Blue Weiss

The main benefits of strategic marketing is 

• (ideally proactive) adjustment to changes is 5Cs,
• clear focus on deployment of resources
  (tangible and intangible) (fin, phy, human, structural, relational) 
• consistent effort (hence efficient deployment and no waste) due to long term direction of what we will (not) do
• towards clear a long term decision regarding where to invest, maintain, scale back, drop ... objectives and resources ...in the long run (program is something that specifies results, resources and their clear allocation)
• based on an analysis of environment and resources and organizational readiness .
• and consistent effort towards a long term objective  n / long term / consistent focus of objectives (CONICS) so that you are clear where to invest,     / long term / consistent focus of

The main point in this case is how the markets evolve over a period of time due to the evolution of  5Cs and therefore marketer must change accordingly. In this case it seems that the 5Cs (strategic environment) is very different now but the company has not evolved accordingly. All that they have done is expanded the capacity (of what they were always doing) and gone deeper to smaller towns.

The basic "Source of Business" (hence strategy) has not changed much because the MVC assumptions have remained the same. M = Wooden chairs made by carpenters and then plywood chairs made by factories ), V - small footprint concenince foldable chair madde of plastic, C - Dealer development into small towns.


Take an example of the consumer durable market in India. Radio ( Philips, Murphy, National Echo) then BWTV ( ECTV, Telerad, Konark, Dynora, Keltron, Meltron) and then CTV ( Onida, Videocon, BPL) . Inspite of being cloase to the back end (assy lines) and front end (durable shops) they missed the bus.

The new circumstances are different. M is more prosperous and urban ( Swift Desire) requires more elegant chair but still small : segmentation : utiltiy, garden, office, decorative. (Just as shirts have become different ) and they want it readymade because cost of manual carpentry is high. V. C = buying from shops. Normally different ends of customers will not buy from the same chop hence specialization of shops is high and customers will not mix.

Can one organization handle all these segments ? 



 as the natural forces markets are different now due to evolution : front end (5Cs), networks, back end (assets) . But the organization is only one. Strategies are mixed up. The same person cannot wear two hats. Tiger and deer analogy.

apart from strategy you need people focus also. The same strategy will produce different results based on organizational focus (7Ss). Best focus : separate SBU with P&L responsibility and separate resources all the way. The least focus is everything is common. In between there are many variations : KAM, PM etc.

How the market evolves and how the 5Cs change. 

1)      The main point is market is a bridge between “market” à ( “marketing mix”, “strategy”, “5Cs” ) ß organization.

2)      Let us do 5Cs analysis

a)      Same Company

b)      Customers have changed , applications have changed

c)      Competitors have changed

d)     Collaborators (channels, fashion writers) have changed

e)      Context (PESTEL) has changed : Wood, design, felling of trees

3)      But the “7S” have changed

a)      Same staff ( hangover)

b)      Same structure ( monolithic)

c)      Same skills ( Injection Moulding)

d)     Same systems ( Plant Utilization) (Not market utilization)

e)      Same values ( Plastic company)

f)       Same style ( family managed)

When markets develop, all three develop simultaneously : the customers develop differently needing different marketing mix. How has the low cost market developed : who buys, what value is created, what competence is needed, how the companies connect to customers through which channels. 

Markets develop through replacement cycles, adoption and knowledge. 

1.      Replacement cars are better than the previously owned cars for the first 30 years of the career of the person. 

2.      Adoption happens from top to bottom and also adjacent. 

3.      Markets develop due to the "mix" of customers changing.  

4.      Customer migration

5.      New needs and wants . 

The groups present the case. Ask them to give 3 recommendations.

First comment : most recommendations will be only product related. For example, many will say Blue Weiss should launch high end or low end but they may not consider that there may be no suitable distribution channel. Or they may not consider that the market may not be ready to accept the value proposition or connect planned. ALL THREE MUST GO TOGETHER HAND IN HAND.

THE PHENOMENON OF MARKET DEVELOPMENT AND MARKET DRAFT 

Markets develop through replacement cycles, adoption and knowledge. 

1. Replacement cars are better than the previously owned cars for the first 30 years of the career of the person. 
2. Adoption happens from top to bottom and also adjacent. 
3. Markets develop due to the "mix" of customers changing.  
4. Customer migration
5. New needs and wants . 

When markets develop, all three develop simultaneously : the customers develop differently needing different marketing mix. How has the low cost market developed : who buys, what value is created, what competence is needed, how the companies connect to customers through which channels. 

The same thing for high end chairs.

The reason is ultimately the end customers develop and they pull the channels and value proposition.

INDUSTRY > MARKET SEGMENT 
> RESEARCH > MARKETING MIX > STRATEGY > STRATEGIST

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Context

Blue Weiss, a chair manufacturing company is facing the problem of stagnating sales. While the CFO has been pointing this out for the last few meetings, no one (till now) is paying heed to this issue. However, today the CFO refuses to budge, he wants the CMO and CEO to take a decision on the future strategy of the company.

Arguments & Recommendations

Given below is a table which highlights both the similarities and differences in point of view of both the groups:

	Group B	Group A
New target customers	Upper end	Upper end
Strategy suggested	Diversification	Market development & Product development
Organization restructure	Yes	Yes. As per new range of products

While group B was questioned on choosing diversification as a strategy and introduction of a new product, Group A was questioned on whether customers will want to have a range of plastic furniture at their homes. It was clear through their arguments that a change was required but it wasn’t quite clear even then what the right strategy would be. Perhaps in marketing, there is never a formula or a right strategy which fits all (quoting from sir).

Synthesis

Let’s ponder on the 5 Cs, on how they evolved over a period of time 1985-2015:

What happens when competition comes in?

The competition has increased since then. The result being segmentation of market. Segmentation leads to emergence of new markets and for new markets, new resources/ assets are required.

Did the customer change?

The customer today has a lot of choice and a higher propensity to pay.

Have the collaborators pruned up?

Dealers have come up in the supply chain today. This requires Blue Weiss to evolve with this change in structure.

Has the context changed?

Yes, even the context of the competition changed. A PESTEL analysis could supplement this argument.

However, one thing which didn’t change was company. The company should have built new resources/ assets to cater to the new market. The next question is how? It required a change in strategy. Strategy as we know is a superset of staff, structure, skills, style, systems and shared values. Organization structure is something which can drive a new market. Hence, a focused structure is a must. In fact, as a rule of thumb Strategy changes with market.

Hence, Blue Weiss requires a focused teams as per the market it is catering to. And yes, new markets would require new products as per the need of the market.

Blue Weiss Industries Ltd Case                        

Group D- Team Members: AbhignanMaduri, SavneetKaur, Srishti Gupta, Suraj Nanda, Swati Gupta, VivekKaimal

Brief of the case:

The case is about Blue Weiss trying to find a way to increase their sales which have become stagnant over a period of time.

Blue Weiss Industries have 5 key businesses: Moulded Furniture, Material Handling Crates, Home Furnishings Retail Chain, Serving Products for Foodservice Industry, Custom Built for OEM. Out of these 5, the key breadwinners for the company are the Monoblocmoulded chair and material handling crates. Blue Weiss was the first company to bring in the concept of stackable plastic chairs. These were considered trustworthy and durable because of the superior quality, which was never compromised on. These chairs formed 55% of total revenue and the market share in this category was 30%. These chairs seemed to be put to use everywhere- shops, banquets, indoors, outdoors, corporates etc. The company did not target low end customers for sale of these chairs

Now, the company is facing stagnant sales of these Monobloc moulded chair. Lot of organised and unorganised players, including regional players, entered pretty soon after Blue Weiss introduced these chairs. Also, these players, especially the unorganized sector used cheap material due to which they could sell their chairs at a cheaper price. The company was also in a financial turmoil with these sales affecting their share prices and interest rates. Along with these problems, they were also facing the problem of reducing customer base as their chairs were no longer seen as branded furniture company.

The following questions need to be answered based on the case

1.      What should the company do to come out of sales stagnancy?

2.      Can the company compromise on quality to ensure higher profit margins?

3.      Should low end customers be targeted with a new product?

4.      How to sustain ROI of the company?

Synopsis of presentation by Groups A& B

1.      Boththe groups analysed various growth strategies using the Ansoff matrix. While one group thought that the company should go for diversification, the other group thought market development was the way forward for the company. The justification for diversification was that there was no new market that they could move into and a new product would just poach the customers of existing products. Thus one group suggested that they should diversify and offer a wide range of products targeting the upper and middle class for all purposes. The other group justified their decision of market development by the fact that 90% of the business of the company came from plastic, which was their process capability. Also, they held a very good reputation in the market which would help them.

2.      Group A had two recommendations. Recommendation 1 was that they should find a new market that was low cost replacement range for metallic and wooden furniture. They could introduce stylish premium plastic chairs aimed at middle class households, coffeeshops, waiting areas. The second recommendation was market development. They should expand other businesses to hedge the risk that concentrating on single line of products posed. They should shift focus to plastic packaging solutions.

3.      Group B suggested a Brand extension by Blue Weiss to cater to the premium and luxury home furnishing segment positioning itself as a ‘one-stop styling expert for homes’. The market would be premium home furnishing and luxury furniture market which would cater to the needs of upper middle class and upper class income groups. They would provide end to end solution providers for all furniture, furnishing and home accessories and would have in house designers for professional interior planning guidance ensuring room setting and colour/mood fit. They would reach both the segments through retail stores starting in Tier 1 cities. The upper class is to be targeted by partnership with Paints Giants like Asian Paints through their ‘Colour Pro’ initiatives: push by Interior Designers.

4.      Some questions that arose during the discussion were: Whether or not plastic furniture will appeal to the upper class customers? How viable it was to create a new product and a new market?  The price range that will actually attract upper and middle class customers.

Learnings and summary post class discussion:

1.      The problem posed in this case can be classified as a Major Problem. Only major problems or serious issues require the attention of the board as the board cannot be involved in all decisions. For this reason only, the board only takes strategic decisions and not tactical ones. Also, since this issue is being raised by the CFO of the company since many years, it has become even more important for the company as the issue now not only impacts their top or bottom line but also the shareholders, the creditors and all other stakeholders. The board, now needs to prioritize goals and the resources need to be channelized correctly because all resources are limited and exhaustible. Thus, it is important for the company to have focus and concentrate on their competencies.

2.      Resources are of two type: Tangible and Intangible. Tangible includes resources like machines, finances, land, plant and equipment. These resources decline over time and with constant use. Intangible resources include human, structural and relational resources. These resources grow with time and use.

3.      As mentioned above, intangible resources are of three types. Human resources are mostly internal to the company and includes things like learning, knowledge and experience. They are thus known as knowledge resources. Structural resources are both internal to the company as well as external. They include resources that prove to be force multipliers for the company. They are mostly features like locational advantage, technology, training and experience. These features are factors that dramatically increase the effectiveness of the company or the product. The third and last type are relational factors. These are completely external to the company and company has very less or no control over these. These are factors like network, reputation in the market and recognition. Brand name is an example of relational factor.

4.      Another great example given for this was that Procter and Gamble acquired Godrej for 42 crores to launch Ariel- it’s own detergent brand. This was done to compete with Hindustan Unilever. HUL, then, had a distribution system of 22 lakh outlets while P&G which only had vicks then had a distribution channel of 1.5 lakh outlets which were all chemists. Thus, P&G acquired Godrej because it could reach 6 lakh distributors that Godrej had.

5.      Another observation has been that the customer has greatly changed from 1985 to 2015. Now the customer has greater choice and disposable income, signaling a change in customer, the competition has increased with more local players coming in. Dealers have come up who now form a very big part of the supply chain showing a change in collaborators. Along with all this, the context (analysed using PESTEL analysis) has also changed. The only C out of the 5C analysis that has not changed is company. This is a reason why company is facing stagnancy because the company has not evolved with the market scenario.

6.      Another important learning is that as the product life cycle progresses, the market diversifies into segment with each segment, albeit slightly, different from each other. These segments also have increased competition within themselves. All these segments have to be targeted as different markets and these markets come in depending upon the product needs. These different markets need different marketing mix which in turn require different assets. If each segment is targeted, a lot of assets will be required and this may become extremely capital intensive. Thus, it becomes even more important to focus on a particular segment to become a leader in that segment. Additionally, smart competitors are the ones that target a slightly different market otherwise it will become too much of a competition and it will become a price war.

7.      The relevant question arising now is how to change with the change in markets? The answer to this question is 7S Model. The 7S model needs to change, most importantly the strategy, if the 5C model has changed. Interestingly enough, the Asian Countries are more prone to changing what are known as the soft S’s-style, skills and shared values while westerners change the so called hard S’s- staff, structure and system.

An important learning from the session was that value not only lies in the product but also in each of the 7S’s as all of them together form the value proposition of the company.