Thus far, the four
previous parts of this web-log have variously described how a new
understanding regards the creation of 'added-value' (at high and low
value levels of the organisation) will need to appear upon the
mid-horizon executive agenda.
As the US begins to
experience its renewed economic traction – domestically initially
and latterly with international influence – and China's own global
economic contribution is seen in new industrial and service realms
(with 'mid-growth' consistency of 5%), so business leaders need to
begin seeing beyond the seemingly endless 'fire-fighting' of the past
8 years, and begin look toward how their own companies will need to
develop so as to maintain long-term value creation.
New Food for New
Thought -
Well understood is that
the depth of the global recession had meant a slow and painful
worldwide resurrection, even if that means a notional “return” to
a possibly pervasive low-growth 'new norm'. Yet, though itself
problematic to handle deftly, even that slower-pace of expansion will
continue to be welcomed as long as a new stability reigns.
With such an outcome
there still remains an expectation that the Triad's future 'business
as usual' atmosphere will be constrained by both commercial caution
and a new era of debt consciousness amongst consumers. So
perpetuating the slow-growth path. This scenario perpetuated by the
fracturing of yesteryear's conventional practice business models,
themselves increasingly disrupted through the opportunities and
challenges of the increasingly digitised broad economy. Moreover, a
new generation of western consumers and the altered perceptions of
many even in middle-age, means that for a substantial portion of the
triad populations the very essence of consumption has shifted. 'YOLO'
(you only live once) has become the ingrained mantra for so many
precisely because of a cynicism regards old social 'grande
narratives'; given the absorption of manifold new-era sociological
beliefs themselves perpetuated by social media.
This change then means
that for Triad facing firms, beyond the challenge of actually
moulding consumer consciousness in a cynical age, new perceptions and
perspectives will be required to create not only value and
added-value in the yesteryear sense, but additionally the need to
find new areas of added-value. This to be mapped-out well in advance
of the possible saturation-effect of conventional business practice.
[NB The
saturation-effect the concept that the historic competitive business
approaches of: Cost, Differentiation and Niche – themselves
largely stemming from a production perspective – could become less
definitive because of the saturation of offerings; so requiring
commerce to identify a new suite of supplementary insightful
client-facing approaches. That new mindset replicated within the
organisation to find hidden value].
Critically, twentieth
century consumerism as known will continue to be highly effectively
replayed across EM and Pioneer regions, done so most effectively
given the remaining scale of opportunity, even with the present
contraction stumble.
Yet possibly
unavoidably, within what may increasingly become recognised as the
'Old-World' West a different evolved approach by corporations,
through best-practice adoption over many speheres – internally and
externally - will be required.
Hence, the old-guard of
western multi-nationals (and indeed the new guard of EM originated
global players seeking a true global foot-print) may well need to
become intentionally bi-polar if they are to fulfil their global
ambitions.
That newly created
additional facet of the corporate brain will need to investigate
exactly how the 'value-streams' of internal and external activities
may be re-configured to create further 'added-value', both
financially for the bottom-line, and increasingly socially for a less
disfunctional and so more harmonious society.
Food for thought for
business leaders, government policy makers and professional and
activist investors.
Such a need to
re-configure the very basis of socio-economic structures requires
much deep thinking, far beyond the remit of this essay.
Past Learning -
Instead, as promised,
investment-auto-motives here-after provides what are deemed to be
useful historic case studies relating to the automotive industry, on
a function by function basis.
The positive outcomes
detailed ostensibly arrived at through intellectual investigation of
how :
1. Conventional
practice could be further exploited through enhanced rationalisation,
or
2. New philosophical
approaches toward the goal of step-change value-enhancement
This description starts
at the 'front-end' of the company, with Marketing, and over the
upcoming instalments journeys through the remaining departments, with
the 'back-end' of Sales and Services likewise returning to the
external customer environment; thus creating the endemic virtuous
circle.
[NB this seen in a
clockwise orientation on the accompanying base-layer graphic,
detailed with the specific case studies].
The Marketing Function
:
Overview -
Once what was simply
called 'the customer' or 'sales', because of the probing academic
attitude of leading FMCG firms since the 1920s, has since been
dissected into the prime elements of:
1. Product / Service
2. Brand
3. Consumer.
This deepened analysis
meant that each of these entwined perspectives has long underpinned
the much expanded role of Marketing; each section itself grown
immensely. Activities are diverse and range from the early arena of
Research wherein what were once 'what if' exploratory exercises have
been much assisted by ever newer forms of real-time monitoring, to
ever more questionable Communications campaigns.
[NB achieved through
the subversion of the spoken word, use of associative music lyrics or
strategically placed associative items – all within what should be
trust based inter-personal relations. Marketing has long used the
pseudo-science of psychology and sociology, but never has it been so
endemic].
From the Product angle,
it could be said that the provider's connection with the market and
user has been entwined ever since the village blacksmith specialised the design of horse-shoe, plough, gate-post or armour
to better befit the needs of his customer.
That level of
personalisation obviously much diminished with the first introduction
of mass manufacture and so inevitable standardisation. Whilst the
masses gained through efficiencies in scaled production leading to
price reduction, with the general improvement in livings standards
and earnings, so the opposite of personalised bespoke using
craft-labour inevitably became ever more expensive.
This said, a new
middle-ground appeared. With the proliferation of mass-manufacture
across multi-various spheres plus expansion in other fields such as
chemicals, by the late C19th, promoted the idea and availability of
what could be termed “base-plus marketing”. Initially formalised
in the C17th with the increased availability of affordable colour
options on items varying from ornamental ceramic tableware to
royal-court fashionware, by the mid C19th the availability of
optional colour palettes for mass-manufactured things was expected.
More complex products often designating status, together with perhaps
multi-role functions, meant that by the late C19th the idea of
“options and accessories” had become the norm, from horse-drawn
carriages to furniture. Thereafter, a combination of colour choice,
functional options and accessories meant that by the 1920s the
average person could both afford increasingly complex items which
could be effectively personalised for them in the factory; or so it
would at least appear.
So much so that by the
1950s there was an adage that GM's American customers could make
choices from an innumerable number of colours and configurations:
said to be “more combinations than the number of stars in the
universe”. Following this rational to create a market for a new
group of aspirational middle-class customers – though with a far
more limited colour palette - the likes of Britain's English Rose, by
adopting the American approach, offered revolutionary
metal-fabricated and paint sprayed kitchen units, literally taken
from the car production line model, so as to transform a previously
stark and dreary domestic space.
Obviously the highly
influential fashion, design and lifestyle media channels have
essentially led those fashion trends which comprise much of modern
era consumerism. But less recognised is the manner in which those
apparent leading lights have actually aligned styles to broadly
commercially befit the optimism or cautiousness of business within
the prevailing economic environment.
Thus far more style
flamboyance was enabled during high growth periods, so providing for
incrementally increased manufacturing and marketing budgets, as with
the 1950s and mid-1980s onward. Whilst during periods of downturn and
stagnation, such as the early and late 1960s, 1970s and post 2008,
has seen a typically reduced availability of multi-various styles.
Instead commercial rationality dictating that fewer model styles of
whatever – clothes to cars – would be produced over a longer
time-frame to lengthen the investment cycle. Instead simple and
effective efforts have been made for low-cost differentiation to
maintain buyer interest – typically regards colour and minimal
modification - to reduce marketing and manufacturing outlay.
[NB herein
investment-auto-motives previously disproved the oft believed
hypothesis that car colours could be viewed an economic indicator,
since bright colours are typically actually applied during
recessionary periods to maintain vehicle purchase interest, with more
sophisticated colours applied to provide the idea of taste and
discernment during upturns].
Whilst core to the
automotive firm, it may the case that the Product aspect of Marketing
has ironically become increasingly considered the poor cousin to its
sibling entities of Brand Management (because of the centrality of
constant brand communications) and the Consumer (given the enormous
rise of wide-ranging personal data and so user information).
Moving to what is today
broadly termed Brand Management, usually encompassing Marketing
Communications, it has been the case that any wholly new or much
improved product has become increasingly reliant upon a powerful
public relations message. To enable what is effectively 'perceptional
marketing'. This obviously first achieved via newspaper adverts and
urban signage in Victorian times, and thereafter most powerfully from
the 1920s onward, this 'below the line' effory married with an ever
broadening array of 'above the line' exercises through the expansion
of media formats (cinema, radio, TV, internet).
From the 1950s onward,
the need to better measure the “market impact” of each format
type, to gauge “bang for buck”, saw a survey-based approach
emerge. This accompanied with an aligned effort toward 'script-based
salesmanship', which deployed elements such as subtle 'trigger
messages' to psychologically soften the defences of potential
customers who had already been prompted by media advertising to visit
the showroom. Fifty years on from that coupling of 'screen and
dream', the arrival of the internet effectively transformed the
distinction that is “the line” into an immersive entity unto
itself, requiring new perceptions and approaches. So the survey
exercise has over the course of a century moved from have developed
from an advertiser's obsession with newspaper circulation numbers,
through TV viewership figures onto today's obsession with the digital
'data mining' of consumers and public at large.
Previously, without yet
the ability to 'read the market' via demographics, psycho-graphics
and targeted individuals, that portion of Marketing which latterly
became known as Brand Management had historically been about not
about chasing the customer at all, instead drawing him and her in.
toward by the attractiveness of a brand's innate personality –
latterly known as 'brand values'. These essentially parallel to those
of the customer in the early days, but increasingly aspirational
through the years. Though a far cry from the 'Mad Men' of 1960s
Madison Avenue, in a similar vein of studied solutions from first
principles, various US and UK academics had begun to set-up their own
far more modest consulting units. To better promote the cohesiveness,
strength and social impact of the often all too divergent and so
disparate conglomerate, or multi-aspect, corporate personality.
Whilst logo-types had long been the recognisable face to a firm, they
themselves had become 'messy', 'lost' or simply 'old'. So a far more
formalised and insightful approach toward was created that sought to
better orchestrate and increase overall influence of the corporate
identity.
[NB This new
understanding of 'semiotics' was actually much boosted by
sociological propaganda work undertaken during WW2. Afterword further
explored and enhanced by the required public signage design used for
massive new infrastructure projects across road, rail and airports].
This formalisation of
all things visually related to the corporation then better
pyschologically connected the firm to the user/customer, employee and
public (environments, uniforms, literature, advertising etc). By the
1980s the discipline was termed Brand Management. (Although itself
actually originating as a sub-element of the all encompassing
1970-80s better unified design exercises held under the broad remit
of Corporate Design Management; before typically becoming a
sub-function of Marketing, as that function took an ever more
prominent role).
Marketing within the
Automotive Sector -
Although the historical
success of specific auto-companies arose from a very necessary broad
mix of commercial ingredients emanating from financial strength,
reduced overheads, the power of vertical integration, new era
production efficiencies, and of course good product formulae, from a
marketing stand-point, it has inevitably also been vital to offer a
well attuned vehicle to the market in a timely manner with strong
marketing launch message.
During periods of
economic constraint, product affordability, fitness for function and
simple direct campaigns have demonstrated themselves as the right
contextual approach. This exemplified by the success of the 1960 Ford
Falcon and the 2010 Dacia Duster; and their initial 'no-nonsense'
messages.
Whilst in times of
economic expansion, the heat of segment competition demands
innovation for identifiable differentiation (ie speed, comfort,
safety, ease of operation etc) aswell as a very different tack
regards the launch advertising campaign. A good example here the
manner in which 1990s European hatchbacks, as the mainstream, had
grown from functional boxes in the 1970s toward aspirational
purchases. The best example being the Renault Clio, in the UK
promoted by associating the car within a small cast of characters led
by 'Nicole and Papa'. The female targeted audience bought Clio to
partly feel 'Parisianne chic'.
As consumer needs,
wants and desires changed over time, so the science of recreating the
product, and introducing an improved service dimension, became
necessarily more intelligent. Since ever improving general vehicle
standards are rarely regressional, that set during the last stages of
an economic boom effectively setting a near benchmark expectation
even going into a new recession.
Seen time after time in
the past, recessions were not the prosperous hunting ground in new
western markets for those lesser developed, then new entrant players.
The likes of (old) Skoda, Lada, Zastava from Eastern Europe thought
they could take advantage of low cost functionality until they
realised there existed a basic expectation. And even Daewoo's better
cars, shipped from then low-cost S.Korea and a unique high impact “no
haggle” marketing stance - together supposedly giving a strong
business case – was relatively short-lived.
Obviously, the car has
long become a highly multi-faceted solutions provider, something that
includes inherent status at whatever level, the ideology of providing
only basic transportation for the masses having disappeared over
sixty years ago. Even those most basic offerings require a defined
attraction. Best exemplified by the highly characterful original 1993
Renault Twingo.
Product Marketing -
Innovation :
Today it is recognised
that the car has become a mobile extension of the ego, personal
values and lifestyle needs. The technical content of even a
mainstream C-segment Vauxhall now spanning much from a retractable
bumper-integrated bicycle rack to an info-tainment centre connected
to the brand's 'Onstar' assistance service. Marketing even the
mainstream has become a complex activity given the heights of
complexity now built into the vehicle.
And of course the
digital era, with the need to wholly integrate the vehicle into that
network, has brought ever greater “connectivity rewards” for
drivers and passengers alike.
[NB the depth of the
steeped marketing age we live in is seen with the use of such
phrases, corporate speak absorbed into everyday parlance, themselves
very disingenuous given that the apparent “reward” does not meet
the usual definition].
Associated examples of
a present 'Marketing Push' illustrated within the accompanying
graphic are that of the Apple Car Play and Google's Android-Auto.
Both very soon to be effectively expected at a base level by the new
car buyer, if not already, the proliferation of Apple and Android
operating systems the societal standard today, with what was not so
long ago the 'plug and play' adage now overtaken by the invisible
ability to communicate between vehicle and smart-phone. (Adaption
devices available for the current car parc of older vehicles, also a
major product trend at present, so as to update their functionality).
The former used to connect any Apple device to the display section of
the vehicle dashboard, so allowing seamless 'on the move' streaming.
The latter is the ability to connect any device using an Android
operating systems to the 'head unit' of the vehicle, likewise to
deploy the general functionality of the smart-phone or tablet via
in-car touch-display.
[NB For safety, Google
provides only primary functions and apps to limit visual
distraction].
[NB It has been a
perennial headache for auto-makers that IT systems new product
development spans have been very much shorter than the NPD time-frame
for a vehicle; causing a mismatch of what would ideally be parallel
life-cycles. So the standardisation of Apple and Android as almost
defacto norms has assisted massively with the engineering integration
needs of auto-makers].
Successful commerce,
since the earliest days of motoring, has been born from the
application of strong macro and micro business acumen; specifically
the alignment of internal capabilities to external challenges and
opportunities. Those who are able to adeptly meet meet this challenge
and seize or create opportunities then obviously gain brand
recognition; especially so when devising something radical or
disruptive; as per the Ford Model T or the Apple iPod.
Brand Marketing -
Co-Branding :
Also illustrated herein
are the Brand Marketing efforts of just a few players, namely Ford,
FIAT, GM and Ferrari.
The idea of co-branding
has long been deployed, whereby two firms view the combination of
their two respective nameplates as mutually rewarding, providing
associative 'rub-off' for each other. For many years in the 1990s
Ford had a relationship with the outdoor leisure clothing company
Eddie Bauer, and used that moniker on its premium variant of the
Explorer SUV. Likewise PSA deployed the Lacoste crocodile on special
edition 205 models in the mid 1980s and again for a Citroen concept
car in 2010. More recently FIAT has had an agreement with the luxury
goods house Gucci for a limited edition series of the 500 city car.
Brand Extension :
Having built-up ever
increasing (automotive) brand equity over successive decades, and
arguably saturated low cost 'near field' propositions such as
merchandising (see following), there was always more to value to be
extracted from new avenues given the grown strong loyalties of
emotional familiarity.
That desire to expand beyond conventional
realms and apply the brand logo and values into unfamiliar but
plausible new arenas was always so. What became known as 'brand
extension' projects has seen a plethora of new ventures, two of the
most notable being the desire to influence families and the next
generation by way of the excitement of theme-parks. In its bid to
recapture its domestic standing GM helped to develop and sponsor
various theme-park rides in the USA, its most recent effort with
Disney within the hyper-real 'Cars' land. In contrast whilst under
FIAT's control, it was decided that Ferrari ought to create a branded
indoor entertainment centre in Abu Dhabi, UAE. This was created as a
multi-dimensional experience ranging from conventional thrill rides
to those that replicate the factory tour back in homeland Maranello.
Italy; created with a broad demographic in mind so as to draw locals
time and again, aswell as single visits from Asian and African
international tourists.
Consumer Marketing -
Merchandising :
Having historically
seen the additional momentum of brand management, it was only a
matter of time before the Customer him and herself would become a
focus for attention. Perhaps the first focus came with recognition of
the loyalty shown by members of the public in motorsports. To gain
income and strengthen tribal spirit, the earliest use of the 'applied
logo' was obviously wiithin clothing (caps, shirts etc) when such
items had true cache given their proximity to the teams in the pit
lanes of NASCAR, Grand Prix. By the 1970s era of sponsorship, and
growth of rallying, there was now a co-conspiratorial syndicated
interest in leveraging the fans as walking advertising boards, the
likes of Ford-Rothmans or FIAT-Alitalia viewed as “cool” given
the jet-set lifestyles and destinations of auto-sports.
However, it was not
until the mid 1980s, and the next chapter in understanding and
influencing consumer psychology became apparent, both relative to
ongoing aspirational, and returned counter-culture, trends.
At its heart
consumerism has always been the outward display of 'social
codification'. Whether that be to maintain social standing by the
wealthy, consciously deploying non-aspirational behaviour, or far
more typically using purchasing power of whatever degree to infer
social betterment. That aspirational consumerism relies upon a raft
of identities created by the melding of social reference and media
influence. Herein the 'Veblanistic' observation about the importance
of leisure-time and leisure activities as a powerful social
distinction iplays an ever ingrained part. Ranging from the overtones
of “old money's”country pursuits, newer 'clubby' pursuits (golf
and sailing) to a broad growing interest in professional level sports
fashions. A prime example has been Aston-Martin's sponsership of polo
so as to become emblazened across the front of Hackett polo shirts
for global sale to the aspirant set.
Such exercises are
obvious to a firm's management as a way to elevate the brand's
standing, but given the grown complexity and the need to ensure high
cost project success, especially regards new vehicle programmes and
the need to understand the customer, companies resorted ever greater
dependence upon external consultants, themselves pseudo-academic
social observers and interpretors.
Nonetheless even with
innate knowledge of various emerging groups and demographic and
psychographic shifts, it was recognised that the personal proximity
of general merchandising still had sway. And with it continued use of
clothing as advertising.
Most notable in the
2000s however has been recognition of the need to create 'early
years' brand awareness amongst tomorrow's customers, even if they be
possibly twenty years down the line.
Such incursion into
ever more different consumer sectors typically operate as joint
venture with a firm already leading or at least well entrenched in
the targeted product or service sector.
Given the historical
proximity of cars and toys – with yesteryear names such as Matchbox, Dinky and Corgi – and the massive growth of hobbyist models – Airfix
to Automodello - it has been little wonder that various automotive
brands have extended into this arena. Hence closer ties between
Scalextrix and auto-firms to ensure correctness given foibles of
the past, and the massive popularity of to educational toys such as co-branded Lego kits
for BMW, Mercedes, Ferrari and others. Most recent the gaming world with ever more
virtually-real video games, from Gran Tourismo to Grand Theft Auto
etc.
To follow is review of the Design function, with examples of how this activity has been deployed as a 'value-added' driver.
