I found the Spartan case this week incredibly interesting because it dealt with the potential overthrow of traditional and time-tested business structure. Food wholesalers like Spartan have existed for many years, but the introduction of conglomerate companies like Wal-mart and Meijer are seriously calling their continued longevity into question. Spartan's Co-op structure may end up proving unnecessary due to the demise of the smaller independent supermarkets that are the company's shareholders.
Co-ops exist to support and benefit their shareholders who are also their customers (in Spartan's case, a number of grocery stores). What that means, however, is that in order for the company to make decisions, they have to satisfy a board of directors that represent the interests of hundreds of separate businesses. While those business owners have the best interest of Spartan in mind, their primary concern is their own business and not Spartan. With all of those shareholders pulling the business in so many different directions, the decision-making process becomes incredibly convoluted and inefficient. A Co-op can never be as efficient as a single conglomerate company can when it comes to making decisions, because with a unified company, the interests of all of the shareholders are in sync with one another. Implementing new technology for a single company is easy...the decision just has to be made, but with a Co-op, making a change in technology requires convincing all of the constituent companies to make the change as well.
In order to solve this fundamental structural deficiency, I think that Spartan needs to ensure compliance with the decisions they make. They could require some kind of contractual assurance that the individual members of the Co-op comply with the decisions made by the company. They could also refuse to sell to companies that fail to comply with their decisions. This would solve most of the problems involved in the implementation of decisions for a Co-op company. There seems to be little that can done to resolve the inefficiencies in the decision making process itself for Co-ops. Becoming more like a conglomerate defeats the purpose of the Co-op itself which is to support the companies owned by its shareholders, so the company will always operate like a several hundred headed monster. It will be interesting to see if companies like Spartan will ultimately be able to withstand competition from companies like Wal-mart.
Sunday, September 26, 2010
Sunday, September 19, 2010
When Low Tech Works
The case study presentation this week about the Zara clothing store was incredibly interesting to me. The business model of that company blew me away. By increased production and constant reinvention of fashion trends, Zara managed to stay on top of the latest fashion trends without having to be on top of the latest technology. To the contrary, Zara managed to use their low tech inventory system to create increased demand for their products.
By constantly rotating their products, Zara created a sense of urgency among the individuals that shopped there. By keeping their inventory system low tech and minimizing inter-store communication, Zara managed to create sales as opposed to hurt them. If a shopper found something that she liked, there was no ability, nor time to check if another store had that product in her size. Despite this, the shopper would be influenced to buy whatever else in the store she found remotely appealing because she knew that it wouldn't be around if she came in later, and she couldn't try to find it somewhere else.
In creating the impression that failing to buy something instantaneously will forever prevent one from doing so, Zara more than makes up for the business that they lose from people that can't find exactly what they want with the business that is created through the constant pressure for impulse purchases. It is an ingenious idea that is counterintuitive, yet incredibly effective.
By constantly rotating their products, Zara created a sense of urgency among the individuals that shopped there. By keeping their inventory system low tech and minimizing inter-store communication, Zara managed to create sales as opposed to hurt them. If a shopper found something that she liked, there was no ability, nor time to check if another store had that product in her size. Despite this, the shopper would be influenced to buy whatever else in the store she found remotely appealing because she knew that it wouldn't be around if she came in later, and she couldn't try to find it somewhere else.
In creating the impression that failing to buy something instantaneously will forever prevent one from doing so, Zara more than makes up for the business that they lose from people that can't find exactly what they want with the business that is created through the constant pressure for impulse purchases. It is an ingenious idea that is counterintuitive, yet incredibly effective.
Wednesday, September 15, 2010
Social Network Marketing
Social Networking Websites (and though I phrase this in the plural, I essentially just mean Facebook) provide a plethora of options for their users. Despite the nearly endless marketing opportunities that such sites have created, firms need to be careful about how they utilize them if they want to actually make headway into the half-billion user markets that such sites have created.
There are many ways that firms who market on Facebook make mistakes. Here are a few:
1) Overly invasive marketing tactics-->
One of the biggest problems with Facebook is that it is potentially the source of too much information. But people who use the site don't want to be reminded of this. So marketing tactics that delve into consumer interests or information too much tend to be very off-putting. There are certain ads that run on the site that take pictures from the albums of user's "friends" and then incorporate those pictures into the banner advertisements that run on the side of the page. This really creeps people out. Although it is an interesting technological feat, many people find it incredibly upsetting.
2) Customizable advertisement that misses the point-->
Another off-putting marketing technique involves an application that tries to customize ad's based on the interests of the user and suggest similar things that the user would like. The problem with this is that Facebook is primarily private and is in many ways the virtualization of everyday human interactions. At this point the ad applications cannot understand context in the majority of things that people put in their profiles. The fact that I like the LSU Tigers doesn't mean that I want to know about about exotic pet sales in the Southeastern United States. Such advertisement also has potential to be offensive. Women who are not considering marriage may be offended if Facebook continually suggests that they buy wedding dresses and baby products.
3) Creating a Facebook profile for your firm-->
This is not always a mistake, but more often than not it is. Bars and restaurants that frequently have special promotional deals can sometimes pull it off. Providers of services can occasionally. But for the most part, firms and businesses should stay away from creating a Facebook persona. Users of Facebook grow very tired of endless marketing updates from employees that work at a company. This is partly what lead to the demise of MySpace. The appeal of Facebook is that it is a networking service for people, so while it is a great way for individuals to market themselves, it is less effective for companies. Users will most of the time change their settings to actively ignore updates from such businesses, making the impact of having a Facebook page minimal. Websites are a much better source of general information about a business than anything that can be loaded onto a company Facebook profile. People will not waste any time paying attention to what the persona of a business has to say.
In my opinion, the best way for a firm to market on Facebook is to create a page that people can "like." This is very non-invasive and takes little effort on the part of users to endorse a product or business.
Shifting away from social network marketing, Facebook could potentially play a role in the evolution of the operational side of business. It could be used in extensively in the planning and management of office activities. We may see a time when meetings are scheduled as Facebook events. Facebook offers a quick and easy way to keep people that are spread out across a large business on the same page.
There are many ways that firms who market on Facebook make mistakes. Here are a few:
1) Overly invasive marketing tactics-->
One of the biggest problems with Facebook is that it is potentially the source of too much information. But people who use the site don't want to be reminded of this. So marketing tactics that delve into consumer interests or information too much tend to be very off-putting. There are certain ads that run on the site that take pictures from the albums of user's "friends" and then incorporate those pictures into the banner advertisements that run on the side of the page. This really creeps people out. Although it is an interesting technological feat, many people find it incredibly upsetting.
2) Customizable advertisement that misses the point-->
Another off-putting marketing technique involves an application that tries to customize ad's based on the interests of the user and suggest similar things that the user would like. The problem with this is that Facebook is primarily private and is in many ways the virtualization of everyday human interactions. At this point the ad applications cannot understand context in the majority of things that people put in their profiles. The fact that I like the LSU Tigers doesn't mean that I want to know about about exotic pet sales in the Southeastern United States. Such advertisement also has potential to be offensive. Women who are not considering marriage may be offended if Facebook continually suggests that they buy wedding dresses and baby products.
3) Creating a Facebook profile for your firm-->
This is not always a mistake, but more often than not it is. Bars and restaurants that frequently have special promotional deals can sometimes pull it off. Providers of services can occasionally. But for the most part, firms and businesses should stay away from creating a Facebook persona. Users of Facebook grow very tired of endless marketing updates from employees that work at a company. This is partly what lead to the demise of MySpace. The appeal of Facebook is that it is a networking service for people, so while it is a great way for individuals to market themselves, it is less effective for companies. Users will most of the time change their settings to actively ignore updates from such businesses, making the impact of having a Facebook page minimal. Websites are a much better source of general information about a business than anything that can be loaded onto a company Facebook profile. People will not waste any time paying attention to what the persona of a business has to say.
In my opinion, the best way for a firm to market on Facebook is to create a page that people can "like." This is very non-invasive and takes little effort on the part of users to endorse a product or business.
Shifting away from social network marketing, Facebook could potentially play a role in the evolution of the operational side of business. It could be used in extensively in the planning and management of office activities. We may see a time when meetings are scheduled as Facebook events. Facebook offers a quick and easy way to keep people that are spread out across a large business on the same page.
Sunday, September 5, 2010
Potential Drawbacks of Moving Downstream for Mobile Technology
The availability of location-based mobile technology is exciting to say the least. Perhaps this excitement stems from the potential usefulness of this technology, or from the sheer novelty of being able to inform all of one's Facebook friends where one happens to be in real time. Those who seek to use such technology for marketing purposes, however, need to make sure that they don't spoil the technology's usefulness by inconveniencing potential customers.
Most users of mobile telephones, and especially smartphones, relish such devices' ability to make their lives more convenient. No longer do individuals have to go home to talk on the phone. No longer do they actually have to have access to a computer to get directions to a meeting. No longer do they have to put up with heinous telemarketers calling them at all hours of the day. The relative anonymity and the freedom from invasive marketing practices that mobile phones provide their users is largely what has led to the decline of the home phone line. Companies employing mobile advertising need to make sure that their advertising techniques make shopping as convenient as possible for customers and don't end up annoying or turning off potential customers.
If location-based technology is used to essentially spam a person's telephone with advertising text messages, people will not be happy at all, and may start limiting their reliance on mobile technology. One major problem with such technology in its current state is its inaccuracy. Most of the time, phones can only determine a person's location within a certain range (say a 100 ft. area). If all businesses within a person's range sent them text messages about sales, activities like going to the mall or driving down a commercial street would become a nightmare. Getting a text message upon entering a store is one thing, but if one were to receive a text message just for being near a store, people would get fed up pretty quick.
The bottom line with the move toward downstream advertising is that it has to be done in a way that encourages mobile phone use and not one that makes a person cringe every time they receive a text message.
Most users of mobile telephones, and especially smartphones, relish such devices' ability to make their lives more convenient. No longer do individuals have to go home to talk on the phone. No longer do they actually have to have access to a computer to get directions to a meeting. No longer do they have to put up with heinous telemarketers calling them at all hours of the day. The relative anonymity and the freedom from invasive marketing practices that mobile phones provide their users is largely what has led to the decline of the home phone line. Companies employing mobile advertising need to make sure that their advertising techniques make shopping as convenient as possible for customers and don't end up annoying or turning off potential customers.
If location-based technology is used to essentially spam a person's telephone with advertising text messages, people will not be happy at all, and may start limiting their reliance on mobile technology. One major problem with such technology in its current state is its inaccuracy. Most of the time, phones can only determine a person's location within a certain range (say a 100 ft. area). If all businesses within a person's range sent them text messages about sales, activities like going to the mall or driving down a commercial street would become a nightmare. Getting a text message upon entering a store is one thing, but if one were to receive a text message just for being near a store, people would get fed up pretty quick.
The bottom line with the move toward downstream advertising is that it has to be done in a way that encourages mobile phone use and not one that makes a person cringe every time they receive a text message.
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