Labels: business model, ecolab

posted by eCreativa Media  # 10:06 AM 0 Comments

I reviewed the first 10 pages of Google and Yahoo and I found the following websites to be our potential competitors:

Note: By directories I mean: providers’ directories: entertainers, food, venues, party supplies, etc.

1- http://www.birthdaypartyideas.com/

This is a content website that offers party ideas. They also have a directory of providers.

2- http://www.birthdayexpress.com/

This website has a shop and offers content about parties.

3- http://www.party411.com/guides.html

This website has content and offers advertising.

4- http://thepartyworks.com/

It is a shop and has content. The ideas contributed by users offer simple, cheap party ideas.

5- http://www.kidsparties.com/

This is a directory of services for kids’ parties. Directory by state and category.

6- http://www.partydirectory.com/

This is a party directory for all types of parties. It does not seem to be an active website

7- http://www.partypop.com/planning/Birthday/

It offers complete directories for all types of parties. It also has some rudimentary interactive tools for budgets and offers ecards and boards.

8- http://www.kidspartyfun.com

It offers directories by state. It is a fun site; a mom created it.

9- http://www.kidsevents.com/

This is a local Fairfield county, CT and Westchester county NY directory. These counties are two of the richest counties in the country next to Beverly Hills and Nassau and a couple of others. They offer directories and other kids’ activities. It is one of the best-designed websites and the co-founders look like very smart people. They do not pop-up in search engines with the regular terms. We found them with very different terms, which are usually not used by people searching. I had a hard time finding them. These guys have the juice to become strong competitors, if they can scale the model nationally.

You may visit their advertising page to get an idea of their services.

http://www.kidsevents.com/advertising/index.cfm

10- http://www.expressbirthdayplanning.com/

This is the closest competitor to our plan. It offers directories of services related to the birthday party. Party directories by state.

They charge the providers for the listings and have many packages.

Sample of their charges:

Step One: Pick a Service

BASIC LISTING :

Select 1 category for your listing plus coverage in up to 3 area codes - $49.95/yr.

ENHANCED LISTING:

Select 1 category for your listing plus coverage in 6 area codes - $79.95/yr.

WEB PAGES OPTIONS are:

ONE WEB PAGE link including 2 photos and 1 title/logo plus text - $95.95*

THREE WEB PAGE links including 8 photos, 4 titles/logos/graphics - $275.00*

* One time fee. Customer must supply all text, graphics and photos.

An Express Birthday Planning representative will contact you within 24 hours of

your purchase to arrange transfer of all elements by mail or email.

MUST HAVE BASIC OR ENHANCED LISTING TO ORDER.

Step Three: Create Your Own Web Site & URL

Instead of our Web Pages residing on our server, we will set up your own domain name and upload your files to your own URL. You will have your very own registered domain name that you can use to refer people to on your business card, news letter and stationary. I.E. http://www.YOURNAME.com. A $30 domain registration fee will be applied if it hasn't been already registered. PLEASE NOTE: We can transfer the Web Pages created in STEP TWO to your own virtual domain, or you can create your own from scratch.

"Express Birthday Party Planning" currently offers 3 hosting options: CLICK HERE to view more information about our hosting plans.

Must have a Basic or Enhanced Listing to order.

Starter - $14.95/mth, 10 megs disk space, 1000 megs data transfer, 5 emails

Power - $19.95/mth, 75 megs disk space, 6000 megs data transfer, 40 emails

E-$$$ - $29.95/mth, 125 megs disk space, 9000 megs data transfer, 60 emails

Similar business models

The knot and the wedding-channel

Both are best in class in wedding and related events planning. They have been in business sine late 90s and have deep pockets.

The knot has extended to all types of media including TV and magazines.

The Wedding channel is the largest in number of visitors and users. It is a wonderful website, very well designed, provides a very pleasant user experience, and is easy to navigate. They work with wedding publications to advertise and attract target visitors.

They offer to providers:

Banners

Direct marketing (ezines)

Local listings

To the users they offer free:

Wedding planning

Articles and very good interactive tools such as:

1- Planning check lists.

This includes list of activities and times (schedule)

2- Wedding Website

You can:

Share your engagement story

Communicate event details and provide maps

Give out-of-town guests travel and lodging information

Display all of your registry information in an etiquette-appropriate way

You also receive:

A choice of designs, including flash animation

A FREE custom web address, good for 2 years

A guest book manager that lets you delete posts

24-hour access for you and your guests

3- Save the date

It's fun and easy to do!

Choose your wording

Select your favorite design

Then, send to everyone you're inviting to the wedding.

4- Guest list manager

Enter guest names once, and we help you:

Total your invitations and RSVPs

Print lists of names for envelope and place card calligraphy

Record table assignments and menu selections

Track gifts and thank-you cards

5- Scrapbook

In order to start your own Scrapbook, you need a FREE WeddingChannel.com membership.

The best way to save all your favorite ideas!

Your Scrapbook makes it easy to organize your favorite photos, add comments to each, and even email them to friends. Plus, your FREE membership gives you unlimited access to all WeddingChannel.com's easy-to-use planning tools.

6- Budget Calculator

To use our Budget Calculator, you need a FREE WeddingChannel.com membership.

Tell us your budget amount and we:

Suggest how much to spend on the gown, flowers, cake and more, based on national averages

Track deposits and balances

Help keep your budget balanced with at-a-glance totals

Reveal insider budget tips to help you save!

They also offer a huge catalog of gowns, party places, etc. That is how they make their money.

They have gift registry services.

They work with some shops that let the clients access the registries (all the articles) from the wedding channel website

Rates for local directories:

Local listings rates:

Premier Listing

$75.00 per month ($900.00 per year)

A web page custom-designed for your business (we take care of all the technical details).

A complete description of your services, along with pricing information

A company logo

A Photo Album of your work (up to ten photos)

A map and driving directions to your front door

A pop up window for special offers or coupons (can be updated monthly)

Geo-targeted banner ads - $30.00 per month

Promote your business with banners that appear in entire region of your Premier Listing

Top tier - $62.50 per month

2- Spa-addicts.com

This is not an ideal model, but perhaps some of their ideas can be part of our offering.

This is how their regular listing works:

National Spa Directory

You can choose from Bronze, Silver or Gold Directory Listings. (Platinum Directory Listings are reserved for Red Hot Special advertisers only.) Prices range from $8.25 - $18.25 per month, plus you receive FREE EXTRA SPACE to offer a spa-addicts EXCLUSIVE special of your choice (encouraged but not required). There is a one-time $50 setup fee for each listing.

Bronze. $99 per year. $199 destination spa

Silver. $169 per year. $269 destination spa

Gold. $219 per year. $ 319 destination spa

Labels: birthday party, business analysis, business plan, competitive advantage

posted by eCreativa Media  # 12:55 PM 0 Comments

Labels: birthday party, business plan

posted by eCreativa Media  # 12:44 PM 0 Comments

Item 1: Interactive tools

This section may include:

Party budget

Polls

Quizzes

Send this page to a friend

Bookmark

Item 2: Listings

Listing of party venues and service providers

Database could be searchable by area code or zip code and by category

Item 3: Create you web page

Registered users can create their own mini-site. This will include the possibility to have a scrapbook

Item 4: Access to forums and boards

Item 5: Party manager

It may have:

Guest list

Save budget

Book services

Cards, e-cards

Store favorite providers (shortlist)

Store favorite articles

Item 6: Gift registry

Wish list of gifts

The guest may register as guest to access to access this list or have a cookie session from an email link. Once a gift has been selected, it will be deleted from the gift list.

Providers’ pages

A provider can select if registered or not.

If not registered, the provider can either select to browse the listings, information on registration fees and benefits and request more information. He or she can also register and pay.

If the potential party provider decides to register, he or she will select a plan.

Silver: listing and booking only

Gold: the above plus one page website to promote services. The providers can make their own website or order our services, plus this provider will appear in a more relevant place on listing than the silver status providers.

Platinum. Gold plus more visibility, perhaps some banners or something similar

Partners: These are big companies such as ToysRUs. We will pursue their partnerships and have special arrangements to offer their services.

If registered the provider can access his own panel control:

Access the booking system

Post messages

Order more advertising

Offer specials, make changes to his/her services or prices etc.

Look at their sales, invoice, payments, etc..

Back end

Databases:

Users

Providers

Guests

Interactive tools

Budget system

Quizzes

Polls

Boards/forums

Website creation

Rating providers system

Rating site features system

Directories

Providers

Services

Scheduling system for providers

Accounting

Send monthly invoices to providers

Charge credit cards for services

Pay providers

Data mining

Collect information on: how the site is used, most used features, how much money spent, what kinds of services/products ordered, zip code, age of kids, and others.

Labels: birthday party, business model, business plan, teens market, web design

posted by eCreativa Media  # 2:36 PM 0 Comments

Features

· Hosts all the local party themed activity providers (E.g. Paint-A-Party)

· Advertisements or lists – Tents, helium tanks, Toys-R-Us, Toys shops.

· Birthday registry

· Evite/Snailvite

o Real time guest list

· Thank you cards

o Form to enter gifts received from guest

· Catering services – Cakes, food etc.

· Entertainers (e.g. clowns, magician)

· Decorations

o Themes

· Hall rentals

· We can design and host a website for these services – Portal to create their own website

· Photo gallery of the party

· Services to create goody bags

· Props (e.g. Moonwalk)

· Birthday parties at museum, aquarium

· Create a community by e-zine, articles etc.

· Discussion boards

· Services for service provider (E.g. Scheduling)

· Coupon generation

· E-mail, Snail mail generation

Revenue

· Revenue from website designs for party hosting companies

· Advertisements

· Commission for lead generation

Different party ideas:

· Birthday parties

· Graduation parties

· All farewell parties

· Christmas parties

· Baby shower

posted by eCreativa Media  # 2:33 PM 0 Comments

Packaging buyers tend to stick with branded products because they’re familiar with them and they know what they are getting. Generally, most successful packaging suppliers follow a strategy based on building brands.

What comes to your mind when you think of Bubble Wrap, Tyvek, and Valeron? These are all well recognized brand names in the packaging industry that are known not for what they are made out of but for what they do. Their suppliers — Sealed Air Corp., DuPont and Valeron Strength Films (formerly Van Leer Flexibles), respectively — could completely change the underlying material of construction, but their users will continue to buy these as long as they perform the functions that the brand is associated with.

Despite this, it continues to amaze me that the number of well recognized brands in the packaging industry is still so small. Our industry has been so focused on product attributes, manufacturing capabilities and materials of construction that we have failed to build brands.

The traditional approach to marketing in our industry has been rather product-centric. The basic assumption has been that if your product is superior to competitive offerings, customers will simply rush to buy it. Secondly, it has been generally believed that the customer is technical-competent enough to disregard the marketing message and evaluate the product strictly on its attributes and performance.

Thirdly, customers have been successful in commoditizing packaging materials so that they can negotiate better prices, and suppliers have fallen into this trap by introducing products that are practically indistinguishable from competitive products (or, in other words, customers do not always like brands because they are reluctant to pay premium pricing).

But why do companies continue to buy branded products despite the availability of cheaper/better alternatives? The answer is relatively simple: because they are guaranteed a definite level of performance on a consistent basis.

Developing brand equity
To develop brand equity, packaging suppliers must consider a number of factors regarding their product(s):

Performance: While the basic concepts of brand equity in the packaging industry are the same as those for consumer products, there are a few subtle differences. While heavy advertising with creative commercials may lead to building a consumer brand, this is not enough in our industry. Remember, the customers of these products are knowledgeable enough to still evaluate a product on its merits. Thus, you have to make sure that your product is as good as other competitive products.

Innovation: Product innovation is extremely critical to buyers of packaging materials. As companies struggle with either increasing shelf-appeal or reducing damage during shipping, they look to their packaging supplier for innovative solutions. Make sure that your product development does not become stagnant. Instead, as customers’ needs change, your product must continue to operate at the cutting edge.

Addressing product problems: There are innumerable examples of how companies can destroy years of brand equity simply by poor handling of product problems. The only time when product problems do not affect brand equity is when management reacts responsibly by immediately addressing the issue. My simple recommendation is to address a product problem immediately rather than denying it or blaming others.

Features and benefits: Suppliers of high-tech products get so enamored with the properties of their products that they fail to fully advertise what the product does for the customer. While charts and tables are needed, make sure that you connect the features with the benefits. Thus, the advertising message has to strongly emphasize how the product will add value to the user.

Co-branding: Consider a co-branding campaign with your key customers. Perhaps a clearly visible logo on a bag of potato chips with the message “Packaged in [name of packaging product].” While a company like Intel can successfully market an extremely high-tech product to an average consumer, packaging companies do not establish a similar connection with the consumers when packaging might very well be the reason they buy the product.

Look at products as brands: The most important approach to building a brand is to completely redefine the way you internally look at your products. If you think of yourself merely as a supplier of products that have certain attributes similar or better than other products in the marketplace, your customers will perceive these in the same manner and will compare them accordingly. If you think of yourself as a seller of brands that make your customers’ brands even stronger, your customers will start setting your products apart from competitive products.

Impact of brand equity on profitability
There is no hard evidence at this time that developing brand equity alone will necessarily result in higher profitability. However, my limited research shows that most successful packaging companies follow a strategy based on building brands. It is increasingly important to do so at this time when emergence of e-marketplaces is based on essentially eliminating product differentiation.

I can clearly visualize a future in which a product will either be a brand or a commodity. The former will demand premium pricing while the latter will be traded on an online exchange like any other commodity. Where do you want your products to be?

Labels: brand management, innovation, marketing, packaging industry, profitability

posted by eCreativa Media  # 2:27 PM 0 Comments

As access to pricing information becomes more readily available to packaging material buyers, suppliers will need to rethink some of their strategies and embrace business models that are based on much more than price alone.

The packaging industry remains one of the few privileged industries since customization is still widely popular. Manufacturers of both industrial and consumer goods may have almost indistinguishable products, but they still make their best efforts to use unique packaging.

The obvious advantage to packaging material manufacturers is that, despite the underlying raw materials being essentially commodities, they can still differentiate their products and obtain premium pricing. This differentiation has been the major driver for pricing patterns, and consequently, margins.

Information access
The second dimension of pricing is not talked about openly very often. The price that a supplier quotes for its products is also largely dictated by the amount of information that its customer can access about competitive products, number of suppliers, supply situation and pricing levels. Over the next few years, this will likely change dramatically. The business environment will see radical changes and competition will intensify as efficient access to information will be more widely available.

Whether buyers purchase a million pounds or a thousand pounds, they will have almost equal access to information. Pricing will become increasingly transparent in contrast to traditional practice in which price was top-secret. Buyers already find it easier and cheaper to obtain comprehensive information about a supplier, its products, inventory levels and its pricing relative to every one of its competitors. As a result, suppliers will find that the power they derived from information gaps in the past will disappear, to the point that pricing will no longer be their prerogative.

In fact, low price will no longer be a privilege available to large-volume customers but will be a prerequisite for being a player in the broader marketplace. Once the first low-cost supplier publishes its prices, the competitors will have to follow, and prices will stabilize at a point that will be set by the most efficient manufacturer.

The third dimension to margin compression is the emergence of online marketplaces that are based on maximizing purchasing efficiencies through encouraging real-time price-based competition among suppliers and making the purchasing process more efficient by use of information technology. Such marketplaces have only a limited role to play in the packaging industry at this time but will very soon become fairly dominant.

Strategies to meet these challenges
In this new business environment, several new businesses will emerge, and small companies will be able to thrive by serving niches. Manufacturers of consumer goods and other specialized products will continue to work closely with their packaging suppliers to create unique, proprietary package designs.

Improvements in information flow will still drive packaging industry growth, but there will be market share shifts as those companies that embrace business models for the new market realities will emerge as the winners while the laggards will struggle trying to compete on price alone.

In this environment, companies will have to do a lot more than just managing their costs and embracing sophisticated customer relationship management programs. Here are some ways that companies can succeed going forward:

• Follow the 80/20 rule. If 80% of your business comes from 20% of your customers — which is true for most small and medium sized packaging companies — then make sure that you do everything possible to hold on to these customers. Give them the most competitive price, and control them through eliminating any layer that may exist between you and them.
• Research has indicated that despite commoditization, it is possible to create a brand identity in the packaging industry. A brand makes it harder for customers to price-shop the product. If you have a new product, try to brand it from day one.
• Product differentiation and customized solutions for your key customers will not only make them recognize the value of having you as a supplier but it also makes it harder for them to switch by increasing the cost of switching.
• Sharing knowledge can be critical in developing customer loyalty and increasing retention. As customers increasingly rely on their suppliers for technical support, sharing market and technology-related information will be instrumental in building long-term relationships.
• Put programs and systems in place that will enable maximum purchasing efficiencies in your organization as well.

All packaging companies have unique market and technology situations, but the impact of margin compression will be most pronounced on suppliers of such products as corrugated boxes, wood-based packages and basic substrates like films and paper. Now is a good time to rethink your pricing and customer relationship strategies.

Labels: investment, pricing strategy, profitability

posted by eCreativa Media  # 2:25 PM 0 Comments

If your company is to be the best it can possibly be, a smart approach is to tap into resources outside of your organization. A “community” allows you access to the best and brightest people — whether they work for you or for someone else. In the near future, as companies increasingly focus only on their strengths and outsource everything else, they’ll have mostly partners and very few competitors.

The fact that you are reading this article is clear evidence of your recognition of the power of a community. I am continually amazed by how much can be done with only a little once you build a community.

If you are a member of a community and contribute even occasionally, you probably know very well that more gets done there than in your office. The added advantages are that one doesn’t have to wait 12 months before the next annual meeting, nor is there any limitation on where the participants live and at what time of the day they contribute.

The power of community
Imagine what can happen if a company can exploit the power of a community. One reason why companies fail to come up with world-class approaches is that their current mindset does not allow them to tap into resources outside of their organizations. If a company could build a community of all the right people — regardless of their affiliations — to achieve a specific goal, it will not only be possible to achieve that goal faster but also do it profitably.

I make this recommendation for one simple reason: no company is as good by itself as it is by partnering with others. A community allows you to get the best and the brightest people whether they work for you or for someone else. At the same time, the knowledge that you collect is also shared with other community members and benefits everyone.

Of course, like any other community, members like to be rewarded for their contribution. If businesses build communities, rewards can come through recognition, financial benefits or any other reward that the members desire. I may even recommend developing proprietary technologies through a community approach; in this case membership would have to be restricted to strategic partners, and more formal structure would have to be implemented.

Information flow
There are a couple of other reasons why I suggest a community approach to doing business today. In the old economy, the word “customer” had a narrow meaning — someone who used your product/service and paid for it. The flow of information and goods was so slow that companies had no choice but to control as many transactions in the value chain as they needed to be able meet their market commitments. This made them categorize other industry participants as either customers, suppliers or competitors.

In the new economy, the distinction between buyers/sellers, manufacturers/consumers, and partners/competitors is disappearing. This is because information flows so fast that it is not only possible to quickly identify potential suppliers and partners but also to look at their inventory levels in real-time and manage production/supply schedules accordingly.

In the near future, I can see that enterprises will be focusing only on what they do best and outsourcing everything else. Thus, a company will have mostly partners and very few competitors.

Building a community
To build a community, a packaging company has to do three things like any other community:

• First, develop a vision for the community. For instance, the foremost goal for a commercial enterprise is to have high revenue and net income, but it could be something different — for instance, to develop a solution to a long-unsolved problem.

• The second step is to bring together the right members to the community. This is needed in order to have the necessary skill base.

• The final step is to facilitate seamless communication among the community members. Since the members may interact mostly virtually and may not know each other very well, the initial roadblocks should not discourage the members.

Packaging companies are better off than companies in many other industries in the sense that once the product is sold, the design and testing professionals on both sides continue to collaborate on a regular basis. On the down side, however, other than these individuals and an occasional courtesy call from the sales representative, there is not a lot of interaction on a corporate basis to address larger issues.

Such relationships with its customers should be exploited by a packaging company since, otherwise, the value of knowledge that is developed regularly within and outside the enterprise is not being fully exploited.

Labels: community, customer segmentation, networking, social networking

posted by eCreativa Media  # 2:23 PM 0 Comments

Packaging buyers are becoming increasing comfortable with using the Internet as a tool to find information prior to making a purchasing decision. Companies who provide effective content and interactivity on their site will grab the most eyeballs and, hence, maximize profits.

What’s missing?
The Web is essentially the easiest way for a company to connect with the world and turn visitors into customers by creating a pleasant experience. But the packaging industry has yet to take full advantage of all that the Web has to offer. For example:

1. In an effort to create an online presence, yet with an unavailability of internal web design professionals, companies have essentially taken their brochures and put them on the Web. It is disappointing to see sites that are not updated regularly, sometimes for months.
2. Another powerful feature of the Internet is its interactive capability. While a company might need to spend enormous resources to speak over the telephone to 100 customers to find out their experience with a new feature on the company’s latest equipment, a poll on the ‘customers-only’ section of the company’s website will provide such feedback at almost no cost.
3. The Internet also allows companies to inexpensively answer questions from visitors by providing links to appropriate individuals or, in the case of a large organization, have a customer service rep available either to answer questions through a chat session or by calling back the visitor.

I have yet to see all of these features in a single website in the packaging industry. (I would like to know if there are such sites since I have not visited every single one.)

Providing effective content
As the comfort level with the Internet increases, customers are increasingly using it as a tool to find information prior to making a purchasing decision. The analogy that comes to my mind is that of a trade show. I see trade shows as having a three-dimensional role in business: inform, interact and market. Companies go to a trade show to demonstrate their products (inform), have discussions with potential customers (interact) and differentiate themselves from their competitors (market).

This is exactly what needs to be duplicated on the Internet. You should think about providing such powerful content that visitors feel that they can find out practically anything about the product. This will result in a higher comfort level and, as a result, higher sales. An informed customer is more likely to buy. Customers want to learn about existing applications, benefits to current users and how it compares to competitive products.

I believe you should provide a comparative chart so that customers do not need to go to many different sites to develop one on their own. It would be even better if such comparisons were provided by an independent agency to make sure that they create an impression of being unbiased. This will help users make faster and better decisions and develop a sense of trust in you. Remember that customers in the new economy are armed with information, and you cannot mislead them.

Make it interactive
The second feature that you need to include is interactivity. For example, make interactive product data available so that customers can plug in their specific information and see the product performance. If you have product pictures, make sure it is possible to see them from all possible angles by being able to rotate them.

As purchasing and technical managers use the Internet increasingly as a tool to collect information, packaging companies have to start exploiting it is a powerful marketing tool. A website that looks like a brochure gets treated like one — to be seen only when absolutely necessary and just thrown away otherwise.

Packaging products present a great opportunity to be demonstrated on the Internet, and those who exploit this faster than others are more likely to grab a larger share of the eyeballs and, thus, potential profits.

Labels: content management, information management, internet, marketing

posted by eCreativa Media  # 2:21 PM 0 Comments

E-commerce is not only about reducing cost and automating transactions; it is also about using it as a channel to exchange better and larger amounts of knowledge with business partners.

If I were to say that competition in the packaging industry has been based all along primarily on knowledge, most of you will agree but only after some thought.

Some of the recent hype about “knowledge management” may give an impression that it is something new. In the packaging industry, we have been doing it all along without necessarily using a very formal name and process.

Even while selling a basic package, a successful salesperson typically talks less about the actual package and more about how it will protect the product, provide aesthetics and reduce cost. This salesperson will also probably bring along a technical professional who can help the customer’s manufacturing group implement all of the above.

This sales team has not only used knowledge to sell the product, it has actually sold knowledge and got paid for it (through stronger customer relationship).

Catalog approach
At the other end of the spectrum in the packaging industry are suppliers who sell using a catalog approach — standard products, service, price, terms of contract and limited or no knowledge to share. With the recent trend to provide e-commerce capabilities, packaging companies need to be extremely careful in not becoming catalog type suppliers. This is especially true when products are sold through an e-marketplace.

Participation in an e-marketplace is almost a must for most companies, but it may also result in erosion of product value and eventually commoditization, which is a serious problem if your products are not inherently commodities. Thus, suppliers of value-added packaging materials have to make sure that the bond with their customers that has been built on sharing of knowledge does not weaken as more business is conducted electronically.

Sharing the knowledge
Suppliers of value-added packaging materials typically dedicate considerable resources to working together with their customers designing customized packages. In fact, most companies end up offering these services for free as a means to strengthen customer relationships and boost sales. Apart from helping customers design better packages and, of course, allowing them to use their materials, this relationship also works as a means of sharing knowledge since suppliers pick up intelligence from the marketplace, get exposed to competitive technologies and better understand unmet and emerging needs.

E-commerce presents opportunities for reducing cost of selling and reaching a wider pool of customers. The downside is that companies are so focused on selling that their sites are turning into electronic catalogs. The e-marketplaces are even worse since their value proposition is based on product standardization and thus encouraging price-based competition.

E-commerce is not only about reducing cost and automating transactions; it is also about using it as a channel to exchange better and larger amounts of knowledge with business partners. As companies employ the latest tools for knowledge management within the enterprise, the program has to be designed to include business partners in the loop as well so that this knowledge can be shared with them and used to strengthen virtual bonds.

Recommendations for an e-commerce strategy
An e-marketplace would work fine for those products that are manufactured by more than one supplier and have attained some degree of standardization in the industry. Fortunately, in the packaging industry, there are not too many of them. Customers continue to demand high degree of customization even if it is in printing of the package. Thus, companies have to segment their customers into essentially two groups.

The first group comprises those customers that seek standardized products with minimal technical support. Suppliers should steer these customers to an e-marketplace if they participate in one, or the supplier should have its own e-commerce site for them.

The second group of customers demands customized designs, technical support and even a dedicated team to assist them. Suppliers have to take special care of these customers because these will not only be the supplier’s most profitable customers, but they are more likely to reward the supplier with additional business as they simplify their supply chain and start treating the supplier as a provider of turnkey packaging solutions. The supplier will need to build a private network for them that will provide a virtual space for collaboration on product and service development and gather intelligence on markets, products and technologies not only about the supplier itself but also the whole industry.

The basis of competition in the future will be predominantly knowledge, and as packaging suppliers’ customers increasingly use it as a competitive weapon, suppliers need to do the same.

Labels: customer segmentation, ebusiness, ecommerce, knowledge management, strategy, supply chain

posted by eCreativa Media  # 2:19 PM 0 Comments

What’s true in life is even truer in business: Isolation does not allow free exchange of information among industry peers and, thus, limits opportunities for developing new ideas or building on existing solutions. Sharing of information builds trust and allows companies to exploit information for the overall good of the industry.

We are all familiar with the expression, “No man is an island,” which, of course, implies the need to be involved in other peoples’ lives and to have them involved in ours. The same could be said about businesses — “No company is an island.”

Yet, a vast majority of packaging companies have a tendency to embrace an “island mentality” primarily because they are able to partner with a select group of large customers, and thus, don’t need to pursue additional clientele. This is further compounded by a tendency among their customers to discourage the packaging suppliers from working with competitors.

Thus, large packaging companies align themselves with their key customers, forming some kind of a loose keiretsu, while small- and medium-sized companies have to constantly work hard to access new customers. This situation also limits the ability of small- and medium-sized companies’ exposure to the latest developments in technology.

Relationships – handle with care
There is another reason why I am emphasizing the importance of moving out of the cocoons that packaging companies have lived in for decades: the increasingly fragile nature of relationships in today’s ever-changing environment.

Several packaging industry executives have indicated to me that their customers who had done business with them for years, and even decades, have suddenly decided to try a reverse-auction process. The message is clear — the relationship lasts as long as it has a positive impact on the customer’s profits. The moment customers figure out ways and means to improve their profitability using an alternate source, there is no incentive for them to continue their relationship with you even if you have memorized the names of all the kids of the purchasing manager.

Isolation may retard innovation
What is true in life is even truer in business: Isolation does not allow free exchange of information among industry peers and, thus, limits opportunities for developing new ideas or building on existing solutions. I am aware of several packaging companies that are so paranoid about their proprietary information that they do not allow their employees to speak to their peers in the industry.

I am not trying to argue that proprietary information be compromised, but sharing of information beyond that should be unrestricted. I continue to believe that despite availability of every single page of document ever published on the Internet, there is no substitute for personally interacting with your peers and sharing information informally. We all know that, for the most part, we do not write down every single idea and thought that we have in our mind, but we might definitely share it during a conversation.

Bridging the islands
The reason I talk about bridging the islands, as opposed to building a continent, is that while companies need to guard their proprietary information, they have to cooperate in developing a better packaging community. As we are already seeing in the automotive industry, large packaging companies need to take similar initiatives and start thinking about sharing information more freely. The technology available today also makes it possible to manage what specific kind of information is shared with which specific outside entities — customers, suppliers, distributors, banks and even competitors — so it is possible to control the flow of information.

Apart from encouraging innovation, free-flowing information allows other, more tangible benefits. For instance, as we all know, more information enables faster and, in most cases, better decisions. When companies build extranets with their key partners, they can also facilitate smoother transactions, reduce manual intervention, minimize paperwork and, as a result, improve the bottom line.

The dangers ahead
Your customers are under as much pressure to improve their profits as you are — and they’ll do virtually anything to achieve it. Accordingly, you have to make sure that you’re able to provide your customers with what they want before they find someone else to do it, probably cheaper and better than you.

Sharing of information builds trust, encourages even more sharing, and allows companies to exploit information for the overall good of the industry. There is no reason for you to hold on to information that may be more productively used by your partners. Companies that fail to take advantages of technology that can help build bridges, may find themselves isolated from their peers, and that can be disastrous.

Labels: alliances, competitive advantage, extranet, intranets, partnership, strategy

posted by eCreativa Media  # 2:17 PM 0 Comments

If you’re a packaging company frustrated with trying to “get your arms around” e-business solutions, you’re not alone. There are, however, some simple strategies that both packaging companies and e-business solutions providers can implement to successfully engage in business online.

As e-business solutions continue to emerge, the pace at which packaging companies are embracing them has been slow. These companies have been frustrated with not being able to identify the right solution for their needs.

My discussions with executives of both e-business solutions providers and packaging companies lead me to believe that some dedicated work needs to be done by both parties before they can better appreciate and complement each other.

A large proportion of packaging companies is seriously committed to exploiting online opportunities. By now, the benefits and strategic considerations are apparent to almost all decision-makers. However, actually making this transition is not easy, especially when these companies do not have the liberty of suspending their operations and dedicating themselves exclusively to making the transformation to online business.

The dilemma
Packaging executives still must meet their regular business goals and, eventually, the expectations of their investors. (It is not hard to imagine the scenario in boardrooms as evidenced by Arthur M. Stupay’s article). The situation is further complicated by the fact that by the time you get your arms around one solution, half a dozen competitors are already talking about a new, better solution.

Providers of e-business solutions, meanwhile, have to recognize that the packaging industry has traditionally been very customer-centric. Most customers rely on their packaging supplier for quality products and entrust them with proprietary information. Packaging companies reciprocate by serving these customers extremely well. Such intimate customer relationships and a relatively stable scenario make it even unnecessary in many cases to actively seek new customers.

Additionally, the pressure to reduce costs is also relatively less due to high costs of switching packaging suppliers. Understandably, these are hard issues to grasp for dot-com companies, who typically start with a clean sheet of paper, have employees that are generally more receptive to change and are under tremendous pressure to increase their revenue in a short span of time.

What should packaging companies do?
The four major issues that I see packaging companies facing are:

• Which functions or set of customers should we shift online?
• Which will deliver the most value to our customers and investors?
• How do we prioritize so that we do not exhaust our resources?
• How fast should we move to keep up with technology but not spend exorbitant amounts of money?

These issues are not easy to address because they have to be balanced with corporate financial goals and limited availability of resources. Here are some guidelines to consider:

1) No business succeeds without best-in-class operations. Building the coolest e-business infrastructure is not going to be effective unless it is backed up by solid operations.

2) E-business has to be seamlessly integrated into the overall scheme. Without a proper integration of these processes into the hardware of a corporation, it will only result in more e-chaos, as some of the early adapters saw.

3) If you do not understand e-business fully, do not try to do it yourself. It is new, complex, and changes faster than anything that we are used to in the packaging industry. In the existing setup of most companies, it is hard to develop the necessary skills and speed. Therefore, I always emphasize that companies should seriously consider outsourcing this function and focusing their attention instead on managing change from a strategy standpoint.

What should e-business solutions providers do?
After looking at the solution providers to the packaging industry, it is clear that only a few of them have had an initial packaging-industry focus. A vast majority of them have served other industries and have not invested sufficient time into better understanding the unique needs of our industry.

While these companies may very well believe they have a solution for every problem of the packaging industry based on the success they may have had in other industries, individual packaging companies may not experience any of those problems for reasons cited above. I would accordingly encourage these providers to respect the dynamics of the packaging industry, better understand its priorities and offer a solution that addresses its problems.

The packaging industry has certain unique issues, and ours is not as homogeneous an industry as the term “packaging industry” may lead some to believe.

Labels: ebusiness, ecommerce, packaging industry, planning, strategy

posted by eCreativa Media  # 2:15 PM 0 Comments

As e-commerce changes the underlying economics of business, is the old business model — based on scale — under serious threat?

In my consulting work, some of the packaging companies that I like to track are AEP Industries; Avery Dennison; Ball; Bemis; Crown, Cork & Seal; Owens-Illinois and Sealed Air. These companies supply a wide variety of packaging materials, and looking at them I can get a fairly good indication of the overall industry trends.

However, by looking at their performance in the past 52 weeks, I am disappointed. Other than AEP Industries and Bemis, the rest have not been profitable investments.

Market share as a driver
What concerns me is that when the economy is so good, the packaging sector continues to perform rather disappointingly. What would happen if the economy slows down? My discussions indicate that only the top management in the packaging industry is concerned about the performance of the stock; the middle-level management is still driven by market share.

I am surprised to see that companies continue to add infrastructure to produce more and eventually gain market share. I am a firm believer of profitability over market share, but most middle-level executives do not seem to believe in that because nine times out of 10 their compensation is determined by sales and not earnings, and rarely the stock price.

I am starting to believe that the old business model based on scale is under serious threat. E-commerce is changing the underlying economics of business. In the past, large infrastructure resulted in high market share, which eventually meant excellent cash flow and future growth. This is no longer the case. Vertical integration (as traditionally understood) is starting to become a meaningless business model because it is now possible to outsource practically everything that someone else can do “better, cheaper or faster.”

Traditionally, companies relied on leveraging their infrastructure to bring down the cost of manufacturing to either drive down the overall market price or to increase their margins. Now this is no longer the prerogative of companies with the biggest infrastructure. A small organization can put together a virtual team of providers where each focuses on what it does best — be it manufacturing, technology, product development or marketing. This is a serious threat to a typical company that tries to do everything, since margins on its core competence can be eroded by inefficiencies in everything else that it does.

Is manufacturing no longer attractive?
As I said in one of my previous columns, if you are not the absolute best at manufacturing a product, stop manufacturing it and focus on what you do best. On the other hand, if you are the best, focus on maintaining that position. Somebody in the future will definitely figure out a way to beat you, and you should be prepared to react immediately.

What about those companies that already have a large base of assets? My recommendation is this: retain what you do best and get rid of the rest. I know this is a rather radical recommendation, but the alternative is even worse. I make this recommendation based on my past experiences.

I lived in Japan from 1992 to 1997. During this period, I saw a revolution taking place there. The bubble had essentially burst, and signs of recession were setting in. During the bubble economy, the wages had reached such high levels that the cost of manufacturing went through the roof. However, during the recession when demand dropped, such high cost of manufacturing made the Japanese uncompetitive in the market.

The Japanese companies reacted fast and started cutting down their Japanese manufacturing base. They established plants in several parts of the world and kept only the value-added operations in Japan. Japanese companies realized that they should focus on what they do best, that is, product design and marketing. Manufacturing could be accomplished by building skill set and infrastructure overseas.

As a final thought, do what General Electric does. Every couple of years, it reinvents itself. The company looks hard at what it needs to do to thrive till the next opportunity to reinvent arises.

The hard reality of business is that while you may invest enormous resources in developing internal capabilities and strengths, sometimes the environment changes faster than you can anticipate. This is exactly what is happening now. Don’t try to beat the marketplace. Instead, adapt your business model to the marketplace.

Labels: manufacturing, packaging industry, production management

posted by eCreativa Media  # 2:12 PM 0 Comments

When business slows down, as it has in recent months, it is not unusual to lose track of what is really important and instead focus on what is more immediate. For instance, as customers of packaging companies pack and ship fewer products, the immediate response in the packaging industry is to cut back on a wide variety of investments and reduce costs. While we have not yet heard any major layoffs in the packaging industry on a scale that some of the larger companies have announced, I suspect that some companies are already doing this on a smaller scale. Similarly, I am also aware that several companies are scaling back on R&D and new product development.

While most of us recognize the potential long-term hazards of cutting down on research and development, I think the way we are structured, these are inevitable. However, there are certain things that a slowdown should allow us to do. I might even say that a brief slowdown is healthy for an economy as well as an enterprise. During a rapidly growing economy, we are all forced to keep up with demand for our products and services, have to make investments for productivity enhancements, and need to compromise on quality of resources that we employ to meet short-term commitments. I am sure a lot of you would agree that we are essentially forced to cut corners, which is not the way winners generally work.

Why a slowdown may be good
It provides us an excellent opportunity to fix what we think is not best-in-class. Resources that are now freed up to some extent can be utilized to improve our processes. There is no better time to test the efficacy of your systems than in a fast-changing business environment. I have been told by several industry executives that they have learned a lot about the limitations of their processes in recent years. This is, then, a perfect opportunity to use that new knowledge to eliminate the bugs from the system.

Similarly, I am aware of hundreds of companies that had to hire employees who were not the most suitable for the jobs that they were hired for. Many of these new employees struggled in their new jobs and, while some were able to pick up speed, others are still having a hard time. This may be a good time to train these employees. So before you decide to get rid of these employees, think hard about the staff you might need in case the economy picks up steam again.

The final area that we can all work on is new product development. When the economy was going through the roof, what customers wanted was packaging that would get their products from point A to B. It really didn’t matter how the design looked and how much protection it provided – speed to supply current products was more important. On the other hand, as economy improves, it will do so only gradually. The implication of a U- or V-shaped comeback is that customers will be more selective. Thus, product differentiation and quality will be absolutely critical. The current slowdown might well provide a perfect opportunity to approve all those dollars that your R&D group has been asking for years. It will payoff real soon.

What are the short-term risks?
It would be appropriate to disclose the short-term risks inherent in this strategy. Almost all public companies are struggling right now to meet their revenue and earnings expectations. The way our economy is currently set up, no matter what happens next year, you still have to meet your expectations for this quarter. This means that a lot of companies are not at liberty to undertake the steps that I am recommending. However, if you can in any way allocate funds for these projects today, do it. It will be a productive and judicious use of your resources.

Labels: market research, planning, recession, risk management, strategy

posted by eCreativa Media  # 2:11 PM 0 Comments

I am often asked to advise sales and marketing executives about their challenges in managing key accounts. While it is critical for a business to have several key accounts to provide stability to the business, it is also important that the key accounts be monitored carefully to ensure that these accounts continue to be profitable at the same time. It is quite common to see in our industry that key accounts end up demanding more than a fair share of their supplier’s resources.

Most executives have to constantly struggle with finding an effective key account management strategy since losing even one of these accounts can have a devastating impact on the company. On the other hand, having account-specific teams is costly, and in most cases, it is hard to cut down on resources committed to key customers.

'Key account value analysis’
This is one tool that I recommend that companies use at least once every quarter. In businesses with small size orders, the tool can be used monthly. For each key account, the following metrics should be captured accurately:

• Total sales
  
• Percentage profits (over sales)
  
• Growth rate of sales in existing product line
  
• Value of new products/services
  
• Order size distribution and average
  
• Price comparison with other customers in the same category

In the subsequent paragraphs, I will discuss how this data can be helpful in resource allocation and sales/marketing strategy formulation.

What does it mean?
There are numerous advantages of working with key accounts. Most large companies have excellent R&D resources and are generally more active in new product introductions. As packaging materials suppliers, some of these pressures from customers mean a lot of opportunities for innovation in developing the right package. However, the thing to remember is that the key driver at these customers is not the profitability of the packaging supplier but their own efforts to come up with the cheapest package that can result in a successful launch of their product.

In an analysis that I conducted, the findings are very interesting. A typical key account does provide stable cash flow to a packaging company and this is exactly why suppliers stick to their key accounts. What I concluded, however, is that key customers are more likely to overuse resources of current supplier for awarding additional/new business because of the relationships.

That is why it is important to at least track key account performance by assessing the value of each account to the enterprise. I am not suggesting that a large account be dropped for generating less value. Instead, this analysis should help an executive answer some of the following questions:

• Which of these key accounts are profitable?
  
• Is growth rate at key accounts higher/lower than other accounts?
  
• What kinds of business opportunities have emerged from key accounts – several small orders, few large orders, a mix of both?
  
• Is the price offered to key accounts justified in terms of revenue/profits/new business generated?
  
• How much resources need to be dedicated to which account to maximize value to the enterprise?

Using the analysis for strategy formulation
I typically recommend that companies follow a dual strategy for managing their customers – one for key accounts and another one for all others. A value analysis of key accounts will clearly indicate to a company the role these customers play – Are these profitable customers that need to be pampered or are these just large customers that provide good cash flow but the growth will still have to come from other accounts?

Such data will enable executives in serving better those customers that have the highest growth potential and thus create value for their company. There is a fine line here. It is an undisputed fact that finding new customers is always more expensive than retaining the existing ones. In most cases, existing customers switch not because of price but due to problems in receiving the right kind of attention. However, a company that is looking for growth has to make sufficient resources available to pursue customers with highest growth potential.

Related articles

How to identify key accounts

Tactics for key account management

Key account management strategies

How to develop a key account management strategy

Key account management for small and medium sized companies

Key account management for MNC

Customer segmentation

Refine key account management program

Key account management framework

Customer relationship management

Labels: crm, key account management, strategy

posted by eCreativa Media  # 2:04 PM 0 Comments

I have received several emails recently pointing my attention to some extremely important things to consider before you digitize your business. The number one item that almost everyone has pointed out as absolutely critical in any business process, and even more so in e-business, is differentiation. The reason I’m dedicating this column to differentiation is the fact that the speed at which companies have had to or are implementing e-business programs has sometimes resulted in a difficult situation. Specifically, in some cases, putting an ‘e’ in business has become more important than paying attention to what we have always considered as the core element of doing business, i.e. differentiating yourself from your competitors.

In our industry, we have not prided ourselves on exploiting IT. We are still an industry obsessed with materials and engineering and have come up with some great solutions for our customers. Of course, some IT tools like design software or communication channels have helped us in doing our jobs faster and better, but these tools have not been the drivers of innovations. What that means is that as an industry, our IT resources are rather weak. We have changed only when we had to.

This impacts us in two ways. By not having strong, internal IT resources, we have been slow to embrace technological changes. Secondly, we are forced to rely on outside agencies to help us with some of these programs. While I am a strong advocate of outsourcing, effectively managing your IT provider is still your responsibility. A provider can only know so much about your business and, while this company may have only good intentions for your business, it may still end up providing you with a solution that is no different than what they sold to half a dozen of your competitors.

The solutions providers have another interest in selling you a standard product. If you do not know enough and also do not want to select a customized product, the only way that you can be served is by using an off-the-shelf product that requires minimum tweaking. The outcome is that, while your packaging products may be significantly superior to your competitors, your website is unable to convey that message.

Why is differentiation crucial even in e-business?
So far the pressure on us has been to develop an online platform to conduct business. However, very soon everyone will be there, and the issue will no longer be if you have an online channel, but how effective it is in highlighting the differences and advantages that you have over everyone else. If that is not clearly apparent, the dot com mantra that ‘your competitor is only few