Wednesday, August 21, 2019
Factors Influencing While Purchasing Tyres AbstractÃ In this project I have study of Ã¢â¬Å"factors influencing while purchasing tyresÃ¢â¬ JK tyres manufactured by Jk Tyre Industries. In this competitive era of marketing where the satisfaction of the customer towards the product is become first priority, it is therefore very important to analyze customer behaviour. Consumer behaviour can be looked upon as study of how individuals make decisions on how to spend their available resources like time, effort, money in various consumption related items. The understanding of customer needs and wants is one of the major underpinning construct of marketing. Without putting customer on the top company cannot get success, forgetting success every company should target customer, because market is totally customer oriented. This project evaluated which factors influence the customer most when he/she goes for purchasing tyres. Finally I have given some views and suggestions to the company with which they can satisfy the customer the most. Preface Inspite of theoretical knowledge gained through class room study, a person is incomplete if notÃ subjectedÃ to practical exposureÃ of real corporate world. He may have to face hurdules, which will be difficultÃ to overcomeÃ without any first hand experience of business. In this context, research program has been designedÃ to make aware ofÃ happening of real business. The project entitled Ã¢â¬Å"Factors influencingÃ while purchasing tyresÃ¢â¬ with special refrece to JK tyres, has been done at New Delhi and Jalandhar as completion part of Msc International Business. In my work-based dissertation, we worked upon the analysis of the JK tyre industries in New Delhi and Jalandhar by customer attitude throughÃ the personal contact andÃ questionnaires. During my work-based dissertation, I got opportunity to apply my theoretical skills and knowledge and meaningful concept to actual business condition and FamiliarizeÃ with the marketing activities of the products. All the work done on thisÃ project is confined to myÃ broad objective. In todayÃ¢â¬â¢s world of intense competition and rapid dynamism, all companies worldwide are tuning their focus on the customer. Suddenly, customer had succeeded in capturing all attention of the companies towards him, so much so, that maxim, Ã¢â¬Å"customer is godÃ¢â¬ has become so true and relevant today. There has been a paradigm shift in the thinking of these companies and none other than customer has brought this about. Earlier there was seller market, since the goods and services were in short supply and sellers use to call the shots. But ever since the advent of era of globalization there has been total transformation in the way of customers being perceived. Today, marketers are marketers are directing their effort in retaining customers and customer base. The customer importance has assumed imponderable proportion in todayÃ¢â¬â¢s world because of inherent value that customers command. A customer can Ã¢â¬Å"make or breakÃ¢â¬ the company. It is the responsibility of every company that to see all its customers are equally satisfied with them , for one single dissatisfied customer will tell at least nine other customer about the dissatisfaction and will spark off the chain reaction and spell doom for that company In the past customer were taken as ride, as there were not many players in the fields, not much importance was attached to product safety, quality, service and product appeal. The attitude of manufacturer was that of Ã¢â¬Å"Caveat-emptorÃ¢â¬ . Thanks to the government policies on liberalization, globalization and privatization, the market has changed today. Today customer has host of defence mechanism like customer protection laws, regulation of government, the powerful hands of organization, switching to or competitors. The maxim Ã¢â¬Å"Caveat-emptorÃ¢â¬ has been replaced by Ã¢â¬Å"Caveat-venditorÃ¢â¬ . In the past after sales service was consider as cost centre, companies were lethargic in attending the customer complaints. Availability of trainee service personal and quality genuine spare parts was serious problems. However, with rising competition, there could not be much product differentiation as product, quality was comparable and latest technology was with each and every company in the field.Ã Since there could not be much differential a tangible assets, the companies concentrated on the intangible assets normally service factor which served as major differentiator. Today after sales is considered as major aspect for every company and it is no more considered as cost centre but now it considered as profit centre Company profile JK tyre is only manufacturer of truck and bus tyres and second largest manufacturers of 4- wheelers. JK tyre and Industries in counted among the huge corporate entity which is the symbol of excellence, diversification and pioneering new technologies. Since its commencement it has been supreme in the value of technology which made it grow .JK tyre manufacturers and sells the tyres and tubes fot passenger car, truck, jeep, buses, multi utility vehicle,tractors and light commercial vehicle under its brand Ã¢â¬Å"JK tyreÃ¢â¬ . The company is the only manufacturer of Ã¢â¬ËTÃ¢â¬â¢ Ã¢â¬ËHÃ¢â¬â¢ high performance tyres in India. JK ranked Ã¢â¬Å"Highest in customer satisfaction with original tyres by J.D power Asia Pacific StudyÃ¢â¬ . Its customers are mostly Replacement for four wheelers, entire Original Equipment Manufacturers (OEMs) in India along with state and defence transport units. Moreover JK have customer base across 45 countries and 6 continents.Ã Administrative Office: Link House, 3, Bahadurshah Zafar Marg,Ã New Delhi 110 002 http://www.jktyre.com/j-k-industries-limited.html Vision mission Vision Ã¢â¬Å"To be amongstÃ most admired companies in India committed to excellenceÃ¢â¬ Mission Ã ·Ã Be customer obsessed company Ã ·Ã No. 1 Tyre Brand in India Ã ·Ã Deliver enhance value to all stakeholders Ã ·Ã Most profitable tyre company in India Ã ·Ã Enhance global presence through acquisition Ã ·Ã Motivated and committedÃ team developmentÃ for high performanceÃ organization http://www.jktyre.com/j-k-industries-limited.html Key developments JK tyre industries Earning results for first quarter declared 30.06.09 For the first quarter company has reportedÃ net profit of INR 40.75 crores or earnings of Rs 9.92per share on the Net Sales of INR 897.67 Crores In gross sales has been INR 964.58 Crores .The board [emailprotected] 27% dividend on equity shares for the financial year ended 31 march 2009 . Companies profit before tax had been INR 62.16 crores and operatingÃ profit was INR 107.14 Crores. PerformanceÃ during the quarter has significantly improved on account of all round cost reduction measures, better operatingÃ effeciencies, productivity, and richer product mix. First tyre company to receive ISO 14001. First and only tyre company to export passengerÃ car radial to Europe. WorldÃ¢â¬â¢s first tyre manufacturer to get QS9000 for its operation. IndiaÃ¢â¬â¢s first to get ISO 9001. JK tyre is pioneer in promoting Rallying, karting, motor sports, JK tyreÃ pioneer of steel radial technology. Customer satisfaction JK tyre is the preferred choice of the all leading vehicle manufacturers in India like Maruti (http://www.jktyre.com/directors-report06.pdf) BEML (http://www.overdrive.in/story-news-general_news/jk_tyre_to_produce_otr_tyres-12662-0.html) Ashok Leyland (http://www.financialexpress.com/news/truck-tyre-mkt-on-road-to-radialisation/88811/) TATA Motors Mahindra Force motors Volvo (http://www.thehindubusinessline.com/iw/2008/03/09/stories/2008030950701100.htm) JK Tyre meets ISO 9001, QS9000, ISO14001,E-MARK, DOT,IN METRO standards where ever applicable. JK Tyres efficient RD department is deeply involved in making improvements in the product performance, quality, and bring out new products. Company aims to give satisfaction to its customer by offering high quality and cost effective tyres and tubes. (http://www.jktyre.com/quality-policy.html) History of the company On 14 February 1951 JK organization was incorporated as a private limited company. Till 31 March 1970, the company was involved only in the business managing agency. After that, company took manufacturing activities and in February 1972 company obtained the letter of intent for production of automobile tyres and tubes. In 1974 company manufactured 4 lakh automobiles tyres and tubes per annum then on 1st April 1974 company was converted into public limited company. After this company promoted manufacturing project, it was done by J.K. Synthetics Ltd and straw Products Ltd. The company took international step by collaboration with General Tire Co.,U.S.A.,which was subsidiary of General Tire Rubber Co.,U.S.A. ,this collaboration was for the technical services which was for about 5 years and sales agreement for the supply of technical know-how, engineer and documentation for operation facilities for eight years. According to the agreement, J.K. tyre had right to use on its products the wording made in the collaboration with General Tire Co. Company renewed its technical collaboration agreement for further 5 years. In 1987 apart from 51 days strike as well as go slow from 14 OctoberÃ the overall working resulted in substantial profits. Since the strike was resolved efforts were made to launch a new pattern in steel belted Radial tyres and it was introduced for Maruti Gypsy and Tata Mobile by the company in 1988. The company proposed install latest and sophisticated RD equipement by incurring expenditure of Rs 300 lakh.Ã Due to RD in 1989 company introduced several new pattern and sizes of tyres including a semi-lug Nylon Truck tyre, and got good response from the market. In 1991 Hidrive Finance Ltd., Radial Finance Ltd., Handeep Investment, J.K International Ltd., J.K Asia Pacific, Shivdham Properties, Pancham Investment ltd., became the subsidiaries of the companies. By 1992 company international division expanded its activities by opening its office in Moscow( Russia) apart from companyÃ¢â¬â¢s subsidiaries already in U.K and Hongkong. Market well accepted the radial tyres for tractors launched previous year. In 1993 company introduced new brands of radial tyres Ã¢â¬ËBruteÃ¢â¬â¢ and Ã¢â¬ËUltimaÃ¢â¬â¢. After this compony started manufacturing steel belted radial tyres for the prestigious cars like Mercedes Benz, Peugeot,Daewoo race and Opel Astra. Market well received the new patterns developed for bus and trucks Ã¢â¬ËPE-T8Ã¢â¬â¢. Despite of rise in inputs cost and cost of raw material and the competion company maintained its progress. Company attained higher capacity and all around cost reduction on both plants at Jaykaygra and Banmore. Many new generation cars accepted the J.K steel radial as T- rated ultima launched and was accepted by DaewooÃ¢â¬â¢s Ã¢â¬ËCieloÃ¢â¬â¢ and then Mercedes benz india also choosed J.K steel radialÃ after this it G.MÃ¢â¬â¢s Ã¢â¬ËAstraÃ¢â¬â¢. Then next were `Peugekot FIATs, `UNO and M Ms `Ford. After this company launched premium tyre to meet heavy load market which was Ã¢â¬ËJet TrakÃ¢â¬â¢-39 with this company launched new tractor rear tyre Ã¢â¬ËSONAÃ¢â¬â¢ which was also greatly accepted by the market. During 1996 company launched car tyre JET Drive XS,and nylon car tyre for maruti along with semi-lug and heavy duty lug tyre for trucks. In radial category, Ultima XR Radial, a terrain tyre was introduced. All these tyres got good response from the consumers. Companies both the plants were operated at full capacity. In radial tyres units also launched dual contact high traction and high performance Aquasonic steel radial car tyre. As company had loan repayment of Rs 635 crores it proposed to reduced its debt by 125 crore in 2000. J.K tyre and the Indian oil corporation cameÃ collaboration to install digital air pressure gauges and setting up sales out at IOC petrol station across the country. In 2001 managing director of J.K Industries Raghupati singhania was selected 19th chairman of ATMA (Automotive Tyre Manufacturers Association). J.K Industries in 2003 got new Marketing Director as Mr. Ajay Kapila who was earlierÃ Senior-Vice President in Kinetic Engineering Ltd. J.K. tyres merged with Vikrant tyres along with the non tyre business, sugar and agriculture into separate companies which were J.K Sugar Ltd and J.K Agri-Gentics Ltd. On 2nd April 2007 J.K Industries Ltd changed their name to J.K tyre and Industries Ltd. (http://www.moneycontrol.com/stocks/company_info/company_history.php?sc_did=JKT01) History of JK Organisation JK Organisation owes its name to late Lala Juggilal Singhania, dynamic personality with broad vision. Inspired by the cause of Swadeshi movement of Mahatma Gandhi and driven the zeal to set up an Indian enterprise .Lala Kamlapat Singhania founded JK organization in 19 century ushering in new industrial era in India. The process of industrialization and diversification was worthily and successfully carried on by Lala KamlapatÃ¢â¬â¢s illustrious sons Ã¢â¬âSir Padampat, Lala kailashpat, Lala Lakshmipat, aided in no small measures by the Late Gopal Krishna son of Sir Padampat. (http://www.jktyre.com/founders.html) 1933- Juggilal Kamlapat cotton Spinning and Weaving Mills Co. Ltd was the first to manufacture calco prints in the country. In 1940 J.K iron and steel Co Ltd manufactured first time steel bailing hoops for jute and cotton with which country became self sufficient in meeting the entire demand. Then in 1944 they produced first timeÃ aluminium virgin Metal from the IndianÃ Bauxite atÃ AluminiumÃ corporation of India Ltd, Jaykaynagar. There after J.K engineer files manufactures first time in India Engineering files in 1949. In 1959 they were the first one to set up a continuous process plant of Rayon.Ã In 1960 J.K Iron steel Co Ltd at Kanpur manufactured for the first time in the country a hydraulically operated cane crushing Mill for their sugar plant in Khandsari and then they completed their 100 ton plant. During 1961 J.K chemical set up worldÃ¢â¬â¢s first plant for production Hydrosulphite of soda by the amalgamation process of sodium. Similarly in 1962 they their company J.K synthetics Ltd at kota produced first time nylon-6 with its own polymerised raw material in India. J.K Chemicals Ltd was the first one to produce sodium formaldehyde in India. InÃ 1968 they produce T.V sets in India along with Metallic Cops for Synthetic Filament yarnÃ industries.Ã In 1969 J.K synthetics manufactured acrylics fibres in the country for the first time in the country and J.K synthetics Ltd developed Dyeable Nylon. In 1973 they were the first to the licence Synthetic fibre technology to third party and produce Synthetic Fibre Machinery. In 1976 they produce steel belted radial for the first time in indiaÃ for the trucks, buses and passenger cars in their tyre plant at kankroli and then they make steel belted radial tyres for three wheelers which was manufactured for the first time in the world. In 1984 they produced white cement in India for the first time in IndiaÃ through dry process. Then J.K Synthetics produced Cathonic Dyeable fibre first time in India and nylon tyre cord based on Spin Draw Technology. In India J.K magnetic produced first magnetic tapes with cobalt technology.Ã In 1991 company set up a tyre palnt at Banmore with annual capacity 5.7 lakh tyres. Then in 1992 HASTERI RD centre was established bu the company after two years in 1994 they launched IndiaÃ¢â¬â¢s first T-rated tyre and Banmore tyre plant crossed 100 TPD. Next year mecedez benz was launched on J.K tyres and they got the ISO 9001 which was given to first time in history to tyre manufacturer. In 1996Ã they introduced steel wheels and launched first time in India dual contact high tractionÃ steel radial- aquasonic. Next was the big year for the compay they acquired Vikrant tyres ,awarded national export award for 96-97, first and the only tyre manyfacturer to get Ã¢â¬ËEÃ¢â¬â¢ mark certification, they launched first H rated tyre and their research institute got ISO 9002.Ã In 1998 they were awarded capexilÃ¢â¬â¢s highest export award for 1997-98, got QS 9000. In 1999 Jk tyre was ranked worldÃ¢â¬â¢s 16 largest tyre company, synergy with VTL in procurement, marketing and production flexibility, they got ISA-14000 certificate for environment and safety. In 2000 National Go-KartingÃ championships were introduced by the company. In 2001 company received CAPEXIL award and FOCUS LAC export award. In this year 2nd Go-karting championship was held by the company. (http://www.jktyre.com/milestones.html) Jk tyre acquisition of Mexican tyre company tornel JK tyre acquired Mexican based Ã¢â¬âcompany with the annual capacity of 6.6 million tyres ,this deal cost Rs 270 crores. This deal made the JK tyre No.1 tyre maker in the country as their annual capacity increased to 15 million units because they have surpassed Apollo tyres which was earlier No.1 with the capacity of 8-10 million. This acquisition not only gives JK tyres an additional tyres but access to theÃ lucrative market of Latin and North America. (http://web.ebscohost.com/ehost/pdf?vid=5hid=3[emailprotected]) The company is planning to sell both the brands JK and Tornel in U.S and Canada. They have planned to spend million more on the Tornel plants to add new shape to JKÃ brand and launch the JK radial and Tornel passenger and light truck brandsÃ for U.S customers. (http://web.ebscohost.com/ehost/detail?vid=10hid=101[emailprotected]bdata=JnNpdGU9ZWhvc3QtbGl2ZQ%3d%3d#db=bthAN=35120934)Ã JK tyre and motor sports ItÃ¢â¬â¢s been two decades that the JK tyre is closely related to adventurous world of motor sports. JK tyre has been constantlyÃ promoting motorsports not just only to discover several winners, but also using their awareness and knowledge of RD departmentÃ to develop tyres on which world can race upon. JK tyre realised the absence of the infrastructure, which is necessary for the accomplishment of the motorsports in India. Over the last five years, JK tyre has embarked over Rs 15 crore to support the motorsport in India. (http://www.jktyre.com/motorsports/jk-in-motorsports-history.html) Global presence Jk tyre along with its associates Vikrant Tyres Ltd is the leading exporter of tyres from the country which counts roughly 26% of exports. JK tyre is the worldÃ¢â¬â¢s first manufacturer of tyre to receive ISO 9000 along with QS 9000 for its operations. Across the world only JK tyre has received has certificate of QS 9000 for its multilocation operations. In the country it is only JK tyre was the first company to receive ISO 14001 in recognition of its environmental management systems. Nowadays, products manufactured by JK tyres compete with international players in the international market across the world. The products are exported to to more than 55 countries and in 6 continents. The company has robust and well developed distribution network for exports and the distributors get the full support from technical team for the product development so that they can meet the market requirements. JK tyre products are internationally certified in Europe, US, Middle East and South America. For commitment of offer in superior quality , standards and path-breaking breaking innovation the company has received numerous awards for exports forÃ last years.in 1999-00 JK being the largest tyre exporter to Latin America it was acknowledgedÃ by the Indian trade promotion organization (ITPO).Ã In 200-01 company was honoured with Ã¢â¬ËThe Special Export AwardÃ¢â¬â¢ from Capexil, with this company made its fourth consecutive award from IndiaÃ¢â¬â¢s premier industrial association. JK tyre is constantly making any eefort to deliver value to customerswith along with sound marketing strategy forms which are establishment consistent performance in international market.Ã To develop new products of excellent and distinguished products so that they can compete in the international market, JK tyre had had maintained its marketing and distribution strategies for export market. This credit goes to IndiaÃ¢â¬â¢s biggest in-house RD centre, HASTERI (Hari Shankar Singhania Elastomer And Tyre Research Institute). This centre is well equipped with latest testing facilities which helps in getting excellence by evolving technologies for superior product performance and it also reduces waste and thinks about the consumer needs. All over JK tyre has obtained many milestones. Despite of , bencjmarking customer sevice and plans to bring in several pioneering technologies there, a lot which will roll out in future in JK tyreÃ¢â¬â¢s winning path. (http://www.jktyre.com/global-business.html) JK tyres in North America In Mexican based company Tornel, JK tyre bought 100% stake. By this move JK tyre got access in the markets Of US along with this company can entered into the markets of South America. Tornel has total three manufacturing units with total capacity of 6.6.Million tyres per annum (http://www.business-standard.com/india/storypage.php?autono=319837) Technology at JK tyres Error proof Computer Aided Design Analysis JK tyres use updated tools and techniques which help them to figure outÃ and annihilate failure at the drawing board only. World class manufacturing on Automatic Machines Manufacturing of radials is done at air-conditioned plant fitted with the finest machinery to provide customer consistent good quality. Rigorous Testing Before the JK tyres reach the market it has to go through tough validation tests, both indoor and outdoor. Jk is one of the few companies that test their tyre so rigorously. Network of JK tyre Marketing Steel Wheels With the objective of meeting customer demand s and bringing best products and services form the customers, JK tyre established franchised chain nationwide retiled outlets as JK tyre steel wheels. It is considered to be one stop solution for the problems of and requirements of tyres and their services. In these they provide facilities like computerized wheel alignment, automated tyre changing, wheel balancing, air care, tyre rotation with the high technology and trained personnel guidance. Dial-a-tyre JK tyre has started delivering the tyre at the customerÃ¢â¬â¢s door. With this JK trained technician will deliver and fit the tyres at a pre-appointed time. In this wheel changing, balancing, and alignment is including. This step is user friendly to make the customer comfortable and for his convenience. AD-Campaigns JK tyre launched different types of ad campaigns to promote the product and the brand. The company publicized its product by placing its information in the media. Following are some of the ad-campaigns of JK tyres. Products JK tyre is leading manufacturer of tyres in India. It manufactures tyresÃ for entire segment of Truck/Bus, LCV, Passenger and Farms. Truck/ Bus-: JK Tyre is the leader in the segment of Truck/ Bus tyres. It has 70% market share in the truck and bus tyre segment. However this is very small sector Indian market but it is expected to grow in near future. They make Bias and radial types of tyres for this segment.Ã LCV-: In LCV segment they manufacturer such type of tyres and this they provide Bias and Radial. JK is the second largestÃ market share . Corporate social responsibility initiative by JK tyres J.K tyre believes that they get numerous inputs from the society, it adds value to these and offers the needed products and services to public at large. The profit which company makes is the enhancement by the public for value added. The purpose of CSR is enhance the government efforts by helping the citizen of the country, with which they can lead life which is prosperous, healthy, happy and more meaningful. It is believed that it is not only the job of the government to do the needful to the extent needed. ThatÃ¢â¬â¢s where the role of corporate citizen comes. In fact, it is helping ourselves because inputs and outputs comes from society and go back to society. So it is long run. J.K tyre and Industries undertook three major initiatives, 2004 onwards, as per deliberation in the central HRD Committee, presided over by Shri Hari Shankar Singhania, where all presidents and all time directors are members. Adult Literacy In 1950 the condition of china and indiaÃ was same i.e 18% of literacy. If the so huge population is illetrate then it is very difficult to imagine society making scientific progress and citizen leading purposeful and meaningful lives. From1950 there has been progress in this issue. China has got illiteracy 95% but our country got stuck atÃ 65%. Looking at this J.K group took initiative, startedÃ in may 2004Ã has made 6900 citizens of the country literate. Today, another 700 are participating in learning session in 30 groups at 10 different locationsÃ in different six local languages viz. Tamil, Telugu, Kannada, Oriya, Gujarati Hindi, under the guidance of our plants local management. The company has target for the year 2009 which 3000 plus.Ã The various place where classes are taken are J Central Pulp Mills at Songadh in Gujarat], Lakshmi Cement in Sirohi Rajasthan, J K sugar nr. Barielly, Fenner [ Hyderabad Madurai], J K agri in Hyderabad. For this company use the software developed by M/s TCS at the locations. The photograph shows a class in progress in a village near Hyderabad, organized by J K agri.K Tyre [ Banmore nr. Gwalior, Vikrant in Mysore, Kankroli in Rajasthan], J K paper [Rayagada in Orissa Prevention Of Hiv / Aids : Focus on Outside Community Mainly truckers and their helpers who are highly attacked by the disease HIV/AIDS. Looking at this scenario J.K tyre started in November 2005, and is supporting three clinics in situated at National Highway at Indore, Dhanbad, and Vishwa karma Nagar. J K Tyre supports the work being done by Melinda Bill Gates Foundation in collaboration with TCI Foundation. Awareness is the main objective of the project so that people should use preventive measures. In Ã¢â¬ËInfotainment MelasÃ which are held near the clinics company also participate , in these melaÃ¢â¬â¢s entertainment is combined with spreading message. Despite of 3 clinics run by TCI foundation and supported by JK tyre , one clinic named Ã¢â¬Å"JEEVAN KIRANÃ¢â¬ which is fully financed by JK tyre has been opened in Nov 2007 at Transport Nagar, Jaipur and 2nd clinic at shahpura on NH-8, which 70 Km short of Jaipur on way from Delhi on 25th May 2008. ItÃ¢â¬â¢s day-to-day operations are controlled and managed by NGO called, Ã¢â¬Å"VatsalyaÃ¢â¬ . Till now , in all five clinics more than 39000 persons have been attended to for ailments, of which 9590 were treatedÃ for STIÃ¢â¬â¢s [sexually transmitted infection] and rest for general ailments. Suspected cases wereÃ referred to government centres. Prevention Of Hiv / Aids : Inhouse , Focus on Our Employees JAN 2008 = MOU signed ; between ILO [Internationaal Labour Organization] for helping us in this endeavour ; also a 2 hr presentation was made to group of Sr executives by ILO. March 2008 = J K TYre HIV /AIDS POLICY was announced has been widely disseminated. Four pillars of this policy are : AWARENESS, NON-DISCRIMINATION, CONFIDENTIALTY CPOLLABORATION. APRIL 2008 = among employees a survey was carried out at all the location to assess the level of knowledge on the subject by an outside agency. MAY 2008 = among the employees training of 31 master trainersÃ by ILD took place who will address the other employees for 2 hour awareness session at all location. By the starting of July 2008, approximately 7000 employees took part in theÃ 2 hour awareness program addressed by the Master trainers/Peer Trainersand this was highly appreciated by the workers and unions. HIV / AIDS, As additional initiative in 2008 for Observing WORLD AIDS DAY ON 1stÃ December 2008 Company joinedÃ TCI foundation in observing the WORLD AIDS DAY at 13 locations across India [Delhi, Kanpur, Ghaziabad, Agra, Varanasi, Jaipur, Indore, Nagpur, Pune, Dhandbad, Jamshedpur, Hyderabad, Bangalore] The function called Truckers Ã¢â¬ËUtsav was attended by 22000 truckers which combined awareness generationÃ with entertainment. Many invitations went out in transport community with J.K tyre logo. JK tyre also facilitates their products and banners and speaks few minutes about the company on the mike. (http://www.jktyre.com/corporate-social-responsibility.html) What is tyre? Review of literature What is Tyre? Ã¢â¬Å"A tyre is just black and round with hole in the middle. Actually, itÃ¢â¬â¢s a complex piece of high technology that is essential for the passenger safety and the efficient running of the vehicle. ItÃ¢â¬â¢s a composite product. A tyre is a composite product that is, an inseparable assembly of materials with very different properties, whose manufacture demands great precision.Ã¢â¬ Ã (http://www.michelin.co.uk/michelinuk/en/car-van-44/what-tyre/20070301111326.html) Structure of Tyre Ã ·Ã Tread is that part of which comes into contact with road. It provides high grip, longer life durabilityÃ and protects carcass. Ã ·Ã Steel belt also protects carcass and provides stiffness to tread. Ã ·Ã The work Spiral layer contributes to high durability and manoeuvrability. Ã ·Ã Shoulder being thickest part of the tyre it saves the carcass from outer shocks and damages. Ã ·Ã Side wall being most flexible protect the carcass and provides comfortable ride to the driver. Ã ·Ã Main body of the tyre is ply cord, itÃ¢â¬â¢s that which manages inflation pressures and endures load and road shocks. Ã ·Ã Bead filler contributes in the high durability as well as manoeuvrability. Ã ·Ã A bead wire is that part which hold tyre on rim. Ã ·Ã Heat generated due abrasion of bead and rim flange id protected by chafer. NOTE: Construction of tyre may vary with size and pattern. (http://www.bridgestone.co.in/tyre/tyreknowledge/radialtyre.asp) Maintenance of tyre Maintenance of tyres is very essential to obtain the best performance. Following steps should be followed for proper maintenance of tyres-: Proper tyre mounting and de-mounting Ã ·Ã New tube should be used with new tyre. Ã ·Ã It should be kept in mind that tyre and tube are of same brand. Ã ·Ã Combination of tyre and rim should always be correct. Ã ·Ã Rim should be dirt and rust free and no bend should be there on the rim. Ã ·Ã It should check that rim valve is smooth and round. Ã ·Ã Before the tube is placed in the tyre, it should be cleaned the properly. Ã ·Ã Mounting machines should used as much as possible and use of hammers and chisel should be avoided. Ã ·Ã Ensure that before mounting and de-mounting tyre beads are lubricated. Ã ·Ã Before inflating the tyre, ensure that tyre beads are seating correctly on rim or not. Tyre balancing An un-balanced tyre may cause vibration. So it is very important. BalancingÃ of tyre should be done under following circumstances-: Ã ·Ã When vehicle covers 5000 Km Ã ·Ã If vehicle is coming across any vibration Ã ·Ã Mounting/de-mounting Tyre rotation Tyres must be rotated if any defect is found or vehicle have covered the distance of 5000 Km. First tyreÃ rotation is very important as it sets stage for long and even for tyre wear. Wheel alignment Ã ·Ã Proper wheel alignment should be maintained of the vehicle. Ã ·Ã It should done when ever required or after every 5000 Km. Daily tyre check Every morning before starting the vehicle, tyres should be properly checked. If the damages are exposed in the tyre, it should be cha
Tuesday, August 20, 2019
Cadbury Competitive Advantage Strategies 5. What is there about this companys strategy that can lead to sustainable competitive advantage? The following are several strategies that Cadbury had used to bid and acquire Adams into its confectionery business. Cadbury had created a dedicated M A team, which is under Stitzers strategy group, at corporate headquarters to replace autonomous and dispersed work by local businesses. Besides that, Cadbury Schweppes brought in nearly 100 managers from divisions around the world to Waldorf Astoria Hotel in New York City for a two week workshop to refine the model and build commitment to the deal and the planned synergy numbers. Thirdly, Cadbury Schweppes had indentified the top tier of Adams management and began making determinations as to who they would like to keep in the event of successful acquisitions. Next strategy is the mantra Best person, right to take the most qualified candidate to match the job that best suited him or her. They also assumed the merger as the potentially transformative event. Cadbury Schweppes had developed an exhaustive integration plan in the event of a successful bid for Adams. A steering committee would be set up with integration management team, and enable teams to achieve the full potential of the merger. Each of this strategies will be evaluated with 4 variables which are value added, rare, hard to imitate, and not easily substitutable. Any of these strategies which had fulfilled all of the four criteria will lead to the sustainable competitive advantage in order to bid Adams successfully from other potential bidders like Nestle, Wrigley, Kraft, Pepsico, Mars, Hershey and Pharma companies. According to the case, Cadbury is estimated ranked as the fifth in the line of potential bidders which is behind Nestle, Kraft, Mars and Hersheys. The first strategy is creating a dedicated merger and acquisition team to replace autonomous and dispersed work by local businesses. We evaluated it as rare because not many companies would spend so many times and human capital to build a comprehensive business model of Adams and also human resources just to make one acquisitions. Besides that, there is a added value behind the team, whereby a team of talented people were gathered to make a strategic business model to bid Adams as they could see the future of Adams which can make Cadbury a leading confectionary company in the industry. It is also rather hard to imitate because the strategy of mergers and acquisitions were planned by whole department rather than just 5 people unit. This 5 people unit team is non-substitutable, as Cadbury is the first company with the team that already begun a comprehensive of Adams model of businesses which include detailed information about marketing and sales, list of potential cost and revenue syne rgies for each of 50 countries and etc. This strategy had proven how well that Cadbury analyzed on Adams before they make decisions to acquire a company. Moreover, Cadbury Schweppes brought in nearly 100 managers from divisions around the world to Waldorf Astoria Hotel in New York City for a two week workshop to refine the model and build commitment to the deal and the planned synergy numbers. We do not see this as rare because according to the case, competitors would have higher cost. This strategy has value creations because it has brought in the value of team work and stimulates closer relationship between managers from division of around the world. It is rather hard to imitate by many of the companies because, such strategy may require a very large cost by having two week workshop the synergy numbers that they planned in this strategy are easy to substitute because in the case, Stitzer claimed that the synergies were not large enough to support the price necessary to win the deal. Third strategy whom Cadbury Schweppes had indentified the top tier of Adams management and began making determinations as to who they would like to keep in the event of successful acquisitions. This strategy has value creation because, before Cadbury identified and analyzed their organizational culture and its top management team whether it is suitable with Cadburys corporate culture to make a successful joint business in future or not. Furthermore, this strategy is considered as rare as it will help increase possibility of becoming the preferred purchaser for Adams as well Pfizer who is currently the CEO of Adams. It is also not easy to imitate by competitors, as not many top executives can win the chance to know Adams detailed corporate information as what Cadburys do. This strategy would be difficult to substitute by other competitors. For example Nestle, as they do not have much information about Adam especially regarding their corporate culture whether it would culturally fit wi th them or not, although they have large capitals to bid Adams over Cadbury. The fourth strategy with the mantra Best person, right job which means human resources will take the best qualified candidate to match the job that best suited him or her. Added value created by having the most qualified and talented employee to produce the best quality job for the company. Besides that, it is rare, because every company is unsure that it had any of their employees who could lead the large American divisions if Adams is successfully acquired. It is also hard to substitute as many managers did not have the experience to run an integrated business on a global scale. However, the mantra or slogan that Cadbury carry with them are easily imitated by others as every company have the same objectives to employ the best employee in order to help the company to achieve the utmost results as well as to improve productivity. They assume the merger as the potentially transformative event. This strategy has value added element where it is an opportunity to centralize, transform practices and create more shared services. Besides that, it is also rare that only Stitzer believed that this kind of acquisition may motivate others to accept changes towards better improvement. Furthermore, acquisition on Adams is something new on both cultural and social on the company itself. With such strategy in mind of every executives is hard and difficult to adapt my every organizations, as not everyone especially the senior executives will accept new changes or new cultural when a company are merged and have to change their rules and organizations which has caused this strategy hard to imitate. However, Cadburys senior managers foresee the merger and acquisition as an opportunity to restructure a new business model for Cadbury towards achieving leading confectionary company. There is very less substitute as Cadbury who wil l have a very motivating thinking towards accepting new changes which help the company to achieve sustainable advantage. Cadbury Schweppes had developed an exhaustive integration plan in the event of a successful bid for Adams. Such plan is rare because, within 90 days, all validation and planning of the synergies has to be complete and new synergy projects that needed to Beat the Model to be identified and mapped out. In addition, the plan is quite hard to imitate, as all the bidding preparation are required to work out within a short time and period whereby there is no other teams or competitors that could work out a successful integration plan in such a short period. Furthermore, we find out that it is quite hard to find another similar merger that could implement an integration will all the detailed work plan as well as synergy projects to be done within 60 days. Within the first 90 days monthly, all the monthly status report about merger integration and applicable synergies will begin in each department of the company itself, which indicated that the Cadbury has added value in terms of building st rategic plan to acquire Adams compared to other competitors. A steering committee would be set up with integration management team and enabler teams to achieve the full potential of the merger. This strategy contains regional value capture teams as well as functional value capture teams which are important to drive the company towards achieving sustainable competitive advantage. This is also rare because it is necessary to prepare huge amount of human resources to manage several teams in carrying out the integration plan. Furthermore, it is not easily imitated by competitors as not many companies would have interest to focus and spend time to organize a huge number of human capital to implement an integration plan just on the acquisition strategy which the company that acquired are not 100 percent would bring profits for the company itself. Besides that, Adams will also find hard to find other bidders like Cadbury whom had been making deep analysis and study about the corporate detailed information and there are some business similarities betw een Cadbury and Adams. In conclusion, out of so many strategies that Cadbury had implemented, only some of the strategies can lead to sustainable competitive advantage as they had fulfilled 4 criteria, namely added value, rare, hard to imitate and hard to substitute. The strategies are: (1) creating dedicated merger and acquisition team to replace autonomous and dispersed work by local businesses; (2) indentifying the top tier of Adams management and begin making determinations as to who they would like to keep in the event of successful acquisitions; (3) assume the merger as the potentially transformative event; (4) developed an exhaustive integration plan in the event of a successful bid for Adams; and (5) setting up steering committee with integration management team, and enabler teams to achieve the full potential of the merger
Monday, August 19, 2019
The Course of Political Development in Uganda and its Effect on Economic Development Development has recently become a new buzz word in international relations. Through an exploration of political, social and economic development around the globe, scholars are trying to understand which policies are most beneficial, and why certain policies are effective and why some fail. The connection between different types of development is often an important part of this research as well. The connection between political and economic development is of specific interest since the end of the Cold War and the failure of most communist-based systems. The emergence of capitalism as the dominant world economic system at the conclusion of the Cold War forces countries in the developing world to adopt capitalist policies. However, the question remains as to the effect of political development on economic development. Political development is traditionally defined as moving towards a democratic system with free and fair elections in which all citizens can participate to govern themselves, and eventually moving to a more liberal democratic state which also protects civil rights. The path of this development is often hard to define because each state has its own history and therefore its own methods for moving towards this end goal. Many western scholars recommend that states create and implement institutions to promote democracy, hold elections and open political competition to multiple parties. However the success of states attempts at implementing these policies is debatable. Economic development, on the other hand, is historically defined as economic growth, often based in gross domestic product, increased international trade, in... ...ame Press: Notre Dame. Harvey, Charles and Mark Robinson. 1995. Ã¢â¬Å"Economic Reform and Political Liberalization in Uganda.Ã¢â¬ Institute of Development Studies: Brighton. Ã¢â¬Å"Hostile to Democracy: The Movement System and Political Repression in Uganda.Ã¢â¬ 1999. Human Rights Watch: New York. Ã¢â¬Å"Idi Amin Dada Oumee.Ã¢â¬ Updated, 8 September 2003. www.moreorless.au.com/killers /amin.htm. JÃ ¸rgensen, Jan Jelmert. 1981. Ã¢â¬Å"Uganda: A Modern History.Ã¢â¬ St. MartinÃ¢â¬â¢s Press: New York. Kreimer, Alcira, Paul Collier, Colin S. Scott and Margaret Arnold. 2000. Ã¢â¬Å"Uganda: Post-Conflict Reconstruction.Ã¢â¬ World Bank: Washington D.C. Sharer, Robert L. Hema R. De Zoysa and Calvin A. McDonald. 1995. Ã¢â¬Å"Uganda: Adjustment with Growth, 1987-94.Ã¢â¬ International Monetary Fund: Washington D.C. Ã¢â¬Å"Uganda Vision 2025.Ã¢â¬ 1999. National Long Term Perspective Studies Project: Kampala.
Sunday, August 18, 2019
Since the mid-1990s, the United Nations (UN) and other multilateral bodies have asserted authority for the administration of war-torn territories and shouldered the responsibility of placing them on the trajectory of political change (Knoll 2008: 2). In 1995, right after Dayton Peace Agreement, the UN assumed responsibility in Bosnia and Herzegovina (Chesterman 2004: 2). In 1999, following NATOÃ¢â¬â¢s armed intervention in Kosovo, the Security Council adopted Resolution 1244 establishing the United Nations Interim Administration Mission in Kosovo (Brabandere 2009: 37). Just a few months later, a transitional administration was created with effective sovereignty over East Timor until independence (UNTAET). These expanding mandates continued a trend that began with the operations in Namibia in 1989 and Cambodia in 1993, where the United Nations exercised varying degrees of civilian authority in addition to supervising elections (Chesterman 2004: 2). However, although the UN had assumed responsibility in 68 countries since 1948, the missions in Bosnia, Kosovo, and East Timor are commonly seen as unique in the history of the United Nations (Chesterman 2004; Doyle 2001; Chopra 1998; Wolfrum 2005; Stahn 2008). First, international administrations of these countries represent the most comprehensive missions ever deployed by the United Nations. Second, these cases also represent clear examples of democratic regime-building efforts on the part of international administrators. In the three cases, democratic regime-building has been an explicit goal, and international administrators have sought to oversee and involve themselves in a full process of regime change (Tansey 2009). Lastly, the three cases also display variation on both independent a... ...lack of interviews or surveys represents a limitation in this respect. These gathering-data techniques could enormously supplement the present paper in addition to primary documents, academic literature and non-academic materials published by think-tanks and NGOs. Second, following Przeworski et. al. (2000) and Mainwaring et. al. (2001), the present paper it leaves out substantive results such as social equality and economic development. Nevertheless, although these caveats are significant and may serve as the impetus for further research they do not overshadow the modest endeavor of the present paper. As Mainwaring et. al. (2000) suggests, by applying a trichotomous scale with a modest information demand, the number of coding errors significantly would be reduced and thus achieve greater reliability than would be possible under a more demanding measurement scale.
Saturday, August 17, 2019
There are many contemporary social concerns in the world today. Information on these concerns can be found just about anywhere including the Internet, T.V. and even articles. A critical thinker has a responsibility to find out information on the topic that is correct, true, has validity and limited to no biases. One contemporary issue that is going on is the issue with the addiction to crystal meth. A critical thinker needs to be able to understand the validity and truth behind a writers work, understand the importance of ethics and moral reasoning, and understand the advantages of informational technology.Any critical thinker can understand how crystal meth addiction is impacting the contemporary world today. Crystal meth is a very addictive drug and has many side effects to the brain and to the body. In order for a critical thinker to find reliable resources, he or she must research many areas of a writerÃ¢â¬â¢s paper.One way that a person can understand if a an article, website, etc. is a reliable source is to conduct research on the resources that writer four his or her information. All resources need to be creditable and those in turn have to credit where the information came from. This information needs to be written by someone who is an expert in the field at hand. In this case the topic is crystal meth addiction. An expert should have no issue with peer-reviewed.A reference should also be peer-reviewed. When a source is peer-reviewed itÃ has been reviewed and passed by a board that works in the authorÃ¢â¬â¢s field of study. This can lead toÃ sources being published allowing others to view information that is correct. It can also create an issue in having some articles rejected if the peer-reviewers do not agree with the information that is being printed. An example of information that can be rejected is bias information.A critical thinker needs to be careful to understand when he or she is coming across bias. Bias is when the writer is defending one side over the other is facts. When a research paper is written, it needs to cover all sides of the issue at hand. A research paper on crystal meth addiction would be bias if it only described how poor, homeless people become addicted to crystal meth. A critical thinker should be able to understand how this is bias and not true. A critical thinker should be able to understand that people from all walks of life could and can become addicted to crystal meth. Along with a critical thinker understanding bias in a resource, he or she must also understand validity.In order for a critical thinker to hold full responsibility for a resource, he or she must look into the validity of a resource. Validity revolves around the logic and truth behind information. A resource must contain both truth and logic. The truth is what a research paper is all about. Information must be true and contain information that can be backed up by research and education. An topic of addiction to crystal meth is a very big social concern that people should be educated on. This information must come from studies, research, and information that have been provided by researchers who have studied the field and have done a number of tests. When looking into the facts about crystal meth addiction, a critical thinker must be able to understand what is the truth and what is not.Many articles about crystal meth addiction have stats and percentages. A critical thinker must be able to look at the stats and percentages and understand where the resource is getting the information. There may come times when the percentages are off based on where the information has comeÃ from. A critical thinker should be able to understand that if an article states that there are a zero percentage of people addicted to crystal meth, this is not the truth and this information should not be looked into. This also contains the fact of how factual the information really is.Fact is a very big part of understanding literatu re review. When a critical thinker is looking at literature, he or she needs the information to be true and to have fact behind every word. If an article is published with fake information, this can lead to the critical thinker having misinformation and understanding the topic of addiction to crystal meth in the wrong way. Every piece of literature that a critical thinker reads must have great resources, peer-reviewed information, contain no bias, and have validity to back it up in order to get the correct and right information.When looking into a piece of literature, a critical thinker should looking into the resources, peer-viewed, bias, and validity of the information at hand. This will allow the critical thinker to get the best information for his or her information on a topic such as the addiction to crystal meth. Finding these four main points in a piece of literature will help keep information as reliable as possible on a contemporary issue.Researching the addiction to crysta l meth will result in a major number of findings. It isÃ the responsibility of a critical thinker to understand the findings of each piece of literature he or she looks into. The first thing to look into is the information about crystal meth addiction. The site that has been published by the National Institute on Drug Abuse is full of information about what crystal meth (methamphetamine) is, what it does to a person, the statistics and trends, how it is abused and must more. In order to make sure this site is going to be useful, a contemporary thinker must look into the sources, bias, and validity of the literature and when the last time it was updated.This website has a section that deals with the research resources. This isÃ a good place to start in order to make sure the information is going to meet the criteria. The research resource includes a list of genetics research resources, data harmonization projects, and justice system resources. This information will provide where the information on the site has come from and who can back it up in order to make sure it is valid information. Here a critical thinking can see whom the NIH (National Institute on Drug Abuse) teamed up with in order to get the findings and information they have published. These researchers can be looked into and followed up with in order to make sure that the NIH is using true and real information on the topic of crystal meth addiction.The information found on the research resources will also let the person know that this information has been peer-viewed by all of the researchers involved in the findings. The next part that a critical thinker needs to look into is if there is any bias information in the literature. Bias information is information that is leading more towards one side.Reading the informationÃ that the National Institute on Drug Abuse has written it is easy to see that the information is not bias and deals with the facts of crystal meth addiction. There is informat ion on how the drug is used. The NIH states Ã¢â¬Å"methamphetamine [crystal meth] is a white, odorless, bitter-tasting crystalline powder that easily dissolves in water or alcohol and is taken orally, intranasally (snorting the powder), by needle injection, or by smoking (National Institute on Drug Abuse, 2010, para 2). There is nothing that is bias about the information found on this website. The literature is informational and very valid.The validity of the information is very present. After reading through all of the resources and researchers involved, a critical thinker can understand that the information at hand is valid. This website has information that is both logical and factual present throughout all of the information that it provides. The same steps can be applied to another article about crystal meth.Sherry Mumford wrote an article called Putting meth addiction in context. This article should be researched to make sure it follows the same guidelines as the first literat ure information. The article revolves around Chilliwack, B.C. and the crystal meth addiction that can be found there. Sherry Mumford wrote the article and was published by Torstar Syndication Services, a Division of Toronto Star Newspapers, LLC. This LLC peer-viewed the article and found that the information was valid and decided to publish it.A critical thinker could argue that the article has some bias parts in it. The article states that Ã¢â¬Å"[Meth] is not an epidemic. ItÃ¢â¬â¢s a drug trend and itÃ¢â¬â¢s problematic. It came on fairly quickly but it will go awayÃ¢â¬ (Mumford, 2004, para 6). This information is leading more towards sayingÃ that crystal meth is not addiction and is more of just a trend that is going around. This does not give the allusion that crystal meth is addictive and some people have trouble getting off the drug. This could also be considered in the validity of the article.The validity of an article is very important. The article contains some num ber on how many people are seeking help in the area. The article states Ã¢â¬Å"a total of 1,200 young people sought help from Fraser Health addictions services in 2003-04, and for adult clients the total was 5,500 in that same periodÃ¢â¬ (Mumford, 2004, para 14). This information is very valid and the overall validity of the article is good.Another way to make sure that a piece of literature checks out is to see when the last time it was updated. An article called Straight faces about meth addiction was published in 2005 by Torstar Syndication Services, A Division of Toronto Star Newspaper, LLC. This article was peer-viewed by the publication company. The article also has a side bar stating the it was late updated in 2010. This left five years for new information to be found and changed if any information was not the same or not correct. This can be a real help to a critical thinker when making sure the information is right. The information also needs to contain no bias.The artic le deals with information on how to try and stop the crystal meth addiction. This article is not bias in anyway. The article is trying to help parents understand that even if it seems tough, there can be help for a son or daughter to get out of the addiction. The article does not state that is not help, which would lead to bias information. Stating that there is no help for anyone who becomes addicted to crystal meth would lead to a bias view. Knowledge ofÃ resources will help a critical thinker understand the truth and validity behind literature.Knowledge not only helps a critical thinker understand the truth and validity behind literature but it can also help with the impact of social elements on both local and global communities. The knowledge that a person gains through social and institution elements can really have an impact on both local communities and global communities.Academic knowledge can impact local communities from a social element on the topic of crystal meth addi ction. People are taught that addiction is real and can effect so many people. It is important for people to understand that addiction can be found locally and education can help with the issue. When it comes to addiction, the more educated a person is, the better the understanding that person will have on the topic and how go about the issue.The Internet is a big way for people to gain academic knowledge on information that is going on locally and globally. This information can help a person see the underling issues that come with crystal meth addiction. Academic knowledge can help people understand the truth in small communities and even across the world. Academic knowledge can be anything from what a person learns in school to what is taught to us by others such as a co-worker who was educated in crystal meth addiction.Academic knowledge can have a big impact on local communities. Understanding the truth behind crystal meth addiction can really help a community understand the iss ue. An article written by Goble and BattershillÃ talks about how the leaders of a town decided to educate the town on crystal meth. A man by the name of Ramsey held a movie screening at the local highschool. Ramsey stated that the forum Ã¢â¬Å"will include a screening of a disturbing eighteen minute filmÃ¢â¬ (Goble and Battershill, 2005, para 17). This information will help to inform the local community and help keep them educated on the topic of addiction.Being educated is the best way to try and find a resolution to any issue in a community. The communities need to know that some side effects of a crystal meth user are Ã¢â¬Å"extreme paranoia, visual and auditory hallucinations and severe cognitive impairmentÃ¢â¬ (Lecomte, 2005, para 3). This can help others to understand what they need to look for in a person who is addicted to any type of drug, not just crystal meth. A person can then use their knowledge to understand that drugs mess with the brain and body.Academic know ledge can also help a critical thinker understand that an environment can have a lot to do with a person who is venerable to addiction. Through academic knowledge we learn that there are different environments, which can lead to different outcomes of how someone is raise, different types of cultures, and different subdivisions. An article by Matt Hartley talks about how some areas in the world can lead to a higher change of a person becoming addicted to drugs. Matt Hartley states Ã¢â¬Å"ItÃ¢â¬â¢s hard enough to positively conduct treatment in you own community, [but] sending the kids far away, especially to a larger city where theyÃ¢â¬â¢re going to run into a lot more troubled youth, is trickyÃ¢â¬ (Hartley, 2006, para. 9). This leads to the issue of the global community academic education can have an impact on.It is very important for a any person to know what is going on around the glob. A person can apply academic education to a global matter. The education a person has to apply to a localÃ community can also be applied to a global community. If using environment as an example, the same different types of environments in a community can alsoÃ be found around the world. Education does not only have to be academic. Education and information can be taught at a young age from anywhere.A survey back in 2009 came back with the results that Ã¢â¬Å"one out of every five students who filled out the survey from after an anti-drug groupÃ¢â¬â¢s presentation said they know of someone using crystal methÃ¢â¬ (Ryan, 2009, Infomart). Kids all across the globe need to be educated on this topic and understand the issues that come along with the addiction to not only crystal meth, but also any drug for that matter. Education is everywhere. Active citizenship in this matter and education could really help with the percentage of addicts in a community and around the globe.Active citizenship could impact the issue of the addiction to crystal meth in the next five t o ten years. The active citizenship has already started to help with getting the numbers of people addicted to crystal meth down. The National Institute of Drug Abuse has reported that the use of crystal meth in teens has started to drop of the recent years. The site suggests that this is because of all of the attention being brought to the subject. If this continues of the next five to ten years, there could be a very low rate at the end. The next five to ten years could show a very big difference in what we see today.Using education, the next five to ten years could show an great drop in the amount of users of crystal meth. There are many different types of educational tools out there besides academic. People can also become educated with the World Wide Web, multimedia (blogs,Ã videos, radio), television. Education has already started to bring down the number of kids doing crystal meth. According to Geoffrey Laredo there has already been a Ã¢â¬Å"significant decrease in methamph etamine abuseÃ¢â¬ (Laredo, 2004, para 1). Education has helped with this.Education keeps growing and so does technology. Technology in the next five to ten years is going to be a great impact with how education works today. Today people can find information on any topic on the Internet. Giving technology five to ten years is going to help education further and help soÃ many more people with the information of addiction to crystal meth.There are so many blogs and videos out there that help people understand why not to do drugs and what the side effects are. Videos, blogs, and prodcasts are a way for people to communicate with each other or even gain information on a topic like crystal meth addiction. When it comes to videos, blogs, and prodcasts; a critical thinker has to be careful about the information that is being provided. These types of multimedia can contain lots of bias and very little validity.There are many blogs out there about addiction. A blog is a personal webpage or website that allows that person to write opinions, stories, personal information, and also allows for others to comment on this information. There are many blogs about addiction that are full of information about recovery, the struggles, and what each person went through personally as a addict or as a family or friend of an addict.The blog called An Addict In Our SonÃ¢â¬â¢s Bedroom is a blog for parents dealing with an addict child. This blog allows for the main Ã¢â¬Å"Mom and DadÃ¢â¬ to communicate with others and for others to reach out to them. The blog does not seem to have very many resources and can come across as bias in some cases. The information in this blog is valid based on the fact that it is coming from real life stories.A critical thinker can apply academic knowledge to this blog and understand the validity of the issues and the fact that some parts may come across as bias. A critical thinker can also understand how some of the information is not true nor meet s the qualifications of a peer-viewed article. The information on the blog is very relevant to the issue at hand: Addiction to crystal meth.This blog has many stories of what a family member of a user is going through. It also tells stories of how the people reach out to others and even talks to school students about the issues with addiction and what addiction can do to a person. There is so much personal information that statistics and numbers will not give someone. The validity and truth behind a blog is much different than the type of truth a validity one would get from an article backed up by many sources.Academic knowledge can help a person understand contemporary social concerns and how to apply the principles of active citizenship to those issues. A critical thinker needs to be able to know what information is good and what information is questionable. A critical thinker needs to be able to understand the validity, bias, and important of peer-viewed resourceÃ and the impor tance of technology gathering data when dealing with any type of concern. This will help a critical thinker gain information that is correct, valid, and usable in the real world.
Discuss the main differences between qualitative and quantitative approaches to data collection and analysis in management research. Your answer should make reference to the philosophical assumptions which underpin these methodological approaches. Introduction Whenever a decision is made to undertake a piece of research a method for conducting the study is required. In scientific research the techniques typically used for data collection and analysis are those which allow the evaluation of data to test a predetermined hypothesis (Zikmund, 2000). An example of this is a laboratory-based experiment where the researcher can be in full control of all the variables involved and can therefore be sure that any change in the phenomena under investigation is a direct result of an identified and controlled stimulus. In marketing research however, which is usually reliant on some aspect of human influence, it has been proposed that such a uniform, rigid approach is not appropriate: Ã¢â¬Å"There is never a single, perfect research design that is the best for all marketing research projects, or even a specific type of marketing research task. (Malhotra and Birks, 2000: p. 70) The aim of this assignment is to critically evaluate the quantitative and qualitative approaches to research, specifically focusing on the marketing perspective. To do this, consideration is firstly given to the basic differences between the qualitative and quantitative approaches, considering the seemingly opposing theoretical paradigms from which they have origina ted. Subsequently the development of the marketing discipline is examined with a specific focus on how and why different research methods have been employed in the field. Attention is Page 1 of 1 iven to the need for marketing to address both the issue of verifying existing hypotheses, and the requirement to develop new theory. As there appears to be no ideal research method for use in marketing it would seem that what is important is being critically aware of the strengths and weaknesses of the approaches available. Finally, therefore, the notion of pluralism, or methodological triangulation, is explored as such an approach is often used to exploit the strengths and minimise weaknesses in research design through the combination of two or more research methods, often from opposing theoretical paradigms. Basic differences between quantitative and qualitative research Qualitative research can be defined as: Ã¢â¬Å"Ã¢â¬ ¦the collection, analysis and interpretation of data that cannot be meaningfully quantified, that is, summarised in the form of numbers. Ã¢â¬ (Parasuraman et al, 2004: p. 195) Whereas quantitative research can be defined as: Ã¢â¬Å"Ã¢â¬ ¦the collection of data that involves larger, more representative respondent samples and the numerical calculation of results. Ã¢â¬ (Parasuraman et al, 2004: p. 195) Historically it has been considered that science based disciplines such as mathematics and physics are especially suited to quantitative research methods. Such methods are considered to be objective and lead to numerical, absolute outcomes, which can be verified through repetition and further testing (Zikmund, 2000); in other words the knowledge is external to the knower (Milliken, 2001), and therefore is available be found by whoever conducts the necessary research (Cunningham, 1999). This view of natural science can be considered to fit within the positivist paradigm, where a paradigm can be thought of as theoretical framework for looking at a situation and a basis upon which phenomena can be analysed and interpreted Page 2 of 2 (Gill and Johnson, 2002). Kuhn (1970) supports the need for paradigms on the basis that they bind disciplines together, and without them there would be no valid position from which to undertake research. Deshpande (1983) suggests that the acceptance of a particular theoretical aradigm is typically followed by a choice of a specific set of research methods that appear to fit within it. This is perhaps exemplified by the significant use of laboratory experiments in pure scientific disciplines. Within the social sciences however there has been a long-standing debate surrounding which philosophical standpoint, or paradigm, it is appropriate for research methods to be derived from (Milliken, 2001). Cohen et al (2000) consider there to be two m ajor, apparently contradictory, views relating to how research should be conducted within social science. The first aligns social science with natural science and therefore implies that research in the field should be directed towards the search for universal laws which regulate individual social behaviour. The second focuses on the human element of social science research, with recognition of the notion that people are not inanimate objects and therefore cannot be treated as such. Aligning social science with natural science arguably implies that data collection and analysis is best performed from a positivist standpoint. As research methods favoured by positivists tend towards those reliant on quantification (Gill and Johnson, 2002), it would follow that in management research the focus should be on quantitative research methods. Research conducted from the positivist viewpoint is usually considered to be reductionist in nature, and is often termed hypothetico-deductive, as it aims to derive a result in relation to a predefined hypothesis (Zikmund, 2000). Conversely, an approach to research which embraces human individuality and places emphasis on how people perceive and give meaning to their own Page 3 of 3 socially created world, can be considered constructivist (Hunt, 1994), and phenomenological (Gill and Johnson, 2002). The focus from this standpoint is therefore on understanding, interpreting and building theory rather than objectively testing, deducing and verifying an existing hypothesis. Such an approach can be considered inductive in nature and therefore favours the adoption of qualitative research methods. ollows: Ã¢â¬Å"Ã¢â¬ ¦the most telling and fundamental distinction between the paradigms is on the dimension of verification versus discoveryÃ¢â¬ ¦quantitative methods have been developed most directly for the task of verifying or confirming theories andÃ¢â¬ ¦qualitative methods were purposely developed for the task of discovering or generating theories. Ã¢â¬ (Reichardt and Cook, 1979: cited in Deshpande, 1983: p. 105 ) This can be explained further as At the extreme of the inductive spectrum lies the concept of grounded theory developed by Glaser and Strauss (1967). Here the researcher builds theory based entirely on the data obtained in a particular study without the influence of predetermined knowledge or preconceived hypotheses. Taking deduction to the extreme hypotheses can only ever be tested, raising the question of how it is possible to obtain a hypothesis in the first place. This presents a number of dilemmas with regard to research in the field of management, including whether it is more appropriate to test existing hypotheses or to develop new theory. The theory-testing versus theory-generation debate is particularly significant in the field of marketing as, due to the relative youth of the discipline, marketers are faced with the challenge of both obtaining and maintaining respect and credibility for the work that has been done so far (Bartels, 1983); and continuing to generate theory needed to develop a coherent, holistic body of knowledge which will clear up marketingÃ¢â¬â¢s existing Ã¢â¬Å"theory messÃ¢â¬ (Gummesson, 2002: p. 349). Page 4 of 4 Development of research in the field of marketing The discipline of marketing, which came about as a departure from economics not long after 1900, originally had no identity of its own. There was no predetermined framework for its development, nor any real expectation of what it should, or could, become (Bartels, 1983). The way the discipline started to develop however led to a belief that it had Ã¢â¬Å"Ã¢â¬ ¦meritorious scientific characterÃ¢â¬ (Bartels, 1983: p. 34), which subsequently influenced ideas about the way in which credible research in the field should be conducted. Consequently approaches to research in marketing have historically been dominated by deductive processes (Hyde, 2000). Milliken (2001) supports this with the observation that within the marketing literature there has been little attention paid to qualitative research. If marketing was universally accepted to be akin to a pure science then this may be an acceptable situation. It has been suggested however that, rather than being a science, marketing is actually an art which belongs both to the world of business and the school of humanities (Halliday, 1999). It was noted by Deshpande (1983) that in the early 1980s there were only four major textbooks dealing with the metatheoretical issues in marketing, and it can therefore be understood that Ã¢â¬Å"Ã¢â¬ ¦self conscious reflection on theory construction in marketing is of fairly recent origin. Ã¢â¬ (p. 104). Peter (1982), supported by Deshpande (1983), argues that the dominant philosophical approach applied in marketing is that of logical empiricism. Such a positivist approach forces a Ã¢â¬Å"Ã¢â¬ ¦search for causality and the assumption of determinismÃ¢â¬ (Hunt, 1994: p. 7), which directs those conducting marketing research towards hypotheticodeductive methods for the verification of existing theories rather than development of new ones. Page 5 of 5 Goulding (1999) suggests that the popularity of the positivist paradigm may be down to the more transparent rules which it projects with regard to the basis of hypotheses and their testing, resulting in a clearer picture of what is a ccepted to be known and what remains unknown or untested. As marketing is a relatively young discipline, quantitative methods have therefore been regularly favoured over qualitative methods in an attempt to establish credibility and respectability (Bartels, 1983). Bass (1993) unreservedly supports quantitative research and the scientific view of marketing, on the basis of the need to make general laws and principles which can be widely applied. To emphasise his position further Bass (1993) repeatedly refers to the discipline as not as Ã¢â¬Å"marketingÃ¢â¬ but as Ã¢â¬Å"marketing scienceÃ¢â¬ . Despite this apparent favouritism of qualitative research, for establishing integrity and credence, it has been suggested that marketing as a discipline has failed to develop a coherent theoretical foundation due to the inappropriate selection and use of methods within the framework of logical empiricism (Leone and Schultz, 1980). criticises how qualitative research is implemented. Gummesson (2001) also He questions whether or not it is ppropriate to make a jump from a subjective answer given by a person, perhaps in the form of a questionnaire response, to hard facts about the population being studied, and furthermore if a model being selected for use in marketing research can be an appropriate proxy for the particular situation being studied. Gummesson (2001) instead advocates an interactive approach to research in marketing based on Ã¢â¬Å"Ã¢â¬ ¦a humanistic, hermeneutic and phenomenological paradigm. (p. 40). Deshpande (1983) is in agreement with this and proposes that, rather th at the incorrectly using quantitative research methods, the shortfall in theory development in the field may lie in the inappropriate adoption of a quantitative paradigm where a qualitative one would be more appropriate: Ã¢â¬Å"If we ignore the qualitative paradigm, we also by definition exclude the principal systematic means of theory generation. Ã¢â¬ (Deshpande, 1983: p. 106) Page 6 of 6 The dominance of logical empiricism in marketing has therefore been seen as potentially detrimental to the discipline, because the successful development of an appropriate holistic and sound body of theory is necessary for the credibility of the field in both management and academe (Bartels, 1983). Hunt (1994) however observes that scholars in the field of marketing, particularly those reviewing papers for publication in academic journals, may themselves be responsible for the lack of theory generation by being over critical when reviewing the work of those who attempt to make an original contribution. According to Gummesson (2001) this behaviour reinforces the belief that to build a publications record, and a respectable reputation, marketers are being encouraged to test existing theory using quantitative methods rather than generate theory through qualitative investigation. This, it has been suggested, has resulted in there being no development in general management marketing theory over recent decades, leaving marketing as an array of disjointed theories and ideas founded on arguably obsolete principles Gummesson (2001). The lack of credibility given to qualitative research techniques in marketing from the academic perspective does however appear somewhat ironic given that such methods are widely adopted in marketing research in industry (Deshpande, 1983). Although it may appear that qualitative marketing research is a relatively recent revelation, Deshpande (1983) argues that this is not the case. He observes that there was significant interest in the topic in the 1950s and 1960s. In the early 1980s, Fern (1982) suggested that the reason one specific qualitative technique, focus groups, had failed to gain prominence was a lack of empirical testing, which would allow the theory development necessary to acquire credibility. In other words a qualitative technique struggled to generate recognition because it could not satisfy the positivistic evaluation criteria needed to do so. This is perhaps indicative of the historical power of positivism in marketing academia in determining what can be accepted as credible Page 7 of 7 nd what cannot, regardless of whether or not techniques are accepted in the commercial environment. Malhotra and Peterson (2001) suggest that for marketing to move forward in the twenty-first century it is necessary to bridge the gap between the academic and commercial positions. There is evidence of increasing acceptance of qualitative methods in marketing research, especially in managing research as the marketplace evolves. For example Kozinet z (2002) developed Ã¢â¬Å"netnographyÃ¢â¬ as a technique for gaining insight into online communities based on a combination of the principles of ethnography and focus groups. Quantitative techniques it would appear still have their place in marketing research too, despite the criticisms levelled at them. The SERVQUAL questionnaire for example, originally developed by Parasuraman et al (1988), relies on the collection of data which can be statistically manipulated to determine levels of service quality. Notwithstanding the substantial criticism it has received (see Buttle, 1996), it is still being used in marketing research today (see e. g. DeMoranville and Bienstock, 2003). What it would consequently appear important to recognise is that both quantitative and qualitative methods have their place in marketing research; neither is sufficient on its own, and there is potentially for significant advances to be made if marketing researchers acknowledge this (Deshpande, 1983). Triangulation and methodological pluralism There is a place in marketing research for both qualitative and quantitative research. There is also a significant risk that overly staunch advocates of a single paradigm will forego the quality of their research by valuing the methodological choice above the aim of the particular Page 8 of 8 study (Bartels, 1983). From a marketing research perspective the importance therefore lies in recognition of the relative advantages and disadvantages of both the qualitative and quantitative research and the understanding of the strengths and weakness of particular methods. Cahill (1996) supports this with the recognition that qualitative and quantitative techniques can be complementary, and Milliken (2001) suggests that the reality of a real research situation demands compromise between the seemingly opposed philosophical standpoints on which the methods are based. Combining qualitative and quantitative methods presents the researcher with an opportunity to compensate for the weakness in each approach. (Deshpande, 1983), and within the field of marketing there appears to be a significant move towards combining qualitative and quantitative research methods (Milliken, 2001). Perry (1998) emphasises the benefit of case study methodology in marketing and suggests that there is no need to consider induction and deduction to be mutually exclusive when selecting a research method. He emphasises that realism is the most appropriate paradigm from which to undertake marketing research as it allows the building of new theory whilst incorporating existing knowledge. Strength in method combination does not necessarily have to include qualitative and quantitative approaches. Hall and Rist (1999) present a marketing study based on the triangulation of purely qualitative research methods including focus groups, observation and document examination. They argue that doing this eliminates the risks of relying on a single method and therefore enhances research quality and strengthens the credibility of qualitative techniques. Page 9 of 9 Methodological pluralism, whilst appearing to offer reconciliation between opposing theoretical paradigms in relation to research method choice, does itself introduce debate and criticism. Gill and Johnson (2002) for example note that embracing realism can be seen as accepting positivism at the cost of phenomenology as it may involve the Ã¢â¬ ¦operationalization and measurement of social reality (stimuli) and action (response)Ã¢â¬ ¦Ã¢â¬ (p. 170). Consequently, combining research methods can itself become part of the argument rather than a solution. Conclusion The decision of whether to adopt qualitative or quantitative methods in management research historically appears to be based on the philosophical assumptions upheld by the individual researcher or the discipline in which he or she is work ing. A paradigmatic dichotomy between positivism and phenomenology (or constructivism) would seem to have resulted in a situation where, in some instances, the research methodology choice is deemed more significant than the subject of the particular study. Marketing is a relatively young discipline within the field of management and, as such, is faced with the challenge of obtaining and maintaining credibility. To do this it has been proposed that it needs to both test existing theory and generate new theory, however the processes required to achieve these two goals can be seem to stem from diametrically opposed paradigms: theory-testing being achievable through deductive methods; and theory generation relying on an inductive approach. This incommensurability has however been challenged with the assertion that what is important is selecting an appropriate methodology for a particular study, rather than fitting a Page 10 of 10 study to a method. Methodological triangulation has been suggested as a means of achieving this, with a move towards a paradigm of realism where the relative advantages and disadvantages of a number of research methods can be embraced. Whilst at face value this approach may appear to offer a compromise offering the best practical solution to the methodological choice dispute, it also introduces criticism of its own which, in turn fuels the debate further. The general aim of this discussion, to consider the differences between qualitative and quantitative research methods, has itself been conducted from an ostensibly positivistic standpoint. In fact any discussion, comparison or assessment of research methods is arguably starting from a predetermined premise that an objective evaluation is being undertaken (Gill and Johnson, 2002), and can therefore be seen to be embracing positivist ideals. Taking into account the amount of attention that has been paid to philosophical approaches to management research; the ambiguities that are apparent; the ongoing search for the most suitable and appropriate means for conducting studies; and the motivation to establish and maintain credibility, it would seem unlikely that end to the debate regarding research methods in management is in sight: Ã¢â¬Å"Like the earth being round, thus lacking a natural end, the journey in Methodologyland has no end. You search again and again and again, just as the term says: re-search, re-search, re-search. (Gummesson, 2001: p. 29) Page 11 of 11 References Bartels, R. (1983), Ã¢â¬Å"Is marketing defaulting its responsibilities? Ã¢â¬ , Journal of Marketing, 47(4), pp. 32-35 Bass, F. M. (1993), Ã¢â¬Å"The future of research in marketing: Marketing ScienceÃ¢â¬ , Journal of Marketing Research, 30(1), pp. 1-6 Buttle, F. (1996), Ã¢â¬Å"SERVQUAL: review, critique, research agendaÃ¢â¬ , European Journal o f Marketing, 30(1), pp. 8-32 Cahill, D. J. (1996), Ã¢â¬Å"When to use qualitative methods: a new approachÃ¢â¬ , Marketing Intelligence & Planning, 14(6), pp. 16-20 Cohen, L. , Manion, L. and Morr, K. 2000), Research Methods in Education, 5th Edition, Routledge: London Cunningham, A. C. (1999), Ã¢â¬Å"Commentary confessions of a reflective practitioner: meeting the challenges of marketingÃ¢â¬â¢s destructionÃ¢â¬ , European Journal of Marketing, 33(7/8), pp. 685-697 DeMoranville, C. W. and Bienstock, C. C. (2003), Ã¢â¬Å"Question order effects in measuring service qualityÃ¢â¬ , International Journal of research in Marketing, 20(3), pp. 217-231 Deshpande, R. (1983), Ã¢â¬Å"Paradigms Lost: On theory and method in research in marketingÃ¢â¬ , Journal of Marketing, 47(4), pp. 101-110 Fern, E. F. 1982), Ã¢â¬Å"The use of focus groups for idea generation: the effects of group size, acquaintanceship, and moderator on response quantity and qualityÃ¢â¬ , Journal of Marketing Research , 19(1), pp. 1-13 Gill, J. and Johnson, P. (2002), Research Methods For Mangers, 3rd Edition, London: SAGE Publications Ltd Glaser, B. G. and Strauss, A. L. (1967), The Discovery of Grounded Theory: Strategies for Qualitative Research, Aldine Publishing Company: Chicago Goulding, C. (1999), Ã¢â¬Å"Consumer research, interpretive paradigms and methodological ambiguitiesÃ¢â¬ , European Journal of Marketing, 33(9/10), pp. 59-873 Gummesson, E. (2001), Ã¢â¬Å"Are current research approaches in marketing leading us astray? Ã¢â¬ , Marketing Theory, 1(1), pp. 27-48 Gummesson, E. (2002), Ã¢â¬Å"Practical value of adequate marketing management theoryÃ¢â¬ , European Journal of Marketing, 36(3), pp. 325-349 Hall, A. L. and Rist, R. C. (1999), Ã¢â¬Å"Integrating multiple qualitative research methods (or avoiding the precariousness of a one-legged stool)Ã¢â¬ , Psychology & Marketing, 16(4), pp. 291304 Page 12 of 12 Halliday, S. 1999), Ã¢â¬Å"I donÃ¢â¬â¢t know much about art, but I know what I like: resonance, relevance and illumination as assessment criteria for marketing research and scholarshipÃ¢â¬ , Marketing Intelligence & Planning, 17(7), pp. 345-362 Hunt, S. D. (1994), Ã¢â¬Å"On rethinking marketing: Our discipline, our practice, our methodsÃ¢â¬ , European Journal of Marketing, 28(3), pp. 13-25 Hyde, K. F. (2000), Ã¢â¬Å"Recognising deductive processes in qualitative researchÃ¢â¬ , Qualitative Market Research, 3(2), pp. 82-90 Kozinets, R. V. (2002), Ã¢â¬Å"The field behind the screen: Using Netnography for marketing research in online communitiesÃ¢â¬ , Journal of Marketing Research, 39(1), pp. 1-72 Kuhn, T. S. (1970), The Structure of Scientific Revolutions, 2nd Edition, Chicago: University of Chicago Press Leone, R. P. and Schultz, R. L. (1980), Ã¢â¬Å"A study of marketing generalizationsÃ¢â¬ , Journal of Marketing, 44(1), pp. 10-18 Malhotra, N. K. and Birks, D. F. (2000), Marketing Research: An Applied Approach, 3rd European Edition, Harlow, Engl and: Financial Times Prentice Hall Malhotra, N. K. and Peterson, M. (2001), Ã¢â¬Å"Marketing research in the new millennium: emerging issues and trendsÃ¢â¬ , Marketing Intelligence & Planning, 19(4), pp. 16-235 Milliken, J. (2001), Ã¢â¬Å"Qualitative research and marketing managementÃ¢â¬ , Management Decision, 39(1), pp. 71-77 Parasuraman, A. , Grewal, D. and Krishnan, R. (2004), Maketing Research, Boston, USA: Houghton Mifflin Company Parasuraman, A. , Zeithaml, V. A. and Berry, L. L. (1988), Ã¢â¬Å"SERVQUAL: A multiple-item scale for measuring consumers perceptions of service qualityÃ¢â¬ , Journal of Retailing, 64(1), pp. 12-40 Perry, C. (1998), Ã¢â¬Å"Process of a case study methodology for postgraduate research in marketingÃ¢â¬ , 32(9/10), pp. 785-802 Peter, J. P. 1982), Ã¢â¬Å"Current issues in the philosophy of science: Implications for marketing theory Ã¢â¬â a panel discussionÃ¢â¬ , in Marketing Theory: Philosophy of Science Perspectives, Bush, R. F. and Hunt, S. D. (eds. ), Chicago, American Marketing, pp. 11-16 Reichardt, C. S. and Cook, T. D. (1979), Ã¢â¬Å"Beyond qualitative versus quantitative methodsÃ¢â¬ , in Qualitative and Quantitative Methods in Evaluation Research, Cook, T. D and Reichardt, (eds. ) Beverley Hills, CA: Sage Zikmund, W. G. (2000), Business Research Methods, 6th Edition, Orlando, USA: The Dryden Press, Harcourt College Publishers Page 13 of 13
Friday, August 16, 2019
Customer Value Propositions in Business Markets by JAMES C. ANDERSON, JAMES A. NARUS, AND WOUTER VAN ROSSUM Under pressure to keep costs down, customers may only look at price and not listen to your sales pitch. Help them understand Ã¢â¬â and believe in Ã¢â¬â the superior value of your offerings. Ã¢â¬Å"CUSTOMER VALUE PROPOSITIONÃ¢â¬ has become one of the most widely used terms in business markets in recent years. Yet our management-practice research reveals that there is no agreement as to what constitutes a customer value proposition Ã¢â¬â or what makes one persuasive. Moreover, we ? d that most value propositions make claims of savings and bene? ts to the customer without backing them up. An offering may actually provide superior value Ã¢â¬â but if the supplier doesnÃ¢â¬â¢t demonstrate and document that claim, a customer manager will likely dismiss it as marketing puffery. Customer managers, increasingly held accountable for reducing costs, donÃ¢â¬â¢t have the l uxury of simply believing suppliersÃ¢â¬â¢ assertions. PETER HOEY march 2006 91 C u s t o m e r Va l u e P ro p o s i t i o n s i n B u s i n e s s M a r ke t s Take the case of a company that makes integrated circuits (ICs).It hoped to supply 5 million units to an electronic device manufacturer for its next-generation product. In the course of negotiations, the supplierÃ¢â¬â¢s salesperson learned that he was competing against a company whose price was 10 cents lower per unit. The customer asked each salesperson why his companyÃ¢â¬â¢s offering was superior. This salesperson based his value proposition on the service that he, personally, would provide. Unbeknownst to the salesperson, the customer had built a customer value model, which found that the companyÃ¢â¬â¢s offering, though 10 cents higher in price per IC, was actually worth 15. cents more. The electronics engineer who was leading the development project had recommended that the purchasing manager buy those ICs, even a t the higher price. The service was, indeed, worth something in the modelÃ¢â¬âbut just 0. 2 cents! Unfortunately, the salesperson had overlooked the two elements of his companyÃ¢â¬â¢s IC offering that were most valuable to the customer, evidently unaware how much they were worth to that customer and, objectively, how superior they made his companyÃ¢â¬â¢s offering to that of the competitor. Not surprisingly,We conducted management-practice research over the past two years in Europe and the United States to understand what constitutes a customer value proposition and what makes one persuasive to customers. One striking discovery is that it is exceptionally dif? cult to ? nd examples of value propositions that resonate with customers. Here, drawing on the best practices of a handful of suppliers in business markets, we present a systematic approach for developing value propositions that are meaningful to target customers and that focus suppliersÃ¢â¬â¢ efforts on creating super ior value.Three Kinds of Value Propositions We have classi? ed the ways that suppliers use the term Ã¢â¬Å"value propositionÃ¢â¬ into three types: all bene? ts, favorable points of difference, and resonating focus. (See the exhibit Ã¢â¬Å"Which Alternative Conveys Value to Customers? Ã¢â¬ ) All bene? ts. Our research indicates that most managers, when asked to construct a customer value proposition, simply list all the bene? ts they believe that their Customer managers, increasingly held accountable for reducing costs, donÃ¢â¬â¢t have the luxury of simply believing suppliersÃ¢â¬â¢ assertions. hen push came to shove, perhaps suspecting that his service was not worth the difference in price, the salesperson offered a 10-cent price concession to win the business Ã¢â¬â consequently leaving at least a half million dollars on the table. Some managers view the customer value proposition as a form of spin their marketing departments develop for advertising and promotional copy. T his shortsighted view neglects the very real contribution of value propositions to superior business performance. Properly constructed, they force companies to rigorously focus on what their offerings are really worth to their customers.Once companies become disciplined about understanding customers, they can make smarter choices about where to allocate scarce company resources in developing new offerings. offering might deliver to target customers. The more they can think of, the better. This approach requires the least knowledge about customers and competitors and, thus, the least amount of work to construct. However, its relative simplicity has a major potential drawback: bene? t assertion. Managers may claim advantages for features that actually provide no bene? to target customers. Such was the case with a company that sold highperformance gas chromatographs to R&D laboratories in large companies, universities, and government agencies in the Benelux countries. One feature of a particular chromatograph allowed R&D lab customers to maintain a high degree of sample integrity. Seeking growth, the company began to market the most basic model of this chromatograph to a new segment: commercial laboratories. In initial meetings with prospective customers, the ? rmÃ¢â¬â¢s James C. Anderson is the William L.Ford Distinguished Professor of Marketing and Wholesale Distribution at NorthwesternÃ¢â¬â¢s Kellogg School of Management in Evanston, Illinois; the Irwin Gross Distinguished ISBM Research Fellow at the Institute for the Study of Business Markets in University Park, Pennsylvania; and a visiting research professor at the School of Business, Public Administration, and Technology at the University of Twente, the Netherlands. James A. Narus is a professor of business marketing at the Babcock Graduate School of Management at Wake Forest University in Charlotte, North Carolina.Wouter van Rossum is a professor of commercial and strategic management at the School of Business, Public Administration, and Technology at the University of Twente. 92 harvard business review C u s t o m e r Va l u e P ro p o s i t i o n s i n B u s i n e s s M a r ke t s Which Alternative Conveys Value to Customers? Suppliers use the term Ã¢â¬Å"value propositionÃ¢â¬ three different ways. Most managers simply list all the bene? ts they believe that their offering might deliver to target customers. The more they can think of, the better.Some managers do recognize that the customer has an alternative, but they often make the mistake of assuming that favorable points of difference must be valuable for the customer. Best-practice suppliers base their value proposition on the few elements that matter most to target customers, demonstrate the value of this superior performance, and communicate it in a way that conveys a sophisticated understanding of the customerÃ¢â¬â¢s business priorities. VALUE PROPOSITION: ALL BENEFITS FAVORABLE POINTS OF DIFFERENCE All favorable po ints of difference a market offering has relative to the next best alternativeRESONATING FOCUS Consists of: All bene? ts customers receive from a market offering The one or two points of difference (and, perhaps, a point of parity) whose improvement will deliver the greatest value to the customer for the foreseeable future Answers the customer question: Ã¢â¬Å"Why should our ? rm purchase your offering? Ã¢â¬ Ã¢â¬Å"Why should our ? rm purchase your offering instead of your competitorÃ¢â¬â¢s? Ã¢â¬ Ã¢â¬Å"What is most worthwhile for our ? rm to keep in mind about your offering? Ã¢â¬ Requires: Knowledge of own market offering Knowledge of own market offering and next best alternativeKnowledge of how own market offering delivers superior value to customers, compared with next best alternative Has the potential pitfall: Bene? t assertion Value presumption Requires customer value research salespeople touted the bene? ts of maintaining sample integrity. Their prospects scoffed a t this bene? t assertion, stating that they routinely tested soil and water samples, for which maintaining sample integrity was not a concern. The supplier was taken aback and forced to rethink its value proposition. Another pitfall of the all bene? ts value proposition is that many, even most, of the bene? s may be points of parity with those of the next best alternative, diluting the effect of the few genuine points of difference. Managers need to clearly identify in their customer value propositions which elements are points of parity and which are points of difference. (See the exhibit Ã¢â¬Å"The Building Blocks of a Successful Customer Value Proposition. Ã¢â¬ ) For example, an international engineering consultancy was march 2006 bidding for a light-rail project. The last chart of the companyÃ¢â¬â¢s presentation listed ten reasons why the municipality should award the roject to the ? rm. But the chart had little persuasive power because the other two ? nalists could make mos t of the same claims. Put yourself, for a moment, in the place of the prospective client. Suppose each ? rm, at the end of its presentation, gives ten reasons why you ought to award it the project, and the lists from all the ? rms are almost the same. If each ? rm is saying essentially the same thing, how do you make a choice? You ask each of the ? rms to give a ? nal, best price, and then you award the project to the ? rm that gives the largest price concession.Any distinctions that do exist have been overshadowed by the ? rmsÃ¢â¬â¢ greater sameness. 93 C u s t o m e r Va l u e P ro p o s i t i o n s i n B u s i n e s s M a r ke t s Favorable points of difference. The second type of value proposition explicitly recognizes that the customer has an alternative. The recent experience of a leading industrial gas supplier illustrates this perspective. A customer sent the company a request for proposal stating that the two or three suppliers that could demonstrate the most persuasive v alue propositions would be invited to visit the customer to discuss and re? e their proposals. After this meeting, the customer would select a sole supplier for this business. As this example shows, Ã¢â¬Å"Why should our ? rm purchase your offering instead of your competitorÃ¢â¬â¢s? Ã¢â¬ is a more pertinent question than Ã¢â¬Å"Why should our ? rm purchase your offering? Ã¢â¬ The ? rst question focuses suppliers on differentiating their offerings from the next best alternative, a process that requires detailed knowledge of that alternative, whether it be buying a competitorÃ¢â¬â¢s offering or solving the customerÃ¢â¬â¢s problem in a different way.Knowing that an element of an offering is a point of difference relative to the next best alternative does not, however, convey the value of this difference to target customers. Furthermore, a product or service may have several points of difference, complicating the supplierÃ¢â¬â¢s understanding of which ones deliver the grea test value. Without a detailed understanding of the customerÃ¢â¬â¢s requirements and preferences, and what it is worth to ful? ll them, suppliers may stress points of difference that deliver relatively little value to the target customer. Each of these can lead to the pitfall of value presumption: assuming that favorable points f difference must be valuable for the customer. Our opening anecdote about the IC supplier that unnecessarily discounted its price exempli? es this pitfall. Resonating focus. Although the favorable points of difference value proposition is preferable to an all bene? ts proposition for companies crafting a consumer value proposition, the resonating focus value proposition should be the gold standard. This approach acknowledges that the managers who make purchase decisions have major, ever-increasing levels of responsibility and often are pressed for time.They want to do business with suppliers that fully grasp critical issues in their business and deliver a customer value proposition thatÃ¢â¬â¢s simple yet powerfully captivating. Suppliers can provide such a customer value proposition by making their offerings superior on the few elements that matter most to target customers, demonstrating and documenting the value of this superior performance, and communicating it in a way that conveys a sophisticated understanding of the customerÃ¢â¬â¢s business priorities. This type of proposition differs from favorable points of difference in two signi? cant respects.First, more is not better. Although a supplierÃ¢â¬â¢s offering may possess several favorable points of difference, the resonating focus proposition steadfastly concentrates on the one or two points 94 of difference that deliver, and whose improvement will continue to deliver, the greatest value to target customers. To better leverage limited resources, a supplier might even cede to the next best alternative the favorable points of difference that customers value least, so that th e supplier can concentrate its resources on improving the one or two points of difference customers value most.Second, the resonating focus proposition may contain a point of parity. This occurs either when the point of parity is required for target customers even to consider the supplierÃ¢â¬â¢s offering or when a supplier wants to counter customersÃ¢â¬â¢ mistaken perceptions that a particular value element is a point of difference in favor of a competitorÃ¢â¬â¢s offering. This latter case arises when customers believe that the competitorÃ¢â¬â¢s offering is superior but the supplier believes its offerings are comparableÃ¢â¬âcustomer value research provides empirical support for the supplierÃ¢â¬â¢s assertion.To give practical meaning to resonating focus, consider the following example. Sonoco, a global packaging supplier headquartered in Hartsville, South Carolina, approached a large European customer, a maker of consumer packaged goods, about redesigning the packaging T he Building Blocks of a Successful Customer Value Proposition A supplierÃ¢â¬â¢s offering may have many technical, economic, service, or social bene? ts that deliver value to customers Ã¢â¬â but in all probability, so do competitorsÃ¢â¬â¢ offerings. Thus, the essential question is, Ã¢â¬Å"How do these value elements compare with those of the next best alternative? WeÃ¢â¬â¢ve found that itÃ¢â¬â¢s useful to sort value elements into three types. Points of parity are elements with essentially the same performance or functionality as those of the next best alternative. Points of difference are elements that make the supplierÃ¢â¬â¢s offering either superior or inferior to the next best alternative. Points of contention are elements about which the supplier and its customers disagree regarding how their performance or functionality compares with those of the next best alternative.Either the supplier regards a value element as a point of difference in its favor, while the custom er regards that element as a point of parity with the next best alternative, or the supplier regards a value element as a point of parity, while the customer regards it as a point of difference in favor of the next best alternative. harvard business review C u s t o m e r Va l u e P ro p o s i t i o n s i n B u s i n e s s M a r ke t s for one of its product lines. Sonoco believed that the customer would pro? from updated packaging, and, by proposing the initiative itself, Sonoco reinforced its reputation as an innovator. Although the redesigned packaging provided six favorable points of difference relative to the next best alternative, Sonoco chose to emphasize one point of parity and two points of difference in what it called its distinctive value proposition (DVP). The value proposition was that the redesigned packaging would deliver signi? cantly greater manufacturing ef? ciency in the customerÃ¢â¬â¢s ? l lines, through higher-speed closing, and provide a distinctive look that consumers would ? nd more appealing Ã¢â¬â all for the same price as the present packaging. Sonoco chose to include a point of parity in its value proposition because, in this case, the customer would not even consider a packaging redesign if the price went up. The ? rst point of difference in the value proposition (increased ef? ciency) delivered cost savings to the customer, allowing it to move from a seven-day, three-shift production schedule during peak times to a ? e-day, two-shift operation. The second point of difference delivered an advantage at the consumer level, helping the customer to grow its revenues and pro? ts incrementally. In persuading the customer to change to the redesigned packaging, Sonoco did not neglect to mention the other favorable points of difference. Rather, it chose to place much greater emphasis on the two points of difference and the one point of parity that mattered most to the customer, thereby delivering a value proposition with resonating focu s.Stressing as a point of parity what customers may mistakenly presume to be a point of difference favoring a competitorÃ¢â¬â¢s offering can be one of the most important parts of constructing an effective value proposition. Take the case of Intergraph, an Alabama-based provider of engineering software to engineering, procurement, and construction ? rms. One software product that Intergraph offers, SmartPlant P&ID, enables customers to de? ne ? ow processes for valves, pumps, and piping within plants they are designing and generate piping and instrumentation diagrams (P&ID).Some prospective customers wrongly presume that SmartPlantÃ¢â¬â¢s drafting performance would not be as good as that of the next best alternative, because the alternative is built on computer-aided design (CAD), a better-known drafting tool than the relational database platform on which SmartPlant is built. So Intergraph tackled the perception head on, gathering data from reference customers to substantiate tha t this point of contention was actually a point of parity. march 2006 HereÃ¢â¬â¢s how the company played it.IntergraphÃ¢â¬â¢s resonating focus value proposition for this software consisted of one point of parity (which the customer initially thought was a point of contention), followed by three points of difference: Point of parity: Using this software, customers can create P&ID graphics (either drawings or reports) as fast, if not faster, as they can using CAD, the next best alternative. Point of difference: This software checks all of the customerÃ¢â¬â¢s upstream and downstream data related to plant assets and procedures, using universally accepted engineering practices, company-speci? c rules, and project- or process-speci? rules at each stage of the design process, so that the customer avoids costly mistakes such as missing design change interdependencies or, worse, ordering the wrong equipment. Point of difference: This software is integrated with upstream and downstream tasks, such as process simulation and instrumentation design, thus requiring no reentry of data (and reducing the margin for error). Point of difference: With this software, the customer is able to link remote of? ces to execute the project and then merge the pieces into a single deliverable database to hand to its customer, the facility owner.Resonating focus value propositions are very effective, but theyÃ¢â¬â¢re not easy to craft: Suppliers must undertake 95 C u s t o m e r Va l u e P ro p o s i t i o n s i n B u s i n e s s M a r ke t s customer value research to gain the insights to construct them. Despite all of the talk about customer value, few suppliers have actually done customer value research, which requires time, effort, persistence, and some creativity. But as the best practices we studied highlight, thinking through a resonating focus value proposition disciplines a company to research its customersÃ¢â¬â¢ businesses enough to help solve their problems.As the exper ience of a leading resins supplier amply illustrates, doing customer value research pays off. (See the sidebar Ã¢â¬Å"Case in Point: Transforming a Weak Value Proposition. Ã¢â¬ ) savings from reduced power usage that a customer would gain by using a Rockwell Automation motor solution instead of a competitorÃ¢â¬â¢s comparable offering: Power Reduction = [kW spent number of operating hours per Cost Savings year $ per kW hour number of years system solution in operation] Competitor Solution ? [kW spent number of operating hours per year $ per kW hour number of years system solution in operation] Rockwell Automation SolutionSubstantiate Customer Value Propositions In a series of business roundtable discussions we conducted in Europe and the United States, customer managers reported that Ã¢â¬Å"We can save you money! Ã¢â¬ has become almost a generic value proposition from prospective suppliers. But, as one participant in Rotterdam wryly observed, most of the suppliers were telling Ã¢â¬Å"fairy tales. Ã¢â¬ After he heard a pitch from a prospective supplier, he would follow up with a series of questions to determine whether the supplier had the people, processes, tools, and experience to actually save his ? m money. As often as not, they could not really back up the claims. Simply put, to make customer value propositions persuasive, suppliers must be able to demonstrate and document them. Value word equations enable a supplier to show points of difference and points of contention relative to the next best alternative, so that customer managers can easily grasp them and ? nd them persuasive. A value word This value word equation uses industry-speci? c terminology that suppliers and customers in business markets rely on to communicate precisely and ef? iently about functionality and performance. Demonstrate Customer Value in Advance Prospective customers must see convincingly the cost savings or added value they can expect from using the supplierÃ¢â¬â¢s off ering instead of the next best alternative. Best-practice suppliers, such as Rockwell Automation and precision-engineering and manufacturing ? rm Nijdra Groep in the Netherlands, use value case histories to demonstrate this. Value case histories document the cost savings or added value that reference customers have actually received from their use of the supplierÃ¢â¬â¢s market offering.Another way that best-practice ? rms, such as Pennsylvania-based GE Infrastructure Water & Process Technologies (GEIW&PT) and SKF USA, show the value of their offerings to prospective customers in advance is Some best-practice suppliers are even willing to guarantee a certain amount of savings before a customer signs on. equation expresses in words and simple mathematical operators (for example, + and ? ) how to assess the differences in functionality or performance between a supplierÃ¢â¬â¢s offering and the next best alternative and how to convert those differences into dollars.Best-practice ? rm s like Intergraph and, in Milwaukee, Rockwell Automation use value word equations to make it clear to customers how their offerings will lower costs or add value relative to the next best alternatives. The data needed to provide the value estimates are most often collected from the customerÃ¢â¬â¢s business operations by supplier and customer managers working together, but, at times, data may come from outside sources, such as industry association studies.Consider a value word equation that Rockwell Automation used to calculate the cost 96 through value calculators. These customer value assessment tools typically are spreadsheet software applications that salespeople or value specialists use on laptops as part of a consultative selling approach to demonstrate the value that customers likely would receive from the suppliersÃ¢â¬â¢ offerings. When necessary, best-practice suppliers go to extraordinary lengths to demonstrate the value of their offerings relative to the next best alte rnatives.The polymer chemicals unit of Akzo Nobel in Chicago recently conducted an on-site two-week pilot on a production reactor at a prospective customerÃ¢â¬â¢s facility to gather data ? rsthand on the performance of its high-purity metal organics offering relative to the next best alternative in producing compound semiconductor wafers. Akzo Nobel paid this harvard business review C u s t o m e r Va l u e P ro p o s i t i o n s i n B u s i n e s s M a r ke t s prospective customer for these two weeks, in which each day was a trial because of daily considerations such as output and maintenance.Akzo Nobel now has data from an actual production machine to substantiate assertions about its product and anticipated cost savings, and evidence that the compound semiconductor wafers produced are as good as or better than those the customer currently grows using the next best alternative. To let its prospective clientsÃ¢â¬â¢ customers verify this for themselves, Akzo Nobel brought them sample wafers it had produced for testing. Akzo Nobel combines this point of parity with two points of difference: signi? cantly lower energy costs for conversion and signi? antly lower maintenance costs. Document Customer Value Demonstrating superior value is necessary, but this is no longer enough for a ? rm to be considered a best-practice company. Suppliers also must document the cost savings and incremental pro? ts (from additional revenue gener- ated) their offerings deliver to the companies that have purchased them. Thus, suppliers work with their customers to de? ne how cost savings or incremental pro? ts will be tracked and then, after a suitable period of time, work with customer managers to document the results.They use value documenters to further re? ne their customer value models, create value case histories, enable customer managers to get credit for the cost savings and incremental pro? ts produced, and (because customer managers know that the supplier is willing to return later to document the value received) enhance the credibility of the offeringÃ¢â¬â¢s value. A pioneer in substantiating value propositions over the past decade, GEIW&PT documents the results provided to customers through its value generation planning (VGP) process and tools, which enable its ? ld personnel to understand customersÃ¢â¬â¢ businesses and to plan, execute, and document projects that have the highest value impact for its customers. An online tracking tool allows GEIW&PT and customer managers to easily monitor the Case in Point: Transforming a Weak Value Proposition A leading supplier of specialty resins used in architectural coatings Ã¢â¬â such as paint for buildings Ã¢â¬â recognized that its customers were coming under pressure to comply with increasingly strict environmental regulations. At the same time, the supplier reasoned, no coating manufacturer would want to sacri? e performance. So the resins supplier developed a new type of highperformance resi ns that would enable its customers to comply with stricter environmental standards Ã¢â¬â albeit at a higher price but with no reduction in performance. In its initial discussions with customers who were using the product on a trial basis, the resins supplier was surprised by the tepid reaction it received, particularly from commercial managers. They were not enthusiastic about the sales prospects for higher-priced coatings with commercial painting contractors, the primary target market.They would not, they said, move to the new resin until regulation mandated it. Taken aback, the resins supplier decided to conduct customer value research to better understand the requirements and preferences of its customersÃ¢â¬â¢ customers and how the performance of the new resin would affect their total cost of doing business. The resins supplier went so far as to study the requirements and preferences of the commercial painting contractorsÃ¢â¬â¢ customers Ã¢â¬â building owners. The suppl ier conducted a series of focus groups and ? eld tests with painting contractors to gather data.The performance on primary customer requirements Ã¢â¬â such as coverage, dry time, and durability Ã¢â¬â was studied, and customers were asked to make performance trade-offs and indicate their willingness to pay for coatings that delivered enhanced performance. The resins supplier also joined a commercial painting contractor industry association, enrolled managers in courses on how contractors are taught to estimate jobs, and trained the staff to work with the job-estimation software used by painting contractors. Several insights emerged from this customer value research.Most notable was the realization that only 15% of a painting contractorÃ¢â¬â¢s costs are the coatings; labor is by far the largest cost component. If a coating could provide greater productivity Ã¢â¬â for example, a faster drying time that allowed two coats to be applied during a single eight-hour shift Ã¢â¬â contractors would likely accept a higher price. The resins supplier retooled its value proposition from a single dimension, environmental regulation compliance, to a resonating focus value proposition where environmental compliance played a signi? cant but minor part.The new value proposition was Ã¢â¬Å"The new resin enables coatings producers to make architectural coatings with higher ? lm build and gives the painting contractors the ability to put on two coats within a single shift, thus increasing painter productivity while also being environmentally compliant. Ã¢â¬ Coatings customers enthusiastically accepted this value proposition, and the resins supplier was able to get a 40% price premium for its new offering over the traditional resin product. march 2006 97 C u s t o m e r Va l u e P ro p o s i t i o n s i n B u s i n e s s M a r ke t s xecution and documented results of each project the company undertakes. Since it began using VGP in 1992, GEIW&PT has documented more th an 1,000 case histories, accounting for $1. 3 billion in customer cost savings, 24 billion gallons of water conserved, 5. 5 million tons of waste eliminated, and 4. 8 million tons of air emissions removed. As suppliers gain experience documenting the value provided to customers, they become knowledgeable about how their offerings deliver superior value to customers and even how the value delivered varies across ation can submit NPI requests whenever they have an inventive idea for a customer solution that they believe would have a large value impact but that GEIW&PT presently does not offer. Industry marketing managers, who have extensive industry expertise, then perform scoping studies to understand the potential of the proposed products to deliver signi? cant value to segment customers. They create business cases for the proposed product, which are Ã¢â¬Å"racked and stackedÃ¢â¬ for review. The senior management team of GEIW&PT sort through aBest-practice suppliers make sure the ir people know how to identify what the next value propositions ought to be. kinds of customers. Because of this extensive and detailed knowledge, they become con? dent in predicting the cost savings and added value that prospective customers likely will receive. Some best-practice suppliers are even willing to guarantee a certain amount of savings before a customer signs on. A global automotive engine manufacturer turned to Quaker Chemical, a Pennsylvania-based specialty chemical and management services ? m, for help in signi? cantly reducing its operating costs. QuakerÃ¢â¬â¢s team of chemical, mechanical, and environmental engineers, which has been meticulously documenting cost savings to customers for years, identi? ed potential savings for this customer through process and productivity improvements. Then Quaker implemented its proposed solution Ã¢â¬â with a guarantee that savings would be ? ve times more than what the engine manufacturer spent annually just to purchase cool ant. In real numbers, that meant savings of $1. 4 million a year.What customer wouldnÃ¢â¬â¢t ? nd such a guarantee persuasive? large number of potential initiatives competing for limited resources. The team approved PanichellaÃ¢â¬â¢s initiative, which led to the development of a new offering that provided re? nery customers with documented cost savings amounting to ? ve to ten times the price they paid for the offering, thus realizing a compelling value proposition. Sonoco, at the corporate level, has made customer value propositions fundamental to its business strategy. Since 2003, its CEO, Harris DeLoach, Jr. and the executive committee have set an ambitious growth goal for the ? rm: sustainable, double-digit, pro? table growth every year. They believe that distinctive value propositions are crucial to support the growth initiative. At Sonoco, each value proposition must be: Ã¢â¬ ¢ Distinctive. It must be superior to those of SonocoÃ¢â¬â¢s competition. Ã¢â¬ ¢ Measurable. A ll value propositions should be based on tangible points of difference that can be quanti? ed in monetary terms. Ã¢â¬ ¢ Sustainable. Sonoco must be able to execute this value proposition for a signi? ant period of time. Unit managers know how critical DVPs are to business unit performance because they are one of the ten key metrics on the managersÃ¢â¬â¢ performance scorecard. In senior management reviews, each unit manager presents proposed value propositions for each target market segment or key customer, or both. The managers then receive summary feedback on the value proposition metric (as well as on each of the nine other performance metrics) in terms of whether their proposals can lead to pro? table growth.In addition, Sonoco senior management tracks the relationship between business unit value propositions and business unit performance Ã¢â¬â and, year after year, has concluded that the emphasis on DVPs has made a signi? cant contribution toward sustainable, double-digit, profitable growth. harvard business review Superior Business Performance We contend that customer value propositions, properly constructed and delivered, make a signi? cant contribution to business strategy and performance. GE Infrastructure Water & Process TechnologiesÃ¢â¬â¢ recent development of a new service offering to re? ery customers illustrates how general manager John Panichella allocates limited resources to initiatives that will generate the greatest incremental value for his company and its customers. For example, a few years ago, a ? eld rep had a creative idea for a new product, based on his comprehensive understanding of re? nery processes and how re? neries make money. The ? eld rep submitted a new product introduction (NPI) request to the hydrocarbon industry marketing manager for further study. Field reps or anyone else in the organi98 C u s t o m e r Va l u e P ro p o s i t i o n s i n B u s i n e s s M a r ke t sBest-practice suppliers recognize that construct ing and substantiating resonating focus value propositions is not a onetime undertaking, so they make sure their people know how to identify what the next value propositions ought to be. Quaker Chemical, for example, conducts a value-proposition training program each year for its chemical program managers, who work on-site with customers and have responsibility for formulating and executing customer value propositions. These managers ? rst review case studies from a variety of industries Quaker serves, where their peers have executed savings projects and quanti? d the monetary savings produced. Competing in teams, the managers then participate in a simulation where they interview Ã¢â¬Å"customer managersÃ¢â¬ to gather information needed to devise a proposal for a customer value proposition. The team that is judged to have the best proposal earns Ã¢â¬Å"bragging rights,Ã¢â¬ which are highly valued in QuakerÃ¢â¬â¢s competitive culture. The training program, Quaker believes, he lps sharpen the skills of chemical program managers to identify savings projects when they return to the customers they are serving. As the ? al part of the training program, Quaker stages an annual real-world contest where the chemical program managers have 90 days to submit a proposal for a savings project that they plan to present to their customers. The director of chemical management judges these proposals and provides feedback. If he deems a proposed project to be viable, he awards the manager with a gift certi? cate. Implementing these projects goes toward ful? lling QuakerÃ¢â¬â¢s guaranteed annual savings commitments of, on average, $5 million to $6 million a year per customer.Each of these businesses has made customer value propositions a fundamental part of its business strategy. Drawing on best practices, we have presented an approach to customer value propositions that businesses can implement to communicate, with resonating focus, the superior value their offerings pr ovide to target market segments and customers. Customer value propositions can be a guiding beacon as well as the cornerstone for superior business performance. Thus, it is the responsibility of senior management and general management, not just marketing management, to ensure that their customer value propositions are just that.Reprint R0603F; HBR OnPoint 3544 To order, see page 151. P VEY . C. Ã¢â¬Å"What we need are some fresh new ideas. You know, like we had last year. Ã¢â¬ march 2006 99 Harvard Business Review Notice of Use Restrictions, May 2009 Harvard Business Review and Harvard Business Publishing Newsletter content on EBSCOhost is licensed for the private individual use of authorized EBSCOhost users. It is not intended for use as assigned course material in academic institutions nor as corporate learning or training materials in businesses.Academic licensees may not use this content in electronic reserves, electronic course packs, persistent linking from syllabi or by a ny other means of incorporating the content into course resources. 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