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Billy Mays-Death of a true salesman

The passing of Michael Jackson had overshadowed all other news but I thought we should not miss out celebrating Billy Mays. I find Arthur Miller's play somewhat unkind to the sales profession and thus the "true" for Billy Mays. Billy Mays was a true salesman and a great pitchman on TV.

What makes personal selling so effective is that when you speak directly with a prospect,face to face and one to one, it has the biggest impact on closing the sale.To do so via television is very difficult and Billy Mays was very good at it . You wanted to believe him and put out the $20 or so that he suggested you spend to acquire a product that sure looked useful.He did the "convincing that it is useful" really well. To do so for a mass TV audience is a rare and remarkable skill.  My guess is that Billy Mays was not only able to sell the products he pitched but the products "stayed" sold. Probably customers who bought Billy Mays pitches returned less product as he upped the satisfaction levels right at the sell stage.

Here is a clip from the Tonight Show to learn enthusiasm from Billy Mays:

Complexity in the supply chain and assortment in distribution - reason for auto dealer woes ?

A Chrysler dealer providing testimony to the Senate Committee  reminded me what complexity does to not only the upstream supply chain but really makes things difficult to manage in the downstream distribution channel.Supply chain complexity (too many suppliers, too many different parts, too many color options) is a nightmare for supply chain managers and supply managers spend a lot of efffort in trying to consolidate supplies and suppliers.

On the customer side of a business though, marketing managers love offering something to every segment of the market. All the offerings on the market side are called "assortment." Businesses start  a new product line based on good market prospects. The distribution side then builds up with more dealers,more marketing and service support,service training,aftermarket spare parts and so on. Unfortunately, there is no manager standing in the showroom end and looking backward at all this "complexity" - at the showroom managers are happily showing the assortment to prospects !

Closing product lines or product deletion is a complex activity, that does not bring glory to the marketing manager. Consequently, it does'nt get done till there is a crisis as currently, as  in US Auto.

New Business Model for Music Industry needs new ways of capturing value

First record stores were closing in the US as everyone wanted to download music.The record stores were affected as distribution moved online with iTunes selling millions of downloads. The music recording industry was kind of okay with this as they still had a method of capturing value or monetizing their efforts of promoting artists and marketing music. But that was in the US.

It turns out that in China most music ( over 99%) is simply acquired free ,violating copyright laws and disabling the music industry from capturing value. Google in China is offering free music downloads and hoping that AdWords will help capture some tiny piece of value through ad revenues. This ad revenue will be shared by the music industry and Google. In other words, music companies have given up on trying to implement the US business model in China.

Musicians and artists I suppose love all of this as their music gets exposure and anyway they did not make big money in the traditional model where record companies,distributors and retailers made most of the margins and customers had to pay. This industry is sort of different because the musicians work primarily on the premise of "live to work" rather than "work to live" in sectors like banking and auto which seems to be having trouble in recent times.In fact,bankers are leaving banking (they don't love banking ?) given the cut back on bonuses.

The restructuring of the music industry in China  should spread to the US in due course and dis-intermediation of the distribution channels and record companies will create interesting opportunities. You can be sure that musicians and artists will proliferate and new ways of "capturing" value will have to be built.

Supply Chain a Market Strategy differentiator

I was rather pleased to read the Aberdeen report , see the CNN summary here. 56% of the over 800 firms surveyed felt that supply chain management was a market strategy differentiator and could make all the difference in customer satisfaction and service apart from delivering sustainability in a firm's overall operations.

This seems fairly logical given the nature of the supply chain with the upstream concerned with supplying materials to the firm and the downstream distribution channel being the customer fulfillment end should be in-sync to deliver customer satisfaction at optimal costs.

Interestingly,however, that is not how either academe or the consulting world is organized. Supply chain is typically part of operations with a serious heritage of linear programming, queuing theory and so on. Distribution is somehow bunched with logistics and deals with the "Place" in marketing  ( of the 4 P's of marketing). One thread that ties this chain together is IT and it's  recent accessibility in web based software as a service (SaaS) applications. Perhaps the possibilities of the softwares that deal with the upstream supply chain and downstream distribution channel that is making managers realize the huge marketing strategy possibilities of the supply chain.

Muhtar Kent at Coke and Indra Nooyi at Pepsi and the Bottom of Pyramid

Muhtar Kent is the new CEO at Coke. This blog had commented on the changes at Coke earlier this year and the elevation of Mr. Kent to CEO is indeed a great development. Not only is Muhtar Kent, of Turkish origin,  eminently qualified but his elevation signals Coke's  diversity  comeback . It also makes good business sense. Good business sense because as Fortune reports, Muhtar Kent led the Coke efforts in Eastern Europe after the Berlin Wall and should be able to lead the market expansion in emerging markets of the developing world. These markets have been called the "Bottom of Pyramid"(BoP)  and involve most of the world where per capita income is low but human aspirations are high. A person drinks soda as a special treat and serving sizes are low ( about 6 -8 fl. oz. vs. 12 fl.oz. in the US) to keep soda affordable. These markets use bottles not merely because of "green" concerns but because a large unskilled  labor pool is able to move bottles at low cost across the distribution chain. Growth for US consumer products will come from these markets and the CEO must understand how these markets actually work.

Pepsi in the meanwhile has India born Indra Nooyi at the helm and the BoP Cola wars should be interesting.

Happy Thanksgiving and Black Friday

Here is to wishing everyone a Happy Thanksgiving! A great bit of good news this morning was that airports were much less chaotic than expected. Better preparation and planning by passengers,airlines and airports seem to be helping. Although the traditional reason of celebrating thanksgiving, i.e. the harvest seems to have been overtaken by the need to thank God for granting us more higher order needs ! Nevertheless some basic stuff is just amazing. Consider oil prices on the 99$ mark and I heard someone on the radio who was grumbling but would spend the extra $10 to get to Grandma's for Thanksgiving. In fact, better mileage and adjusted for inflation the gas prices seem less bad than they are if you compare with the 1980's - just don't compare with last year....

Tomorrow is Black Friday , the start of the Christmas holiday shopping season and the hope for retailers that the ink on their books will turn from red to black.  With the mortgage meltdown and gas prices consumers are reportedly cutting back and early indicators are that there is less Starbucks coffee being sold. In addition, parents are trying to figure out which toys to buy and avoid lead problems. Luckily consumers are not slowing down according to this report.  Let's hope that the retail sales continue  pick up because consumers need to buy if the supply chain has to move forward.

Enjoy your  turkey !

Apple iPod early adopters receive iPology

Less than two months ago this blog discussed the spectacular iPhone launch. Today the early adopters who had signed up for the $599 iPhone are furious. Apple decided to reduce the price to $299 to enhance adoption by mainstream consumers, in time for the holiday season. According to Steve Jobs the price cut will make the iPhone more affordable.

Understandably, the price cut has left the original early adopters of the iPhone, angry. Naturally, if you stood in line for hours and forked up $2000 for the yearly contract and then realized that the marketer had cut prices by 33% in less than 60 days - you'd feel shortchanged.

Luckily, Steve Jobs and Apple have responded and are giving a $100 credit. What was Apple thinking? Early adopters are crucial for any market and more so for the revolutionary products like the iPhone. Early adopters are those who are recognized as folks who "are first to try something new" and "order a new dish or go to new restaurants" and generally take the risks and kinks that come with being the first to try something new. Most consumers just wait it out till things stabilize and some (the laggards) do not adopt the innovation at all. Without early adopters there would be no innovation which could really reach the market. I am glad that Apple realized it's folly and Apple enthusiasts are happy again. The iPology worked ! Classic service recovery by Apple on this one.

So what is the big deal with "Sterling Service Contracts" ?

Well for one,  the new Sterling Service Contracts , gets linked to many of the categories that I blog about! And that is a lot of categories...

Some of the things that Sterling Service Contracts will do includes, and I quote from Sterling's press release:

START QUOTE:

• Storefront capabilities that provide customers and partners with a personalized and branded buying experience increasing loyalty.
• Intelligent order orchestration that determines the most efficient and least costly location to fulfill an order.
• A 7000+ member logistics network that reduces the cost of inbound and outbound shipments through optimization, automation, and collaboration with carriers.
• Network-centric WMS that reduces inventory levels at each stocking location by managing inventory across all locations as a single inventory pool.
• Supply Chain Visibility capabilities that balance supply and demand by collecting, summarizing and displaying inbound supply information in a usable, understandable and actionable format.

END QUOTE

Sterling is probably not the only supplier offering this bundle though Forrester Research does think that the product is a step closer to the "perfect order". What's "perfect" about the concept and so fascinating is that it brings alive a lot of organizational theory that was developed for years and years before IT and the Internet made all this a reality.

Software as a Service(SaaS) and the Liquor Control Board

I am a great supporter of SaaS ( Software as a service) simply because businesses should get going with business  and IT should be a facilitator. In house IT departments  should be focusing on the business application end of things. Several  thinkers believe that software will become like electricity which started originally with generators at your factory and then moved to the distribution model that has electricity companies piping the electricity from the power station to your factory.  Therefore, I was rather pleased to read the report that a SaaS based supply chain system as been developed for the LCBO. The LCBO or the Liquor Control Board of Ontario is apparently the largest buyer of liquor in the world with over 600 stores and 5 distribution centers  in the Ontario region of Canada. The LCBO website is rather fun although the "Control Board" conjures up a somewhat stern image ! The story of the SaaS system appeared as a press release here. The company that has developed the web based supply chain solution is QLogitek.  Since the whole system is web based suppliers can simply login and offer new products. Since wines are an important product category for LCBO one can visualize the endless vintages and now countries that are involved! With a web based system that connects suppliers in different countries with warehouses and retailers in Ontario by every product offering in real time should make life much easier for all concerned. Cheers to that !

Prescription drugs for 4$ a month?

From the moment I learnt that Walmart will be selling a month's supply of prescription drugs for $4 - I was intrigued. Apparently Walmart is starting this with 300 generic drugs out of its Tampa, Florida stores and no you cannot mail order. Yes, you can order by telephone and get your friendly retired Uncle or Aunt to pick up on your behalf in Florida. But the good news,particularly for the un-insured, is that Walmart is going to roll the program out nationwide.

What intrigued me was that I had the 4$ figure somewhere at the back of my mind and much before the Walmart story broke. Then I remembered my pharmacy(called chemist) visit in India over the summer. That was one place that you can buy common prescription drugs in retail for a month for about $4. Since the US stories did not mention that Walmart had global sourcing plans and I have just too many US pharmaceutical industry students and friends who would be incredulous at the $4 figure - I went to the local Rite Aid  and checked out the Claritin generic (Loratidine 10 mg) selling at $13.99. The package had a "Made in India" label.

So how would Walmart make a profit?? The mystery was solved when I located this report from the Canberra Times, Australia which states that Walmart will get the drugs manufactured out of India. In any event, this is good news for the less wealthy US consumer who is really beleaguered with high drug costs and would have the assurance of the Walmart brand.