8/9 of the Iceberg is below water

Most of the needs of the Consumers are below

surface

See the unseen

Turn the tide

Topple the Iceberg

Know your customer better and direct the whole organisation

towards her

Highlights

Industry ClassificationIndispensabilityProduction PressureDangers in R &D

Industry Classification

In the business of Restaurant

in the business

of feeding the

Hungry

In the petroleum industry

business of

producing usable

Energy for the

average citizen

Is it the same or different…?

Our mission is to provide customers with

an unparalleled selection of

fashion right and lifestyle product

in an environment that is enjoyable, welcoming

and that encourages customers to tap into their creativity and

explore their personal styles

Our mission is to delight customers by

providing quality innovative

clothing and related products

through an island-wide network at affordableprices whilst ensuring satisfactory returns to

our stakeholders.

CustomerCustomer

NeedsNeeds

InsightsInsights

Basic

Clothing

Accessories

Shoes

Lingerie

Hand bags

Jewelries

SportswearGift items

Designer clothes

Kids wear Women’s wear

Men’s wear

Office wear

Baby

productsHandlooms

Party w

ear

Branded

cloth

es

Cosmetics

What industry are they in?

Beyond the Obvious

Looking FashionableLooking Fashionable

• Total revenue has been on decline.

• Despite a reduction of 827 employees through a VRS at a cost of Rs.198mn Company has been continuously incurring losses.

• The accumulated loss - Rs. 646mn

• The Company's equity - negative Rs.367mn.

Classification Myopia

CustomerCustomer

NeedsNeeds

InsightsInsights

Beyond the obvious

Basic

Clothing

Accessories

Shoes

Lingerie

Hand bags

Jewelries

SportswearGift items

Designer clothes

Kids wear Women’s wear

Men’s wear

Office wear

Baby

productsHandlooms

Party w

ear

Branded

cloth

esLooking FashionableLooking Fashionable

What Industry are they in?

The Idea of Indispensability

• “My products will always sell”.

• The petroleum industry.

• The Population Myth.

• No guarantee against product obsolescence.

A Victim of MyopiaControlled 70% of the market.Reduced to less than 15% !!

• Complacent Management

• Not focusing on “Getting” & “Keeping” customers.

• Focus on production. Not marketing.

• Not foreseeing strong competition.

Success Story

• Captured a lion’s share of the market within a few years of entry (current share – 55%).

• Leads the market with Innovation.

• A “step ahead” of competition.

The Idea of Indispensability

Lost over 50% of market share

Gained a 55% share

Production Pressures

Producing goods or services?

Satisfying customer needs?

Production focus?

Market focus?

Product?Total

experience?Needs of seller?

Needs of customer?

Research – available products?

Research – customer needs?

Production Pressures: A Near Failure

• Mass production• Low cost camera• High revenue and profits from film roles

• International distribution

• Extensive advertising• Continued focus on film and hybrids

• Loss from continued business $1.32bn

• Share price drop $80 to $3• Laid off 25,000 people

Production Pressures: A Success

• Electronic manufacturer• Identified customer need• First digital camera - Sony Mavica

• Sony Cyber-shot - scene detection

• Image capture - phones, camcorders

• Images revenue up by 57%

Production Pressures: Comparison

Dangers of Research & Development

• Profit possibilities of technical R&D

• Manage what is within control

• Atmosphere of creation and delivery

• ‘Stepchild status’ for Marketing and Sales

Apple’s Pippin

• Manufactured in 1995 • Multimedia player • Both a computer and gaming console

• Not good at being either• US $599 - too expensive for a gaming console

• Competitors – Nintendo, Sony, Sega

• 42,000 units sold before quick death

Sony’s PlayStationPlayStation 1 released in 1994 PlayStation 2 - best-selling console, over 140 million units soldFocus on customer needsUser friendly, exciting, affordable, and innovativeDevelopers understand gamers’ needsGames are popular, have long term useSatisfy East and West

Marketing Myopia -Dangers of R&D

PC World Magazine's ‘25 Worst Tech

Products of all Time’

Best-Selling Gaming Console

How to Topple an Iceberg

• Industry Boundary• Customer Centric Culture

• Marketing leading Innovation

• Accommodate or die

Team

• Chatra Nakkawita• Rukshan Jayaratna• Nadee Wickramasinghe• Kesara Jayasinghe• Shameena Hanifa• Eshani Obadage• Nilushika Gunasekara

www.pik.lk – MBA 2010