August 2007 Archives

By Art Ilano Pricing oneâs product or service is often a stumper. Are we pricing too high? A re we pricing too low? Set a price and this will often result to pricing anxiet ies. Here, then, is a crash course in pricing that, hopefully, can bring about a bit of much-needed peace of mind, at least when it comes to matters of price setti ng. How to price low Ever had the experience of looking at a productâs price and saying "Itâs too ch eap. It must be inferior?" Many product managers make the mistake of pricing too low, perhaps out of despe ration, or perhaps out of a sense of insecurity about their products. The problem is that the market senses too-low prices as a sign of weakness (or yes, desperation too). Price too low and you become typecast as a cheap, inferi or good. The sad fact is that pricing too low almost never works as a sustainable strate gy, except perhaps if the economy is in a permanent recession. First of all, th e market ends up distrusting your product. And second, your business becomes pr one to financial woes since you are essentially starving yourself. How to price high If you want to compete using a premium product, however, then note that product quality, features and packaging become very important. Without the sensory cue s about your productâs superiority (no matter how artificial it may be), then y our product will simply come across as being overpriced. A strong brand identity also counts. Premium strategists invest in their brand value, taking pains to ensure the integrity of the brand by way of stringent gu idelines on the use of the brand as well as all materials involved in conveying the brand. Strangely enough, pricing a product higher can actually help increase sales, pa rticulary in the case of so-called "me" products, or products that are bought t o express oneâs self. Classic case: a product called Fleischmannâs Gin was dying in the market, where it was sold at US$ 4.50 per 750ml bottle. When the manufacturers RAISED their prices by 50 cents, however, a funny thing happened--sales actually rose! These are just some of the basics that you may want to keep in mind when pricin g your product or service. It is by no means comprehensive, but at least itâs a start. And perhaps the biggest lesson you can take home from all this is that, letâs face it, pricing is all in the mind. The author is a business professor at the University of the Philippines. He is also a management consultant and is the Editor-in-Chief of SME Insight maga zine. For the full article, read the January-February 2007 issue of SME Insig ht, the magazine for small and medium enterprises. For subscriptions, call 759.2022 or 813.4396 loc. 816 or e-mail hipcards@hip.ph.

by Atty. Jessica Los Baños Are you complying fully with the law? Here's a checklist of the basic legal req uirements that your business should be following. Because MSMEs have great potential for growth and contribute significantly to e conomic development, they are subject to simple registration and compliance pro cedures, provided with ready bank financing, and afforded easy access to govern ment services and assistance. However, this preferential treatment does not mean that MSMEs are no longer req uired to comply with government rules and regulations. As MSMEs, you must manag e your legal issues and concerns in the same manner that your larger counterpar ts do. Business Registration MSMEs must register their businesses, whether operated as sole proprietorships, partnerships or corporations. For sole proprietorships, you must obtain a busi ness name registration from the Department of Trade and Industry. MSMEs that ar e established as partnerships and corporations, on the other hand, must registe r with the Securities and Exchange Commission. Tax Compliance MSMEs must also register with the Bureau of Internal Revenue. You have to secur e a Tax Identification Number as well as a Value Added Tax (VAT) or Non-VAT cer tification. HR Benefits Compliance MSMEs must also observe existing labor laws and regulations on compensation and legally mandated benefits. To enable you to comply with these rules and regulations, you need to obtain fr om your employees their Tax Identification, SSS, PhilHealth, and Pag-IBIG numbe rs. You are also oblige to pay your employees a 13th month pay, equivalent to one m onth's salary. These laws are mandatory, and non-compliance entails the payment of a fine or imprisonment, or both. Exemption fro Minimum Wage Orders A major concern for MSMEs is the payment of wages and salaries. Payment of mini mum wages is mandatory, except for household and domestic workers, and in estab lishments that are distressed or determined by the National Wage and Productivi ty Council's Board to be exempt. The full article appears in the September-October 2006 issue of SME Ins ight, the magazine for small and medium enterprises. For subscriptions , call 759.2022 or 813.4396 loc. 816 or e-mail hipcards@hip.ph.

Getting the Demand Side of Purchasing Right by Ma. Gloria Talavera Most businesses can manage the supply side of purchasing. But not everyone know s how to manage the demand side. It often amazes me how fast-food chains like Jollibee Foods Corporation and KFC ensure that stocks of patties, burgers, and chicken arrive on time so that yo u and I can be assured of having our favorite meals when we order it. By contrast, I am quite sure that you've experienced being in a restaurant and ordering an advertised meal, only to be told that it's out of stock. These situations highlight the need for firms to have a system that will ensure that the company is able to balance the supply and demand of its materials and products so that customer demand will always be satisfied. An emerging strateg y that is receiving much attention lately is Supply Chain Management, or SCM. SCM is a systems approach to managing the entire flow of information, materials , and services, from raw materials suppliers, to factories and warehouses, and down to the end customer. It is founded on three important pillars, including s upply management, demand management, and logistics management. SCM involves the following: 1.Supply chain integration This involves both internal and external integration. 2.Information sharing Internal and external integration require partners in the value chain to share critical information such as sales data, materials requirements, lead time, and other relevant information. 3.Trust SCM will only succeed if the suppliers, the firm, and the customers all trust o ne another and believe in the critical role that each one plays in order to mak e their value chain efficient and cost effective. The full article appears in the September-October 2006 issue of SME Ins ight, the magazine for small and medium enterprises. For subscriptions , call 759.2022 or 813.4396 loc. 816 or e-mail hipcards@hip.ph.

by Neil Mananquil If you have a service-oriented enterprise and you feel the need to provide your own contact center services, then you have two ways to go about this. One, you can outsource your needs to an established contact center, or two, you can set up your own facilities yourself. If you choose to do the latter, then you may want to avail of the services of a turnkey solutions provider such as Diversified Technology Solutions Internatio nal, Inc., or DTSI. DTSI offers what are ca lled "turnkey solutions." In other words, they can take care of everything that has to be done to set up your contact center, including legal requirements, in stallation of cabling and equipment, and actual facilities construction... down to the ergonomic seats that are required for people who are to sit there for h ours on end. So that in the end, all you have to do is to âturn the key." In fa ct, DTSI can even provide training for your potential contact center workforce. "Basically, any business that frequently uses a phone and email system and that wishes to increase efficiency, profitability and offer better value to their c ustomers are well qualified for contact center solutions," says Riane Garfin, m arketing associate at DTSI. For small and medium businesses, this typically tra nslates to online ticketing and reservation types of applications. So how much does it cost to set up your own contact center? It depends on how m any seats you plan to get. The full article appears in the September-October 2006 issue of SME Insight, th e magazine for small and medium enterprises. For subscriptions, call 759.2022 o r 813.4396 loc. 816 or e-mail hipcards@hip.ph.

by Atty. Jessica Los Baños Have you ever wondered why some people earn millions even with very little or n o products to sell? The answer lies in the intellectual properties owned by these enterprising geni uses. Intellectual Property (IP) is a bundle of rights vested by law in recogni tion of one's intellectual, pioneering, inventive and innovative efforts. IP th at are valuable, rare, difficult to imitate and not easily replaced can be a ma jor source of sustainable competitive advantage. The following are the key elements of intellectual property: COPYRIGHT Copyright or economic rights consist of the exclusive right to reproduce a work for sale such as a book, to dramatize, translate or adapt the work as when the book is made into a film, to rent out the work in original or copy in the case of audiovisual or cinematographic work, work in a sound recording, computer pr ogram, compilation of data and other materials or musical work in graphic form and other communication of the work to the public. Copyright exists upon the cr eation of the work and no further act is required for this right to be recogniz ed by others. TRADE NAME AND TRADEMARK A trade name is a name that identifies and distinguishes the goods, services an d business entities from those of others. Famous trade names, such as Jollibee, Smart or Petron, carry great economic value because they represent the goodwil l, track record, reputation, quality, or distinctive characteristics of the goo d, service or enterprise represented. A trademark, on the other hand, is any vi sible sign capable of distinguishing the goods or services of an enterprise. Th e golden arches of McDonalds is an example of a trademark. PATENTS AND UTILITY DESIGNS When you are able to discover any technical solution to a problem in the form o f a product, process or an improvement of any or both which is new, involves an inventive step and is industrially applicable, you may apply a patent for your invention. HARNESSING YOUR IP You can benefit from your IP by utilizing them yourself or by allowing others t o use them and charging license fees and royalties. The full article appears in the January-February 2007 issue of SME Insight, the magazine for small and medium enterprises. For subscriptions, call 759.2022 or 813.4396 loc. 816 or e-mail hipcards@hip.ph.

My MBA students and I had a bit of discussion last night about research and dev elopment activities in the country, and why we do not have an "R&D culture" her e. Is it because we're a developing country? Well, yes, the fact that we're a developing country does count as a factor. We simply do not have the budget for investing in R&D activities. In fact, most pa tents that you will see filed in our Patents Office come from the pharma giants here. Not much in terms of new patents from our other enterprises. We also have to factor in the fact that most of the businesses here are SMEs, w hich means that they are mostly in the process of ensuring that they survive fo r the long haul. Therefore, there's not much funds that they can "sacrifice" fo r research and development activities. But having said all that, we do have to distinguish between R&D and innovation. R&D requires investments. But innovation per se need not imply having to inves t precious funds. In fact, all you need is the ability to think creatively and innovatively. And Filipinos can be great innovators, given enough motivation to do so. Many m ay bewail the lack of innovations in Philippine business enterprises, but that is simply because there hasn't been much motivation for us to do so. At least n ot yet. But turn your heads towards one of our most aggressively competitive industries , namely telecoms, and you will see signs of just how innovative we can be... g iven sufficient competitive motivation to do so. Our telecom giants have become amazing innovators in the fields of online transactions, to the point that SMA RT's software technologies have been exported to telecom firms abroad. That's h ow aggressively innovative we can be. But again, we just need the inspiration and the motivation to be innovative. On ce any given local industry starts getting extremely competitive, you can bet t hat Filipinos here are going to start getting extremely creative, whether or no t R&D is in their budgets.