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CONSUMPTION CHAIN AND MARKETING

Kotler, in his famous book, defines marketing as finding opportunities and filling them. Whether you are the first person in the market and a director or you are a follower, in both cases, you should have innovation ability and fast. In today’s world in which generation gap is about three years, this change speed is more important than the necessity of change. The ability of companies to be adapted to change and improvement creates a serious competitive edge.

In short, today’s companies have two options: To face with change or to collapse!

Change is a process which everybody desire but only some achieved. In fact, it is a continuous phenomenon rather than a process. It is a must in the life. Well, what forces us to be changed?

The answer is easy: customer expectations and changing of these expectations with a high speed. A Walkman we bought many years ago is used by anybody today or nobody use cable internet because customer expectations were changed. Expectations increase and improve. A popular product in the past is not demanded now. So, we should understand customer expectations clearly and improve strategies which will meet these expectations and apply them.

In today’s world, we can say that there are three group companies in general terms.

1-      One which is first in the market and direct the technology. These companies have well-developed innovation abilities and act according to marketing principles which create demand. That is to say, they improve a product or service which anyone think about it and they make profit because they are first one in the market. Apple, Google and so forth technological companies are good examples for this group.

2-      This group companies have a strategy of being a fast follower though they are not innovative like the first group. They are not one who set the market in motion; they are one who is set by the market.  They act according to marketing principles which need their expectations and they make an effort to get a partial share thanks to their change and adaptation abilities. As an example, we can give tablet pc and smart phones producing companies which came onto the market later.

3-      The third group is trying to get share with their less innovation abilities by using buy-sell approach. They get into the market although it is not ready and expectant for new innovations and they want to get share with low price low quality principle.  Especially, container commerce without research and development investment is a good example for this group.

At this point, the most important thing is that how fast we can learn and be changed as being an organization. That is to say, how we can create new markets or how we can take effective opportunities in a market?

In lean concept of Toyota, one of the most important principles is to focus on the value stream. The target is to eliminate wastes and find the ideal about quality and cost of products by removing activities which do not have a meaning for customers. It examines this process by starting with suppliers to customer has the product.

Nowadays, in addition to this process, an extra process called as consumption chain is pursued in above-mentioned director and first in the market companies. In order to examine all chains which include all process like purchasing, using and disposing by customer and to make a difference in innovation, they use consumption chain maps and they aim to find new opportunities and develop new and different products.

In fact, this process is a follow-up the value chain. The value chain which exists to delivery process classically is examined to a circle including disposing products with this process.

A lot of processes from how customers found product or service to how they made a choice; from how the product was delivered to customer to how it was assembled; from for what reason the product was used to what customers needed help for and from how the product was repaired and maintained to how and why the product was disposed are examined in details. Thus, pluses and minuses about the product are revealed clearly and market expectations are understood well and more effective products can be produced.

(Source: Ian C. McMillan “Discovering new points of differentiation” Harvard Business Review)

The most important common trait of value and consumption chain is the ability of seeing on site (genchi gebutsu) and solving problem. In fact, the lean concept is established on these two bases.  You should be in the area where the value is created whether you are a producer of an existing product or make a new product. Production area or the market. We can perceive the process of improving new product as a process of solving problem.

Kotler, Marketing strategy and lean problem solving strategy

The most primary subject in the process of improving new product is research. It is to find answers of some critical questions like ‘What does the market demand?’ or ‘How are customer behaviors and preferences changed?’ An extensive fieldwork is essential for this process. It is a process to understand real expectations of the market like searching a problem.

We call it as the process of identifying and clarification of problem.

After this process, there are segmentation, targeting and positioning processes. Because all extent of research do not concern all customers, the market breaks apart and for each part, the segment is determined by comparing necessary conditions with your own conditions which you are strong and targets are set. Finally, the process of adopting customers to differences or market superiority of product is finished.

In lean, we call it as the process of segmentation of problem with pareto analysis, setting targets and finding root cause of problem. Because we cannot do everything at the same time, we segment problems then set goals and finish that part.

In the process of improving new product or marketing, one of the most important processes is ‘marketing mix.’ In this process, strategies about product, price, place and promotion (4P), delivery and guarantee conditions, delivery and advertisements  are argued and made a decision.

In lean we call it as the process of improving solution plans and precautions to apply against root causes of problem. It is the process of planning how we will remove root causes which are determined in the previous process.

Implementation is an application process after the process of strategy and planning. A particular product should be put on a market which is determined in first processes with determined price and delivery conditions and it should be worked increasing the sales.  It is the heart of the matter.  A lot of good strategies fail because this process is not managed well. (Thomas Bonoma, The marketing edge, 1985)

In lean, we call it as the process of trying solutions. It is the process of actualization of action plan which is determined in the previous process.

In the process of improving new product, the last stage is control. It is the process of control how much results of applications which are done according to plan overlap with targets and necessary precautions are taken. One of the most important qualities of an organization is learning ability and applying what one learn.  Feedback and quick control is the only possible way to achieve it.

In lean, we call it as the process of comparing results and processes. Thus, we can control how much successful actions are and necessity of precautions. If results are not desired, we examine where the mistake is by starting with the beginning of process and improve action and put them to the test until problem is removed and solution is become standard.

'One Response to “CONSUMPTION CHAIN AND MARKETING”'
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