| Issue 59 |

Raphy Ben-Shimon, CEO of Floris (and Hadas)

• Number of company employees : 14 0.
• We provide: Nutritional supplements, vitamins, pharma products and medical cosmetics.
• I have been in my position for : 24 years.
• History: I immigrated to Israel in 1978 and started running a private pharmacy.
  I started getting bored after 5 years, and on a visit in France I window shopped at several pharmacies and noticed there was a new “herbal” trend. When I got back to Israel, I embarked on a plan to build a factory with my brother, who is also a pharmacist. It started more as a hobby rather than a business. We encountered a lot of bureaucracy from the Ministry of Health, since there was no definition for medicinal herbs. The factory was up for a year (on a small area of 150 m2) but not running, while we waited for Ministry of Health decisions. Since the answers we needed were late in coming, the factory started working in early 1986 as a food (and nutritional supplements) factory, with four employees. In 1988, after still not receiving any relevant decisions from the Ministry of Health, and in light of the required investments without knowing what tomorrow would bring, we decided to start manufacturing apothecary-type remedies (with quality control and cheaper prices). Between 1988 and 1995, we registered 20 drugs with the Ministry of Health, some in the pharmaceutical field. In late 1995, the Ministry of Health decided to change its definition of vitamins from drugs to nutritional supplements, which brought us back to working in the nutritional supplement industry. In 2004, the factory changed its status from a company owned by the Ben-Shimon family to a company in partnership with Moshav Massuot Yitzhak. The purpose of the partnership was to duplicate Massuot Yitzhak’s success with the wet wipe factory, Albad. Large quantities of Albad’s wet wipes were sold to all the retail chains in Europe. But vitamins are not wet-wipes… At the end of 2004, we acquired Hadas, and it took Floris two years to adjust to the new situation. We finally managed to move away from the concept of selling to the retail chains in 2007, and started looking for a different type of customer – ones from the industry that are knowledgeable about products. Throughout the entire period of the factory’s development, we have placed an emphasis on standards and their importance to us and to our customers (GMP pharma and food, ISO). We have been witnessing very positive developments and an increased demand for our food and nutritional supplement products abroad over the past two years, thanks to the excellence of our products and a built-in quality assurance system at the factory .
• What I like about the job : As CEO, I feel responsible for all the company employees. This connection manifests in my participation in birthdays, festive occasions, and regrettably also in the grief of employees’ families. I feel that we have fostered a warm and family-type environment for our employees.
• The most difficult part of the job : Firing an employee. Also the times when we didn’t succeed, and our failures - are hard for me. But sometimes failure makes it possible to learn, and to fight for what you want with renewed vigor.
• Goals I want to attain : To safely navigate the ship with its 140 passengers (employees), even though the economy is currently unstable, and to continue to expand and develop. In light of the importance of quality assurance, and our comparative advantage in this field, our goal is to export large quantities to the pharma, nutritional supplements and cosmetics industries.
• Our vision: To become a leading manufacturer of medical-quality nutritional supplements, pharma products and cosmetics - with an emphasis on subcontracting for customers abroad. We arrived at this direction through a series of internal management discussions, facilitated by Ari Manor from Z OOZ .
• Original products in the field : Hizukit - an immune-strengthening product, backed by clinical research. Hizukit has recently become more popular in France and other countries because of the Swine Flu.
• Sources of innovation : Our ideas come from our staff. Our human resource is the most important source of innovation. Another important source is our customers, for whom we develop unique and customized products. We have a comparative advantage in rapid response time, and in the ability to set up new and stable formulas that adhere to advanced standards.
  
    
• Send feedback to raphyb@floris.co.il
• Would you like to be interviewed?: contact us
  

Analyzing a Competitive Market

OK, we’ve defined a product (or product line) in this section in the past. Now we need to make sure that the product will have customers to buy it from us, and that it will be worthwhile for us to sell to these particular customers. For this purpose, we need to analyze the market in which we operate.

A recommended model for analyzing our market is Porter’s Five (or seven) Forces. There is a lot of information about it in numerous languages on the Net, so anyone that is unfamiliar with it is welcome to Google and read. Porter’s model deals with analyzing competitiveness in a specific market, and if we use it, we don’t forget anything along the way: not the competitors, not the barriers to entry, etc.
 

So where’s the problem? The question is WHAT market do we need to analyze?.

Let’s take a company that sells products to cellular operators, for example. The cellular operators use these products to offer services to their customers: corporate and private customers. How many markets do we need to analyze? What markets are the most relevant to understanding where our product stands?

In general, the first analysis is done on the market in which we want to operate: Who are our competitors? Who else might enter the market and become a competitor? What are the barriers to market entry? This analysis is important to the success of the product and the company, but it’s not enough.

Especially in the technology industry, other markets with similar technologies must be identified, and checked to see what is happening in them as well: regarding opportunities (whether the market is growing - whether there is a business opportunity that we are missing) and regarding the potential threat (whether it is a shrinking or saturated market – whether players in this market will decide to enter the market that we are trying to build). A (very general) example of such as process is the entry of the large IT companies to the field of added-value services at cellular operators.

It is very important to also analyze the customer market to understand the customers better. What problems are they dealing with? What are their aspirations? How can we help them solve problems or fulfill aspirations?

The problem is that our customer market is also influenced by other markets. For example, the saturation and shrinkage of landline telephony service providers leads them to look for ways to bite into the ever-growing pie of the mobile services. In other words, a change in an “external” market can lead to pressure and increase competition in “our” market.

In addition, our customer market is also affected by what happens with the consumers. For example, a recession in the market will lead many companies to cut costs on communications, and minimize their interest in advanced communications services.

After completing all these analyses, either the patient dies (we reach the conclusion that our market is impossible and we have to go back and redefine our product) or we’ll be ready to go for it.

To date I have described how to create a marketing strategy in this column. We are getting closer to being able to stop thinking and start doing: In other words – take our strategy and make it happen.  

• The column was written by: Neta Weinrib, an expert on marketing technological products. Information about Neta appears here.
• More information about marketing assistance for technological products appears here.

The Perfect Temptation

 Seeing as summer is rapidly approaching, we will present the story of the world’s best-selling ice cream bar.

It all started in the late 1980’s, when Unilever decided to develop a novel ice cream bar for adults. The new ice cream bar contained rich vanilla ice cream (cream-based), but in order to set it apart from the competition, Unilever decided to focus on the chocolate coating. The ice cream bar that Unilever developed, originally called Magnum Classic, contained a thick coating of good quality bittersweet chocolate, weighing in at 68 grams. The exceptional thickness sent customers a clear message: this is the ultimate indulgence, combining ice cream and chocolate (more than half a bar of chocolate per ice cream bar!).

Magnum Classic’s launch in England in 1987 was a smashing success. Ice cream bar consumers quickly got hooked on the tempting combination of ice cream and chocolate that Magnum offered. Chocolate lovers that hadn’t been fans of ice cream bars until then began to relish the Magnum bars. Also, Magnum, which was designed for the more mature customer, appealed to youth and children as well. Absolutely everyone bought Magnum, loved it and became die-hard customers.

In light of its success in England, Unilever started selling Magnum bars worldwide, and expanded its variety of flavors and types of Magnum ice cream bars. New flavors included Magnum Mint (1992), Magnum Double Chocolate (1996), Magnum Double Caramel (2000), and Magnum Yoghurt Ice Cream (2002), to name a few. Later, several new product lines were launched, including Magnum Sins (2003), Magnum Intense, with a truffles core (2004), Magnum Senses (2005), and Magnum Moments with bite-sized bars (2009). Concurrently, Unilever expanded the Magnum brand to other types of ice cream, including cones and sandwiches.
 









The gamble on the thick chocolate coating and making the Magnum brand a trendy and craved-for product, while launching new flavors every year, paid off big time for Unilever. Magnum is the leading brand in its category in more than 40 countries that sell it. More than once billion (!!) Magnum ice cream bars are sold annually worldwide. Talk about sweet success…