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Posts Tagged ‘differentiation strategy’

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I believe that there are a lot of things we could learn from Google even when they take a wrong step and make a wrong decision!

About a year ago, Google introduced a new product called “Google Wave” which was presented as the new and revolutionary way to communicate online. It combined instant messaging, documents sharing, emails, and many other features that promised instant interaction on the network.

Few days ago, Google decided to stop developing “Wave” as a single product; simply, It did not accomplish its targeted goals!

Here are some Google lessons:

  • The company that does not fear innovation is the same company that does not fear setbacks. There is no doubt that Google spent a lot of resources on “Wave” and was, in a way or another, betting that it will change the online interactive scene. But the moment it felt that the product is not harmonious with customers, the company had the gut to stop it!
  • A message to customers; we are here to serve you. We thought that a new product will be beneficial to you all, but once we sensed that you did not like it, we stopped it and we are working on something else to meet (or exceed!) your expectations.
  • A message to employees; the company is ready to believe in and support your innovative ideas. We are ready to accept the risks to make a difference in our customers lives. And if that idea did not make it, we are ready to accept the consequences. Just go there and bring us some fresh and innovative ideas.

All in all, innovation management does not mean that all ideas should be introduced to the market without proper market analysis, but it certainly means that a company should know when to retreat and learn its lesson instead of being stubborn and start losing customers loyalty.

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Whenever you receive an advice from an experienced man/woman, you should appreciate it and see how much you can integrate it into your own vision and style. But when you receive the advice from someone who is heading an iconic company and is believed to be the innovative spirit within that company, and not to mention that he has just been selected for the fifth time to be among the 100 most influential people around the world by the Time magazine then you should really listen … and listen carefully!

I am taking about the CEO of Apple, the man who does not need to be introduced; Steve Jobs. In the following clip, Mark Parker, the CEO of Nike is sharing with audience, and with all of us, the advice he received from Steve. Although the advice is very straight forward and, you could say, simple. thinking of it for few minuets would tell you that it is a strategic advice. An advice about the mission and personality of a company. And if not taking that from Apple, whom should you take it from anyway!!

Check it out …

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I have a confession to make. and if, by any chance, Steve Jobs is reading this; I am sorry!

I have been a long time advocate of Microsoft and I hated the gut of Apple before even trying it!

My reasoning was simple, we would not know the world as we know it today without Microsoft Windows and Office, and that is partially true even after my confession. In other words, I was feeling gratitude toward Microsoft more than being happy with its system quality. I was not looking at its shortcomings, I was looking more to its role in my daily life.

Anyway, before this get very sentimental … this post is neither about Microsoft nor Apple. It is about our psychological attachments to certain brands.

There is something in marketing called ‘the switching cost;’ They are the costs a person, or even an organization, has to pay when deciding to choose another product, supplier, service, etc. The cost here should not be only thought of in terms of financial means. Beside money, there is time, efforts, and there is physiological costs as well. And to make things clearer, think of switching from a phone brand to another. You have to spend some time learning and getting familiar with the new brand.This is a switching cost right there and some people might not be willing to deal with.

Psychological switching cost or barrier, plain and simple, is anything a brand does in an attempt to relate to its customers. This will turn into feelings such as admiration, respect, love, …, etc in the customer minds. And eventually, customer will get attached to the brand because of these feelings. The touch of a product, the smell, the quality, or customer service, all these are examples of investments that can be made to create the required psychological switching barrier.

So the next time you are drafting your branding strategy, or planning an advertisement campaign, you better not only think about customers buying more of your products, but how customers will never think of switching to your competitor. Not only having more customer attention through the ads, but having more customers relating to your brand through these ads.

Now, If you look around, you might find something that you are psychologically attached to; maybe the perfume that makes you feel sexy and mysterious when wearing it, a clothing brand that adds elegance to your personality, what about the brand of your laptop, or the type of the car you are driving.

So, do you have any confession to make 🙂 … share it with the rest of us …

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No doubt about it; it is a historical moment for Saudi Arabia that just decided to go nuclear. A royal decree initiated the nuclear era for the Kingdom by announcing the establishment of King Abduallah Nuclear and Renewable Energy City in Riyadh. For a wealthy country that can afford the initiating stage of nuclear facilities like Saudi Arabia, such decision should not come as surprise at all. It could be even said that it’s been an awaited decision for some time now.

Such a move is a step further in many fields and on so many levels. And these are some interesting points:

  • Modernizing the almost expired electricity and desalinated water infrastructure beside reducing the dependance on hydrocarbon resources.
  • Meeting the increasing demands on power and water in a country that besides its huge requirements, it aspires to attract more foreign capital and creates more competitive investment environment.
  • Opening a whole new market with all its needs of manpower, technology, and logistics.
  • Familiarizing the country with the technology that could be later on extended to the medical field applications and scientific research requirements (it seems that because of KAUST, we are now more relaxed talking about scientific researches … and let me tell you, that feels great 🙂 )

I still remember how the nuclear engineering department in King Abdulaziz University (KAU) was not amongst the favorites by us, the engineering students, by that time. I assume that it will be among the most desired majors in the coming few years in the Kingdom and we might see more nuclear sections in both science and engineering within our universities. And that is another benefit of going nuclear.

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Few days to the kick off of the Global Competitiveness Forum 2010 taking place in Riyadh. Prominent leaders and heavy businesses’ names will gather to talk and discuss investments and economics.

Such a big event to be hosted in Riyadh is something we should all respect and admire. However, it makes you wonder, what is really global competitiveness and how Saudi Arabia is performing in this field anyway?

[picapp align=”right” wrap=”true” link=”term=Saudi+Arabia&iid=5165658″ src=”7/e/3/1/view_of_the_0f8b.jpg?adImageId=9333455&imageId=5165658″ width=”234″ height=”184″ /]The answer can be found in the Global Competitiveness Report 2009-2010 issued by the World Economic Forum. It is a really interesting read for those concerned with economics, investments and regulations in general, or for those who are only curious like myself 🙂

Here are some highlights related to Saudi Arabia in case you do not want to go through the 492 pages PDF file.

–          What is competitiveness anyway?

Competitiveness is usually associated with countries’ economies and their ability to sustain growth and maintain improvements to prosper and keep a healthy status.

–        How competitiveness is measured?

Many economical factors are studies and evaluated to rank the overall country’s position in regard to others. These factors are grouped under what the report likes to call ‘the 12 pillars of competitiveness’ and they are: (Institutions, Infrastructure, Macroeconomic Stability, Health and primary education, Higher education and training, Goods market efficiency, Labor market efficiency, Financial market sophistication, Technological readiness, Market size, Business sophistication, and innovation.)

–          How are we doing?

Surprise … surprise; Saudi Arabia is ranked 28th out of 133 countries! Can you believe that? this is what the report is stating clear and simple. I do not know about you, but I started to suspect the report results after this fact! Not that Saudi Arabia is not going through number of modifications, but hey, ranked 28th!! ahead of China (29), Spain (33), Italy (48) and India (49). I am not trying to give any conclusive scientific opinion here, but I am afraid we are not doing that good in many of the competitiveness pillars they built their report upon.

According to the report, Saudi Arabia strongest advantage is its macroeconomic stability; we ranked 9 out of the 133 countries which is totally understandable given the strong Saudi budget. On the other hand, we do really bad at ‘health and primary education’ where we rank 71 and we do bad as well at ‘labor market efficiency’ where we rank 71 again. Giving that our recent budgets were concentrating on eduction and health care, this is a clear indication that we still have a lot of work to do.

As a conclusion, nobody can deny that there are movements in the Saudi business environment but my point is that I do not want such reports to give us a false sense of security and accomplishment, we still have a lot of work ahead of us to grant ourselves a competitive advantage at the global economical scene.

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[picapp align=”left” wrap=”true” link=”term=angry+manager&iid=5243917″ src=”0/1/9/1/Angry_businessman_yelling_2fea.jpg?adImageId=8774502&imageId=5243917″ width=”234″ height=”156″ /]Here is an interesting question asked by Gill Corkindale in her HBR blog; does your company’s reputation really matter? She is arguing that some big companies in certain industries do not really care about customer services! Despite regular customers complains, such companies are keeping their lousy performances and customers are still coming back.

The blog post is filled with examples and cases supporting her point; and thinking about it, we do have our own fair share of examples: our beloved Saudi Airlines (I love Saudi Airlines so much; I already have two posts about them 🙂 here and here), most of service industries and most, if not all, public services are bright examples of lousy performers.

Lack of competition is the most obvious reason comes to your mind in your desperate need to understand those companies’ mindsets. That could be true in a lot of cases and, furthermore, even with some minimum competition, the situation is not that different. Again, Saudi Airlines and its competitors are good examples. Saudia has the power and the support of the government while NAS and SAMA are struggling to get a small piece of the cake.

However, I would not accept this point as a justification, or at least as the only justification. There is another big problem in our own behavior and mindset; I am talking about us, customers!

I believe we mostly lack a certain understanding of our own rights. We acknowledge companies’ mistreating us, we get angry about it, may be shouting all the way and telling everybody about it, and … that’s it! We return to these companies and use their products/services again! If there is no alternative and the company is enjoying a monopoly state in the market; then it is really sad for you, you do not have a choice! Actually you still have the option of making official complains, talking to their managers, and even going and talk to regulatory bodies supervising their sector. The most important point, do not simply let it go!

Finally, those companies ignorant enough at the moment should always remember that they might face the moment of truth when the market is opened for real competition. Globalization is a trend; and one of the lessons coming with it is customer services philosophy as an essential aspect of companies’ differentiation strategies.

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It is time to talk about another local business success story; and how can we talk about successful organizations without talking about Al-Baik.

It is next to impossible that you are living in Jeddah or ever visited it without being to Al-Baik. The local fast food chain has been around since 1974. After 35 years by now, the restaurant is mainly operating in Jeddah with minimum number of branches in Makkah, Madinah, Yanbu and Taif. Arguably, Al-Baik possesses the highest market share and customer loyalty amongst its competitors especially in Jeddah; noting that when I say competitors, I mean international multibillion brands like McDonald’s, KFC, Pizza Hut etc …

Let’s shed some lights on Al-Baik main success recipes :

–          The Quality & Price: for those of you familiar with the debate surrounding Porter’s Generic strategies, Al-Baik is a living proof that you could follow a strategy that combines both differentiation and cost leadership. Although there are a lot of restaurants serving fried chicken, the quality and taste of Al-Baik are certainly unique and its prices are way below the average.

–          The Trustworthy Brand: Al-Baik has a very strong brand equity whether we are measuring it by evaluating the restaurants’ products or by studying its brand impact on customers. Al-Baik brand communicates strong messages of quality, fast service, trust, affordability, convenience, and social responsibility. Its management has been very smart emphasizing these values into the brand using different methods of advertisements, public relations, or even by spreading stories about the brand. The entrepreneurial story of its founder and how he struggled to raise his community awareness about eating outside the home which was strange back then and how he has been working alone in the restaurant preparing the food, serving it, and then cleaning the small shop are all meant to build some kind of connection with its customers. Also, some suspense and mystery would not hurt either; the secret chicken formula that is only known by few individuals is one of the most preferred stories amongst such food and beverages organizations (didn’t you hear similar stories about Coca-Cola, Pepsi, and KFC?)

–           Superb Customer Service: whether we are talking about fast service, servicescape design, or cleanness of the restaurants environment; Al-Baik is providing exemplary services in all of that. Even more, Al-Baik is one of the few restaurants that introduced items to the menu based solely on customers’ suggestions.

–          Convenient Locations: Al-Baik marketers are masters in choosing locations for their restaurants; I have never seen a branch of Al-Baik without it being packed with customers. The huge expansions they carried out in Jeddah have been built on population distribution analysis. That is why wherever you live in Jeddah now; there must be Al-Baik branch within your easy reach.

–          Social Responsibility: Al-Baik has always been known for its socially related campaigns. They have a regular presence in Hajj seasons providing free meals to pilgrims and they are periodically campaigning for environmentally related causes like banning smoking in their restaurants or preserving the city clean image. Furthermore, their active participation in the aftermath of Jeddah floods by providing free meals to those devastated by the catastrophe is one shiny example of how organizations could be interacting with its society.

Nevertheless, staying on the top is not an easy job. Al-Baik management has to deal with many issues to facilitate its growth. One of these important issues is on the mind of every fan who happen to live outside Jeddah; how much should they expand? Should they consider opening new branches in other cities at the Kingdom? What about being multinational or even global?

Moreover, how Al-Baik should respond to the growing concerns raised by healthy and organic foods advocates (it is selling fried chicken, right!!)? And most importantly, how its managers are going to maintain its competitive advantages and how are they going to nurture its sustainability strategy?

Finally, the free spirit statement; this is to confirm that I do not know, or have any relation with anyone working at Al-Baik management or restaurants, and this post has not been influenced by Al-Baik or any of its partners in any way …

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