The concept of Supplier Evaluation can be defined as the process of assessing and approving the potential line of suppliers of the company through various quantitative and qualitative evaluation measures. The main and vital purpose of the process is to ensure that the portfolio of the top notch suppliers is available at the disposal for the company.   

Importance of Supplier Evaluation :

The overall process and approach of the Supplier Evaluation are usually applied to the current set suppliers to measure and monitor their performance for the purposes of reducing costs of the goods required on the regular basis, mitigating the chances of risk involved, and driving continuous improvement in their performance.

The process lays utmost importance in the current scenario of global purchasing methods and every organization especially manufacturing the ones into the manufacturing operations needs to have an evaluation matrix or model in place.

Companies that regularly evaluate the performance of their suppliers find that they have better visibility into supplier performance, remove hidden costs, reduce risk, get a competitive advantage by reducing order cycle times and inventory, gain insight on how to elevate on their supply base, and align practices between the company management and the suppliers.

Benefits of Supplier Evaluation process :

1) Increase performance visibility

When companies have no or little knowledge on how their suppliers are performing, supplier management tends to be based on the game of guesswork with the factor of ambiguity. With the simple process of measuring the performance of the suppliers can help improve the overall performance of the company. This improvement can be even more dramatic and lucrative in nature when companies award additional business on the yardstick of suppliers meeting their performance goals.

2) Remove hidden waste and cost drivers in the sustainable procurement.

The sustainable process of the procurement is full of potential risks that can originate from suppliers with regards to the aspect of corporate social responsibility. Some of these risks can be avoided through the way of better and clear communication channel between customers and suppliers. With the better understanding of the supplier performance and supplier business practices, customers can help suppliers drive waste and inefficiency out of the business processes that result in the higher-quality suppliers and lower costs of the goods procured.

3) Leverage the supply base

Through the process of Supplier Evaluation, the company is able to set a threshold for its suppliers that can result in the higher-quality results. Companies can plan better and new range of products and services based on a good understanding of its suppliers’ expertise, vital capabilities, and performance levels.

4) Align customer and supplier business practices

In the ideal case scenario, the suppliers should run their business operations in alignment with their customer sharing the similar business ethics, expect similar levels of excellence, show commitment towards the aspect of corporate social responsibility, and work towards the continuous improvement of their operations.

5) Diminish risk factors

With the proper insights into the performance of the suppliers and their overall business practices helps to reduce the business risk, particularly when the companies increase their dependency on their key suppliers. Risks can range from financial to operational in nature and increase with geographic distance.

6) Improve the performance of the suppliers

The main goal of the Supplier Evaluation process should be the improvement of the performance of the suppliers. While simply measuring their performance has a positive effect, the supplier Evaluation can be more effective when it leads to continuous improvement activities and actual performance improvement of the suppliers. Follow-up activities, such as supplier training and development, and counteractive actions to address the evaluation findings are the best ways to attain measurable and positive results.

Tips for a Successful Supplier Evaluation :

1) Assessment of Risks

In order to have a full understanding of your supplier risk portfolio, individualized risk evaluations should be made on the performance of each and every supplier.

Usually, the purchase and quality control managers send their agents for on-site reviews to see precise production lines, processes, and outcomes. Another approach is to incorporate it within the quality agreements by obtaining the audit and data reports for the duration of the contract at regular intervals.

2) Percentage of Products in Compliance

This is one of the significant and crucial metrics in regulated enterprises such as food and beverages and pharmaceuticals. Indeed, even in ventures such as national defense, automotive and aviation, this metric plays a vital role. It measures the percentages of product that are quite consistent with their internal guidelines, processes, and compliances with the government authorities.

3) Quantification of Risks

The risk of suppliers can be evaluated as an element of two factors that are the probability and effect of adverse events occurring in the internal and external environment of the company.

The principal variable identifies the supplier’s performance by breaking down the performance pointers in a way that highlights the metrics such as corrective actions, average response time, customer complaints, inventory levels, and delivery timelines amongst others.

The second risk factor greatly relies on the factor of the supplier’s production capacity. For example, if there is no viable substitute for a material used for the production, that supplier should consequently be viewed as riskier in spite of his good and positive performance levels. If production cannot go ahead without this specific supplier, it should hold extensive weight in the risk portfolio of the company.

4) New Products Introduction

The approach of the New Products Introduction as a metric is that characterized as a rate of new items presented at the marketplace that hit quality targets, volume, and time. New items are frequently introduced in the market by the company and are a source of competitive advantage specifically in consumer electronics and automotive domains.

The growth of profit and revenue for the firm depends not just on how successful the business is at introducing new and novel items into the market to the customers, but how successful the business is at hitting at the targets of New Products Introduction.

5) Prioritization of Risks

As the fraternity of businesses hugely depends on the aspect of the supply chain, providing high-quality services has to be of extraordinary in nature. By evaluating the risks of the supplier and the related factors, giving details for both criticality and performance of the operations can viably treat important issues that require the most contemplation. It is very imperative to treat the external risks such as gaps or internal inefficiencies of the business.

6) How Frequently Suppliers Are audited in the company

There is no particular number of times as such that suppliers should be audited by the company. But if there are any sort of persistent issues and the supplier has not addressed it, an unexpected visit to the company might be a good option for fix the issue. Major suppliers of the company should be visited once every year by the main management or by a subcontractor to inspect. Spontaneous audits are better as the supplier is not at all ready for the visit and you can review the operations on an ordinary production day at the company.

7) Review of Audit Priorities

The utmost significance of an audit is for the top management to guarantee that quality is a top priority and they understand the quality and evaluating the process.

Few questions to consider :

• What is the company’s quality standard and objective?
• What are the overall objectives and goals?
• Is there any set up of the Supplier Quality Manual?
• What does the quality financial judgment look like?
• Who manages the quality of ongoing education and training?
• Is the Quality Manual continually updated regularly?

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The RFM Model stands for recency, frequency, and monetary analysis and can be defined as a marketing analytical tool to determine quantitatively which customers are the best ones for the company by analyzing and examining how recently a customer has purchased the products (recency), how often they purchase the products (frequency), and how much the customer spends on the purchase of the products of the company (monetary).

The RFM Model is based on the marketing adage signifying that 80% of your business comes from 20% of your customers.

Importance of the RFM Model :

• It utilizes numerical scales that are objective in nature and yields a precise and high-level informative depiction of the customers of the firm.
• It is quite simplistic in its nature and approach and the marketers can use it effectively without the requirement of the data scientists or any sophisticated software.
• It is intuitive as the output of this segmentation method is easy to understand and interpret by the management of the firm.
• Recency can be explained as how much time has been elapsed since a customer’s last activity or the purchase indulgence with the brand? Activity is usually a purchase, although there are certain variations such as the last visit to a company official website or use of a mobile app. In most cases, the more customer has interacted or transacted with a brand, the customer will be more likely responsive to communications from the brand.
• Frequency can be explained as to how often a customer transacted or interacted with the brand during a specific period of time? Customers with frequent activities are more engaged and involved and probably more loyal to the brand as compared to the customers who rarely do so.
• Monetary factor reflects how much a customer has spent with the brand during the specific period of time. Big spenders having high disposable income should usually be treated differently than customers who spend little on the purchase of the products from the brand.

Steps to building the RFM Model :

Step 1

The first and foremost step in building an RFM Model is to allocate Recency, Frequency and Monetary values to each and every customer of the firm. The raw data to conduct this step should be readily available in the company’s CRM software or transactional databases can be compiled in an Excel spreadsheet:

• Recency is simply the amount of time since the customer’s most recent transaction with the firm indulging in the purchase of its products.
• Frequency is the total number of transactions made by the customer with the firm in a particular period of time.
• Monetary is the total amount that the customer has spent across all transactions during a particular period of time.

Step 2

The second step involved dividing the customer list into tiered groups for each of the three dimensions of the model (R, F, and M) using Excel or any another software tool used by the firm. Unless the firm used any specialized software, it is advised to divide the customers into four tiers for each of the dimension of the model so that each customer will be assigned to one tier in each of the dimension of the model.

Recency           Frequency       Monetary

R-Tier-1 (most recent)            F-Tier-1 (most frequent)         M-Tier-1 (highest spend)

R-Tier-2           F-Tier-2           M-Tier-2

R-Tier-3           F-Tier-3           M-Tier-3

R-Tier-4 (least recent)            F-Tier-4 (only one transaction)           M-Tier-4 (lowest spend)

This technique results in 64 distinct customer segments (4x4x4), into which customers will be segmented accordingly. Three tiers can also be used that will result in the 27 segments.

Step 3

The third step of the model involves selecting the groups of customers to whom specific types of communications will be sent, based on the RFM segments in which they appear.

It is quite helpful to assign names to segments of interest of the customer.

• Best Customers – This group consists of the customers who are found in R-Tier-1, F-Tier-1 and M-Tier-1as they have transacted recently, do so often and spend more than other customers of the firm. A shortened notation for this segment is 1-1-1; we’ll use this notation going forward.
• High spending New Customers – This group consists of those customers in the category of 1-4-1 and 1-4-2. These are customers who have transacted only once, but very recently and they spent a lot on the purchase.
• Lowest Spending Active Loyal Customers – This group consists of those customers in the category of 1-1-3 and 1-1-4 and they have transacted recently and often do so but spend the least).
• Churned Best Customers – This segment consists of the customers in the categories of 4-1-1, 4-1-2, 4-2-1 and 4-2-2 and they have transacted frequently and spent a lot, but it’s been a long time since they’ve transacted with the firm.

Step 4

The fourth step of the RFM Model actually goes beyond the RFM segmentation by crafting specific messaging that is tailored for each customer segments. By focusing on the behavioral patterns of the particular groups of the customers, the RFM Model allows marketers to communicate with customers in a more effective and efficient manner.

1. Below mentioned are a few examples for illustration, using the groups named above:

• Best Customers – Communications with this group should make them feel valued and appreciated by the firm. These customers generate a disproportionately high percentage of overall revenues for the firm and thus focusing on keeping them happy should be a top priority of the management. Further studying and analyzing their individual preferences will provide additional opportunities for even more personalized messaging and means of communication.
• High spending New Customers – It is always a good idea to nurture all new customers of the firm because these new customers spent a lot on their first purchase. Like with the Best Customers group, it’s important to make them also feel quite valued and appreciated by giving them terrific incentives to so that they continue to interact with the brand.
• Lowest Spending Active Loyal Customers – These repeat customers are active and loyal, but they there spending capacity is quite low. Marketers should create specific promotional campaigns for this group to make them feel valued and incentivize them to increase their spending levels. As loyal customers, it also pays to reward them with special discount offers so that they also spread the word about the brand to their friends earning the referrals for the firm.
• Churned Best Customers – These are valuable customers for the firm who have stopped transacting a long time ago. While it’s often challenging to re-engage with them for the firm, the high value of these customers makes it worthwhile trying to get them back. Likewise the Best Customers group, it’s vital to communicate with them on the basis of their detailed preferences with the data derived from their earlier transactions.

Caveats of the RFM Model :

RFM Model and its segmentation approach is a straightforward and powerful method for customer segmentation. But the RFM Model only looks at three specific factors meaning that the method may be excluding other variables that are equally important such as products purchased, previous campaign responses, and other crucial demographic details of the customers.

The RFM Model is a historical method by nature and looks at past customer behavior that may or may not precisely specify future activities, preferences, and responses.

The other advanced customer segmentation methods are based on predictive analytics technologies that are far more accurate at predicting future customer behavior with the firm.

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The concept of Supplier Relationship Management can be defined as the systematic approach of evaluating the suppliers’ contributions and influence on the success of the organization, determining the various tactics to maximize suppliers’ performance, and developing the strategic approach to work on these determinations.

The overall process and approach help to create a positive relationship between the buyer and the supplier relationships determining that activities engage in with each of the suppliers of the firm. Supplier Relationship Management is used by the various supply chain professionals and experts who involved in areas such as procurement, project management, and operations amidst which these professionals deal with the suppliers on a regular basis. Supplier Relationship Management includes both the aspects of business practices and software.

Goals and Objectives of the Supplier Relationship Management :

1. The typical and usual objective of the Supplier Relationship Management is to streamline and align the processes between a buyer and its various suppliers.
2. The supplier company is intended to streamline and improve the processes between their firm and its customers.
3. The main focus is on developing a mutually beneficially relationship with suppliers specifically who are strategically important to the brand to promote quality, efficiency, innovation along with the various other benefits.
4. The concept of Supplier Relationship Management has become widely significant as the buyer and supplier networks have become more global and interdependent and companies are heavily relying more on the strategic suppliers for their overall growth and success.
5. The practices create a common framework of reference to enable effective communication between both the parties involved and measure the performance of the supplier.

The process of Supplier Relationship Management :

• It is quite important to segment the suppliers in the various categories depending on their vital importance and contribution to the business and its success.
• It is also very imperative to develop the governance and the performance management models in order to align the business processes and define stakeholders as per the business goals and objectives.
• It is also crucial to improve the relationships with the supplier that involves sharing strategic information with the key suppliers of the firm with an aim to develop better products.

Types of suppliers in Supplier Relationship Management :

1) Wholesalers & Distributors

Wholesalers purchase large quantities of goods in bulk from the manufacturing companies and then resell them in the lower quantities demanding a higher unit price. They usually offer the lowest prices as they are selling the same in large quantities, and are quite hesitant to work with the smaller quantity of orders.

2) Manufacturers & Vendors

In this type, the suppliers handle the goods of different companies. The prices might be higher than those of the wholesalers, but they handle small orders from a wide range of manufacturers over a short time period.

3) Import Sources

The various types of domestic importers work like domestic wholesalers and sell foreign goods to various companies in the domestic market.

Strategies for Supplier Relationship Management :

1) Your suppliers are not just vendors

It is very important to note and understand that your suppliers are your partners, and this partnership should be based just on the financial transactions but on the mutual trust and loyalty as well. It is also crucial to make your suppliers feel like they are a part of your company and inform them about your business processes such as the launch of new products, promotions plus hear out their concerns and issues as well.

2) Technology makes Supplier Relationship Management simple and easy

It is important for the business to invest in good supplier management software to keep the track record of all the information about the suppliers in one place. It is also advised by the experts to install the software that helps in creating, processing, and tracking the purchase orders and other related functions as well.

3) Timely payments are important

It is crucial to make the payments on time if you don’t want to lose your suppliers. This business objective will also prove that you are a reliable customer and easy to work with. If the payment is delayed for any reason whatsoever, then inform the supplier as soon as possible with the next possible date on which they can expect the payment. All the suppliers like to get payments on time just like you like timely deliveries from their side.

4) Relationships with suppliers should be deep and strong

It is important for businesses to maintain strong, clear, and regular communication with the suppliers. Keep them regularly informed and up to date, on your business strategies and plans so that they know where they fit in and how they can help and plan in a strategic and dedicated manner. If you like their work, appreciate and let them know. And if something’s not working, address the issue.

5) The aspects of price and value are interrelated in nature

Nothing is better for growing your profits than getting high-quality materials at the right and valuable price and if you have the financial flexibility use it for your business’s growth. You can buy the goods in bulk quantity and get a better price but you will have more stock in your accounts, or you can arrange to pay a vendor earlier in order to get a bigger and better discount. Sometimes it is better to pay a little more price because the supplier is giving you a better service by giving good quality products with the delivery as per the scheduled timelines.

6) Detailed agreements make relationships with the supplier easier

If you are buying the goods from a specific supplier on a regular basis, the Supplier Relationship Agreement is mandatory for the business.  Make a note of everything that both parties expect from each other such as Item description, Price per unit, Delivery Terms, Payment Terms and other such crucial details and then both parties should sign it.

The said agreement can be a very simple or a complicated document depending on your business needs and requirements. A well-documented Supplier Relationship Agreement will reduce the possibility of confusion or disputes in the future dealings.

7) Evaluate risks

It is always important to evaluate the risks of dealing with a supplier, specifically if your business has a complex supply chain. Ask suppliers for the references, examples of their previous work, years in business or industry domain, areas of expertise and knowledge, how they deal with a crisis, what they did the last time they had to deal with a crisis, and other such details. Are they competitively priced? Do they offer the right experience? Do they have the capacity to deal with huge and bulk orders? Are they financially stable in nature? In business dealings and operations, things go wrong, and by evaluating the supplier’s risk profile in tandem with a good Supplier Relationship Agreement, you can always avoid such risks and be ready to deal with any emergencies.

8) Think global and act locally

As the world becomes ever more connected with the power of the internet and social media, we are increasingly finding ourselves dealing with vendors that are either across the country or across the globe. Every city, state or country has different rules, laws, norms, and terminology.

If some of your suppliers are located in another country, then the SRM specialists should consider cultural differences when communicating with those suppliers.

9) Get everyone onboard

Having a strategic Supplier Relationship Management Process is very important but getting everyone in your organization on board over the process is very critical. Hence, it is very imperative to involve all the key members of your company in selecting the suppliers and formulating the SRM software and program for the smooth flow of the work processes attaining the overall growth and success of the business in a dedicated manner.

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The concept of Market Equilibrium is based out of the subject of Economics from the concept of Economic Equilibrium. There is a concept in Economics wherein the supply and demand curve intersect and it is termed as Economic Equilibrium.

Thus Market Equilibrium is a condition where the amount of goods produced by sellers is equal to the number of goods sought by buyers. This market is in the state of complete equilibrium. When the demand and supply are equal, the price tends to remain constant and does not get influenced by external conditions and the market is said to be in equilibrium.

There could be three causes of Market Equilibrium :

1. Amount of goods or services demanded by customer = amount produced by the seller
2. The quantity supplied and demanded = quantity of equilibrium
3. The price charged by the buyers = the price at equilibrium

Disequilibrium: For one to know the concept of Equilibrium, it is of utmost importance that they should also know the concept of Disequilibrium. As the name suggests, the state when there is no equilibrium or when the demand and supply are not at all equal and vary by either minor or major percent, that is known as Disequilibrium. The market is constantly in the state of disequilibrium and every company tries to achieve equilibrium.

Types of Market Equilibrium :

There are two major types of Market Equilibrium :

Both these are studied to determine the overall equilibrium of the economy and there is a dependency of one on the other. While partial equilibrium is the starting of the determination and the analysis, General equilibrium is a step ahead.

1) Partial Equilibrium

Here the equilibrium is viewed partially or rather only of a single entity, a company or an individual. A variable is always a single unit which may be a company, industry or customer. This type of equilibrium is based on a selective or partial range of data. This kind of analysis is done only for a specific sector of the economy. This method acts as inception for General Equilibrium and is helpful in predicting changes in economic factors.

2) General Equilibrium

As the name suggests, this deals with the overall variables as opposed to the Partial Equilibrium which deals with single entities or units. This considers all the single units as one single big entity. Being more extensive in nature than Partial Equilibrium, it follows the partial equilibrium owing to the nature of information collected. This equilibrium is useful in defining the entire economy and understand the problems of the market as a whole. It determines the interrelationships between different parts or entities of an economy.

Factors affecting Market Equilibrium :

1. Excess Demand : Excess demand usually shifts the equilibrium point and there is instability. Prices rise up and continue to go up for a long time until the demand has not subsided. This results in disequilibrium.
2. Excess Supply : Prices drop down and the companies are unable to make a profit over the products. Excess supply, again, shifts the equilibrium and results in unsteadiness.
3. Changes in both Demand and supply : There are certain times when the changes in both demand and supply are inevitable. In those cases, the market equilibrium goes haywire and shifts or displaces by a major variance. Both demand and supply get affected after things like a change in ruling government, laws, natural calamity etc.
4. Competitive factors : the level of competition in the respective industry often affects the price thereby affecting the market equilibrium in-turn. In a competitive market, low-cost results in higher volumes and high costs result in lower volume and both the pricing strategies affect the market equilibrium as the demand and supply chain is disturbed. Mid-range priced products are close to the equilibrium but fail to attract the mid-segment income population because few of them are towards low-cost products and few towards the other type of products.
5. Strategic factors : Apart from the ones mentioned above, there may be numerous factors which affect the Market Equilibrium such as government, political and legal factors, weather, nature of the demand, change in taste of the people. To attain equilibrium, the companies must constantly improvise on the pricing.

Importance of Market Equilibrium :

1. Stagnation : As much as the Market Equilibrium is a theoretical concept, it cannot be followed in practice even if one would attempt to do it. The reason is obvious that the demand will always be equal to supply and there will be stagnancy in the market. The study of equilibrium is helpful in determining the in-equilibrium which is more important.
2. Deadweight loss: If equilibrium is not reached, there is always a deadweight loss with the companies for not maximizing the producer surplus. Major companies like Google would be different today if they had sold products at equilibrium prices.
3. Cost: The companies can reduce costs significantly if they achieve equilibrium like the production costs, inventory costs, and many other expenses which are incurred due to disequilibrium. The reduced costs can further be passed down to customers.

Advantages of Market Equilibrium :

1. It helps to determine the minimal point of equilibrium that ideally every company needs to attain.
2. It helps to plot and numerically determine the minimum equilibrium point of every industry and for all companies.
3. It is applicable to single companies and entities and also to the economy as a whole.

Disadvantages of Market Equilibrium :

1. Theoretically, it may be possible to determine the market equilibrium but practically it is impossible for companies to achieve a perfect market equilibrium because demand and supply can never be equal. A company cannot determine the precise number of units that may be sold in the current year and neither do the customers can determine their purchasing power.
2. There will be no profits for the companies if they achieve Perfect Market Equilibrium which may affect the further growth of the company. This will also affect the existence of that company in the market.
3. Calculating Market equilibrium is tedious for FMCG industries or other parts where the demand is massive and is influenced by numerous factors. In such cases, an arbitrary number is taken close to the actual demand and it may not be accurate in determining the market equilibrium.

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Michael Kors is a famous brand by an award-winning designer of luxury accessories and ready-to-wear products. It was established in the year 1981 with operational headquarters in New York. The products include footwear, watches, jewelry and eyewear and the full line of fragrance products.

The stores are operated either directly or through licensing partners in some of the most prestigious cities in the world including New York, Beverly Hills, Chicago, London, and Milan.

Michael Kors, the designer has won the number of accolades within the fashion industry and has also been honored for his philanthropy.

Segmentation, targeting, positioning in the Marketing strategy of Michael Kors

According to Ashley Lutz in Business Insider Michael Kors succeeded because it was one of the first retailers to hit the right market, it targeted t people that were not rich but had the money to spend.

Some of the variables used for segmenting the market where the demographics, psychographic and geographic. Under demographic segmentation, Michael Kors targets the people with income between $100,000 and $250,000.

It also segmented the market according to the market size and the consumption capacity. It also segments the market on the basis of logistic reachability, expected growth. Kors customer includes the working women, housewives and also the younger generation. Since Michael Kors is a well-known face of the brand and is a famous celebrity, the brand is popular among the celebrities. The celebs love him as much as they love the brand.

Michael Kors positions itself as a luxury brand with “innate sense of glamour and the unfailing eye for timeless chic”.

Michael Kors became the most searched brand on the internet because it offered a lower-priced diffusion line that was most appealing to a wider range of customers.

Marketing mix – Click here to know about the Marketing mix of Michael Kors

SWOT analysis –  Click here to know about the SWOT analysis of Michael Kors

Mission in the Marketing strategy of Adidas – Not found

Competitive advantage in the Marketing strategy of Michael Kors.

One of the few competitive advantages that Michael Kors is that it has a very strong brand name. The designer himself an esteemed celebrity designer. The customers are very loyal, the brand has been fancied by women for the past 30 years. The affordable price also makes the brand very attractive to the customer base.

To stay relevant to the latest fashion trends, Michael Kors himself joined as a judge in the reality TV show, Project Runway. This exposed him to a wider range of audiences. This provided him the opportunities to open branches of the store in the fashion capitals of the world. He personally leads his teams when creating the products.

Another advantage Michael Kors brand has is that he uses his celebrity status. His brand has been endorsed by famous celebrities. What celebrities wear are always being watched and everyone wants to look like a celeb so this exposed his products to very wide customers making it a brand every millennial aspires to own.

BCG Matrix in the Marketing strategy of Michael Kors

Handbags represent about 70% of the company’s overall sales but according to the Michael Kors website the share is expected to fall to 62% by 2020. The handbags very popular among the millennials and is a category leader, with competitors like Coach and Kate Spade. The handbags are highly accessible due to its mass presence which has resulted in the loss of the exclusivity factor. The handbags of this brand come under the star of the BCG matrix.

Michael Kors has ventured into men’s footwear and women’s ready-to-wear category and are expected to grow. They expect the men’s category to grow from 3% sales in 2017 to 8% sales in 2018.  Thus they are still in the question mark category in the BCG matrix.

The Michael Kors watches represents around 5% of the company’s overall sales. Michael Kors watches are very famous, with its unique designs. The watches come under cash cow but with the trends of smartwatches, the traditional watches category is declining. So they must innovate in smart watches and wearable technology to prevent the loss of its market share.

Distribution strategy in the Marketing strategy of Michael Kors

Michael Kors has a global distribution network that has the presence in over 100 countries through company-operated retail stores and e-commerce sites, leading department stores, specialty stores, and select licensing partners.

Michael Kors has a global distribution network that has its presence in over 100 countries. There are the number of company-operated retail stores, e-commerce sites and department stores and specialty that is in the famous fashion capitals of the world. With such a vast distribution channel, the products are readily available to the customers. As soon as an order is taken the product is shipped and the route is tracked via the online tracking system. The brand has a good online presence online with robust capabilities to deliver products in different online portals around the world.

Brand equity in the Marketing strategy of Michael Kors

The value that the brand name gives to the products of Michael Kors is quite high giving it competitive and financial benefits. The brand name itself is a point of differentiation of when it comes to Michael Kors products. The brand has increasing preferences from the millennial customers as it resonates with the latest trends in the fashion industry. The millennials accounted to the third of the spending on Michael Kors brand. Since the brand is highly endorsed by celebrities, it has become an aspirational brand attracting customers worldwide.

The brand has placed itself between an upper end and fast fashion, allowing it to have a wider consumer base This brand has a globally consistent brand image which has increased products desirability and thus keeping the customers loyal. The equity of this brand is strong but it has eroded a little due to heavy discounting and extensive outlet stores compared to other affordable luxury brands. Consumer loyalty and price pressure are also high. Michael Kors needs to rebuild its price positions and needs to recover its brand equity

Competitive analysis in the Marketing strategy of Adidas

Michael Kors faces tough competition from other luxury brands and Coach is Michael Kors’s primary competitor since they operate in the common market. Coach, after an acquisition of the brand Kate Spade, changed its name to Tapestry.

The fierce rivalry is seen mostly in the USA. In the past years, Coach had failed to spot numerous fashion trends and pricing trends which resulted into loss of market. But recent marketing strategies of Coach has helped it slowly regain its market position. They recently took Selena Gomez as the brand ambassador which has given Coach a competitive advantage as Selena Gomez has the huge following on social media.

With the acquisition of brands like Jimmy Choo and Versace which has a rich history, it has allowed Michael Kors compete better in categories like footwear where competitors like Kering SA is enjoying better performance.

Market analysis in the Marketing strategy of Michael Kors.

The fashion and affordable luxury market have seen weak spending in apparel and accessories, declining traffic in the mall. The products of Michael Kors are constantly seen for sale in department stores so the brand has decided to scale back its exposure in this channel.

The brand has the good presence in the domestic US market and is expanding internationally, the brand faces the number of challenges in its domestic market and the extension in men’s accessories has helped Michael Kors gain the new customer base.

In FY2017, the retail value of Asia Pacific reached 9% of total Michael Kors sales. The luxury market segment is expected to grow in the Asia Pacific mainly due to China and India. Michael kors have expanded internationally through the acquisition of geographic licensees in China, Hong Kong, Taiwan as also growing in the South Korean market.

Customer analysis in the Marketing strategy of Adidas

The customers of Michael Kors is people mostly between the ages of 16-39. The brand is more popular among women than men. Michael Kors is mostly aspired by women and the focus of the brand is to target the millennial customers and is investing strategically in delivering a multichannel seamless shopping experience to appeal to them.

The customer preferences are changing, they want better products that are trending and technologically attractive. The Michael Kors watch market has seen a decline as customers are more into smartwatches. The brand has taken initiatives to re-invent itself and become more appealing to the young customer base.

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A Minimum Viable Product can be defined as the product with just enough features to satisfy early customers of the company with the intention to provide feedback for future product development.

Minimum Viable Product is a development technique and approach in which a new product is introduced in the market by the company with some basic features but enough to get the attention of the customers towards the product and its features. The final product is released in the market post getting sufficient feedback from the initial users of the product.

It is the most pared down version of the product that can still be released in the target market. The Minimum Viable Product has three main characteristics:

• It has enough value that people are willing to use it or buy it on its initial launch level.
• It demonstrates enough future benefit to retain early adopters of the product in the market.
• It provides a feedback loop to guide the future development of the product.

The vital key to this development technique is that it assumes that early adopters of the product can envision the final product and provide the valuable feedback required to guide product developers the way forward.

The approach also suggests that technically orientated products procured and used by the technical users in the market may be most suitable for this type of technique.

Description of the Minimum Viable Product :

Minimum Viable Product is the most basic version of the product that the company wishes to launch in the market and by introducing the basic version to the customers; companies want to gauge the response from their prospective customers.

The technique facilitates the companies in making the final product much better than its launch version. With the help of this concept, the research and the marketing team will come to know where the product is deficient and what are its major strengths or weaknesses.

The concept of MVP comprises of three distinct features: One is that it will have enough features and attributes for the customers to purchase the product, second is that it will have some sort of a feedback mechanism where the users would be able to send their feedback about the product to the company. And, lastly, the product should have enough future benefits for the customers to adopt the product first.

The main aim and idea are to get feedback from the customers that will help in making the desired changes and developments in the final product. The concept tests the usage scenario of the product as it is much for more help for the company to make changes in the final version of the product.

The Minimum Viable Product is a smart way to :

• Release the product in the market in the shortest possible time frame.
• Cut down on the implementation costs.
• Test the demand for the product in the market before releasing the final full-fledged product.
• Avoid failures and huge capital losses.
• Gain valuable insight into what works and what doesn’t work for the product and the company as a whole.
• Work directly with the customers and analyze their behaviours taste and preferences.
• Gather and enhance the customer base.

Even though the concept of a Minimum Viable Product might seem simple and easy in its overall approach, some companies still misunderstand its whole idea and working. In the case of a perfect product, some companies lose their focus on the core value and objectives trying to include every single feature in the product. And if the MVP is overloaded with features, the company may lose its money and fail to succeed in the market.

Another mistake that many companies indulge in is to overdo filtering the product features and to cut out on the key functions of the product. It’ is very crucial to understand that a basic set of features doesn’t mean you can release a rudimentary product to the customers. You have to provide the customers with a viable and working product that will allow them to complete the entire journey achieving the goals.

Aftermath, you can gradually add more and more features to it for its betterment. The golden principle is that each extra feature or each new release of the MVP should offer a better solution to the customers solving their problems much faster and in a better manner.

The purpose of the Minimum Viable Product :

As mentioned earlier, the main aim of the Minimum Viable Product is to provide a working product that serves core functionality for a set of users. It is also used to gain feedback from the customers and to showcase the potential of the business to them.

It also provides a rich and learning experience to the companies that allow them to learn more about their end users and their target market that they wish to enter.

It also sets the stage for future development of the product and clarifies the successive steps to be taken whether it is changing directions totally or continuing with the set development path.

Steps to creating a Minimum Viable Product :

1. Identify and understand the overall business needs

1. a) Decide on the long-term goal of the product and write it down
2. b) Answer the simple and most crucial question, “Why are we doing this project?”
3. c) Identify the success criteria that will indicate whether or not the product will be successful in the target market

2. Find the Opportunities

a) Map out the customer journey

• Identify the customers
• Identify the end goal
• Identify all actions that customer must take to meet that end goal

b) Create a pain and gain map for each and every action

• Note down the action the customer completes when using the product
• Note down the pain points for each and every action
• Note down the gains for each and every action

c) Summarize all the pains and gains into opportunity statements

Use how might we statements or a similar method to summarize the pains and gains you have identified as per the above step

3. Decide the crucial features to build

1. Use opportunity statements to finalize the product features
2. Work on the breakdown of the features and attributes to include in the product roadmap
3. Use a prioritization matrix concept to prioritize product features and attributes

Features to include in the Minimum Viable Product :

Determining what all product features and attributes to include in the Minimum Viable Product is a difficult task but keep in mind that the main features to be included are the only features that are connected to its overall goals and objectives.

The main team members of the company will have to work together to create a detailed workflow and the overall process to represent the MVP and prioritize only the main and vital features that are required to take the product to the target market.

Features to avoid in the Minimum Viable Product :

1. Cool add-ons that serve no real purpose

These features and attributes can be defined as the ones that only serve an aesthetic purpose and they don’t actually add value to the MVP.

2. Copycat Features or Competitor Features

Copying every feature your competitor in the product is definitely not recommended as the main aim and purpose is to develop an MVP that aligns with your business goals and objectives.

3. Features requested by early users and customers

Even though initial users and customers feedback shapes each and every stage of the product but the company has to still proceed with caution. Implementing user requested features and changes should be based on thorough research and analysis over time a period of time.

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The concept of Lean Manufacturing can be defined as the methodology that mainly focuses on minimizing waste within manufacturing systems of the company and simultaneously maximizing the levels of productivity.

Lean Manufacturing is also known as lean production, or just lean and is the integrated socio-technical approach used by various renowned companies such as Toyota Production, Caterpillar Inc., and Nike.

The concept is based on a number of other specific principles such as Kaizen and more to attain continuous improvements within the manufacturing systems.

Lean Manufacturing was introduced to the Western world through the 1990’s publication The Machine That Changed the World, which was based on a five-year, $5 million MIT study of the future of the automobile that highlighted Toyota’s lean production system. Since then, the lean principles have profoundly influenced manufacturing concepts in various companies all across the globe along with the industries outside of manufacturing processes such as healthcare, software, and service industries

The benefits of Lean Manufacturing include reduced lead times, reduced operating and overhead costs, and improved quality of the final product amongst others.

The five Lean Manufacturing Principles :

1) Identify value from the customer’s point of view

Value of the product is created by the manufacturer or the company but it is actually defined by the customer. The companies need to understand the value the customer places on their products and services offered, which, in turn, can help them determine how much money the customer is willing to pay for their offerings in the market. The company must strive to eliminate waste and cost from its business processes so that the customer’s optimal price can be attained at the highest profit levels to the company.

2) Map the value stream

This attribute of the process encompasses recording and analyzing the flow of information or materials required to produce a specific type of product or service with the intention of identifying waste produced and methods of improvement in the manufacturing process. The value stream comprises the product’s entire lifecycle, from selecting the raw materials through to disposal phase.

It is necessary for companies to examine each stage of the cycle for waste management. Anything that does not add value to the customers and the production system should be eliminated. Also, lean thinking and process application recommend supply chain alignment as part of this overall effort.

3) Create flow

It is also necessary to eliminate the functional barriers and identify ways to improve lead time ensuring the processes are smooth from the time an order is placed through to the delivery timelines. Flow is very critical to the elimination of waste in the manufacturing process. Lean Manufacturing relies on preventing disruption in the production process and enabling an integrated set of processes in which activities move in a constant flow of the stream.

4) Establish a pull system

This aspect means that you only start new work when there is a demand for it in the market from the customers. Lean Manufacturing uses a pull system instead of a push system in the overall process.

With a push system, used by manufacturing resource planning systems, inventory needs are determined much in advance and the product is manufactured to meet that forecasted demand by the company. However, forecasts are typically inaccurate in nature, which can result in swings between too much inventory and not enough, as well as subsequently disrupted work schedules and poor levels of the customer service experience.

In contrast to the MRP approach, the concept of Lean Manufacturing is based on a pull system in which nothing is bought or made until there is the demand by the customers in the market. Pull relies on the aspects of flexibility and communication.

5) Pursue perfection with continual process improvement or with the concept of Kaizen

Lean Manufacturing relies on the concept of continually and consistently striving for perfection, which also involves targeting the root cause of quality issues and eliminating waste across the value stream and manufacturing process.

The 7 wastes of the Lean Manufacturing :

The Toyota Production System laid out the seven wastes or processes and resources, that don’t add value for the customer:

• Unnecessary transportation costs and of the products
• Excess inventory of the products and types of equipment
• The unnecessary motion of people, equipment, machinery, and other resources
• Waiting, if it is for the people or an idle equipment
• Over-production of a product
• Over-processing or putting more time into a product than a customer needs, such as designs that require high-tech machinery for unnecessary features in the product; and defects, which require effort and cost for the due corrections.

Although not originally included in the Toyota Production system, many lean practitioners and masters point to a seventh waste:

• Waste of unused talent and ingenuity in the manufacturing system

7 Lean Manufacturing tools and concepts :

The concept of Lean Manufacturing requires a persistent chase of reducing waste within the manufacturing process. Waste is anything that customers do not believe adds value and for which they are not willing to pay a price for. This requires continuous and consistent improvement, which lies at the heart of the Lean Manufacturing.

• Heijunka : The production levelling or smoothing that seeks to manufacture a continuous flow of production, releasing work to the plant at the required rate and avoiding the unnecessary interruptions.
• Kanban : It is a signal mainly physical, such as tag or an empty bin, or electronically sent through a system to streamline processes and create just in time delivery of the products.
• Jidoka : It is a method of providing machines and humans with the ability to detect an abnormality in the process and stop work until it is corrected.
• Anon : It is a visual aid, such as a flashing light, that alarms workers to a specific problem.
• Poka-yoke : It is a mechanism that safeguards against human error, such as an indicator light that turns on if a necessary step was missed during the manufacturing process, a sign given when a bolt was tightened the correct number of times or a system that blocks the next step until all the previous steps are completed in an efficient manner.
• 5S : It is a set of practices for organizing workspaces to create efficient, effective, and safe areas for the company workers which prevent wasted effort and time. 5S mainly harps on the organization and cleanliness of the systems and processes.
• Cycle time : How long it takes to produce a part of the product or complete a process.

Lean Manufacturing Examples :

1) Nike

The trendy and youth targeting apparel brand worked with NGOs and fellow manufacturers on the various sustainability projects. They worked with the Fair Labor Association to create performance indicators and sustainable sourcing plus also launched the Sustainable Apparel Coalition with the US Environmental Protection Agency and other manufacturers, and in the process saved a lot of money on energy and waste materials.

2) Toyota

• The Toyota philosophy and it truly is a philosophy has helped make the brand Toyota amongst the world top three car company and has resulted in the Lean Manufacturing concept that is replicated worldwide.
• Lean Manufacturing is a management philosophy and the concept is derived mainly from the Toyota Production System, an integrated socio-technical system which includes its management philosophy and practices.
• A socio-technical system is an approach to complex organizational design that recognizes the interaction between people and technology in workplaces during the manufacturing processes.

The above article was a complete look into Lean manufacturing and on Lean Manufacturing Principles, tools and techniques with examples.

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The Kraljic Matrix Portfolio Purchasing Model was developed by Peter Kraljic in the year 1983 and the model could be used to analyze the purchasing portfolio of a company. The matrix duly facilitates the company gains a crucial insight into the working methods of the purchasing department and how they spend their time on the purchasing and evaluation of the various products.

Understanding The Kraljic Matrix – Portfolio Purchasing Model :

The model makes clear which products can be subcontracted and do not have to be ordered again and which ones involve a particular risk or threat for the overall growth or development of the company.

It is one of the most effective and efficient approaches to delivering accurate supplier segmentation information and details.

The model is devised as a means to segment the supplier base in the article published in the Harvard Business Review in which he argued that supply items should be mapped against two main dimensions of the company that are risk and profitability.

The factor of risk relates to the likelihood for an unexpected event in the supply chain management of the company to disrupt the business operations. For example, in the significant areas of spending such as tire suppliers for an automotive are very important and if there is any sort of disruption in the process, the automobile company will have to face substantial issues and problems.

Purchasing element and aspect of the organization should be part of the overall corporate strategy. It is quite important that the purchasing department of the company should know how to evaluate the risk patterns and maximize profits by having the right approach to the procurement cycle.

The model helps the purchasing department to understand where their products are classified in terms of supply risk and profit contribution, and also know whether the balance of power lies with them or the suppliers as once they are aware of the same, they can select and devise the apt purchasing strategy for the organization.

Dimensions of The Kraljic Matrix

1) Profit impact

This dimension of the model is defined from low to high. What is the strategic importance of the purchase of certain materials required for the organization? What is the added value and advantage that they deliver in the production line and what effect do the costs of these materials have on the company’s overall sales, profitability, and market share?

2) Supply risk

This dimension of the model is also defined from high to low. To what extent is supplying complex; is there abundance or scarcity of the material required for the production in the organization? To what extent are the materials as per the latest trends and have the latest technology and materials substitutions been used? What are the logistics costs involved in the purchase cycle and are there any sorts of monopoly or oligopoly conditions?

Product categories in The Kraljic Matrix – Portfolio Purchasing Model:

1) Strategic Product Items

These types of products are purchased from one supplier only and there may be a balance of power between the company and the supplier of the products required. But when this supplier fails to deliver, purchasing stagnates. In general, raw materials belong to this category. Raw materials determine the value of the cost price of the finished product.

2) Bottleneck Product Items

These items do not represent a high value but they are vulnerable in nature and in the entire process of the supply chain. These are products that are essential for the production process but they are difficult to obtain from the suppliers in the market. There is an imbalance of power between the company and the supplier as the supplier is the dominant authority. By creating the buffer stock of these scarce items and by finding alternative suppliers, a company can iron out the flaws of this bottleneck situation.

3) Leverage Product Items

These types of products can be easily be purchased from different suppliers in the market and they determine the value of the cost price of the finished product. A minor change in price or a change in quality will strongly affect the cost price of the final product that is to be sold in the target market. In the balance of power between the company and the supplier, the company is the dominant one. By concluding good framework agreements and finalizing the lucrative targeted pricing, the relationship between the company and the supplier continues to be quite fruitful in nature.

4) Non-critical Product Items

These types of products cause the least problems in the purchasing performance of the company as such types of products to represent a low value and they can be purchased in different varieties and from different suppliers in the market. Most types of raw materials and substances fall into this category. There is a balance of power between the company and the supplier in this scenario and by increasing product standardization, much time and money can be saved of the company.

Steps in the purchasing process as defined in The Kraljic Matrix – Portfolio Purchasing Model:

1. Prepare the well defined and aligned portfolio analysis
2. Determine criteria for-profit impact and supply risk involved
3. Determine the detail level of the portfolio analysis
4. Fill in the matrix in a dedicated and analytical manner
5. Analyze and discuss the derived results
6. Determine purchasing portfolio strategy and improvement actions
7. Implement and monitor strategy accordingly

The scope of The Kraljic Matrix – Portfolio Purchasing Model:

1. Using the model in a dedicated manner the organization can professionalize and improve its purchasing performance which will result in a considerable amount of cost savings.
2. To avoid unnecessary risks and issues, it is imperative to spread the goods across the four quadrants of the framework explained above. A supplier should not have the upper hand and the factor power over the organization or the purchasing team.
3. The precondition of the model is that each product or product group can be placed into the matrix in a seamless manner.
4. It is quite preferable to place the products only in one of the quadrants. When agreement has been reached about the position of the products within the model, it can be determined what level of actions needs to be taken to achieve a better positioning.
5. The purchasing strategy can be formulated for each part of the model. Aftermath, it can be concluded if the product is in the right quadrant or whether it would be better to move it to another quadrant as per the derived results considering various factors.

The three purchasing strategies of The Kraljic Matrix – Portfolio Purchasing Model:

• Exploit – Make the most of your high buying power to secure lucrative prices and long-term contracts from the suppliers, so that you can reduce the supply risk involved in these important items of purchase. You may also be able to make on the spot purchase of individual batches of the item if a particular supplier offers you a good deal that will add to the overall profitability of the company.
• Balance – Take a middle way between the exploitation approach and the diversification approach depending on the merit of the situation.
• Diversify – Reduce the risks involved by looking out for the alternative suppliers or alternative products in the market.

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Just in Time Manufacturing is also known as just-in-time production or the Toyota Production System and can be defined as the methodology with an objective to reduce times within the manufacturing system as well as response times from suppliers and to the targeted customers.

Just in Time Manufacturing concept is a management philosophy and not just another technique. It was originally referred to the manufacturing of goods to meet the demands of the customers exactly in time quality, and quantity, whether the customer is the final purchaser of the product or another process further along the production line of the company.

It has now come to mean production with minimum amount of waste during the manufacturing process. Waste is taken in its most general sense and includes time and resources along with the raw materials and inventories.

Just in Time Manufacturing – Background and History

Just in Time Manufacturing is a Japanese management philosophy which has been applied in practice since the early years of the 1970s in the various Japanese manufacturing organizations.

The concept was first developed and perfected within the Toyota manufacturing plants by Taiichi Ohno as a means of meeting customer demands with minimum delays possible. Taiichi Ohno also very frequently referred to as the father of JIT.

The automobile giant Toyota was able to meet the increasing challenges of the market for survival through an approach that focused on people, plants, and the manufacturing systems.

Toyota realized that the concept will only be successful if every individual within the company was involved and committed to it and if the plant and processes were arranged for maximum output and efficiency of the products, and if quality and production programs were scheduled to meet the exact demands of the market.

Just in Time Manufacturing has the capacity if properly adopted by the organization, to strengthen the organization’s competitiveness in the market and substantially by reducing wastes and improving the overall product quality and efficiency of production techniques.

There are various strong cultural aspects associated with the surfacing of JIT in the country of Japan. The Japanese work ethics involves the below concepts:

Workers are highly motivated to seek constant improvement in the production processes that which already exists. Although high standards are currently being met, there exist even higher standards to achieve within the organization.

Companies focus on the overall group effort which involves the combination of talents and sharing knowledge, problem-solving skills, ideas, and the achievement of the common goals and virtues.

Work itself takes precedence over leisure in the approach. It is not unusual for a Japanese employee to work 14-hours a day on a consistent basis.

Employees tend to remain with one company throughout the course of their career span and it allows the opportunity for them to polish their skills and expertise at a constant rate while offering numerous benefits to the company as well.

Elements of Just in Time Manufacturing :

Continuous improvement in the processes

Attacking fundamental problems that do not add value to the final product.

Devising systems to identify potential problems.

Striving for simplicity as simpler systems are easier to understand, easier to manage, and less likely to go wrong in nature.

A product-oriented layout that produces less time spent moving of materials and the required manufacturing parts.

Quality control at source as each worker is responsible for the quality of their own output during the entire process.

Poka-yoke that signifies the foolproof tools, methods, jigs etc to prevent mistakes

Preventative maintenance and Total productive maintenance to ensure machinery and equipment functions perfectly when it is required, and continually improving the process.

Eliminating the seven types of waste:

1. Waste from the overproduction of goods
2. Waste of waiting time.
3. Waste of transportation.
4. Processing and manufacturing waste.
5. Inventory waste.
6. Waste of motion.
7. Waste from the product defects.

Some more steps in Just in Time Manufacturing are

• Good housekeeping that signifies workplace cleanliness and the overall organization.
• Set-up time reduction that increases flexibility and allows smaller product batches. Ideal batch size is 1item.
• Multi-process handling is a multi-skilled workforce that generates greater productivity levels, flexibility, and job satisfaction.
• Leveled and mixed production that smoothens the flow of products through the entire factory.
• Kanban simple tools to pull products and components through the manufacturing process.
• Jidoka (Autonomation) that provides the machines with the autonomous capability to use judgment so that the workers can do more useful things than standing and watching them work.
• Andon (trouble lights) that helps to signal problems to initiate the corrective action.

Benefits of Just in Time Manufacturing :

When done well in the organization, adopting the concept of Just in Time Manufacturing system can have a drastic and fruitful impact on an organization’s productivity, risk management, and operating costs. Below mentioned are a few of the quantitative benefits experienced by the various manufacturers worldwide:

• Reduction in the product inventory costs
• Considerable reduction in labor costs
• Reduction in space required to operate
• Reduction in the work in process
• Increase in the production levels
• Improvements in quality of the product and lower rates of defects
• Reduction of overall throughput time
• Reduction of standard hours of production
• Increase in the number of shipments of goods

Potential Risks of Just in Time Manufacturing :

1. In general, companies adopting the Just in Time Manufacturing practices enjoy the benefits of reduced production cycle times, faster delivery times to market, and reduced operating costs but there are some potential risks, especially for smaller companies.
2. In order to find success with the overall process, it is very important to find suppliers that are close by to the company location, or that can supply materials quickly with limited advance notice as and when required.
3. Sometimes, minimum material order policies can pose a risk to smaller manufacturers who might order smaller quantities for the required materials.

How does Just in Time Manufacturing differ from traditional manufacturing?

1. In traditional manufacturing concepts, we try to predict what the customer in the operation will require and we will create a forecast against which we will produce our products.
2. We will also try to produce those products in a large number of batches as the belief is that will make machines and processes more efficient and effective, especially if those machines require a longer time to set up.
3. This will typically result in longer lead times through the overall processes, huge amounts of Work in Process stocks and also large quantities of finished goods stocks that have not yet been ordered by our customers and are lying unused.
4. If the customer does order something that is not in the current stocks of the company they will either have to wait for many weeks or even months for the product to be manufactured or work will be hurried through the system by progress chasers causing a huge amount of disruption to the entire manufacturing schedule.
5. These systems are usually run by Manufacturing Resource Planning programs that will try to schedule each and every process within the production facility of the firm.
6. These software packages will seek to control each and every step and everything requires careful, intricate, and complex planning.
7. The Just in Time Manufacturing system, on the other hand, will seek to use simple visual tools and methods such as Kanbans to pull production through the various processes according to what the customer actually requires.
8. It massively reduces the amount of stock held in the warehouse and will reduce lead times by a significant amount, often from weeks to a few hours or days.

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The 5S system can be defined as a systematic form and methodology of visual management utilizing everything from the floor tape to operations manuals during the manufacturing process in the firm. It is not just about cleanliness or organization in the process but also about maximizing the efficiency of work and the profit ratio.

The 5S System framework emphasizes the use of a specific mindset and tools to create efficiency and value in the organization. It encompasses observing, analyzing, collaborating, and searching for waste in the process and also comprises of the practice to remove the waste.

The 5S System Explained :

The 5S System is a standardized process when properly implemented in the company creates and maintains an organized, safe, secure, clean, and efficient workplace.

The improvised versions of visual controls are implemented as a part of the methodology to make any process nonconformance’s and easily measurable.

It is often one element of a larger manufacturing process initiative and promotes continuous and consistent improvement.

The 5S System list is as follows :

• Sort : Separating of the essential items from the non-essential items
• Straighten : Organizing the essential materials where everything has its proper and defined place
• Shine : Cleaning the work area in the organization
• Standardize : Establishing a system to maintain and make 5S System a habit
• Sustain : Establishing a safe and sanitary work and manufacturing environment

The 5S System Principles are recognized in various industry domains as one of the effective tools for improving workplace organization, reducing waste, and increasing the overall work efficiency.

Organizations should be careful to not allow the system to become viewed as the whole of the company’s improvement efforts otherwise it could become the end goal of the company’s improvement process instead of a key part of a larger continuous and consistent improvement journey.

The greatest benefit of using the 5S System is realized when it is part of a larger initiative in the firm and the entire organization has adopted its principles in a dedicated manner.

The system is a business philosophy and should be integrated into the organization’s culture in a successful manner.

Why to implement the 5S System?

There are quite many benefits of implementing the 5S System methods into a work area on the production line as well as in the business office to not only survive but thrive in today’s competitive market.

The cost and expenses must be controlled and waste must be avoided or eliminated. When the system is implemented properly, it can identify and reduce many forms of waste in any process or workstation in the company.

An organized work area reduces excessive motion and wasted time looking for the right kinds of tool and methods. The main visual aspect of the methodology is also quite effective when everything has a proper place, it is easier to spot something that is missing or misplaced.

A clean work area helps to draw the attention to possible problems or safety issues and a clean floor helps spot any leakages or spillages that could indicate machine maintenance and prevent slips and falls during the work processes.

Furthermore, encouraging people to watch for and address the potential problems can result in a positive change to the entire organization’s work culture.

Hence, the 5S System implemented as a larger lean manufacturing initiative or as a standalone tool can reduce the considerable amount of waste, improve quality of work, promote safety and drive continuous improvement in the work processes.

How to implement the 5S System?

1) Sort

The first and foremost step in the 5S System is sorting. During the sorting process, the team should go through all items in the work area including tools, supplies, materials, and bulk storage parts, etc. The team leader should review and evaluate every item within the group as this will help to identify which items are essential for getting the job done effectively and efficiently and which are not.

If the item is essential for the everyday business operations it should be tagged and cataloged and if the item is not essential, determine how often it is used in the performance of that specific work area. If it is a bulk item, decide the proper amount to be kept in that area and move the remaining quantity to the storage warehouse. Any excess inventory is one form of waste and should be eliminated.

2) Straighten

Properly designate a place for all items that remain in the work area and put all items in their designated work location. During the straightening step of the process, look for ways to reduce or eliminate any form of waste. One form of waste in a process is unnecessary operator motion or movement during the manufacturing of the products.

Therefore, frequently used tools and supplies should be stored in the immediate work area close to the main operator. One effective method commonly used to avoid wasted time searching for the correct tool is constructing shadow boards for all the required and essential tools.

Items that are not used often should be stored based on their frequency of use in the manufacturing process. All parts bins should be properly and aptly labeled. The label should comprise the part number, part description, storage location, and the recommended minimum and maximum quantities. A properly straightened work area allows the operator to quickly review, assess, and verify that they have everything they need to successfully perform their task at hand in the firm.

3) Shine

The next step in the system is to clean everything in the area and remove any sort of trash. To be effective we must keep the area and any related equipment clean and properly sanitized. Dirty process and work types of equipment can actually increase the potential for process variability and lead to equipment failure in the work area.

Lost time due to equipment failure is considered as waste and non-value-added time.  A dirty area can also contribute to various types of safety issues that have the potential to cause a worker to be injured. Operators should clean their areas at the end of each shift during the day or night.

By doing this they are likely to notice anything out of the ordinary such as oil or lubricant leaks, worn lift cables or wires, burnt out bulbs, and, dirty sensors, etc. The main aim here is to reduce waste and improve operator safety and work efficiency.

4) Standardize

The fourth step in the system is the most important step as it develops the standards for the 5S system. They will be the standards by which the previous 5S steps are measured and maintained in the firm.

In this step, work instructions, checklists, standard work orders, and other documentation are developed. Without any sort of work instructions or standard work, operators tend to gradually just do things their own way instead of what was determined by the team at the very start.

The use of visual management is quite imperative and valuable in this phase. Color coding and use of standard colors for the surroundings is used sometimes. Photos of the area are often posted for easier identification of nonconformance’s factors of the process. The operators are also trained to detect non-conforming conditions and correct them on an immediate basis.

5) Sustain

This step in the process can sometimes become the most challenging of all the above mentioned five steps. Sustaining is the continuation of the Sort, Straighten, Shine, and Standardize steps and it is the most important step in as it addresses the need to perform the overall 5S System on a consistent and organized basis. During this step, a standard audio system is developed and implemented with the main goal of the sustain step is to ingrain in the 5S process into the company culture.

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Lipton Tea British brand of tea named after its founder Thomas Lipton and currently owned by Unilever was founded as a small shop in Glasgow, Scotland in the year 1871 by Thomas Lipton which by the year 1880 had grown to more than 200 stores.

Sir Lipton Thomas then began traveling the world to stock new items in his stores and one such item was tea. Realizing the demand of tea growing exponentially in the European market by mid-1890 he purchased his own tea gardens in Ceylon, Sri Lanka and packaged and sold Lipton Tea at low cost by making it available in small packets. Lipton Tea later also went onto become a huge success in The United States.

Unilever acquired Lipton Tea later in a deal which was completed in a number of separate transactions. With the company starting its acquisition of the United States and Canadian Lipton business in 1938 and completed in 1972 with purchase of the remainder of the global Lipton business from Allied Suppliers.

A joint venture was created by Unilever in the year 1991 with PepsiCo, Pepsi Lipton Partnership to market the ready to drink teas in North America. A second joint venture namely Pepsi-Lipton International (PLI) was created in the year 2003 to cover many non-United States markets which were then expanded to a large number of European markets in the year 2007.

Segmentation targeting and positioning in the Marketing strategy of Lipton Tea

Lipton Tea adopts a flexible segmentation strategy with a wide range of products it offers. Its Geographic segmentation of markets is according to nations, states, regions, countries, cities, and neighborhood.

Demographic segmentation for Lipton is age, occupation, and income of the market as customers are closely linked to variables such as age and income.

For psychographic segment consumers are divided according to their personality, lifestyle, values, and social class.

Lipton applies Undifferentiated marketing or mass marketing as it focusses on equal benefits for everybody and follows one market with one offer strategy. The reason is to become a market leader in the future.

Geographically Lipton has a good amount of customers in USA, India, and Europe. With demographics and psychographics varying from High-income class to middle-class groups.

Lipton was initially positioned as a delicious, sophisticated and premium tea for global citizens with their advertisements also echoing this theme. For example, all props and participants in the advertisements were foreign. Possibly this approach did not find much favor with the customers. Repositioning specifically then helped to address the Indian consumer through an Indian idiom.

Marketing mix – Click here to read the Marketing mix of Lipton Tea.

SWOT analysis – Click here to read the SWOT analysis of Lipton Tea

Mission in the Marketing strategy of Lipton Tea – “To meet the everyday needs of people everywhere, to anticipate the aspirations of consumers and customers and to respond creatively and competitively with branded products and services which raise the quality of life. Also, Lipton drives to serve consumers in a unique and effective way and attract and develop highly talented people, who are excited, empowered and committed to delivering double-digit growth”

Vision in the Marketing strategy of Lipton Tea- “To provide the best quality tea has made Lipton the number one tea in the world today. Lipton offers an option for tea lovers to enjoy their favorite drink in an exciting and refreshing way”.

Tagline – Lipton tea – Lipton. Tea can do that.

Competitive advantage in the Marketing Strategy of Lipton –

Being one of the leaders in the tea market over the years Lipton has been aggressive in its marketing strategies to ensure an advantage over its competitors. The brand also has the advantage with a variety of products it possesses in its kitty.

Its products include:

1. Yellow Label Tea
2. Lipton Green Tea
3. Lipton Darjeeling Tea
4. Black Iced Tea Peach
5. Classic K-cup pack
6. Matcha Green tea and Mint
7. Green Iced Tea Citrus
8. Berry Citrus

However, there still remains certain domains which can be worked upon by the organization to avoid the decline of market share with the entrance of many regional players in various domestic markets and this could be anchored by addressing the following issues:

Low Foreign Sales :

Lipton in the previous few years has failed to gain much traction in foreign markets with the entrance of Foreign players. A quarter of Lipton sales across the globe comes from The US market while other regions contribute the rest which is not an impressive ratio and thus the company should go to aggressive marketing strategy to increase its share in other markets.

Failure to meet large segment demand :

With its competitor like Nestea targeting the entire population, Lipton continues to target only its segmented market as it doesn’t define its real target market resulting in relaxed marketing strategy.

Lack of foreign manufacturers  :

Lipton has to import raw tea products from across different plantations around the world with the lack of foreign factories and plants which makes it dependent on the economic and political stability of other nations ultimately resulting in change in companies marketing strategies in response to these factors.

Some of the major global, as well as local competitors for the brand, includes:

1.Teley (Global)

2. Twinings(Global)
3. Dilmah Tea (Australia, New Zealand, and Sri Lanka)
4. KaziKazi Tea (Bangladesh)
5. Brooke Bond (India and Pakistan)
6. Tata Tea Limited (India)
7. Punjana (Europe)
8. Yorkshire Tea (Europe)
9. PG Tips (Europe)
10. Typhoo Tea (Europe)
11. Imperial Tea Court (US)
12. Arizona (US)
13. Nestea (US)
14. Upton tea (Europe)

BCG matrix in the Marketing strategy of Lipton Tea –

With Lipton Clear and Yellow Label tea continuing to hold their positions in Star and Cow segment globally major chunk of revenue for the company from these to brands.

While Lipton Iced tea still appears to be a question mark for the brand and Lipton tea and honey is something company still seems to be pondering upon its future.

Distribution in the Marketing strategy of Lipton Tea  –

With its availability in over 110 countries, Lipton Tea enjoys a robust distribution network of its partner PepsiCo which has its presence in almost all the countries.

Lipton’s Joint Venture with PepsiCo has helped the brand to deepen its roots in some of the initial hostile markets. Lipton Pure Leaf and Brisk seem to have gained a lot, especially in North America.

Marketing analysis in the Marketing strategy of Lipton Tea 

Lipton continues to be a market leader in the US with a market share of 26.5% and Arizona tea coming distant second with 21.5% market share.

In UK Tetley leads the market with 27% market share followed by PG tips with a share of about 24% and Lipton placed at fifth in UK market with around 10% market share.

In India Lipton holds a market share of around 15% which is almost at par with its parent Unilever brand Brooke Bond and second only to TATA tea.

Customer analysis of Lipton Tea –

Lipton Tea targets tea lovers with Middle to High-class income across all age groups. With its wide range of products like Iced tea Lipton even reaches out to children over 8 years to senior citizens 70 and above.

Promotion strategy of Lipton Tea

Following an aggressive marketing strategy, Lipton has positioned its beverages as a healthy brand through several promotional activities highlighting its main features such as quality, affordability, and user-friendliness. Brand positions itself among the consumers with slogans such as “Direct from the tea gardens to the teapot”, “100% Natural and 100% Real tea” and “Lipton gets into hot water than anything”.

Ad campaigns of the brand have been launched and broadcasted on television, radio, newspapers, magazines and social media platforms.

Banking upon the celebrity endorsement strategy to rope in the common Indian masses brand has signed actress Shraddha Kapoor and Anushka Sharma for Lipton Green Tea campaigns in India and actor Hugh Jackman to promote Lipton Ice Tea globally.

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The concept and methodology of Total Quality Management can be defined as an extensive and structured organization management approach that mainly focuses on the continuous quality improvement of products and services offered by the firm by using continuous feedback. Joseph Juran was one of the founders of Total Quality Management concept just like William E. Deming.

Breaking Down Total Quality Management :

Total Quality Management originated in the industrial sector of Japan in the year of 1954 and since that time the concept has been developed and can be used for almost all types of organizations and industry domains such as schools, motorway maintenance, hotel management, and churches.

Nowadays, the approach is also used within the e-business sector and it perceives quality management entirely from the standpoint of the customer.

The vital objective of Total Quality Management is to do things right the first time and over and over again. This saves the time that is required to correct poor work and failed product and service implementations in the organization.

It can also be set up separately for an organization as well as for a set of standards that must be followed, for instance, the International Organization for Standardization (ISO) in the ISO 9000 series and is known worldwide. Total Quality Management concept aptly uses strategy, data, and effective communication channels to integrate the required quality principles into the organization’s work activities and the overall culture.

It is a structured approach to the overall organizational management and its main focus is on the process to improve the quality of an organization’s outputs, including goods and services, through continual improvement of internal practices and work procedures.

The standards set as part of the TQM approach can reflect in both internal priorities and the various industry standards currently in place.

Industry standards can be defined at multiple levels and may include adherence to various laws and regulations governing the operation of the business domain. Industry standards can also include the production of items to an understood custom, even if it is not backed by official rules and regulations.

Primary Principles of Total Quality Management :

Total Quality Management is considered a customer-focused approach and it mainly aims for continual improvement of business operations of the firm.

It strives to ensure all the associated employees work toward the common goals of improving product and service quality, as well as improving the work procedures that are in place for the production process.

Special emphasis is laid on the fact-based decision making, using performance metrics to monitor the progress on regular basis.

High levels of organizational communication are encouraged for the rationale of maintaining employee involvement and morale at work.

Industries Using Total Quality Management :

While TQM actually originated in the manufacturing sector, its principles can be applied to the various organizations and industry domains.

With the focus on the long-term change over short-term goals, it is mainly designed to provide a cohesive vision for systemic change within the organization.

With this aspect in mind, the concept of Total Quality Management is used in various industries including manufacturing, banking and finance, and medicine among others.

These techniques can be applied to all departments within the organization and it helps to ensure all employees are working toward the same goals set forth for the company, improving work function in each area.

All the involved departments include administration, marketing, production, HR, and employee training.

8 Ways to Implement Total Quality Management  :

1) Focus on the customer

When using the approach of Total Quality Management it is very crucial to remember that only customers determine the level of quality of the products and services. Whatever efforts are made by the firm with respect to training employees or improving the work processes, only customers determine through evaluation or satisfaction measurement, whether your efforts have contributed to the continuous improvement of product quality and services or not.

2) Involvement of the Employees

Employees are an organization’s first and internal customers. Employee involvement in the development of products or services of an organization is quite imperative as it largely determines the quality of these products or services. Do ensure that you have created a work culture in which employees feel they are involved with the organization and its products and services offered to the market.

3) Process-centered

Process thinking and process handling both are a fundamental part of the Total Quality Management approach. Processes work as the guiding principle and people support these processes based on the basic objectives that are linked to the mission, vision, and strategy of the company.

4) Integrated system

Following principles of process-centered, it is quite important to have an integrated organization system that can be modeled for example ISO 9000 or a company quality system for the understanding and handling of the quality of the products or services of the company.

5) The strategic and systematic approach

A well structured strategic plan must embrace the integration and quality development and the development or services of the firm.

6) Decision making based on facts

Decision-making within the firm must be based on facts and not on opinions such as emotions and personal interests. Data gathered should support this decision-making process.

7) Communication

A communication strategy must be formulated and structured in such a way that it is in line with the mission, vision, values, and objectives of the firm. This strategy comprises the stakeholders, the level within the company, various communications channels and the measurability of effectiveness, timeliness, and more.

8) Continuous improvement

By using the right measuring tools and innovative and creative thinking strategies, continuous improvement proposals will be initiated and implemented so that the organization can develop into a higher level of quality processes and products.

Practical approach of Total Quality Management :

When you implement the concept of Total Quality Management, you implement a concept and not just a system.

It is not a system that can be implemented but is a line of reasoning that must be incorporated into the overall organization and its work culture.

The practice has proved that there are a number of basic assumptions that contribute to a successful rollout of the process of the Total Quality Management within the firm.

The basic assumptions are:

• Train senior management on the aspects of Total Quality Management principles and ask for their commitment with respect to its proper roll-out.
• Assess the current culture of the firm, customer satisfaction, and the work quality system.
• Senior management of the firm determines the desired core values and principles and communicates this within all the levels of the organization.
• Develop a basic Total Quality Management plan using the basic starting principles and fundamentals mentioned above.
• Identify and prioritize customer needs and of the market and determine the organization’s products and services to meet those specific needs and requirements.
• Determine all the critical and imperative work processes that can make a substantial contribution to the quality of products and services.
• Create teams that can work on process improvement for instance quality circles in the firm.
• Managers support these teams using planning, resources, and by providing required training.
• Management integrates all the desired changes for improvement in daily work processes. After the implementation of improved processes, work standardization takes place.
• Evaluate progress on the continuous basis and adjust the planning or other issues, as and when necessary.
• Stimulate employee involvement at a high level. Awareness and feedback lead to an overall improvement of the entire work process.

This was a complete understanding of Total Quality Management.

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The Concept of Six Sigma is a disciplined, statistical-based, data-driven approach, and a continuous improvement methodology for eliminating defects in a product, process or service offered by the company.

It was developed by the Motorola company in early to middle years of the 1980s based on the fundamentals of quality management and then became a popular management approach at General Electric (GE) in the early years of 1990s. Hundreds of companies and organizations all around the world have adopted Six Sigma as a way of doing business in an efficient manner.  

Breaking Down the Concept of Six Sigma :

Sigma represents the approach of population standard deviation, which is a measure of the variation in a data set collected about the work process. If a defect is defined by any sort of specification limits separating good from the bad outcomes of a work process, then a six sigma process has a process mean that is average that is six standard deviations from the nearest specification limit. This provides is enough buffer between the process of natural variation and the specification limits.

The Concept of Six Sigma can also be thought of as a measure and methodology of process performance, with Six Sigma being the main goal, based on the defects per million. Once the current performance of the process is measured, the next goal is to continually improve the sigma level striving towards the 6 sigmas in an effective manner.

Even if the improvements do not reach the 6 sigmas, the improvements made from 3 sigmas to 4 sigmas to 5 sigmas will still reduce costs and increase customer satisfaction in the best way possible. Six Sigma is a methodology that mainly focuses on eliminating defects in the business processes of the firm.

Motorola was the first company to introduce the Concept of Six Sigma methods in its manufacturing process. These principles were employed by the firm to bring down the defect rate in their production line and entire processes.

After it was implemented by Motorola, these Six Sigma methods were practiced by various other firms as well. The principles of Six Sigma caught the attention of various companies located all around the globe when the General Electric Company earned a huge sum of $300 million because they implemented Six Sigma principles in their manufacturing process.

Well, that’s not the end of the story; these principles were also employed by domains such as healthcare, telecommunications, education, finance, military, and various other service sectors. These results proved that Six Sigma methods are appropriate for meeting business goals and objectives in an efficient and efficient manner.

The Concept of Six Sigma is an organizational structure that mainly concentrates on continuous improvement of the manufacturing processes. The primary objective of this methodology is to achieve goals and objectives set by the organization in an efficient manner keeping costs and defect rate at a minimal point possible by the management.

The Five Steps of the Concept of Six Sigma :

True believers and practitioners of the Six Sigma method follow an approach called DMAIC that stands for define, measure, analyze, improve, and control.

It is a statistically driven methodology that users learn through Six Sigma certification or companies implement as a mental framework for the improvement of their business processes.

The main ideology behind DMAIC is that a business can solve any seemingly unsolvable problem also.

First, a team of people, led by the Six Sigma champion, defines a faulty process on which to focus, decided through an analysis of company aims, goals, and requirements.

This definition outlines the problem, goals, and deliverables for the required project. Secondly, the team measures the initial performance of the work process. These statistical measures make up a list of potential inputs that may be causing the problem or a bottleneck and help the team understand the process’s benchmark performance in a better way.

Thirdly, the team analyzes the process by isolating each input of the process, or the potential reason for the failure, and testing it as the root cause of the problem.

Through intricate levels of analysis, the team identifies the reason for the process error. From there on, the team works to improve overall system performance and finally, the team adds controls to the process ensuring that it doesn’t regress and become ineffective again.

What is Lean Six Sigma?

As discussed above, the theory of Lean Six Sigma is a combination of Six Sigma and Lean methods. By combining these two processes and implementing these methodologies within an organizational structure, results in work process improvements, reduction in waste, and an effective monitoring of the processes which would eventually lead to increase in the profit margins for the firm. Organizations must follow a set of rules and regulations for obtaining the desired result after implementing Lean Six Sigma methods in the business processes.

Below mentioned are the success factors of Lean Six Sigma :

1) Leadership Responsibility

For the success of any project in the firm, the project leader plays a very critical role. The project leaders have the responsibility to prioritize all business activities in the right sequence and order of the priority. They have to ensure that all the resources are readily available to the team to start the production process as per the timelines.

2) Allocation of Right Resources

It is always advisable that the project manager employs the right members in the project team for the work processes. If the team members are already Six Sigma certified members then the project manager can assign them the task of monitoring the overall project development process, as they are well versed with all the methods and techniques of the concept of Lean Six Sigma.

3) Training for the Employees

Proper training sessions and programs have to be conducted for the employees of the firm so that they have a complete knowledge about the project and also the required tools for completing the project successfully.

4) Project Approach

The project status must be reviewed at regular intervals and this can be done by conducting regular team meetings with stakeholders and senior management team. The feedback and suggestions must be shared with all the members working on the project

5) Reporting

It is important that all the procedures must be correctly documented and reported to the senior management, which will give the organization a complete information about the financial impact that has been created after implementing Lean Six Sigma methodologies in the firm.

Benefits of Lean Six Sigma :

Customer benefits

Lean Six Sigma benefits are not only the members confined to the organization, but it is also beneficial for the customers of the firm as well. With the help of Lean Six Sigma methods, customers receive the final product according to their required specification and quality, and this will lead to customer retention and loyalty which is beneficial for the organization.

Stakeholder benefits:

Stakeholders of the company are also benefited by Lean Six Sigma methods as these procedures cut down on the waste during the business work processes resulting in higher profit margins and revenue generation.

Employee benefits

As part of the Lean Six Sigma methodology, all the employees of the firm will be thoroughly trained. They all will get the required information for successfully completing the project and they also have good knowledge about the tools that they have to work with for implementing the method.

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House of Quality can be defined as the most convenient, easy, and simple tool used to convert the customer needs into technical descriptors for the firm. House of Quality is actually a matrix and is also termed as Quality Matrix.

The matrix gives us details such as customer requirements, technical descriptors, priority levels of the various descriptors, the relationship between the descriptors and target values for each descriptor amongst others. It also shows competitive evaluation between various other products with the current product in the market.

Anatomy of House of Quality

Image Courtesy – whatissixsigma.net

The ceiling of the house gives the various technical descriptors to the management of the company. The technical descriptors of the product are provided through the various engineering design constraints, requirements, and various other parameters. The roof of the house explains the inter-relationship between the various technical descriptors available.

On the left side wall we have the list of customer requirements and on the right side wall, we have the prioritized customer requirement that reflects the importance of the various needs of the customer. It shows competitive benchmarking and the importance of customer rating. The interior of the house gives inter-relationship between the voice of the customer and the technical descriptors of the product and business operations.

The base or foundation of the house gives the list of the prioritized technical descriptors. It also showcases factors such as technical benchmarking, target values, and the importance of technical descriptors.

The focus in House of Quality is the correlation between the identified customer needs, termed as the Whats, and the engineering characteristics are termed as the House. House of Quality is a kind of conceptual map that provides all details required for inter-functional planning and communication in the organization.

The various departments in an organization must work closely together to form efficient HOQ. Hence the QFD team includes the marketing, design, and manufacturing staff all working together towards the common goal.

Advantages of House of Quality

• Reduces the time required for the planning process
• Focuses completely on customer needs and requirements
• Reduces design changes and alterations
• Improved quality of the products
• High customer satisfaction
• Decreased design and manufacture costs and overheads
• Reduces time to market the product
• Helps in prioritizing various design parameters
• Aids in benchmarking the processes

Steps in House of Quality

1. Identify what are the exact needs and demands of the customer in the target market.
2. Identify how the product will satisfy the targeted customer. It refers to identifying specific product characteristics, features or attributes that the customer is looking for and showing how to satisfy customer’s needs and wants
3. Identify relationships between How’s and What. A couple of questions, those are to be answered here: How do our how’s tie together? What is the relationship between our two or more how’s in the entire process?
4. Develop the importance of ratings as it refers to using the customer’s importance ratings and weights from the relationships in the matrix to compute the important ratings.
5. Evaluate competing products or services as the main question to be answered here is: How well do the competing products in the market meet customer wants? This activity is completely based on thorough market research.
6. Determine the desirable technical attributes as in this step, our performance and the competitor’s performance are determined and compared in an effective manner to arrive at a conclusion.

Primary Purposes of QFD & House of Quality

Understand Customer needs and desires

Many times, customers need outside perspective to discover what they really require to build their product or process. The goal is to understand customers perhaps in a better manner so that they understand themselves so as to open their eyes to ideal and best solutions available to them.

Understand the priorities of the Customer:

During the interview stage, get to know the exact customer needs, but then break those needs down into prioritized parts in an effective manner. For instance, if a customer is building drones for media production, how important is the battery life as compared to camera quality? How important is an aesthetic appearance as compared to the quality of the drone body?

Then the weights are assigned to each quality based on what is most important to the customer’s needs and requirements. How well each need is carefully met is ultimately how the customer will judge your solution’s value in the market.

Departmental Buy-In

Quite often, disagreement or misunderstanding between various departments of a customer’s organization can occur in relation to what is actually needed and required. As per the above-mentioned examples, the marketing department may think that a drone with trending features is the top priority, but the engineering department may think that renovation of the problematic part is the top priority. The process helps to create a plan that addresses all the true priorities and to which all departments can agree upon.

Translate Customer Desires into Goals & technicalities

This is at the heart of the QFD process where the recorded desires of the customer are ranked on the basis of the priority and specific process and where resource planning takes place. They are laid out onto a useful diagram labeled as the House of Quality.

Specify traceable requirements

Specific requirements for the execution of the customer’s product or process should be laid out in an effective and efficient manner. The how and why questions should be answered in the plan such as how are we meeting the client’s requirements and why are we doing it this way? The written requirements should be specific enough in nature that their completion and success ratios are traceable.

One should be able to work forward and backward in the plan to determine easily whether or not the overall plan is being executed successfully or not. For instance, if there is a question on why something is done a specific way, one should be able to trace back to the beginning of the process to the initial requirement that the determined process is needed to meet that specific requirement.

Provide structure

It is quite easy for customers to jump all over the place stating what they desire and are tossing out the ideas. But, at the end of the day, your role is to hone in on what they actually want and provide a logical, executable, and the traceable structure to organize their ideas.

Allocate resources

Whether developing a physical product or creating the process for a customer, effective resources are required to do the same. Human resources, machinery, computer systems, construction materials, along with the disposable materials and more must be accounted for.

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Assessment is defined as a proper collection, interpretation and use of information in regards to learning. It gives the teacher a better awareness about the knowledge of peoples and their understanding and what are learning experiences are also about their skills and personal characters and capabilities.

The assessment should be in sync and supportive of learning, it should be and should be valid in nature, the assessment should be proper and manageable, it should support the judgment of a teacher and lastly, it should support accountability.

10 Types of Assessment :

1) Summative Assessment

Summative comes from the word summary. The summative assessment arrives at the very end of the learning sequence and is used to record the students overall achievement at the end of learning. The primary objective summative assessment is to measure a student’s achievement post instructions or learnings.

Examples of summative assessment II midterms and final papers and examinations which give overall knowledge test of the student at the end of the learning. The summative assessment gives an insight into an overall scenario of the understanding of the student regarding particular learning or a topic. Summative assessment helps to answer the questions like what happened and what went wrong at the end of the learning.

The United States uses summative assessment all over their educational institutes. Summative assessments have more weight compared to formative assessments. Questionnaire service interviews testing’s and projects are few of the methods used to measure Summative assessment.

2) Formative Assessment

Formative assessment includes a variety of formal and informal assessment procedures which are used by teachers in the classroom so that they can modify the teaching an improve the student’s attention retention and his learning activity.

Formative assessment survey geyser in throughout the learning process and usually determined the performance of the student during the learning, unlike summative assessment which determines the performance at the end of the learning.

The primary objective of formative assessments is to involve the attention of the students and help them achieve their goals. It is performed in the classroom and determines the strengths and weaknesses of students. The routine question during the teaching of a lesson is an example of formative assessment.

Following are the characteristics of formative assessment

1. Formative assessment is positive in its intention such that it is directed towards promoting learning and hence it is an integral part of teaching.
2. It helps in addressing individual or group deficiencies by identifying it.

3) Evaluative assessment

This is concerned only with evaluating assessment. The overall idea is to evaluate the assessment in the school or in the system or in the department. Evaluation of candidates helps in assessing and judging whether the candidates are capable enough for the learning program. Evaluative assessment is done only with the aim of evaluating and grading the candidates.

4) Diagnostic Assessment

When the objective is to identify individual strengths and areas of improvement diagnostic assessment is the one that is used. It helps to inform next steps in the assessment bike including the strengths and weaknesses areas of improvement and other characteristics. Unlike Evaluative assessment, diagnostic assessment does not aim to grade the candidates but rather it helps in diagnosing the issue after which the teacher can take steps to address it.

5) Norm-referenced tests (NRT)

Robert Glaser coined the term Norm-Referenced Test.

Norm-referenced tests commonly known as NRT tests is used to assess or evaluate with the aim of determining the position of the tested individual against a predefined group on the traits being measured. The term normative assessment means the process of comparing one test taker to his seniors or peers.

The primary objective behind this test is to determine whether the test taker has performed better or worse than the other test takers which in turn determines whether the test taker knows more or less than the other test takers. Comparison by benchmarking is the method used in NRT.

The primary advantages that this kind of test can provide information about an individual vis-a-vis the reference group while disadvantage includes the reference group may not represent the current population of interest since most of the norms are misleading and therefore do not stay over a period of time. This test also does not ensure if the test is valid in itself. Norms do not mean standards which is another disadvantage of this test.

6) Performance-based assessments

This is also known as education assessment in which the skills, attitudes, knowledge, and beliefs of the student are checked to improve the standard of learning. The assessment year used at times done with the test but not only confirm to tests and it can extend to class or workshop or real-world applications of knowledge used by the student.

It is further divided into few subtypes such as

• Initial and diagnostic assessment
• Objective and subjective assessment
• Referenced and norm-referenced Assessment
• Informal and formal assessment
• Internal and external assessment

Examples would include multiple choice questions approach and answers as a post to the traditional responses which are normally done in writing a report.

7) Selective response assessment

This refers to the objective assessments including multiple choice true or false and matching questions. It is a very selective effective and efficient method to measure the knowledge of students and is also the most common method of assessment for students in the classroom.

Selective response assessment determines the exact amount of knowledge that the student has and also provides an insight into the skills the student has acquired over the time of learning.

8) Authentic assessment

Intellectual assessments that are worthwhile significant and substantial are measured by authentic assessment. In contrast, to standardize tests authentic assessment provides deep insights about the student.

It focuses to enable the skills of students to demonstrate their capabilities and competencies in a more authentic setting. Like the performance of a particular skill or demonstrating a particular form of knowledge assimilation and role plays or strategic and selecting items. Authentic assessment helps to determine and develop the problem-solving skills that are required out of school. Case studies are one of the common examples of authentic assessment.

9)  Criterion-referenced tests

This kind of assessment determines the performance of student against a fixed set of pre-determined and agreed upon criteria or the learning of students. Unlike norm-referenced test here without reference is made against a particular criterion other than a benchmark or a human being or another student.

While criterion-referenced assessment will provide whether or not the answer is correct the norm-referenced assessment will provide information on whether the answer is better than student number 1 is worse than student number 3.

The comparison here is not against a person or fellow competitor is what is the biggest advantage of criterion-referenced assessment over norm-referenced assessment. While the earlier assessment provides the exact running status of student the latter one provides the running status of a student with respect or in comparison to others.

10) Written and Oral Assessment

These include projects, term papers, exam papers, essays etc. The primary objective behind the written assessment is to determine the knowledge and understanding of the student. Written assessments are performed under the supervision of the teacher and the questions are given on the assessment day with limited time to answer the questions.

Written assessments are one of the most popular methods in Summative Assessment. Oral assessments, on the other hand, involve the evaluation of the candidates orally. They are evaluated for the knowledge with their verbal answers. Questions can be elaborative or objective or a combination of both.

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The Theory of Constraints is a unique methodology for identifying the most important limiting factor that stands in the way of achieving a goal and then systematically improving that constraint until it is no longer the limiting factor for the company. In the manufacturing process, the constraint is quite often referred to as a bottleneck.

The Theory of Constraints takes a scientific route for the overall improvement. It hypothesizes that every complex system, including the various manufacturing processes, comprises of multiple linked activities, one of which acts as a constraint upon the entire system and is the weakest link in the chain.

The ultimate and vital goal of most manufacturing companies is to make profits both in the short term and long term. The Theory of Constraints provides a powerful set of tools and methods to achieve that goal also including the below mentioned:

• The Five Focusing Steps that works as a methodology for identifying and eliminating the various constraints
• Thinking Processes working as the tools for analyzing and resolving issues.
• Throughput accounting that is a method for measuring performance and guiding the important management decisions

Dr. Eliyahu Goldratt conceived the Theory of Constraints TOC and introduced it to a wide audience through his bestselling novel, “The Goal” in the year of 1984.

Since then, the concept has continued to evolve and develop in various ways, and today it is a major factor within the world of best management practices.

One of the most appealing characteristics of the Theory of Constraints is that it innately prioritizes improvement activities and its top priority is always the current constraint. In environments where there is an urgent need to improve, the theory offers a highly focused methodology for creating speedy improvement.

Benefits of Theory of Constraints :

• Increased profit: It is the primary goal of TOC for most of the companies.
• Fast improvement: It is a result of focusing all attention on one critical area that is the system constraint.
• Improved capacity: It helps to optimize the constraint and enables more products to be manufactured.
• Reduced lead times: It helps to optimize the constraint resulting in the smoother and faster product flow.
• Reduced inventory: It helps to eliminate bottlenecks and means there will be less amount of work-in-process.

Theory of Constraints Strategy :

The management philosophy of the Theory of Constraints can be practically executed. The rate of the throughput is delayed by the bottleneck. To identify, reinforce or eliminate the bottleneck it is important to follow the below mentioned five steps:

Step 1 : Identify the system constraints and issues

The weakest link in an organization is identified and the aftermath it must be decided whether its causes are physical or policy-related.

Step 2 : Decide how to exploit the constraint

The organization and the management as a whole determine how this constraint can be eliminated as a result of which the throughput can actually be increased at every level. Should these actions not lead to an increase, it is considered advisable to abandon the breakthrough of this constraint totally.

Step 3 : Subordinate everything else to the above decision

The organization as a whole must side with the adopted solution, as a result of which the constraint or a bottleneck is solved. It is a wise decision to make an assessment in between steps 3 and 4, to establish whether performance is still being hindered by this earlier constraint or not.

Step 4 : elevate the performance of the constraint

Other adjustments can be used to break through the figured out constraints. This could involve changes in the existing system by the way of reorganization, increase of sales or changes in the market strategy. Such adjustments require investments and will only be deployed after all other options have been considered wisely and accurately.

Step 5 : continuous process

After the implementation of the opted solution and post the elimination or breakthrough of the constraint, the process starts all over again from the first step. On the one hand, the impact of the implemented solution is looked at and checked plus on the other hand, new constraints are identified and broken through.

Theory of Constraints: Internal and external constraints

Constraints can be an internal and an external part of any organization. Internal constraints are the ones when there is too little output to meet the demands in the market.

By identifying and reinforcing this constraint, a breakthrough is realized eventually.

Examples of such constraints are badly deployed production methods in the firm, lack of competent employees, and bad policies as a result of which a system cannot function optimally and efficiently.

External constraints indicate a too large output with respect to the overall demand in the market. In that case, an organization should cultivate the market which leads to a higher demand for the offerings but this often requires huge capital investments.

Eliyahu Goldratt was in favor of looking at one constraint per cycle of the approach. By focusing all attention only on one constraint, this could be dealt with in an adequate manner.

The other links in the system are regarded as non-constraints in nature and are therefore not reinforced.

Reinforcement or breakthrough of the identified constraint will automatically lead to another constraint or bottleneck that will have to be identified again starting the whole process all over again. Therefore the Theory of Constraints encourages an organization to improve its system continuously and on a consistent basis.

Combining the Theory of Constraints and Lean Manufacturing

One of the most powerful aspects of the Theory of Constraints is its laser like focus on improving the constraint in the process. While Lean Manufacturing can be focused, more typically it is implemented as a broader spectrum tool within the organization.

In the real world, there is always a need to compromise, since all companies have finite resources available to them. Not every aspect of every process is truly worth optimizing in nature and not all the waste is truly worth eliminating.

Theory of Constraints can serve as a highly effective and qualitative mechanism for prioritizing on the improvement of projects, while Lean Manufacturing can provide a rich toolbox of all the improvement techniques.

The result is that the manufacturing efficiency is significantly increased by eliminating waste from the parts of the system that are the largest constraints and obstacles on the firm’s opportunity and profitability.

While the tools of Lean Manufacturing are primarily applied to the constraint, they can also be applied to equipment that is subordinated to the constraint.

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Supply and demand are one of the most fundamental concepts of economics working as the backbone of a market economy. The concept of demand can be defined as the number of products or services is desired by buyers in the market. The quantity demanded is the amount of a product that the customers are willing to buy at a certain price and the relationship between price and quantity demanded by the customers is known as the demand relationship.

The concept of supply can be defined as how much the market can offer to its customers. The quantity supplied refers to the amount of certain good producers are willing to supply when receiving a certain price for their products in a specific period of time. The association between price and how much of goods or services are supplied to the market is known as the supply relationship. Hence, the price is a manifestation of supply and demand.

The Law of Demand in the Supply and Demand Curve

The law of demand focuses on the fact that if all other factors remain equal in nature, the higher the price of a good as compared to the competition, the fewer people will demand that good. Precisely, higher the price of the goods, the lower the quantity demanded by the customers in the market. The amount of goods that customers purchase at a higher price is less because as the price of a good elevates and so does the opportunity cost of buying that good. Hence, the customers will naturally avoid buying a product that will force them to skip the consumption of something else they value more.

The Law of Supply in the Supply and Demand Curve

Just like the law of demand, the law of supply highlights the quantities of goods that will be sold at a certain price in the market. But unlike the law of demand, the supply relationship shows an upward slope in nature. This means that the higher the price of the goods in the market, the higher the quantity supplied to the customers. Good manufacturers supply more products at a higher price because selling a higher quantity at a higher price elevates revenue generation and overall growth of the firm.

Time and Supply in the Supply and Demand Curve

The relation of supply is a factor of time as compared to the demand relationship. Time is a very crucial factor to supply as suppliers must, but cannot always, react quickly to a change in demand or price of the products in the market. So it is very imperative to try and determine if the price change is caused by demand will be temporary or permanent in nature.

For example, if there is a sudden increase in the demand and price for umbrellas in an unexpected rainy season; suppliers may simply cater to the demand by using their production equipment more intensively. And if there are a climate change and the population will need umbrellas all year round, the change in demand and price will be expected to be long-term in nature and suppliers will have to change their equipment and production facilities to meet the long-term levels demands of the market.

Equilibrium in the Supply and Demand Curve

The main function of the market is to equate demand and supply through the mechanism of price. If customers wish to purchase more quantity of goods that is available at the prevailing price in the market, they will tend to tender the price up. And if they wish to purchase less quantity than is available at the prevailing price, suppliers will bid the prices down and there is a tendency to move toward the equilibrium price and this tendency is called the market mechanism, and the resulting balance between supply and demand is called the market equilibrium.

As the price rises, the quantity offered also increases, and the willingness of consumers to buy the goods decline, but those changes are not necessarily proportional. The yardstick of the responsiveness of supply and demand to changes in price is called the price elasticity of supply or demand and is calculated as the ratio of the percentage change in quantity supplied or demanded to the percentage change in the price of the goods.

The demand for products that have readily available substitutes is likely to be elastic meaning that it will be more responsive to changes in the price of the product because the consumers can easily replace the good with the substitute if its price rises. The demand for a product may be inelastic if there are no close substitutes or alternatives and if expenditures on the product amount to only a small part of the consumer’s income. Firms that face relatively inelastic demands for their products may increase their total revenue by raising prices of the products and the ones facing elastic demands cannot.

Supply and demand analysis may be applied to markets for the final goods and or to markets for labor, capital, and other various factors of production. It can be applied at any level of the company or to the industry as a whole or at the cumulative level for the entire economy.

Aspects that come into the Supply and Demand Curve

1) Products

A luxury brand restricts its supply of products to maintain high prices and the status of the brand in the market.

2) Services

A type of business software is typically sold as a monthly user-based service in the market. Its supply is essentially unlimited as it costs firms very little to scale their services up and down. The demand for this software all over the world is 1 million user licenses with 99% of demand falling below a price of $200 per user on per month basis. Any company that charges more than $200 will only have access to 1% of demand in the market.

3) Club Goods

A theme and entertainment park has a fixed capacity of 100,000 people a day that represents the overall supply. Demand for the same is based on the calendar with high demand for holidays and a relatively lower demand on workdays and in poor weather months. The theme park offers a wide array of discounts on days when they predict demand to be low and on high demand days, no discounts are given to the customers.

4) Common Goods

Common goods are things such as air, water, and ecosystems that are a shared common resource by one and all. They have a fixed and limited supply. Common goods are often used without any cost involved so that their demand tends to grow very quickly. This result in the over usage of common goods resulting in their depletion. Application of the cost factor to the use common goods can rectify this as it helps to limit demand.

5) Labor

Supply of a particular skill set is determined by factors such as demographics and education. Demand for a skill set is driven by factors such as the economic growth of the country or industry, recessions, business cycles and the evolvement of the technology. When a skilled labor is in high demand their salaries increase. This causes supply to increase on a long-term basis as higher salary gives people incentives to acquire the required skill set.

6) Assets

Supply of assets such as real estate or gold is mostly fixed with small increment over a specific time period. Demand can rise and fall dramatically due to factors such as economic conditions, dynamic environment, interest rates, and money supply in the market.

7) Securities

A security can rapidly increase in supply. For example, a firm that does a secondary offering of its stock in the market can increase the supply quickly. Demand for a security is determined on how the investor estimates for its future returns and risks.

8) Currencies

The supply of a currency is set by the monetary policy of the country and demand is generated by economic activities such as trade and investment flows in the market.

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The 3C Model by Ohmae was developed by the Japanese organizational theorist Kenichi Ohmae and is an industrial model. It offers the strategic outlook and guidance on the factors that are required for the success of the business and attaining the objectives such as higher sales of the products offered, elevated profits, competitive advantage, and enhanced brand value.

Anatomy of the 3C Model by Ohmae :

The main aim and idea behind the model revolve around the shared and integrated value to the company with the external environment and the community.

The model point outs that the company management and the business strategist should focus on the 3 main elements that work as the significant factors of success that are:

1. Customer
2. Company
3. Competitor

The model refers to these 3 factors as the strategic triangle. By the successful and optimum integration of these 3 factors, the aim of sustained competitive advantage can be accomplished.

The customers have needs and want and the company understands the requirements of the customers and offers the products that are high on the realms of quality and innovation meeting the demands of the customers. The competitors also try to come up with the similar line of products to pull the customers towards them by adding the new level of innovation and novelty in their products. And all these factors give rise to the competitive environment.

The main aim and objective on which the 3C Model of Ohmae focuses on understanding, meeting, and catering to the needs and demands of the customers rather than of the shareholders of the company. The company should be genuinely interested in the customers as doing the same will automatically take care of the shareholders, profits, sales, and other crucial objectives of the business. The customer should always be at the focal point of every business aspect.

The business needs to conduct a thorough competitive analysis in the market figuring out that who are the direct competitors and who are the indirect competitors. Finding out their core strengths, business strategies, values, objectives, sales strategies, marketing strategies, and other such crucial facets is important to work out the plan to beat the competition and gain the advantage.

It is not necessary that the company needs to excel in each and every function to win and gain the competitive advantage. It has to figure out and gain a decisive edge in one key function, and then it will be able to improve and gain the momentum on the other functions that are average on a gradual level.

In-depth analysis of the 3C Model by Ohmae :

1) The Customer

According to the model, the customer is the main base and objective of any business strategy. The primary goal of the business should be to meet the needs and demands of the customers and not of the shareholders. In the long run, this strategy will be quite beneficial and fruitful for the company as it will automatically take care of the interests of the investors and shareholders.

Segmentation is important to understand the customers.

a) Segmenting by objectives

Customer thinking is not one of the primary functions of considering over here but the differentiation is done on the terms of the various ways and means in which the customer uses the products to meet his needs and requirements.

b) Segmenting by customer coverage

In this segmentation, the main task in the hand of the organization is to optimize its range of market coverage in terms of geographically, demographically or channel wise. It is the trade-off study between the marketing costs incurred to pull and attract the customers versus the market coverage. In most of the cases, the time comes when there is a point of diminishing returns in the costs incurred as compared to the coverage relationship.

c) Segmenting the market one more time

With the factor of growing and fierce competition, the competitors are very much likely to apply the similar line of business strategies to attract the customers and dissect the market in the similar ways and fashion. Plus over a period of time, the effect and efficiency of the initial segmentation strategy tend to decline due to the factors such as increased competition and the changing dynamics of the market due to the external forces that are many a time out of control. Hence, in such a given situation it is imperative to pick up a small group of customers and re-examine on what exactly they are looking for, their preferences, needs, and requirements.

2) The Competitors

The competitor based strategy highlighted by the 3C Model by Ohmae focuses on formulating the strategies by looking at all the possible sources of competitive differentiation such as customer service experience, sales strategy, marketing strategy, design and packaging, purchasing, engineering, manufacturing techniques, and features and attributes of the products offered by the competitors.

a) Hito-Kane-Mano

The above mention phrase is the favorite one of the Japanese business planners and strategists and it stands for people, money, and things. They truly believe that the well aligned and defined corporate planning and management is achieved when these three critical resources are in perfect balance without any surplus or wastage of the resources.

Of all the 3 resources, the funds need to be allocated at the last stage and the business should first allocate the management talent based on the factors such as plant, machinery, production techniques, technical know-how, and the functional strengths to attain the targets amongst others. Next comes to develop the people harping on the creative strengths, imaginative ideas, and innovative abilities that will help the business to grow in the upward direction. Lastly, the money should be given the required importance to work on the ideas generated and make the optimum use of the same.

3) The Corporation

It is not at all necessary that the corporation has to excel in each and every facet of the business. It has to gain a decisive edge in one specific key functional area that works as its competitive advantage and the other functions that are average in nature automatically get improved and aligned over a period of time.

a) Make or Buy

In order to stay ahead of the competition by generating more revenues and profits, the company should either outsource some of the activities to the outside vendors or third parties that are working out to be quite expensive in-house and are not adding any value to the product offerings or should plan and apply the backward integration methods in its core business areas.

This case is also applicable in the case of rapidly increasing wage costs that elevate the overheads of the company affecting the overall profits and revenues of the firm.

Examples of 3C Model by Ohmae :

1) Corporation

The telecom company Vodafone follows the strategy of selectivity and sequencing.

2) Customers

The high-end luxury brand Mont Blanc follows the strategy of segmentation by objectives.

3) Competition

The premium brand Harley Davidson follows the strategy of the power of the strong image and brand value.

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This article discusses the Marketing Strategy of Johnson and Johnson. Johnson and Johnson is one of the most highest valued brands in the market and has presence in various industries like Pharmaceutical industry, consumer packaged goods industry and others. It is regularly ranked in the Forbes top 500 and in fact ranks in the Forbes top 100 frequently too. Without further ado, let us go through the Marketing Strategy of Johnson and Johnson.

Segmentation, targeting, positioning in the Marketing strategy of Johnson and Johnson

Johnson has considered demographic (education-income-occupation), geographic (urban-rural-further city wise segmentation), and behavioral (lifestyle) factors to seek out the consumers.

Johnson’s baby care product targets young parents and positions itself as a safe, mild and gentle product for babies.

Johnson’s Clean and Clear brand is a global skincare brand dedicated to teen girls and promotes that beauty comes from being happy in their own skin.

Johnson has segmented the market for adult and has provided a range of beauty products which positions itself to be perfect for all skin types.

Under psychographic segmentation, Johnson has the brand Neutrogena which markets itself on the basis of being recommended by dermatologists, where customers who take expert advice when it comes to skin care are being targeted.

Band-Aid which comes under health and healing product has positioned itself as a staple in a family’s first aid kit as a source of care, comfort, and protection.

Listerine Mouthwash is purely centered on functional benefits that it offers protection against plaque, gingivitis, and bad breath and has been positioned as a ‘bomb of freshness’.

Mission in the Marketing Strategy of Johnson and Johnson

“Make diversity & inclusion how we work every day. Our mission is to make diversity & inclusion our way of doing business. We will advance our culture of belonging where opens and minds combine to unleash the potential of the brilliant mix of people in every corner of Johnson & Johnson.”

Vision in the Marketing Strategy of Johnson and Johnson

“Be yourself, change the world. Our vision at Johnson & Johnson is for every person to use their unique experiences and backgrounds, together – to spark solutions that create a better, healthier world.”

Tagline – N/A

Competitive advantage in the Marketing Strategy of Johnson and Johnson

1) The brand itself

Johnson & Johnson was founded more than 120 years ago and it has around 250 companies located in 57 countries around the world. The legacy of the brand and its dominance gives the brand a competitive edge.

2) Product

Gentleness, safety, and comfort have always been a topmost priority of J&J. It uses harmless chemical and products go through rigorous clinical testing to ensure the highest standard for their baby products. It has a strong presence in the mind of the parents.

The company has a product-focused initiative called EARTHWARDS, which challenges teams to incorporate sustainability across the entire product lifecycle, from design, manufacturing and product use and bringing positive change in sustainability space.

3) Innovation

Every year J&J invests billions of dollars in R&D, in 2014, it had invested 11.4% of its total sales ranking it as one of the world’s top companies spending in R&D and topmost in its industry.

Every year they come up with innovative products which helps it stay ahead of the competition.

BCG Matrix in the Marketing Strategy of Johnson and Johnson

In baby care J&J has the complete portfolio of products that provide safe and gentle products for babies in the form of the baby cream, diaper cream, oil etc. It is widely recognized by all and it’s the brand that first comes in people’s mind when they think about getting products for their babies. It is providing a relatively stable cash flow thus it is the cash cow.

In wound care, Band-Aid has long been a staple in family’s first aid kit. J&J is the leader in the Indian wound care market thus its cash cow in the BCG matrix

Under beauty products, J&J has Aveeno, Clean & Clear, Johnson’s Adult, and Neutrogena. According to the reports by J&J, the worldwide consumer sales increased by 2.2%, and primary contributors to growth were Neutrogena, Aveeno, Tylenol. Neutrogena is a 40-year-old brand and offers over 400 products in the international market. In 2009 Johnson and Johnson introduced skincare range of Neutrogena brand in India, however, the product is not able to establish itself well in the Indian market, the leading brand are Dove, Fair & lovely, Lakme etc. so in consideration of the Indian market, it is a question mark in the BCG matrix.

In 2017, J&J introduced Aveeno with a baby and body care in India, since there is an emerging segment of mothers who are seeking for products with natural ingredients, Aveeno is expected to do well however since it will be competing with other well-established brands, the uncertainty puts it in the Question Mark category.

Distribution strategy in the Marketing Strategy of Johnson and Johnson

Employing more than 120,500 employees J&J sells products in more than 175 countries. Since it is one of the biggest consumer-oriented companies, J&J has a huge network of distribution in India and the brand instills a feeling of pride among the distributors that they are associated with J&J so it can exert coercive power over the distributors.

While selecting the channel members, J&J selects channels on the basis of its relevance rather than the economic criteria that is the reason why J&J products are found even small shops of rural areas. The brand has been distributing the products through Wholesalers/distributors, Retailers, supermarket chains and e-commerce websites.

It has more than 350,000 SKUs, more than 350 distribution centers around the world catering to the needs of thousands of customers.

J&J has recently made a major development in Europe, It has invested 33 million in the construction of a European distribution center which acts as a European Supply chain hub. Since the company has mostly grown through acquisition each has its own management, structure and distribution network which tends to complicate matters. So this center has helped to harmonize the companies by streamlining its warehouses whilst maintaining a good relationship

Brand equity in the Marketing Strategy of Johnson and Johnson

The company uses emotional and mental communication developing trust and creating feelings to convince its customers to buy their products. J&J the brand’s success in India is due to its sharp focus on mothers. It focuses on reliability in the market where that is a premium when it comes to baby products. The Johnson’s baby brand offers the promise of recognized and quality product.

Neutrogena launched a global campaign with the tagline “See What’s Possible”, directed towards female-empowerment and it was the first time Neutrogena Launched ads that were not product focused. The equity campaign was used to unite Neutrogena Brand known for different product strength in different countries.

Band-Aid focused on Brand Equity with its new #CoveringIsCaringEffort focusing on what the brand means rather than its product-differentiating category stating caring is pretty much universal.

The brand personality is edgy and also projects perfectionism. The edgy personality comes through its efforts towards innovation and with the product that offers consumer high quality and completely reliable product depicts perfectionism.

Market analysis in the Marketing Strategy of Johnson and Johnson

In 2017, Johnson & Johnson’s share of the global baby care market was estimated to be 21.3%. The franchise’s sales fell 7.2% to $2.0 billion in 2016, including an operational decline of 2.7% US market. Strong competition is limiting the growth of Johnson’s baby products. Unilever has launched baby care products under the brand Dove. Strong sales were reported by Aveeno baby products because parents are preferring products with more natural ingredients.

Oral Care franchise reported growth due to successful marketing campaigns and the geographical expansion of the Listerine brand.

The beauty franchise sales rose 7.9% to ~$3.9 billion in 2016, with the good performance by Neutrogena brand.

Customer analysis in the Marketing Strategy of Johnson and Johnson

Customers of Johnson’s baby care products are almost all the parents with medium income and also the pension earning grandparents. Clean & Clear works in the anti-acne market and has developed its presence among the teens.

The Neutrogena targets youths and working professionals both male and female who trust dermatologist when it comes to skin care.

The customer of Band-Aid are from all segments and people from all age groups and is a top-of-the-mind product.

Promotional strategy in the Marketing Strategy of Johnson and Johnson

J&J has managed to interest a large community of followers by creating an independent content platform. Content Marketing Strategy for their baby product has been well defined through a sharp audience profile of young parents and expectant mothers who want reading about parenthood and information about babies and want to connect with peers, facing similar issues. The Clean & Clear brand has recently launched a new campaign called #ForEveryFace in Indonesia empowering teen girls to be more confident. With “See Whats possible” campaign under the brand Neutrogena J&J has pulled efforts towards female-empowerment.

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It is often answered fact that business means growth. Every company seeks growth in one way or the other. Every company has their own strategies by which they can implement growth by increasing their sales and profits. The strategy that the business with used to implement in the market will depend on its financial situation in the market, the competition, and to a large extent on government regulations.

Business means growth and growth are measured in terms of increased profits and increased market share. Every business aspires for growth and they achieve this through either by increased sales or by reducing costs.

Either way, the aim is to increase profits. By increasing sales, the organization can also increase market share and that is why every company aims to increase sales. Following are some common types of business growth that businesses plan.

1) Organic Business Growth

This is the most basic type of business growth but is more effective means of growing your business. This type of business growth focuses more on manufacturing increased products and services and space for the success of the business.

The businesses which focus on organic business growth tend to buy larger store or expand shifts in order to get more output of products. The businesses which focus on growing organically should aim to expand in order to accommodate more for their needs. This type of business growth is considered to be very solid for new businesses and also for an existing business is who have typed into the potential of a new market and face shortage of product.

The increase in space or production meets the growing needs of customers and also prevents shortages of the products. Organic business growth is unanimously considered as an unsustainable strategy of growth but one which ultimately helps for the business to succeed in future. If existing products are to be sold to new customers or in new territories the company may have to launch an advertising campaign or expand the sales team.

On the other hand, if the company decides to use new distribution channels then it is to be ensured that this generates new sales rather than take sales from existing distribution channels. Yet another way to grow the business organically is to sell a new product that increases the product vertical and serve them to the existing customer base.

2) Strategic Business Growth

Strategic business growth is the one which focuses on long-term growth of the business. The businesses which focus on strategic growth have reached a peak of the organic business growth stage and are forced to find an additional market.

This type of business growth is used to reach a market which is previous the untapped by the use of advertising power bank making additional products and adding them to the existing inventory. The money which is generated from organic business growth is required by strategic business growth because the businesses will not experience watershed business acceleration and instead there will be a gradual rise in sales.

Strategic business growth is considered as an unavoidable step for businesses which have reached a plateau in the growth. This type of business growth allows businesses to focus on the long-term plans and use the capital which is stored in order to attain those growth goals. Strategic business growth can be very difficult for startups or the businesses that are producing fewer products then the demand in the market. By far strategic business growth is considered a great strategy to apply when the businesses are looking for long-term planning.

3) Partnership/Merger/Acquisition

For some businesses, it is beneficial to merge or acquire or create a partnership with other businesses. This is also considered as the riskiest strategy of business growth with more potential for success. A valid and executed merger or acquisition can help business to enter, sustain and grow in a new market. It can also help to manufacture more products and gain increased customer loyalty.

Some consider a joint venture to be also a part of the partnership. Joint ventures have not become very common due to the advantages over partnership and merger and acquisition. The best example of a successful joint venture is the alliance of Starbucks in India with Tata Group.

The Starbucks Tata alliance has successfully started more than a hundred joint venture Starbucks outlets all over India.

4) Internal business growth

This type of business growth is considered as both easy and hard to promote a business. This business growth strategy makes the use of resources which are currently available and determine how they can be used in a better way rather than looking outward to production. This type of business growth would include a lean system for implementing business or workforce automation.

Businesses find it often hard to use Internal business growth because this is not like expanding a business market our expanding a product line but rather the businesses must change entirely the way their business is conducted and that process can be scary to the current employees and managers.

 At times, instead of choosing between strategic and organic growth, internal business growth is a great way to increase resources without significant expense of capital. In fact, internal business growth is seen as a process which helps the business to reduce using of resources and continuing the growth at the same time. This business growth is considered a practical growth strategy.

5) Rapid Business Growth

When the growth is needed in a short time rapid business growth is the only option. During this period the production levels or customers or even staff increases at a great pace which can lead to certain risks and challenges. Cash flow shortfalls or customer service issue common for every rapidly growing business organization.

Operational efficiency and outgrown premises are other associated issues. To start a business, they have to take a lot of debt to finance their growth. Also when the growth is fast, the growth rates increase, which tends to make your cash leave your business as well as the costs, will grow in order to accommodate the increased demand. This means that if the growth increases rapidly there is a chance that it can spiral out of control which can put the financial solvency of the business at risk.

One of the ways to achieve rapid growth while reducing the risk is to buy another business. You can buy the entire business over a part of it and business can be your competitors or it can also be that could complement the existing business. Growing a business is considered to be exciting but it will be worthwhile if you can not only achieve but also sustain the growth.

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