Archive for the ‘Companies’ Category

Car-Purchasing Experience, the Sequel—This Time: Jeep

Friday, June 27th, 2014

In my search for a new car, a Jeep Grand Cherokee SRT is also on the agenda. OK, so I contact the dealer.
A friendly lady at the switchboard: “Autohaus . . . good afternoon.”

  • Me: “Good afternoon. Who should I talk to for a quote on a Grand Cherokee SRT?
  • She: “You want to buy a car?”
  • Me: “Perhaps. I’d like a quote.”
  • She: “The salesman is busy right now. Please call back a little later.”
  • Me: “No, I’m not going to do that. Please give me the email address, so I can send a configuration and then wait for a quote.”
  • She: “I’m not allowed to share the email address.”
  • Me: “Say again?”
  • She: “I’m not allowed to share the email address.”
  • Me: “Then give me the dealership email address.”
  • She: “But you could just as well call back.”
  • Me: “No, I’m not going to do that.”
  • She: “Or go to our website.”
  • Me: “No, I’m not going to do that, either. What would I do there? You want to sell cars, right?”
  • She: “I’m sorry.”

I ended the conversation.

This was either a misunderstanding, or the store is abysmally managed. And by the way, I doubt that this is an isolated incident. The management will never learn that their dealership just now lost the opportunity for a lucrative deal. I’m not going to tell them about it; to do so would be of no value to me. And the switchboard lady will certainly not have understood. She didn’t even take my name—that’s a dead end.

How many deals slip past you because your team doesn’t deal appropriately with customers.

 
© 2014, Prof. Dr. Guido Quelle, Mandat Consulting Group, Dortmund, London, New York. All rights reserved.

Nespresso: Brand, Convenience, and the Effect on Price

Saturday, May 31st, 2014

It is widely known that Nestlé has created an impressive success story with Nespresso. Today, we’ll take a look at the impact of a strong brand—plus convenience—on price and (in-this-case-inevitable) profits.

OK, calculator at the ready.

  • After a pronounced rise in prices on the coffee market since the beginning of 2014, the cost per kilogram of coffee beans on the commodities market stands today (3/14/2014) at about $4.41.
  • Today (3/14/2014) on its home page, Tchibo is advertising a sale on its “fine-mild” blend: $10.38 per kilogram.
  • The “New York” coffee blend that we at Mandat purchase: about $42.00 per kilogram.

Now to Nespresso.

  • A single pod costs some where between 51 cents and 54 cents.
  • In each pod, there are about five grams of coffee. So, a kilogram would fill 200 pods.
  • According to Adam Riese, that comes to between $102 and $108 per kilogram. That’s a factor of ten compared to the Tchibo offer and still a factor of 2.5 against the “New York” blend.
  • In other words, for the price of a box of ten Nespresso pods, you can buy more than a kilogram of green coffee in South America.

Not bad.

We discuss with many of our clients the power of a brand on price and the advantages of convenience for price. The next time you find yourself in an executive meeting, bring up the subject of how you use the power of your brand and which convenience-advantages you can create for your customers—to the profit of both parties. You will encounter open doors to your customers. Whether this is also true of your team depends on their readiness to grow.

© 2014, Prof. Dr. Guido Quelle, Mandat Consulting Group, Dortmund, London, New York. All rights reserved.

“It’s Miller Time, Let’s Have a Bud”—It’s Not Enough to be First.

Friday, May 23rd, 2014

As our Canadian colleague and friend told me, the Miller brewery created “Miller time” in an ad campaign much noticed at the time—a Miller beer as reward after a stressful day. “If you’ve got the time, we’ve got the beer.” A grandiose concept for the industry. “Miller time” was born. Unfortunately, Anheuser-Busch (A-B) wasn’t exactly asleep, because then came: “For all you do, this Bud’s for You.” A-B’s strength in the beer market gained its slogan gained even wider prominence at the time. Analysts quipped that it actually had to mean: “It’s Miller Time, let’s have a Bud.” A branding disaster.

It’s just not enough to be first. It is more important—and more difficult—to remain first. People sometimes ask market leaders how they have succeeded in remaining the market leader over the years. We get no answers such as these:

  • “We did the same thing, only more often and more quickly.”
  • “We started a large-scale sales offensive.”
  • “We simply always copied others.”

Market leaders with a long-term view of themselves reinvent themselves, dismantle things that aren’t working before others do so, and they are definitely not the cuddly sort. They never rest. Never. The not only dominate the market, they define it. Someone to whom that doesn’t appeal would be better off not trying to be a market leader at all.

Postcript: There is an outstanding article about Miller and A-B (“Busch Family Builds a Name”) in the Milwaukee Journal of 10/30/1988. You can find it on the Web.

© 2014, Prof. Dr. Guido Quelle, Mandat Consulting Group, Dortmund, London, New York. All rights reserved.

Strategic Challenges. Today: Caran d’Ache

Friday, May 2nd, 2014

If you know Caran d’Ache, the producer of writing instruments (truly phenomenal products), then you’ll know what I’m getting at. If you don’t know Caran d’Ache, then, you might want to have a look at  the company’s web site or – better yet – at this remarkable YouTube video about the “Caelograph”, a writing instrument of the highest order from the Caran d’Ache product line, to get a picture of the strategic balancing-act the company performs.

From colored pencils worth just a few cents to Caelographs costing more than $135,000, from grade school to the carriage trade – that is a broad product-, sales-, and cultural spectrum. Here it’s critical to cleanly separate market segments and to ensure that the brand isn’t stretched thin by centrifugal forces at both ends of the portfolio. This kind of dilution poses considerable risk, because it usually won’t be noticed right away. By the time it’s detected, the brand has become so misshapen that reconstructing it will take a considerable amount of time.

Many of our clients must ask themselves the same questions that confront Caran d’Ache: What is the appropriate product mix How do we grow sensibly, without distorting the contours of the business or sacrificing profitability? Do we have the right market-access? Do we have the appropriate team on board? Do we even have the right customers, and do we know what their needs really are?

Please note: At the moment, Caran d’Ache is still doing its thing very well, but the family-owned business, with its extreme spread across segments, offers a classic example of the kinds of strategic challenges to be overcome. In this respect, by the way, the Caran d’Ache example fits splendidly into my lecture “Strategy Consulting” at the SRH College for Logistics and the Economy.

© 2014, Prof. Dr. Guido Quelle, Mandat Consulting Group, Dortmund, London, New York. All rights reserved.

 

 

Benefit from Growth Opportunities in the Commodities Market. Example: Freenet

Friday, March 21st, 2014

How often have you heard it? That things can’t work; that the competitive environment is difficult because products are interchangeable; that others can do something better; or that others have already tried something – without success.

During the 10th International Brands Colloquium on September 12-13 at Seeon Abbey, Christoph Vilanek, CEO, freenet AG, made it clear that at the moment, especially companies that are offering commodities are well-advised to look for growth-potential in their markets. Freenet, for example, is on course to become a “digital-lifestyle” provider and is pursuing this course consistently. Vilanek said that it is necessary to maintain a very rational view on the own products and to keep in mind that there is nothing wrong with low-priced products as long as a lot of people buy them. Just as a sidenote, Vilanek also put to rest the question, he is often asked, of whether you need a new name if you become a “mobilcom-debitel,” which is the brand since the fusion between the two providers “mobilcom” and “debitel.” His stereotypic answer is “no,” since it’s not about a clever name. Haven’t Mercedes-Benz, Rolls-Royce, and Hennes & Mauritz also worked out all right in the end?

In addition, one’s perception of the facts is crucial. Forty-seven percent of Germans have a smart phone. A huge number. Vilanek’s view: Fifty-three percent of Germans DON’T have a smart phone. A huge potential.

In our role as consultants, we frequently scrutinize traditional business models as to their potential for growth. It’s not unusual for us to discover that over the years, an organization has learned behaviors that must be examined critically if it wants to grow further. But this assumes a certain “internal opposition,” because it means grappling with the fact that what has brought the organization to its present prosperity will probably not be what will guide it to future prosperity. A sea change in thinking that requires strong leadership.

On my own account: The 11th International Brands Colloquium will take place on September 18-19, 2014 at Seeon Abbey in Chiemgau, as always. Once again, business leaders, companies, and senior-brand managers will convene to speak in a familiar and confidential setting about brands, strategy, leadership, and growth. There is no documentation of the proceedings so that the speakers can talk about things not intended for wider publication. You can find out more about the International Brands Colloquium here.

 
© 2014, Prof. Dr. Guido Quelle, Mandat Consulting Group, Dortmund, London, New York. All rights reserved.

Virgin Atlantic: Very Attentive!

Tuesday, February 18th, 2014

Waiting for my first class flight with Singapore Airlines to Frankfurt on Valentine’s Day at JFK, I was not only greeted by the Virgin Atlantic team at their lounge with “Happy Valentine’s Day,” but also was presented the handwritten note below. I call this very attentive.

Valentines Day Virgin Atlantic

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

© 2014, Prof. Dr. Guido Quelle, Mandat Consulting Group, Dortmund, London, New York. All rights reserved.***

The Washington Post, Bezos, and Growth: What We Can Learn

Wednesday, February 5th, 2014

Perhaps the most noteworthy sentence concerning the sale of the Washington Post to private-investor Jeff Bezos is to be found in a letter from Donald Graham, the publication’s chairman. “The newspaper business hasn’t stopped raising questions for which we have no answers,” wrote Graham, as quoted on the German newspaper Frankfurter Allgemeine’s website this morning.

Aside from the fact that I find it commendable when a company’s leadership concedes that they don’t have answers to questions on the horizon, there are lessons here for all of us who grapple with growth.

  • The other guys: The “newspaper business” cannot raise questions. It’s not the other guys. As the Washington Post, you are a part of the “newspaper business.” The Post can, should, and must help to shape it. The opportunity passes you by while you’re thinking about the “newspaper business” in the abstract.
  • The target audience: There are indeed newspapers that operate successfully. So, what was the fatal flaw? What role did the readers play? Are they dying out, as is the case with some newspapers? Did the Post neglect to refine its target audience? So it would seem.
  • The brand: As a result, the brand wasn’t refined to keep up with the times. The Frankfurter Allgemeine plainly illustrates that some such refinement happens, even in the sector’s conservative companies. Although the Frankfurter Allgemeine wrestles with even the slightest change (something that makes sense!), the newspaper continues, for instance, to develop on-line business – and even paid on-line business – without sacrificing high editorial standards.
  • The employees: It is not the chairman’s responsibility to find answers to questions about the “news business,” the more so because the Washington Post reportedly generates only 14 percent of corporate sales. It is, however, the employees’ responsibility to move a newspaper forward. Part of this is cooperation among the editors to achieve – in the case of the Washington Post – the required high level of quality. But part of this, too, are employees who work at strategic and tactical positioning, and who consequently come into conflict with the editors. It is quite apparent that there are considerable shortcomings here.

The problems of the Washington Post lie in the more-distant past, and not so much in recent days. The brakes lie within the company, not outside it. They neglected to further, purposeful development of a company, a storied brand, and they neglected to accept that change, focus, and omission are crucial drivers of profitable growth.

© 2014, Prof. Dr. Guido Quelle, Mandat Consulting Group, Dortmund, London, New York. All rights reserved.

The Hope Principle–a Fallacy

Wednesday, January 29th, 2014

Most people are good-natured. Perhaps too good-natured. With the result that employee’s blunders are systematically tolerated, incorrect deliveries from businesses are systematically endured, product defects tolerated more or less without complaint. And shares are issued by companies whose business model has yet to be proven a performer.

The hope principle doesn’t work in business life. Employees repeatedly deliver poor performance despite corrective efforts, have no business being there. When business fail to make deliveries on time over a long period of time, there is no cause for hope that they will change anytime soon. And when software firms deliver so-called banana software – the kind that “ripens” in the hands the customer – we have no hope that this will undergo a transformation, at least not as long as the products continue to be purchased. And when a company steadily generates losses, it clearly lacks a basis for its business.

An example of a “business model”: Zalando, an on-line clothing vendor in the UK, happily and repeatedly claims that it is growing especially quickly. Two minor snags: 1. The considerable minus recorded in their profit-and-loss statement. 2. the number of returns which, according to analysts, is somewhere in 70- to 80-percent range– and that greatly contributes, in a negative sense, to point number 1. Despite the fact that the company, to all appearances, is an attractive brand, we shouldn’t forget that it generates a loss. Moreover, it’s unclear how partnering with an outfit whose business is returns could profit anyone but a third-party logistics provider. Bottom line: As long as there’s a Zalando, buy shares in DHL. (This is not an official stock recommendation!) You might object that Amazon operated at a loss for years. But Zalando is no Amazon.

Don’t attach yourself the hope principle. It inhibits you from seeking out fields that are more rewarding.

© 2014, Prof. Dr. Guido Quelle, Mandat Consulting Group, Dortmund, London, New York. All rights reserved.

Focus on the customer: Four Seasons Hong Kong

Wednesday, December 11th, 2013

During our stay at the Four Seasons Hotel in Hong Kong on the occasion of our annual meeting of the Million Dollar Club, a network of international consultants, a woman from our group asked for hot water and ginger. Unfortunately, there seemed to be no fresh ginger available. Upon further inquiry into the beverage, the woman received an apologetic answer: It would take a few minutes longer. Someone had been sent to the market to buy fresh ginger. Shortly thereafter, the woman got her drink. Please note: It was about 8:00 o’clock in the evening.
Two lessons:
1. Focus on the customer. The customer is to be taken seriously.
2. The decision was made on the front line; no manager was involved. The responsibility for making such decisions on their own was assigned to the employees.
I call that commendable. And please don’t come back at me with: “A high-class hotel like that should always have ginger on hand.” Please don’t.

© 2013, Prof. Dr. Guido Quelle, Mandat Consulting Group, Dortmund, London, New York. All rights reserved.

Singapore Airlines: Two More Points

Tuesday, November 26th, 2013

Those who know me know also that I am a brand ambassador of Singapore Airlines. Not only that I didn’t have any negative experience so far, with more than thirty intercontinental flights. I exclusively had positive experiences so far. Here are two more points the airline made on our recent first class trip to and from Asia:

1. Stopover in Singapore: One hour.

On our flight back from Hong Kong via Singapore to Frankfurt we had a one hour stopover in Singapore. I was sceptical about this short stopover already at the time of the booking, but SIA told me, it wouldn’t be an issue, they would take care of us. I kept being sceptical, having made all these experiences in Europe, but they were the experts. In fact: It wasn’t an issue at all. We landed almost on time in Singapore, were the first passengers to leave the aircraft, took the skytrain to terminal 3, arrived there, were guided by Singapore staff that directed us to the gate and – voilà – found ourselves sitting in the next aircraft.

Our luggage? Here’s the tag the luggage got: “T3”, “Hot”, “Priority”, “First.” Of course the luggage was expecting us in Frankfurt on time. Respect.

Kofferticket

2. If someone wants to know how Singapore Airlines treat their best customers, get a personal invitation to the private room at Singapore’s First Class Lounge in Changhi. Silence, a private butler, wonderful.

This is what I call customer service and this is what leads to customer retention. Period.

(c) 2013, Prof. Dr. Guido Quelle, Mandat Managementberatung GmbH, Dortmund, London, New York.