Headline –
“Performance cycle and the bell curve: the final verdict”
HR.com - https://www.hr.com/en/magazines/talent_management_excellence_essentials/december_2017_talent_management/performance-cycle-and-the-bell-curve-the-final-ver_jb68nvcu.html
Tuesday 19 December 2017
Saturday 16 December 2017
Thursday 26 October 2017
Tuesday 8 August 2017
Monday 7 August 2017
Tuesday 9 May 2017
Tuesday 2 May 2017
Saturday 1 April 2017
What made you Successful, will make you Fail
I came
across an article which runs like this:
“Many businesspeople
aspire to be as rational, data-driven and deliberate as possible in every
action. Nonetheless, everyone has habits, biases, behaviors and thought
patterns that have become second nature. These instincts are, of course,
grounded in experience. If something has worked for you in the past, you are
likely to keep doing it.”
Is it something new? I will say No. We see it happening
around daily but most of the times we can’t do much. Reason – ABILENE PARADOX.
So, I feel it is not
the Team which can make a Leader fail but his own habits, biases, behaviors and
thought patterns.
Perhaps, ‘Thoughtfulness’ is the only medicine to this
disease. Business People who once get success following a path need to look for
a different path to remain successful. Biases - the most common shackles need
to be broken- not easy, but must to take care of organization’s health &
life.
Proven now, experience
does not provide any guarantee for success. It is losing its sheen, reason
- every business is moving away from
routine, repeat activities. Even in repeat activities, one has to be creative
and undefined to create Value.
Thursday 30 March 2017
Buying Behavior based Segmentation and Pricing
Segmentation has been an integral
part of modern day management. Every company does some study to segment its
customers. It is being used first to know and then satisfy needs of various
sets of customers. Under segmentation, demographic differentiation,
psychographic differentiation and behavioral differentiation are the focus of
product developments and offerings to customers.
Many marketing and business experts
perhaps have used this methodology to segment and satisfy needs, but I see a
change happening in this field.
Look at the entire lengthy,
time-consuming & continuous process of segmentation, so as to know
demographic, psychographic and behavioral dimensions of customers. Whereas the
entire underlying reason is to meet the need so as to earn more money from
customers. Today, customers’ needs, wants and demands are getting blurred.
Reason, customers themselves are not clear what they really need. Old theories
describe needs as means to live. But today meaning of Living per se has
changed. What some see as needs may be a demands for others.
I conclusively see merit in organization
moving away from old way of segmentation based on attributes.
Value Proposition - a concise
statement of customers benefits, truly reflects not only the value of a product
but what value it adds to each customer based on cost, servicing worthiness and
price value.
Customers reasonably can be categorized
based on their price sensitiveness, cost of serving them and more apparently how
poorly they being served by competitors. Therefore, Marketing and thereon
Pricing has to be based on Buying Behavior of Customers and not attributes of
product/customer.
More often when I look at
one-product companies, I see huge challenge in their segmenting product and
then finding reasons to charge premium. Commoditization is not the outcome of
only easy entry or more & more competition in a segment but perhaps inability
of producers to move from attribute based segmentation to value/Buying Behavior
based segmentation.
Lastly, Buying Behavior based
segmentation will provide much needed distinct grouping of customers for a
single product and satisfying customers’ needs more appropriately. This will
help further achieving much required – Company Branding and Effective Pricing,
leading to sustainable Life to a company and making more & more money. The
ultimate aim of a business, perhaps for most?
Saturday 4 March 2017
Pricing- a victim of IT Revolution
Businesses have undergone tremendous
change due to information revolution. Pricing, which was in the hands of
producers has shifted into the hands of customers. Today, marking up profit by
simply jacking up prices is no longer possible. Transparency, customer awareness
and easy modes to compare have changed the whole mechanism of pricing. In
older days, margins were decided whimsically by different decision makers
leading to various pricing techniques.
I feel that pricing techniques
were all depended upon who were deciding them. Cost-Plus Pricing was a long-time
favorite to Finance Managers. Likewise, Customer – Driven technique was a favorite
of Sales Professionals and Market-Share Pricing Technique was liked by
Marketing Managers.
Let’s look at, Cost Plus Pricing
Technique. It was decided keeping in view primarily Unit Cost. The notion was
that if ‘fixed’ cost is allocated to each unit and a margin is added to it that
will give a price for a product; without realizing the fact fixed cost
allocations depend on volume and volume changes with the change in price,
thereby making it apparent that unit cost is a moving target. It means prices
were decided as if they won’t affect volume and vice versa. Here, is the catch
- any price increase to cover-up fixed costs can reduce sales and can raise average
unit costs further, leading to further price escalation, resulting into a
spiral effect of increase in price, decrease in volume; eventually lowering
profitability. Inherently, it was a
faulty presumption based pricing methodology adopted my finance managers
wherein overpricing was done in weak markets and under-pricing in strong
markets. The premise that sales volume can be determined well in advance and
thereupon unit costs and profits. It has been well accepted thumb rule that if
the change in revenue minus the change in variable costs is positive, company
will earn more revenue to cover it fixed costs.
Sales Mangers on the other hand
preferred Customer Driven Pricing Technique. Prices were determined to achieve
short term sales objectives. It was more like sell the product at whatever
price to close the deal without giving importance to the fact, the organisation
is into a business to make profit and that too more & more, as some CEOs
says. If we reflect back here, sales people job is to raise customers’
willingness-to-pay according to the true value of the product and not
otherwise. As rightly being said “low pricing is never a substitute for an adequate
marketing & sales effort”.
Coming to the third one, the Market-Share
pricing technique as preferred by the Marketing Managers who always prefer to
increase market share without realizing the fact market share may not make a
company profitable. Constructively, prices have no linkage to market share but
to value as being offered to customers who can willingly pay right price for a
product.
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