| Issue 05 |

Yoni Glickman, VP & Manager of Raw-Materials division, Frutarom

• Number of employees in firm: 300 in Israel, Nearly 1000 Worldwide
  
• Number of employees under my direct responsibility : 9 report directly to myself, 350 in the division
  
• We provide : Flavorings and medical plant extracts for the food industry.
  
• I'm on the job for : A year and 3 months. Before that I worked for 12 years in Katlab-Hanita, 7 of which as CEO, and previously in marketing and sales. I have graduated in Business Administration from the Hebrew University of Jerusalem.
  
• I like on the job : Frutarom is one of the few Israeli firms that is truely global, that is - not only with worldwide sales but also several prodoction sites around the globe. Most of our employees are overseas. This is quite different from Katlab, which does see 98% percent of the revenues coming from abroad, but produces in a single site in Israel. The work in Frutarom is characterized by rapid growth, frequent changes, complex thinking processes, and fascinating challenges. I love all that.
  
• Most difficult on the job : The challenges and frequent cjanges are also the most difficult aspects of the job.
  
• Goals I set for myself: That the division I manage will become the world leader in natural health value substances for the food industry. My personal ambitions in life are to always work in an interesting place (that is - challenging and enlightening), and to have time for my family and hobbies in the not-so-distant future.
  
• Our vision: To be a leading supplier of tasty and health solutions for the world food industry.
  
• Original product in our market: Actimel, with the pro-biotic bacteria, is a good example for food products with added health value. We focus on scientifically researching the benefits for known plants (for instance the Ginseng - used in Chinese medicine as a stimulater and energizer), and then producing medically proven active extracts, to be marketed to the food industry.
  
• Sources of innovation :
  (1) Surveying the market - e.g. worldwide supermarkets.
  (2) Examining start-up firms (and cooperating with relevant ones.
  (3) Identifying food market needs and trends and developing innovative solutions to
  answer those.
  
• Book recommendation : 
  (1) Good to Great / Jim Collins - Recommended on LaZOOZ 1 (see here).
  (2) Thick Face, Black Heart / Chin-Ning Chu - this unique book presents business management according to Chinese martial arts philosophies.
  
• To purchase these books: Good to Great | Thick Face, Black Heart
• Send comments to : yglickman@frutarom.com
• Would you like to be interviewed? : contact us
  

Positioning as the Key to Marketing Strategy

Positioning, in the narrow sense, is a term coined by Al Ries and Jack Trout in 1981, meaning the ownership of a concept or word in the potential client's mind. For instance - in the car market, Volvo succeeded in possessing the word Safety, and Mercedes "owns" the word Luxury. As a result of this positioning Volvo and Mercedes were able to maintain a substantial market share and relatively high prices for decades. Figuratively speaking, one may imagine flags of Volvo and Mercedes imbedded in costumers' minds, in the memory cells that hold the combination "safe car" and "luxury car", moving them to act accordingly.

How to position? When you are positioning, you try to make clients think that you are the best there is in a certain area. For example - in delivering pizza on time (Domino's) or having the most peppery mint drops (Altoids). It is costumery to think the if we finds an area in which we which to excel we should convey the appropriate message to the clients - essentially design a new logo and proper slogan, and make all marketing material accordingly. However, if we wish to be credible, that is to achieve the desired positioning, a mere cosmetic change will not suffuce. We have to back up the marketing promise with action - change our logistics so that the pizza does get there in 30 minutes, change product ingredients so that the mint drop is really peppery. In other words - we have to revise the way we do things, and in a broad sense - our strategy.

How is positioning related to strategy? According to Michael Porter's model, positioning is a part of a Differentiation strategy, or more specifically an Added-Value strategy. In fact, the word that you own (safety, luxury, etc.) is exactly the added value that you provide to your clients. It is the root of your differntiation and your relative advantage in the eyes of the clients. Since this word is the root, it is also the key to the whole strategy, and may serve as a seed to grow a powerful marketing strategy.

How to find the right word, to base our positioning? To begin with, we have to identify different values that are important to clients in our market, that is - values they will be willing to pay extra for (e.g. - in the car market: clients will pay more for a safe, comfortable, luxury, sports, stylish or durable cars). This may be checked through a market survey asking clients what they value, and what are they willing to pay extra for. Next, we have to choose which of these values suits us, that is - how should we position ourselves?. We do so through a process of elimination. Rule out marginal values, not important to enough clients. Rule out any values which are already taken by competitors. Of the significant and available remaining values, choose a value that best fits of abilities (especially our strengths), and our reputation (the way we are viewed today or could be viewed in the future if we wish to). At this stage, the choice should be down to 1-3 options, and we have to make a decision - perhaps with the help of another market survey, checking estimated market size and appeal of each of the identified values.

How to develop a strategy to achieve the desired positioning? Once we've decided on hte direction - the value that we have chosen will serve as an anchor for developing the entire marketing strategy. Here is a example to demonstarte the idea. A producer of roof tiles has had enough of price wars, and decided to focus on the value of "Esthetic". Accordingly, the board decided to take, among other things, the following steps:

• Location: presence only in countries where people will pay for esthetic design
• Clients: to focus on architects and private high-class homes
• Pricing: relatively high price levels
• Exhibitions: only professional architecture ones (no construction exhibitions)
• MarCom: marketing material (website, company profile, etc.) will be re-designed to have a high-class look
• PR: focus on design magazines, critic colomns and TV shows
• Variety: gradually discontinue cheap tiles, and offer a wide range of colors and shapes
• R&D : employ designers in the R&D team, promote new ideas the have to do with roof appearance

As seen in the above example, the chosen value (in this case - being "Esthetic") directs and sets the other aspects of the marketing strategy, thus gradually taking the organization through a major shift. A meticulous long term execution of the new strategy is bound to increase the chances of achieving the desired positioning, reaping the benefits it will bring.

Before we conclude, some words of warning for the seekers of this path:

• Positioning is not easy to achieve : evidently - most of the companies in the world fail to do so. For instance: Toyota, Mazda, Mitsubishi are three Japanese car manufacturers which are seen as reliable. However, despite of reasonable advertising budgets, they were unable to get hold of a unique and differntiating place in the clients' minds. Not even one of them has a clear positioning.
• Positioning theory is quite simplistic : that is its strength - making it easy to understand and implement. That is also its weakness - because reality is more complex, sometimes requiring a deeper analysis. For example, choices clients make are influenced by sub-conscious levels, not normally exposed in regular market surveys.

• For articles on strategy and other subjects : click here
• For information on strategic consulting : click here

The Fall of Advertising & the Rise of PR / 
Al Ries & Laura Ries / Harper Collins

Al Ries, one of the developers of the positioning theory in the 1980's, is an esteemed marketing strategist, and since 1994 the co-partner (together with his daughter, Laura) in a markeitng consulting firm. In spite of Reis's early career experience in advertising (in GE and later in his own advertising agency), The Fall of Advertising and the Rise of PR , his new best-seller, challenges many conventions, and one of the major claims in it is that advertising has lost most of its power.

The book details the reasons for the diminished effectiveness of advertising today, and recommends the use of public-relations as a much more effective alternative. Among other things, Ries notes that the effectiveness of adveritising has lowered due to the over-exposure of the public to ads, and because people disbelieve the advertising messages. In contrast, PR, according to Ries, carries the marketing message thourgh a third party (the journalist), thus atracting far more attention and gaining credibility.

If you plan on launching a new brand in the near future, reading this book might very well change your insights and tactics. Instead of massive advertising in the launching stage (probably ending up in terrible waste), the book advocates the development of a public-relations plan, and waiting patiently to see its fruits materializing. Brands such as Starbucks, Body Shop, Amazon, Harry Potter, Red Bull and even Microsoft and Intel have become the talk of the day on their way to success much thanks to PR rather than advertising. The book goes through these and dozens of other PR success stories, as well as devastating failures of creative and famous advertising campaigns (the Energizier rabbit, Budweiser's What's up, and more) - in the bottom line results (sales graphs). In fact, most known success stories originated in good PR efforts. The role of advertising, according to the book, is mostly to support well known and firmly based brands, and to strengthen common positive beliefs and perceptions of the products in the public.

Al Ries himself is a master of public-relations, as demonstrated by the many controversies concerning his book published in the media, including the Israeli media. The book is straightforward, and at times provocative, written a semi-preaching style repeating the same arguments time after time. It can get annoying, but it does what it's meant to do - forcing us to rethink our common conventions, and perhaps even change the way we market. In the centralized Israeli market, with one "everybody's newpaper" and a single financial daily journal, Ries's message of the importance of public-relations is doubly instructive.

• Buy the book at : Amazon | Barnes & Noble
• Visit Al Ries's website : www.ries.com
• A list of other must-read books for managers 
• For information on ZOOZ active PR workshop : see page 20 of our Strategy and Marketing workshops description (Hebrew Pdf file), or contact us

Unification

The Unification thinking tool starts out like Reduction (see previous newsletter): you eliminate a certain component of an existing product or service. However, you then seek a replacement for the eliminated component - another component able to take its place. This sometimes results in a simpler, cheaper, more efficient or longer lasting product/service.

The steps for performing Unification are as follows:

1. Choose an existing product or service

2. List the components and resources of the product or service and its immediate environment

3. Remove one of the components/resources

4. Find another component or resource (listed on the 2nd step above), capable of replacing the component

5. Visualize the new product or service, and identify its benefits and uses

Example 1:

• Existing product: wind surf glider (Saluting Gal Friedman, Israeli Olympic Champion)
• Components of the product: sail, board, foot straps, boom, mast...
• Components & resources of the environment: wind, hand, foot, wetsuit, water, waves, kites...
• Improvements that have already been made:
  • Kite surfing (replacing sail and mast) 
  • Harness - tying the surfer’s body to the boom and sail, thereby relieving pressure from hands
• Improvements that have not yet been made (as far as we know):
  • A wetsuit with a built-in sail, opening between the arms and body - like bat wings (wetsuits replacing sail)
  • Holes on the board instead of foot straps (the holes create a refreshing water jet effect when the feet are not in them)

Example 2:

• Existing service: restaurant
• Components of the service: host, waiter, chef/cook, table, chairs, tablecloth, menu, food ingredients, drinks…
• Components & resources of the environment: guests, clothes, handbags, money, eyeglasses, eyes, hand, ear, children...
• Improvements that have already been made:
  • Self-service (guests help themselves instead of waiters)
  • Fondu (guests cook for themselves instead of the chef/cook)
  • Menu written on table-clothes or table (instead of paper or board)
• Improvements that have not yet been made (as far as we know):
  • A restaurant where guests cook in the kitchen, following written instructions, and then eat
  • A restaurant where one of the guests at the table serves as a waiter (and gets a free apron)
  • A restaurant where guests bring raw ingredients from their home and the chef cooks it

• For a description of the Unification thinking tool, along with other tools, read the article on Six Thinking Tools

Washable Suit

In the textile industry, one of the most conservative and traditional markets is that of tailored suits. Suits are a heavily knowedge-based product, requiring complex production processes (many cloth layers, materials and cloth types). It is quite surprising that Israel, a mostly informal wear country, has introduced to the world the most notable revolution in tailored suits. Incredible, yet true.

In 2000 Bagir developed a unique suit, that may be wash in a domestic washing machine (instead of dry-cleaners). The innovative suit was a great commercial success. Over 600,000 suits have been sold so far in the UK, through Marks & Spencer, even granting M&S the queen's innovation and industry reward of 2003. Bagir itself won the entrepreneurship and innovation IDB group reward. The suit has been introduced in the USA and Germany, allowing Bagir to grow and penetrate new markets.

As it often happens in other organizations - appetite grew with success. When Ofer Gilboa, Bagir's CEO, experienced the success brought on by an innovative product, he decided to that Bagir should ride the innovation train, and introduced systematic innovation processes to the firm. During 2003 Ofer approached ZOOZ to assist in this process. Two years later, after introducing several other innovative suits, already sold for tens of millions of dollars, Bagir's innovation train continues to take it to higher peaks.

P.S. In case you were wondering, the washable suits is another example of Unification , discussed in the above section of this issue. The dry cleaning was eliminated, introducing an existing celement instead - the home washing machine.

• For the full story of Systematic Innovation in Bagir: see here
• For details on Systematic Innovation workshops: see our Innovation and Creativity workshops description (Hebrew Pdf file) or contact us

Innovation ideas for table lamps

The following ideas were developed using various thinking tools, and do not exist at present (to the best of our knowledge):

1. A lamp with a detachable "head" that may be used as a flash-light (with chargeable batteries)

2. A lamp with a built-in clip for documents to be lighted

3. A lamp in which the foot or lampshade is also a message board (cork board or erasable board)

4. A lamp with two flexible arms and light-bulbs - for two adjacent tables

5. A lamp with a daylight effect bulb - showing the lighted object in "true" daylight colors

6. A lamp with a storage area in the lampshade for warming gloves or woollen hats in winter

7. A folding lamp, that fits into a drawer (like a jack-in-a-box)

8. A lamp capable of projecting a slide on the wall or lampshade (e.g. of a loved one)

9. A lamp that is automatically switched on when the person sits down in the chair (to be sold with wireless weight or pressure sensors)

• Articles on Systematic Innovation 
• We will be glad to read your comments and suggestions

The Science of Purchasing and Commercialization

If you could hear the thoughts of the costumers, as they walked down the shlelves in the shop looking for products, you would surely increase your sales sevenfold. Well, you don't have to be able to read minds. Apparently, there are tried and tested rules for the things that make consumers choose (or reject) consumer-goods.

ZOOZ now offers a new workshop, that provides important insights on consumer behavior. These have been based on tens of thousands of observations in shops and shopping centers. The workshop is intended for managers, salespersons, shop-attendants, etc. Participants learn a variety of tools for effective commecialization and increased consumer influence. The tools include: rules for correct product display, avoiding erros in shelf arrangement, solutions for specific and important consumer groups (e.g. elderly, women), and ways to achieve highly effective display and promotion.

• For further details please see page 17 of our Strategy and Marketing workshops description (Hebrew Pdf file), or  contact us

Linko Database

Computerized databases with Israeli firm's managers contact information have been quite expensive until recently, and contained partial and insufficient information. No more! The new Linko databases are sold at introductory prices that simply turn the market around, and they contain valuable information. The database we review here, The Guide for Businesses and Capital Market , was launched some 2 months ago. We consider it to be a useful and efficient tool for marketing, business development, sales, buyers, exporters and importers.

The database, sold for 799 NIS, lists the 1,400 leading persons of the Israeli economy and business, along side with details of marketing managers, financial officers, puchasing and human resource managers of 600 Israeli leading firms. Each category lists the names of the managers, the organization's name, and a (direct or assistant's) phone number. Clicking the organization's name opens its website, if there is one. Clicking the manager's name, usually opens an email message directed to him/her. The regular mailing address is not listed, perhaps as a mark of our digital and electronic communication age.

The database also includes details of senior managers in finance, government and public organizations. In addition the The Guide for Businesses and Capital Market , has thousands of links to websites and suppliers, including: marketing consultants and research institutes, adevrtising channels and financial editors, and conventions and exhibitions organizers. Other list may be of help to businesses operating abroad: import and export services, worldwide holidays and events, and Israeli and foreign embassadors and financial representatives. The entire database is supplied on a single CD-ROM, and it may be installed on a single computer. Subject to the Israeli law of electronic databases, users cannot export whole lists out of the database, but information on each listed manager may be saved in MS Outlook format.

The Guide for Businesses and Capital Market still suffers from some early-version drawbacks: it is not always easy to find a requested listing, the search engine is very limited, and the user interface is somewhat inflexible. In addition, a sample examination we performed revealed that about 7% of email addresses were inaccurate, mostly due to typing errors. Database updates are supposed to be issued several times a year, and the manufacturer promised to fix most of the mistakes until the next update. Updates cost 79 NIS. In spite of these shortcomings, the database is a bargain for anyone planning on approaching potential clients in Israel or looking for a suitable supplier. It should return the investment within a week or so.

• More information on the database may be found on Linko website

Extreme Result II

Since we already mentioned Altoids mints in this issue of LaZOOZ (under the Focus section), we could not refrain from including one of their marvelous campaign ads.

The pattern of this ad, Extreme Result , was demonstrated in the third issue of LaZOOZ with the "fatal" Wallis wardrobe (see here).

This time, the product is extremely peppery mint drops. The (extreme) result of using the mints is that teeth need to be braced with a massive device to prevent them from flying out of the mouth due to the strong taste.

Since Al Ries is also mentioned in this issue, it is appropriate to state that in his book he mentions Altoids as the only example he is aware of in which an advertising campaign brought on the penetration of a new leading brand and its surpassing of the mint drops category leader - Tic Tac. How come advertising did work in this case? According to Al Ries, mint drops have little PR potential. In addition, as he claims, Altoids in fact created a new category (very peppery mints), was the pioneer in this category, and gave potential clients a reason for buying the product (I wonder how hot they could be?) 

• Source: Altoids - Brace Yourself. Callard & Bowser Suchard. March 98.
• For information on creative advertising workshop see page 18 of our Strategy and Marketing workshop description  (Hebrew, PDF file)
• This section is dedicated to Ronen Cohen, VP of P.O.S. division in Creo, an avid collector of Altoids.