Saturday, July 31, 2010

The organization and marketing spirit

The above image from here.

First there were governments then there are organizations!

"Young people will have to learn organizations the way their forefathers learned farming"
- Peter Drucker

Truly, it is a different world! In medical practice there was an era of the solitary reaper! In India, doctors would have to just complete their MBBS and with the help of well wishers or through Medical Representatives (who through their travel are aware of the good spots where clinics can be put up), the doctor would start a clinic and start counting the money! Is it that easy today?!

Besides competition from individual medical practitioners, a doctor (new or old) will have to face competition from medical institutions. There are medical organizations competing to offer medical services to patients. And this is changing the way medical services are being delivered, thanks to the medical organization.

Wherever you go ... there are organizations and more organizations. Peter Drucker is right in the above quote where he has indicated that it is now an organizational society. The post industrial society and the e-enabled society (internet driven or information society) is seeing a plethora of virtual and "brick and mortar" organizations.

Living in and with organizations

Life in organizations is not easy. It is not as in family (which is also an organization, in a way). The basic principle of life in organizations is ACCOUNTABILITY (which is not so very tight in families, ie., it is more flexible in families. There is scope for "free lunches" and poor ROI ie., return on investment in families. Come what may, normally families are always together - there is no sacking or leaving the organization). Besides accountability, there is the ROI factor in organizations. When organizational resources are being used for activities by individual(s) in the organization, inevitably there are formal and informal assessments of return on investments done. And it is this that makes life in organizations challenging.

Why do people join organizations?

Organizations refer to groups of people having a common purpose. At the very basic level, people join an organization to get money - for a living. This is the first level why a person joins an organization that pays him/her. Organizations provide jobs, and people need jobs. So people join organizations. There is no other easier way of earning money today.

At a slightly higher level, a person joins an organization due to his or her qualification. There is a match between the joinee's profile and organizational need. For the services rendered, the entrant to the organization is paid a salary or provided a compensation.

At a higher level, an ideological level, people join an organization inspired by the mission or purpose of the organization. Joining political parties, or NGOs or terrorist organizations (!) or even some commercial organizations that have a particular culture or inspiring purpose are such examples.

Why do people start organizations?

There are various motives why people start organizations. Typically, an unmet market need, visualized by an entrepreneur is the spark for the start of organizations. When the Indian Patents Act, 1970 came in to being (where product patent was not recognized in India, only process patents were recognized), many entrepreneurs smelt a market kill through reverse engineering and marketing branded generics. Cipla, Aristo, Alkem, Sun Pharma, Zydus Cadila etc are examples of Indian companies who grew on the foundation provided by the new market opportunity created by the Indian Patents Act, 1970.

The game has however changed from 2005. Now product patents are recognized. Reverse engineering is getting progressively more difficult. So inevitably product innovations are getting to be more important. Marketability is also gaining higher importance rather than mere selling based organizations.

The second need for starting organizations is the ego drive or power need. People like to have reportees. Individuals enjoy having people reporting to them, and having these reportees doing the organizational leader's bidding. These are the feudalistic type of organizations. The financial control of leaders in the organization provides them with the power to have and control behavior of reportees.

The third set of people who end up starting organizations are those who reach very high levels. Egs.: Bill Gates, Steve Jobs, and Michael Dell. They are the marketers. They create markets through their ideas and products. There are very few of them in this world, and they create organizations of maximum value. In fact, their organizations recast the business world. Their activities are paradigm shifts, their entrepreneurial and marketing work causes tectonic shifts in the business milieu. Their organizations change the lifestyle of people and the way of the society significantly.

Steve Jobs is doing this with his i series of products: the i-pod, ... and now the i-pad. In fact, in the pharma marketing news (electronic newsletter) published by John Mack: he has written nicely on how the i-pad can revolutionize pharma marketing communication activity. Ray Croc who created the franchisee business model of McDonalds - changed eating behaviour of human beings particularly in USA!! He is the marketer's marketer!! Coca Cola that started as a product sold in pharmacies, has changed the way people quench thirst and consume fluids.

Organizations, ideas, products and marketing

The question to ponder on: do organizations create super products or do super product ideas create organizations or is it a mix of these two approaches? One thing is for certain, good product ideas require organizations. Nevertheless, for the organization which revolves around a good product idea to succeed, the MOST ESSENTIAL INGREDIENT is the marketing spirit.

Marketing is not just about charismatic marketers (like Vijay Mallya or Steve Jobs or Richard Branson). Such marketing approaches that depend on the charisma of certain people will not be as effective as a marketing process driven organization. A typical company that is marketing process driven is the collossus GOOGLE. Contrast Google with the way Apple works. Apple appears to click only when Steve Jobs is around. However, GOOGLE is always clicking! Until recently or even now there are many who have not heard of Larry Page and Sergey Brin (the founders of Google). So the marketing process, ideas, great product concepts and then the organization ... these are the ingredients for success in today's world!!

In India, till 1991, the Govt. was the most important entity. After 1991, the economic liberalization process started under the guidance of IMF, which bailed out a bankrupt Indian govt. After 1991, the importance of private organizations has slowly and steadily increased. The development of new media and increased educational attainments of Indians, has further catalyzed the process. Hence, to succeed in the organizational society of India, as Peter Drucker says, we need to gain important organizational management skills! Thnks for reading this blogpost, kindly scroll down and read all other blogposts, please recommend my blog to your acquaintances.

Monday, July 5, 2010

Category killers

Steve Jobs (above) is not just a product entrepreneur, he is a category inventor. Steve creates products that are 'category killers'! Apple, Mackintosh, i-pod, i-phone, i-pad ... all these products are about a new category of products. Steve's success lies in making products that meet new customer needs. He has the knack to identify the market gaps, fill them, and succeed.

Entrepreneurs aim for mega successes. They look for concepts that create something new, redefine the present, set new standards, help gain a leap in sales and provide a higher platform of performance. From where do such mega successes come?

Categories not products create mega successes

New categories are the paradigm creators. New categories create mega successes:

Ujala: the whitener for clothes
Nirma: the first mass market affordable detergent powder
Hero Honda: India's first four-stroke mobike that combined style, performance and ECONOMY, it became a runaway success
Nano, the car: from Tata has created a lot of buzz and in June 2010, Nano helped make Tata Motors become India's second largest 4 wheeler manufacturer after Maruti
Viagra: for the management of erectile dysfunction, from Pfizer, was a runaway success. Viagra was a new product, in fact, a new pharma category
Ciprofloxacin: the fluoroquinolone antibiotic was India's first twice daily effective antibiotic for typhoid and gastroenteritis, this molecule got instant acceptance from prescribers
Mineral water @ Rs. 10/-: Before the mass packaged drinking water concept, brand Bisleri was the only bottled 'mineral water'. Things changed when more manufacturers jumped in to the packaged drinking water bandwagon, and produced packaged (bottled) mineral water - this created a new category
Electrolyte-energy drink concept from Jagdale Industries Ltd., Bangalore is a category creator that has met with robust market success
Mobile phone is a category product that has altered commerce, communication and society in general, as never before. The mobile is not just a communication tool, it is an entertainment device to watch TV, listen to music, and now banks are looking towards the mobile for banking solutions. In the future, the mobile will enable those out of the banking net (right now) to be brought in. People will be able to having bank accounts via the mobile and pay through the mobile. The Indian Railways is also looking to reduce paper usage by providing the "ticket" through sms
The 'i' series of products ie., i-pod, i-phone, and i-pad are all new categories of products backed by fluent marketing

The nub of the matter is that mega success comes from category killers as illustrated above.

Category killer is a brand, product, company or service that has a distinct sustainable competitive advantage that competing firms find it almost impossible to operate profitably in that industry.

There is of course another meaning to this term: large retail chains like Wal Mart that put other smaller retailers out of business are called category killers. However, in marketing and strategy, category killer is a group of products or a product that delivers superior value and creates a category in the market. A category killer redefines the market.

Oral insulin is another example of a change champion product that can become a category killer. Biocon is working on this concept. If oral insulin becomes a reality, Type 2 diabetes mellitus becomes easier to manage, similar to thyroid disease, where oral thyroxine tablets are given. Just imagine, if management of thyroid disease was possible only through injectable thyroxine what a painful disease hypothyroidism would have been.

It is difficult to create products that have superior value that can create a new product category market. Hero Honda continues to be the evergreen example of a product that has created a new category in the market, leading to its triumph in the motorcycle market. Steve Jobs seems to have perfected the art and science of hitting the market regularly with new categories of products backed by savvy marketing.

New categories = innovation

Simply put, innovation is doing something new that is useful. It takes an interdisciplinary approach to do it. And innovation depends on competition. The need to innovate comes from the desire of an organization to exist in the market.

Innovation in the Indian pharma market

Today, the pharmaceutical industry and marketing is a demystified place. People know the tricks of the trade. There is a thriving ecosystem that provides products, this has led to commoditization, and a plethora of brands. Hence, in the Indian pharma market place the need to innovate is felt as never before. Innovation to try and create new product categories is becoming a vital strategy in the Indian pharma industry.

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