Fall+2008+Section+07-PS+Week+6

Strategy as Ecology - Iansiti and Levien
Ecosystem Strategies:
 * Keystone (Microsoft)
 * Physical dominator (Walmart)
 * Niche
 * Commodity[[image:file:moz-screenshot.jpg]][[image:file:moz-screenshot-1.jpg]]



Hotelling’s Law
We discussed Hotelling’s Law which was introduced as an analogy of carts at the beach. The assumption is that 2 carts would try and move closer to the center of all customers to have a wider customer base to appeal to. This analogy can be translated to products that some industries will begin looking homogonous as companies drift to the best selling features. ·  Hotellings’ law is also known as the principle of **minimum differentiation**. ·  The opposite is known as **product differentiation** Another interesting point related to Hotelling's Law is the strategy that Walgreens uses....putting many many stores in the same area.

Socially Responsible Distribution: Strategies for Reaching the Bottom of the Pyramid - Vachani and Smith [[image:BOP.JPG width="492" height="334"]]
Above image taken from week 6 lecture material... Vachani & Smith propose what should be a common sense strategy for every for profit organization on the globe. According to our reading (and the graph above), ~1/2 of the global population lives on less than $2 per day. Sadly, narrow minded business teams neglect to consider the purchasing power of this group, and therefore write the group off as invaluable. The company that figures out how to provide very inexpensive services to this group will become highly profitable (any takers?)

Here is the CEO of PepsiCo talking about the profitability of creating wealth. http://www.youtube.com/watch?v=qbTPgIJAFHI&feature=PlayList&p=749732FFD312CA7F&index=9

Link to the TED talk by William Kamkwamba who build a windmill out of scrap parts. http://www.ted.com/index.php/speakers/william_kamkwamba.html

Jacqueline Novogratz bio and information http://www.ted.com/index.php/speakers/jacqueline_novogratz.html

Ending global poverty can benefit multinational corporations, small businesses and government. Economics is not a zero sum game, that is, there is not a fixed amount of wealth in the world and in order to be wealthy another has to be poor. What does that have to do with Marketing? Current (not all, but many) marketing and pricing practices take advantage of poorer segments inability to "buy in bulk" and charge the most for the smallest amount possible but instead focused on lifting the segment up that company (and others, given) would be better off because of the increased buying power. Conversely, some marketing is based on the perception of community contribution and a company's participation in improving specific problems. The video of Jacqueline Novogratz is one example of how companies can operate while working towards building and improving issues in a specific area. This can be especially beneficial when their contribution can operate independently and create a cost savings to those communities while improving the available services and infrastructures. Bill Gates is another example of a wealthy company contributing to health care initiatives in other communities. The potential for one company to make a significant improvement, such as slowing or ending malaria, has positive effects on a company's PR, while also creating new markets for a company's products.

CASE: Hariyali Kisaan Bazaar
Using the "Hariyali Kisaan Bazaar" concept, DSCL corporation wisely began implementation of a program aimed at India's poor farmers. Similar to Vachani & Smith's recommendations, the Kisaan Bazaar offers useful tools for poor communities. The net result of this will be substantial in that: DSCL will gain a loyal consumer base, DSCL will know first hand how harvests are shaping up (from thier "advisers on the ground" network) & DSCL will help eliminate middlemen by purchasing farmers grain directly which will simultaneously enable farmers to elevate thier income levels and standard of living (money which will in turn be spent at DSCL outlets). Please see DSCL link below: http://www.dscl.com/Business_Agree_HarKisBzr.aspx?PID=27

While also looking at what different companies are getting into the India economy, I found a link to Motorola's website which states that they are now in an alliance with the DSCL and is disturbing handsets to the rural farmers. This was interesting since we were talking about start up and entry costs in rural India and Motorola is just piggybacking off of the DSCL network. Here is the link I would recommend the reading .... it's short but interesting. http://www.motorola.com/content.jsp?globalObjectId=7170

When we look at the Hariyali Kissan Bazzar and how they interact with the economic ecosystem of India? The development of Hariyali Bazzar in areas where these type of establishments had never been before; do we consider the Bazzars disrupters? In the definition of a disrupter, it is a situation where markets cease to function in its regular manner. This type of innovation has caused considerable disruption not only in the economic ecosystem but also in the functionality of the culture in which it has been established. Within this or any other culture is there a point where innovators or disruptors in a market should be concerned with the cultural impact on the society it is striving to gain profits from? To run the hard line of capitalism and knowing how the free market works we would say if there is money to be made damn all else. But by damning all else, especially in today’s global and socially aware market, would be in essence damning any competitive advantage we may have had? With this being said is there or was there ever true capitalism. If we look to create a world of business with an increased level of social responsibility would we not have to conduct a great deal more research not just on Customer Retention or Customer Loyalty Score, but more on the cultural implications of innovation within the given society. When we look at the view point of the Hariyali Kissan Bazzar we can clearly see they did not have a true understanding of the people and or the cultures ethos they were developing in. To fear they had to guard their goods with bars and barriers or be set back by their patrons feeling the need to take their shoes off before entering it is apparent there was little understanding. How ethnocentric is it for businesses to do extensive research on how customers would receive them in affluent places of business yet in places of low economic standing or even third word, do they stop long enough to survey what the people want? I doubt it! Should we? Is it because we are more scholarly we know what they need? Could their lack of understanding of business impede on truly helpful innovations for their economy to prosper?

The Hariyali Kissan Bazzar case is a great example of the prosperity that can be created when you give individuals access to information that can empower then to succeed on their own. Rather than continuing to be exploited by middle men, these farmers are able to speak directly with agriculture experts who give them advice on best seeds to plant when, how to rotate their farms, etc. These farmers have access to funds at a much lower rate by borrowing from the micro-credit institutions set up by the Bazzars, and this has been found to be a much better way for the poor to move up the income chain than direct funds to often corrupt governments. It's a fantastic example showing that when given the proper resources, individuals take pride in working hard and improving the lives of both themselves, and their families.

CASE: Natureview Farm
[|HBS Channel Margins]

The 5-Marketeers Our group took a more "out-of-the-box" approach to addressing these challenges. From our perspectives the following activities would best enhance profitability at Natureview Farms:
 * Align with a major food service firm that provides meals for public schools systems (small 4oz packages). We feel that there is major potential here for profitability & product visibility, which could have great implications for customer lifetime value
 * Align with distributors to penetrate the supermarket sector, 4oz, 8oz & 32oz would be offered.
 * Better optimize Health Food store sales by introducing a child size 4oz lineup with "enviro-pack" packaging to appease the environmentally conscius shoppers, as well as maintaining the line of 8oz.

We felt that choosing (option 1) which was to move ahead with taking their product to standard grocery stores was the decision that would afford Natureview the best probability of generating the necessary revenues. With 97% of the market coming from the chain stores they were simply limiting the ability to grow sales of their products. We believed they should modify the plan to the following;
 * Team #3-The Marketing Marvels**:
 * Implementation of this plan should only occur in the north east and west coast regions of the country as to minimize risk
 * Sell only the 8 oz sized yogurts in a minimal number of flavors (aprox 4)
 * Provide their current distributors (health food stores) new flavors of yogurt with a portion of proceeds going to either help the impoverished people from the region(s) where the fruit is indigenous or offer some kind of carbon credit.



Team Mavericks ;-)

The case stated that Natureview was not in a position in 1999 to handle the projected capacity that would be required of them to break into the supermarket segment. Therefore, team #4 felt Natureview had to take a hybrid approach to reaching their $20 million goal in a two year timeframe. The current customer was able to find this brand of yogurt at specialty locations and natural food outlets. We felt the best plan was to build upon their brand recognition in year one and expand within the natural food sector with 2 SKUs of the 4 oz childrens multipack product while gearing up for the launch of the supermarket opportunity. In year one Natureview would increase revenues by $3,317,073. In year two, with the supermarket expansion, Natureview can obtain their revenue goal by introducing 6 SKUs in 20 chains in 2 regions with their 8 oz product.

MARKET-BASED MANAGEMENT, CHAPTER 9 The key to marketing success is identifying and reaching target customers through deliberate, well-managed marketing channel strategy. This chapter addressed the second point of reaching customers and the need to determine if the tactics should incorporate direct, indirect, or mixed channel system. Best advocates for the cost-effective mixed channel and e-marketing systems. This helps to "leverage the ability to reach customers and capitalize on existing brand awareness, order-entry systems, and operating expenses.