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Managing Change in a time of Economic Slowdown
chillibreeze writer — Pranoti Sheldenkar
This is the era of improvisation. As the economic slowdown necessitates a tightening of the belts and wallets, it becomes increasingly important for everyone – individuals and companies alike, to innovate.
For the individual this has meant that having skills is not enough – there is a need to create a unique combination of skills which are not easily replicable. For corporate houses, this has translated into a need to operate beyond the conventional business boundaries and foray into newer, and often, unknown terrains.
A great example of this could be a company like Google – which started off as a vanilla web-search engine (competing with Yahoo and Ask Me), moved on to becoming an online repository of photographs (the ‘Kodak territory’) and has now come up with a G-drive which is challenging hardware companies. The Indian counterpart could be Reliance industries which has traversed a long way from petrochemicals to footwear.
Illustrations like this make it increasingly obvious that it is not enough to be “Few things to few people”, but is necessary to be a “Many things to many people”.
Even for the B2B companies, traditionally selling their wares to purchase/production managers are finding it increasingly important to embrace, if not lure the elusive end consumer. Intel can serve as a wonderful example of how having the buy-in of the end user can significantly and directly impact profitability. From a company which sells microprocessors – it is now a household name that has left the competition quite far behind.
Any company planning to make this transition needs to realize that the task is much wider than just creating a product or modifying the business spiel to cater to end consumers. The fundamental premise of the two types of businesses are so completely different that it calls for a seismic shift in approach right from management strategy to the operational minutiae.
For this, it’s essential to evaluate and take cognizance of the many differences between B2B and B2C products in order to formulate and execute an appropriately compelling business plan. (A caveat here, these differences refer to typical and not outlying products in B2B and B2C space.) The five main differences between B2B and B2C products are as follows.
1. Why does the product exist?
A consumer product on the other hand starts at the other end of the spectrum – it is a POSITIVE enhancement to the end consumer’s life – a product which makes the quality of life better, more luxurious, more comfortable...
This necessarily implies a approach which is nuanced in the manner in which the product is perceived – a soap which cleans faster – might not necessarily be the right spiel to give to the end consumer.
2. How is the product developed?
Consumer products on the other hand, evolve from a much more “outside in” developmental method. A consumer product comes into being as the outcome of the socio cultural trends and the forces operating in the market. Trends, fashion and societal change is not a continuous or cyclical process – thus consumer product development tends to be much more intermittent than business products. Thus consumer products can often be harnessing two different trends rather than any fundamental technological progression – a Nike Plus rode on the fitness AND iPod trend to come up with a unique new product.
3. How is the product sold?
Consumer products however, are sold on a completely different paradigm – the “pull” philosophy rather than the push since it works on a mass produced, volumes game than the more restricted business products.
4. How are the buyers different?
Of course there is a business to consumer continuum which shades which overlap – a consumer buying a high ticket functional purchase would have a significant amount of rational motivations as conversely a Business buyer would also have some “human” motivations of not wanting to err in the decision and so on.
5. The selling philosophy:
The underlying assumption of course is that former is led by the ideology of rationality. And I use the term ideology on purpose – it’s a misconception that business purchases are completely rational – a purchase manager evaluating two equally attractive alternatives – with only one difference – a known entity versus a new player, which one would he chose?
But the fact remains that the business product sales approach needs to LOOK and SOUND rational rather than the overtly emotional approach which works well with end consumers.
While there are many other variables which can impact the success or failure of the business plan, being aware of these differences can have a significant impact on the way the production strategy will be formulated and implemented and consequently on the success of the migration.
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