Fall+2008+Section+08-PJ+Week+4

=Class Discussion For Week 4=  Rosewood Hotels and Resorts is at a crossroads. How do they grow the company? Should then continue with the existing model - individual branding for each property - or is the time right for moving to a unified brand? How competitive do they want to be and how much do they plan on growing?
 * 1. Rosewood Hotels and CLV/Branding** 

**2. Conjoint Analysis** Using statistical formulas and survey results based, market segmentation, and product preferences can be obtained. Based on the Salsa results, the primary deciding factor was Spiciness. This can be seen from the slope of data collected. So why use conjoint analysis? There are several advantages and disadvantages. The main advantage is that it measures preferences at an individual level. If you have a large enough sample size you should start to see patterns within individuals. The main disadvantage is with the amount of time it takes to develop a useful survey that will produce real results. If there are too many variables then maybe your results are not reflecting the real issue. For instance, if we ask customers to rank flight preference and stated they were flying through Chicago, would they rank them differently then if they were flying through Seattle? If it is not set up correctly, we may have results that are insignificant. In addition, firms many use the conjoint analysis to set up surveys in figuring out consumer preferences. Usually the surveys will have preferences that is reflective of what the firm can produce. In the case of the salsa factory, if they can't produce orange color salsa then it will not appear on the survey. The conjoint analysis helps firms decide on opportunities for new product innovations and understanding consumer preferences.

The main issue in this case is whether or not to invest $40 million in part-time labor to improve customer service. Will improving customer service result in increasing sales? Answers will vary, like they did in our class discussion. Besides the abundance of Starbucks locations, what type of competitive advantage do they still have? Obviously, the growth of Starbucks was because of their high coffee quality and unique Europe-like coffee house experience. But, before Starbucks stores hit the mainstream, most coffee drinkers were satiated with such store bought brands as Folgers and Yuban. For many, a diner was the place to get a superior cup of coffee. However, after the mass eruption of Starbucks stores, many coffee aficionados were created and, thus, the coffee quality bar was raised. In fact, the well known Starbucks logo symbolized that very quality. For example, bringing someone the gift of a bag of Starbucks coffee beans use to mean something special but, these days, it’s just perceived as a kind gesture. Many would argue Starbucks’s coffee quality has diminished over the years and that the experience they are selling is no longer unique. Starbucks needs to be the disruptive innovator in the industry and separate itself from local coffee houses and smaller more distinctive chains.
 * 3. Starbucks Case**

Starbucks is at an interesting crossroads because their clientele is not who they thought it would be. Their clientele is everyone and really shows no boundaries. Starbucks intends to sell more than a product, they aim to sell an experience. However, how to they keep the experience fresh? One option is to have different "brands" of stores, just as they have different brands of coffee. Perhaps having an "expresso" store where it is aimed towards the clientele who values a fast coffee experience. A mid-level store would feature a "living room" where it's theme is similar to the traditional coffee house. Lastly, a tasting room where the true aficionados may enjoy high-end coffee.

On the other hand, Starbucks' strategy of saturating the market with stores has paid off handsomely, and it will be a big risk to change their focus at this point. As retail coffee beverages became mainstream, Starbucks moved to become the MacDonald's of coffee, with ubiquitous stores at which customers can expect the same level of quality (albeit not the highest) anywhere they happen to be. In this type of business, customer service is a big part of customer satisfaction and retention, and is the best way to stave off possible competition, and $40 million is a well-justified expenditure.

Animalcoffee is an example of a disruptive innovator of the coffee bean industry. The Animalcoffee company roasts and sells Kopi Luwak coffee beans, which are coffee beans collected from the scat of the Luwak animal. As peculiar as this type of coffee seems, it is considered gourmet and retails for $180 per pound. For more information on Kopi Luwak, visit the Animalcoffee website: http://www.animalcoffee.com/index.php

  **4. RKS Guitars Case** Building the RKS brand: We discussed the RKS strategy of teaming up with Hohner in the early stages to gain access to distrbution channels. This did not match the direction they wanted to go. With Dave Mason's help, this company created a professional guitar, as opposed to a starter, "off the shelf" guitar. Checking on line, there's only one dealer that sells RKS in Oregon: Musician's Friend in Medford. On their website, several professionals are pictured with the RKS guitar including Don Felder from the Eagles. It will be interesting to see the progression of this brand. Could it gain notariety with legendary guitars such as the Gibson Les Paul? We'll see. Early Market, Tornado, Early Main Street, Mature Main Street, Declining Main Street, End of Life.
 * 5. Product Life Cycle**

Competition becomes very intense during the Process Innovation period and during Experiential Innovation period. This competition causes companies to outsource to compete in price. Outsourcing is not always the best solution as Clayton Christensen points out.

The two forces that a company must combat are evolution and inertia, or as Moore appropriately names them-- Darwin and the Demon. The types of innovation mentioned are: Disruptive Innovation, Application Innovation, Product Innovation, Process Innovation, Experiential Innovation, Marketing Innovation, Business Model Innovation, and Structural Innovation.
 * 6. Darwin and the Demon**

Guy Kawasaki says there are 10 steps in the Art of Innovation: 1) make meaning 2) make mantra 3) jump to the next curve 4) roll the DICEE 5) don't worry, be crappy 6) polarize people 7) let a hundred flowers blossom 8) chum, baby, chum 9) niche thyself 10) follow the 10/20/30 rule.
 * 7. The Art of Innovation**

People who are innovators usually stay along the same curve and do not advance to the next technology curve in the series. As explained with the Ice Example from class: Ice Cutter--> Ice Factory--> Refrigirators. If you innovate and can create a disruptive technology you might be able to "Jump the Curve". It is where you see the overlap that you find a discontinuity, from ice cutters to ice factories, and it is here that one technology can replace another.



The Art of Innovation video: http://www.zentation.com/viewer/index.php?passcode=epbcSNExIQr**