, the family converted their agricultural land into a subdivision, calling it Villa Teresa. Three years later, Nepo Mart Commercial Complex was established and was known as the place to go for PX goods. Now there’s Nepo Mall with department stores, cinemas, banks – name it, they have it. Just one family started all these. Mendoza’s profile of the couple shows the Nepomucenos’ secrets to success: the ability to identify a need, proper timing in providing that need, hard work and perseverance, with faith in God. Good formula. *A Cofradia of Two published by Holy Angel University Press is available at National Bookstore (SM North EDSA and Quezon Avenue), Solidaridad Bookshop, Tradewinds, Lopez Museum, and Filipinas Heritage Library. It won a National Book Award from the Manila Critics Circle in 2005.

LAST WEEK, my friend Jenny wrote on her Facebook status that she ate at an Italian restaurant and found a cockroach in her pasta. Judging from the number of comments posted by her friends, that Italian restaurant has just lost about 10 possible customers as of today. And if each one tells her friends and family about it, tsk tsk, that restaurant may be doomed sooner or later. This is one example of ‘badvocacy.’ According to a new e-book released by Weber Shandwick called The Good Book of Badvocacy (downloadable for free at http://www.webershandwick.com/Default.aspx/Insights/Advocacy?DivID=7), badvocates are “people who stand on a virtual soapbox to criticize or detract from companies, brands or products. They represent a considerable segment of the global online adult population (20 percent). They are passionate enough to share opinions. Their influence reaches far and wide…on average, they tell 14 other people about a bad experience.” It used to be that when people had a bad experience about a product or service, they just told their family and friends about it. But with the coming of the Internet, they have found out that spreading the bad news is just a mouse click away. Negative feedback can be posted in blogs, chat rooms, social networking sites, and even in the customer feedback form of the company website. The sad part: everything is searchable, thanks to Google. And such negative feedback can really hurt a company's image. So how can companies handle badvocacy? The book lists six things a company can do: 1. Be prepared 2. Defend yourself 3. Embrace dissatisfaction 4. Apologize 5. Don’t ignore 6. Inoculate Each step has tips on how to achieve it. With the nice graphics, easy readable style (you can read it in 5 minutes) and relevant insights, The Good Book of Badvocacy should be a must-read for every corporate executive.

AT a marketing seminar I attended last week, participants shared how their companies are affected by the global financial crisis. Two companies dealing with imaging equipment with head offices in Japan said their sales were a bit down this first quarter. A restaurateur in Greenbelt said sales weren’t as high too as before, but since Filipinos love to eat out, they’re still OK. Housewares exporter Cecilia Josef Gift Collection’s sales were likewise affected this first quarter, says Cecilia Ordonez, one of the partners. “We may have to be content with less and see up to what point we can fill in demand,” she says. Their case is interesting because not only are they coping with the global financial crisis; they are also part of the declining handicrafts and housewares industry in the country. To cope, Ordonez says, “We did some maneuvers.” (See this link to read about what they did.) “To survive in the business, you have to be aware of what is happening, be able to utilize current technology, and give the market what they want at their price,” adds Ordonez. In short, don't sit at a corner and lament declining sales--be creative in finding ways to clinch that sale.