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Written by ZOOZ
consulting and training | (972)-9-9585085 | info@zooz.co.il
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| Issue 05 |
Hello!
We are glad to
send you the fifth issue of LaZOOZ.
The newsletter is sent
as a free service to thousands of senior executives in
the Israeli market. It is published every
other month, and does not include advertisements.
We tried to keep it short, assuming that
your
time is precious
and the work is plentiful. Those who wish to learn more, will find
links to articles and relevant information sources.
We hope that you will find the newsletter useful. We will be glad to read any comments and suggetsions.
Pleasant reading!
Ari Manor, CEO, ZOOZ
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Details
An interview with a senior executive
Yoni
Glickman, VP & Manager of
Raw-Materials division, Frutarom
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Number of employees in firm: 300 in Israel, Nearly
1000 Worldwide
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Number of employees under my direct responsibility
: 9 report directly to myself, 350
in the
division
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We provide
:
Flavorings and medical plant extracts
for the food industry.
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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.
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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.
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Most difficult on the job
: The challenges and frequent cjanges are also the most difficult aspects of the job.
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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.
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Our vision: To
be a leading supplier of tasty and health solutions
for the world food industry.
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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.
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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.
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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.
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To purchase these books:
Good to Great | Thick Face, Black Heart
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Send comments
to
: yglickman@frutarom.com
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Would you like to be interviewed?
: contact us
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Focus
On strategic development in practice
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:
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Location:
presence only in countries where people will pay for
esthetic design
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Clients: to
focus on architects and private high-class homes
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Pricing:
relatively high price levels
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Exhibitions:
only professional architecture ones (no construction
exhibitions)
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MarCom:
marketing material (website, company profile, etc.)
will be re-designed to have a high-class look
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PR: focus on
design magazines, critic colomns and TV shows
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Variety: gradually
discontinue cheap tiles, and offer a wide range of
colors and shapes
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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:
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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.
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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.
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For articles on strategy and other
subjects
: click here
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For information on
strategic consulting
: click here
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Education
A must-read book for managers
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.
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Innovation
Methods and tools for managing innovation processes
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...
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Improvements that have already been made:
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Kite surfing (replacing sail and mast)
- Harness - tying the surfer’s body to the boom and sail, thereby relieving pressure from hands
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Improvements that have not yet been made (as far as we know):
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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...
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Improvements that have already been made:
- Self-service (guests help themselves instead of waiters)
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Fondu (guests cook for themselves instead of the chef/cook)
- Menu written on table-clothes or table (instead of paper or board)
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Improvements that have not yet been made (as far as we know):
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A restaurant where guests cook
in the kitchen, following written instructions, and then eat
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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
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Invention
An innovation which
surprised the world market and competitors
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.
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Futurism
Innovation ideas not yet realized
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)
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Move
What's new at ZOOZ
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.
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Efficiency
A tip on effective management
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.
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More information on the
database may be found on Linko website
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Exposure
A creative
advertisement and its logic
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?)
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Source: Altoids -
Brace Yourself. Callard & Bowser Suchard. March
98.
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For
information on creative advertising workshop see page 18 of
our Strategy and
Marketing workshop description
(Hebrew,
PDF file)
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This section is dedicated to Ronen Cohen, VP of
P.O.S. division in Creo, an avid collector of
Altoids.
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