Business Cartoons – Work Life Balance

Are you maintaining a good work life balance? Most kids of working professionals have a degree of insecurity, despite the time you may think you are carving out for them. Do remember, work life balance not only keeps the harmony in your home but also improves the longevity of hard working professionals.

What do you prefer to do as a professional? What are your priorities in your life?

Expense Management in Telecom

Expense Management systems typically refers to the management information systems adopted by a business enterprises to process, pay, control and audit all expenses that the firm may incur during its day to day functional life. This may include programs like integrated financial management systems which will make it simpler to keep track of costs and help keep your business ahead of problems. Expense management teams govern the policies and procedures for every spending, as well as the technologies and services utilized to process and analyze the data associated with it, and is expected to have a huge impact on the bottom line of the firm.

Most average Fortune 500 company spends more than $100 million on telecommunications services each year. This arises predominantly from communication that may happen internally (Often 40%-60%) and with external stake holders (20% – 40%) Yet, on average, 7 to 12 % of telecom expenses are in surplus of what they could have been brought down to. This means that there is a high possibility of lowering costs by upto even $10 million each year! Think about all the revenue generating opportunities that could be funded with that money and the possible impact such a cost saving may have on the bottom-line of the firm.

It is interesting to understand how the Telecommunications Management Network facilitates the organizations consuming these services to achieve these goals.  This framework enhances the operations management within the service provider, and expense management systems play an integral role in these systems.

Communications tools, such as wireless and wired connections, are crucial in managing the organizational day to day functionalities, communicate with the employees, liaison solid relationships with the customers, suppliers and business partners. Yet, firms are  often forced to delay new communications projects that could give them a competitive advantage using ICTs, such as Voice over IP, because it’s difficult to accurately forecast labor and infrastructure costs.  implementing a proactive Telecom Expense Management program can help defray those costs.  With the telecom managed service from IT Service providers like IBM, Oracle, Infosys, the firms now-days can look beyond just cost savings and implement business process improvements through innovative adoption of communication technologies.
The best part about these services are that they are outsourced completely to the service providers and billing is done entirely based on how much the firms plan to use the benefits of such a service. It means, firms will pay a small percentage based on the dollar benefit they get out of such an engagement. They are completely priced based on usage. (Read   Pricing of Information Technology)

Firms will be able to utilize the business intelligence sometimes bundled with such services to optimize network price/ performance, plan network strategies, forecast spend and justify telecom expense decisions to your management team.

Supply Chain Management Basics

In this article, we take you on a tour on the very basic focus of supply chain management. While there are many articles, which talk about the intricacies, the sole focus of this article is to cover all the various aspect an opening class for a grad program is likely to address.

There are few issues which are of prime importance while studying the subject. Before, one can call oneself conversant with the discipline, one needs to ask himself,  can he answer the questions in details regarding these aspects? This article is off course written more on lines of a strategic view point rather than an implementer ‘ s viewpoint.

  • Distribution Network Configuration: This is related to the number and location of suppliers, production facilities, distribution centers, warehouses and customers.
  • Distribution Strategy: This is related to the centralized versus decentralized issue, direct shipment, cross docking, pull or push strategies, and third party logistics.
  • Information: This is related to integration of  systems and processes through the supply chain to share valuable information, including demand signals, forecasts, inventory and transportation etc.
  • Inventory Management: How should one manage stored quantity and decide the location of inventory including raw materials, work-in-process and finished goods.
  • Cash-Flow: Arranging the payment terms and the methodologies for exchanging funds across entities within the supply chain.

Focus: Customer, cost saving, value adding, time from cash to cash, percentage of fill rate against customer specifications and total response times

The extension of the supply chain definition is to provide a context for measurement or to operationalize theoretical concepts. Existing definitions may not always explicitly provide a basis for measurement. The development of new measures and the development of new benchmarks, based on these measures; in developing the new measurement format, various aspects of the supply chain definition can be expected to affect the specific mix of measures used.

It is important to understand that the position of players in the chain (supplier, manufacturer, wholesaler, service supplier) affects their contribution and relevant measures, the level of integration and the strategic approach may affect the relevance of measures needs to be scrutinized. Creating benchmarks based on the new measurement systems may contribute to directing management effort in optimizing the supply chain. Thus this is of prime importance to a supply chain manager.

Also, the development of tools that can help support the implementation of the new measurement approach may be a crucial final step leading to the actual application of new measurement approaches. The tools cannot be limited to the measurement system itself; they also need to include strategic trade-off and planning frameworks in order to assure executive “buy-in” and commitment and initiate actual improvement processes in the supply chain.

Finally some finer aspects to ponder for supply chain managers while attempting to operationalize theoretical models.

  • Whether the models are qualitative or quantitative will affect the plans.
  • What they measure is of paramount importance: cost and non-cost; quality, cost, delivery, resource utilization, flexibility, visibility, trust and innovativeness
  • Collaboration efficiency and coordination efficiency and configuration and input, output and composite measures.
  • Their strategic, operational or tactical focus.
  • The process in the supply chain they relate to.

These are some of the basics that a supply chain manager is expected to plan about while going about his job. By the way, did you read our article on Supply Chain Value Management

Office Cartoons – Coffee Break

Some of our colleagues always seem busy loitering around the coffee vending machine. Despite their apparently not working as hard as some of the others, they always seem to do just great. What can be their secret success story?

The road to success is not an easy one to travel. To achieve it, some professionals work hard, others work smart. Which one would you prefer?

Top Social Media Marketing Channels

In an independent survey conducted by Business Fundas, the top channels as perceived by social media marketers were identified and ranked. For this study, the over 20,000+ twitter followers (and also other social media marketers on twitter) were presented with a questionnaire for understanding the perceived importance of the various media for these marketing experts with a conversion of 1034 respondents for the study. Based on the results, the following results were obtained:

The top social media marketing channel based on our survey results was search engine. It performed extremely well as a channel to improve brand or service or product awareness, as well as a channel to improve conversion rates from potential leads to actual customer engagement.

The results for the best channel for creation of awareness for the service or products are as displayed in the graph below:

As these results indicate, some of the more popular and initially perceived important social media channels like Twitter, Digg, Reditt, Stumbleupon received lesser votes in confidence when it came to actual performance in terms of a channel to increase service or product or brand awareness.

Similarly, the top social media resources to convert potential customers to buyers are as follows:

As is evident from the results of the graph, the top resource, as perceived by the social media marketers in both cases are search engines. This was closely followed by Facebook and Youtube. However, some of the more popular and initially perceived important social media channels like Twitter, Digg, Reditt, Stumbleupon received lesser votes in confidence when it came to actual performance. Maybe since these are perceived as more of a media for capturing interesting sources of stories and / or multimedia, they are losing their importance as channels of social media marketing.

Do let us know what are your feedback about the social media marketing channels. How do YOU draw traffic to your blog? Is that a sustainable source of traffic or does that depend on daily marketing efforts and link exchanges amongst colleagues to promote your content? Do let us know.

Am I SICK?

Is the title giving a blow!! You must be thinking what is this!! “Am I SICK?” No, I am fit and fine. Who says I am sick !! Whoever is telling, he is sick!! And why I will be!! –No Not All.— I know this is what is going on in your mind – am I right!!

 

Let’s give some time for ourselves. Let’s realize ourselves. Let’s give a blow in our inner mind- let’s give a shock in our everyday behavior. I am telling you- you will find yourself in ICU. Shocked !! I know you are. But this is a bitter truth.

Trust me- find out some time for analysis. See who you are, what you are doing, how you are doing and for whom you are doing. Are you actually working!! Working hardly or smartly!! Or just running after money. Dream is big money- big house- costly car; A luxury life. If you are already enjoying- still you want more!! Right!! And if you are a struggler or gradually making your career- still dream remains the same. Going through the same rat-race. Right! Have you ever though to find five minutes for the needy person standing beside you! Have you ever extended your hand when you saw a blind person struggling to find his way on the road where you just passed him giving a veered look? Have you ever gone to help the person who just met with an accident!! Probably No. And if at all your friend suggested going, you said No No!! This can be a police case!! So let us be safe and keep ourselves away. I know you are remembering when you did that. Probably you thought to go but your friend suggested the same. Right!! Have you ever thought to just get up from the seat and let the old person sit there –who is just standing beside you!! You are just happy that somehow you managed a seat. Good if you have done. But probably you will find the answer ‘No’ if you ask yourself.

You must be thinking – how does these make a difference in your life. Your life is cool- and it will be as cool as it is. Right!! You are absolutely right. And if you are thinking in this way- you can’t be blamed for this. Because the value system you are in or the value system you are inculcating into your  next generation – this is quite natural. You don’t have time. But think once. Instead of the person met with an accident; you have met with the same accident! And people are reacting in the same manner and you are just   lying-down  helplessly on the road. How will you feel!! Good !! !! No ; right!! You will expect help from the persons probably whom you did not help when they required oneday!! Right!! If everybody will think the way you think- then imagine what will be your situation on the road after your accident. But do you think that you were not capable of helping the person. Were you sick that day!! You were too sick to talk with the person or hold the hand of that blind person!! No !! But Yes – I will say- you were SICK. Mentally you were SICK. Otherwise a healthy and Ok mind would have instructed you the right thing. Your mind would not have stopped you from helping. Or your mind would not have stay untouched in spite of seeing the blood-stained person lying on the road. It clearly shows that we are fine, but our mind is not. It’s not well. It’s SICK.

 

Find some time to think. Think – are you doing right!! Think are you inculcating the right value into your kids!! Because if you are giving such value to your child – definitely when you will require help, the person who will be standing beside you probably with the same value like your kid- will not help- because they never realized this thought.

It’s never a late. Beginning of anything is good. Let’s think and start realizing. Let’s start making a difference. Let us take our society towards a better one- a cultured- value added healthy and humane society.

Brief Profile of Author : Amitava Pal is a Software Engineer and XLRI Alumni. His special areas of interests are Human Psychology and Soft Skills. He has been writing papers since 2005 and the papers have already been published in India and Abroad like University of California, Bonn University Germany and so on. He is currently writing a book on “Typical Human Psyche on Differential Behaviour”.

Business Cartoon – Survival during recession

So what would you do if your firm is facing problems from lowered revenue generation due to a dip in market conditions? If your boss breathing fire over your back, especially if you are in the sales division? Possibly although you are doing your best, still the sales of the company is dipping. Even if the general conditions of the market is bad, there is so little you can do.

Always remember, when the going gets tough, that is the actual time when the tough gets going. And tough people always survive the hard times and eventually emerge as winners.

Indian Telecom Sector – Market Analysis

In this report we try to provide some information of the Indian Telecom Sector in June, 2011, based on secondary research. The boom phase for Indian telecom market continues to thrive on the availability of cheaper telecom services alongside an aggressive marketing strategy by the service providers. The growth phase is panning out across India and is not just limited to urban India. While the customer satisfaction has increased substantially in 2010 and 2011, as per a survey done by TRAI, the profitability of the sector has decreased substantially in 2011.

While the market continues to be led by Bharti Airtel, in terms of market share by revenue, it is closely followed by Vodafone and the relative younger player, Idea Cellular. BSNL is continuing to witness a sharp decline in its subscriber base, with probably the highest ever telecom churn in the industry.

One of the major causes while the telecom operators have seen such a mixed bag of fortune is due to the introduction of the Mobile number portability (MNP).  Due to the introduction of this service via regulation, customers will be able carry their mobile number across service providers in India. The biggest affected service providers had been Reliance and BSNL, while Airtel has been the leading gainer from this exercise.

Services marketing strategy

Typically marketing of services is done following the services marketing mix using the 7 Ps framework unlike the marketing of products for which the marketing mix involves the 4 Ps framework. Today, marketing has evolved over time into a discipline of its own. Over time marketing managers have realized the sustainability of pull marketing than the traditional approach of push marketing strategies.

The initial movement in marketing strategies was from a direct marketing scenario to brand marketing. In direct marketing, the marketing managers typically had a role of sales managers and the most important strategic focus was to ensure a incentive structure for the sales force, both internal salesmen and external salesforce (dealers, retailers, distributors) such that the one-to-one marketing could be done at the point of sales. However, it was realized that if a fraction of the sales force deviated or moved to another firm, the entire customer segment was lost to the business. The face of the product or service was essentially the sales force. Now as services gained in importance, it was realized that the differentiation of services was even more difficult based on tangible features like that of a product. This was when brand marketing started getting its due importance, where a pull strategy was implemented so as to “pull” the customer to the product or service based on his perception of the quality of the same.

However, with services gaining prominence over time, it was realized that the very definition of services was evolving as more and more services were being focused on internet or info-tech based services where direct interaction with the customer was lost. While branding definitely ensured that the customers develop a brand association with the service, sometimes the nature of the service is such that the essence of the service is a transactional one. So brand marketing focus gradually started to shift towards customer engagement and the benefits of social networks started getting conceptualized. This paved the way for the next generation of marketing, namely marketing using social media.

Since services cannot be differentiated purely based on features on offer, the major differentiation to create a brand association and thus customer engagement, is through tapping the social networks. In the internet economy, social networks are getting increasingly dominated by social media and thus marketing managers of even larger traditional “brick and sell” firms have started recognizing this fact and focusing their efforts on social media marketing.

The 7 S framework for digital marketing started gaining in prominence for services marketing strategists. While the dynamics of a pure internet marketing strategy is slightly different, the essence of the same has been captured in more comprehensive frameworks on digital marketing, which have been derived purely through the theories based on economic rationality.

Over time, it was realized that social media is perhaps the biggest tool today to lead a brand marketing strategy for many of the services and product categories, since in both cases, the target segment often uses the internet as a source of information (through websites or though the personal social network) while deciding on a service vendor. It is at the point of information search that social media marketing can create the largest impact and thus builds its reputation for having a high impact on “brand recall” at the “point of purchase”.

Do let us know if you have any feedback regarding this article.

Top Ranked Engineering Colleges in India

The ranks of the top engineering colleges are out again. This time this is on the basis of a study conducted by Careers and published on Yahoo. While most of the rankings appear genuine, this list is very crucial for all the engineers wanna-be-s who are scouring for a college where they can kick start their professional career as an engineer.  While as always the ranks in the top are heavily dominated by government colleges and institutes like the IITs, Jadavpur University, IT-BHU, the BITs and the NITs, the top-50 listing is a roll call of excellence India’s top 50 engineering institutions in 2011.

A balanced scorecard methodology was used to cluster the top ranked institutes (colleges and universities) after checking the last five year rankings of about 241 colleges and normalizing heir ranks, by assigning differential weights to subjective and objective ranking criteria, as is the standard in such studies. Such a process has been used to develop clusters of institutions which have similar performance against those criteria.

So before jumping into where you may be targeting, while joining up for your graduate course in engineering, do check out this list. For where you pass out from not only affects how well you learn your discipline, but also the kind of career track you can expect after passing out of the hallowed portals of your Alma Mater.

Genetic Algorithm Applications

Today, in this world of information processing, business intelligence and business analytics, are gaining in importance very fast. The three major techniques or groups of algorithms which have gained a lot of visibility in recent times are fuzzy logic, neural networks and genetic algorithms. In this article, we discuss in brief about the possible business applications of genetic algorithms.

In general, genetic algorithms find their application in problem domains that have a complex fitness landscape with many criteria with divergent needs or fitness function curves. Typically, genetic algorithms find application in computational science, engineering, manufacturing, phylogenetics, bioinformatics, economics, chemistry, mathematics, physics and other related disciplines.

The most popular application of Genetic Algorithms is in the field of Search applications.

Mostly, in such search techniques, the end objective may be an optimization function where the genetic algorithm may be applied for Fast Search through a huge pool of possible solutions so as to find the most optimal solution fast, without compromising the fitness of purpose too much.

Similarly, problems which are often solved using genetic algorithms include time-table scheduling and job-scheduling problems. Many scheduling software packages use Genetic Algorithms as a predictor model. GAs have also been applied to classic engineering disciplines besides the information technology, communications, telecommunications, electronics and semiconductor industry. Genetic algorithms are also popular for usage as an approach to solve global optimization problems.

Some of the other popular applications of Genetic Algorithms are in computer-automated design, artificial creativity, automated design of industrial equipment, design of mechatronic systems, in the financial services sector, design of multi-objective decision making problems, bioinformatics, quality control, operations planning, chemical kinetics, clustering,  code decryption, configuration applications,  design of distribution systems, control engineering, computer network design, gene profiling, electronic circuit design, economics modelling, scheduling applications,  marketing mix strategizing, molecular research,  neural network based applications,  software engineering, data compression, plant floor layout planning, and so much more.

By the way, did you read our article on the application of Fuzzy logic and Fuzzy set theory.

Brand Personality Dimensions

Brand personality refers to those human personality traits (sometimes developed cognitively) which are developed harmoniously with a brand, whether it is a product or a service. While branding a product or a service, especially if it is new, or is being launched in a new market, or is getting repositioned in a new or existing market, in depth understanding of all the dimensions of Brand Personality is of utmost importance to the product or service manager or the brand manager.

Consumers often describe products or services offered as brands (more often than not in their sub-conscious level of comprehension or brand association) by using descriptors of certain common personality traits. Marketers attempt to use this consumer behavior to create or reinforce these perceptions through strategies involving brand positioning or unique re-positioning. Now successfully positioning (or re-positioning) a brand’s personality within a product category requires the application of multiple measurement models and frameworks. This is to ensure that the branding manager can successfully disentangle a brand’s unique personality traits from those generic traits that are common across all the other brands in a similar product or service category and also from amongst its substitutes.

The dimensions of Brand Personality was initially proposed by Aaker (1997) in his famous brand personality framework consisting of 5 dimensions of every brand that impacts cognitive branding, brand association and brand recollection.  Again brand  association  appears  to  partially mediate the influence of the competence dimension of brand personality on brand attractiveness.

The 5 main dimensions of brand personality are Sincerity, Excitement, Competence, Sophistication, Ruggedness. Consumers perceive sincere brands as being honest, not-exaggerating, truthful, and cheerful. Similarly consumers perceive exciting brands as being daring, adventurous, high spirited, imaginative, and somewhat with a sharp cutting edge (especially for certain technology gadgets like the Play Station). Consumers perceive Competence from product or service reliability, deliver-ability and from the success symbols from a brand. A brand that is perceived to be sophisticated is viewed as being charming and associated with a higher snob value and thus fit for the upper society, or to fulfill higher order needs from Maslow’s hierarchy of needs. Similarly rugged personality brands are perceived to have the features of being outdoorsy and tough.

Generally speaking, brand  personality  is likely to be more difficult to imitate by competing brands and substitute products,  than more tangible product attributes or service level dimensions. So marketing practitioners have the advantage of using it more suitably to  achieve more  sustainable  advantages  (Ang  and  Lim  2006),  for  creating  product or service level  differentiation  and positioning, which in turn ensures a Pull strategy and is more sustainable in the long run. This also creates the highly sought after greater Brand Equity, something for which in current times, branding and advertising managers spend millions (if not billions) of dollars upon.

Now, since high  brand  equity tends  to  occur when  consumers have  numerous  positive  and  strong associations, either in the conscious our sub-conscious level, related  to  the brand. Brand association, which  is defined as “anything  linked  in memory  to a brand” is one of  the major components of  brand equity, and is greatly affected by the brand personality dimensions. Brand association, not only results in high greater brand awareness but also creates greater brand recall and so has a distinctively positive correlation with brand equity since it can  represent brand quality and brand commitment. These in turn creates the initial platform for any product or service brand to harness the strength to pull consumers, i.e. implement a pull strategy.

Now brand name recognition with strong brand association can  successfully developed through  a carefully planned and panned out  long-term marketing strategy, which involves activities like advertising,  public relations, customer need identification, pricing,  understanding evolving market dynamics and subsequent product or service offering modifications. No wonder today, multinational companies and business firms are investing millions and billions of dollars in advertising and other forms of marketing communications in order to create greater brand awareness and also greater brand association, so as to be able to implement a pull strategy.

With time a more detailed brand personality structure evolved as managers attempted to understand the requirements of branding activities better through greater focus on consumer behavior.

By the way, do you know about how to create a marketing plan in a structured manner?

Also, Have you read our article on the Marketing Mix or the 4 Ps of Marketing?

Genetic Algorithm

Today, in the world of data mining, business intelligence and analytics, techniques which can learn and provide decision support is gradually gaining in importance in leaps and bound. The three major techniques or groups of algorithms which have gained a lot of visibility in recent times are fuzzy logic, neural networks and genetic algorithms.

A genetic algorithm (GA) is a search based, self learning algorithm (technique) that imitates the theory of natural evolution based on selective screening of results based on fitness of purpose. This self learning algorithm is routinely used to generate solutions to multi-criteria  decision making problems, optimization problems and search problems. Genetic algorithms have evolved from the more popular class of evolutionary algorithms (EA), which generate solutions to optimization problems using techniques mimicked from that of natural evolution like those of inheritance, selection, mutation  and crossover.

The structure of a generic technique developed based on the genetic algorithm would follow the mention sequence given in the diagram below:

First while coding using a genetic algorithm, the first activity is to code the data-sets in such a way so as to be equatable  for the fitness of purpose of the problem domain. Then typically, a random sample is chosen from the data set and the fitness of purpose of these data points are evaluated. Now for those points which have a higher fitness score, they are selected for further application of genetic algorithm optimization techniques like those of inheritance, selection, mutation  and crossover. The other data points are rejected and the algorithm continues to recreate data-points from this pool of selected data points using the techniques of inheritance, selection, mutation  and crossover.

Selection: During each successive iteration, a part of the existing population is selected to form a new generation sample pool. These data points are selected through a fitness-based purpose of usage in the problem domain, where fitter solutions (as measured by a fitness function) are  selected preferentially. Some selection algorithms rate the fitness of purpose of each solution and preferentially select the best solutions. Other methods often rate only a random sample of the population, as this process may be very time-consuming.

Reproduction using Cross-over and Mutation
The next step is to generate the next generation population of data points from those selected earlier (using selection), through the operator algorithms called crossover (also called recombination), and/or mutation.

Cross-over: During cross-over, a pair (or triplet) of data points are chosen from the refined selection and they are combined and data-exchange takes place based on the individual coding. After the data exchange occurs multiple times, the new data points created from this process is returned to the selection pool to be operated by the selection operator.

Mutation: The coded data point obtained after the operation of selection on the sample pool of data points, is modified by tweaking one parameter to test its fitness factor and this continues for the entirely set of selected data points. The newly created generation of data-points are then tested using the selection operator again and the entirely process is restarted.

Although Crossover and Mutation are known as the main operators of genetic algorithm, there are also other operators such as regrouping, colonization-extinction, or migration in genetic algorithms.

The application of these operators and re-selection of these new generation data-points continue till the optimal fitness of purpose is attained. Common terminating conditions are often due to a solution satisfying minimum criteria, fixed number of generations being reached, allocated resources (complexity of computation, computation time, money) reached, the highest ranking solution’s fitness level is reaching or a fitness plateau has been reached such that successive iterations no longer produce better results, manual inspection produces better results or even combinations of these.

Customer sentiment and Opinion Mining

Customer sentiment mining or opinion mining refers to the application of datamining techniques like natural language processing, computational linguistics, and text analytics to identify and extract subjective information from customer data like textual interactions (sms, emails), recorded phone calls (calls to CRM divisions) and more recently usage of products/services (website usage, etc).

There are many popular technology products for customer sentiment mining.

Typically, these products analyze e-mails and telephonic conversations to decide if it is a complaint or a query and forwards it to most suitable agent for immediate resolution thus increasing agent productivity. They can also perform both structured and unstructured data analysis to understand & quantify customer satisfaction, display customer details and past communication, prioritize complaints based on customer satisfaction level the value of the customer, update customer contact details in the data warehouse, and also helps to differentiate services to HNI and LNI clients.

Sometimes, these data-mining systems can even create customized email/sms/ automated phone call campaigns for the marketer to increase revenue from cross-selling and up-selling, analyze customer preferences post campaign-creation, analyze customer actions post email reading, generate reports to facilitate management decision making process (which can be integrated with the existing other report generation tools)and also helps to analyze productivity of agents and channels.

Customer opinion mining

A feature-wise competitive analysis of the 15 most popular instruments available in the market for customer sentiment mining can be obtained on request to arpan.kumar.kar@gmail.com. The comparative report is easy to understand with charts implying a comparison of features an is priced $350 only.

Customer Lifetime Value management

Today “customer is the king” is the mantra for success for all marketing managers. But for actual decision making, the marketers (especially the relationship managers) are often poised with a simple challenge. They cannot meet the needs of of all the customers equally and satisfy them all.  So how should they prioritize how to satisfy the needs of the customer and by what means to select such customers?

The answer lies in the estimation of the customer’s lifetime value. Customer lifetime value ( CLV or CLTV ), or lifetime value (LTV), or lifetime customer value (LCV) is the net present value of the economic benefits (monetary returns in terms of cash flows) attributed to the relationship with a customer throughout his relationship with the company. The focus on customer lifetime value as a marketing metric is for placing a much greater emphasis on relationship marketing for improving customer service and long-term customer satisfaction, rather than on maximizing short-term sales.

So then, comes the big question, how do one estimate the Customer Lifetime value? The answer is presented to you diagrammatically below, in a simplified manner.

So what should be done to maximize the value from CLTV management? Let us discuss the same in this article step-wise.

  1. First estimate your customer lifetime value for your entire customer base. This would enable you to make an estimate of the total revenue that the customer is likely to provide you if he/she stays with you throughout the estimated life-cycle of the product.
  2. For each customer, estimate the possible churn probability at each stage and discount the CLTV value for each customer.
  3. Segment the customers based on the discounted CLTV value into high net-worth individual (HNI) customers, medium net-worth individual (MNI) customers and Low net-worth individual (LNI) customers
  4. Now, allocate your budget for marketing and relationship management likewise for each customer segment, to maximize the retentivity of every customer in the segment. Do remember that normally, every new customer acquisition is 5 times costlier than retaining an old customer, as had been found out through research. However, if the cost of retention of a singular customer (based on a case-to-case analysis) is more than the discounted CLTV, incentivising his churn is often a good strategy to optimize the negative effects of his network value and negative word of mouth viral effects.
  5. Always try to ensure a greater deal of attention for maximizing customer satisfaction. A fully satisfied customer is likely to provide 5 times more economic value to the firm than a customer with a mid-level satisfaction level. It is also important to remember that it is better to let a customer with low satisfaction level churn rather than attempting to retain him, since such a customer has a negative return to the firm, from the customer’s network ( remember Customer Network Value? )

These are few of the necessary steps to ensure customer lifetime value maximization and optimal management of the same, through better resource allocation. Do let us know if you have any queries, we would be happy to resolve your problems.

Fuzzy Logic and Fuzzy Systems

A fuzzy system is basically a control system based on fuzzy logic, which is a mathematical system that analyzes input values in terms of logical variables that take on continuous values between 0 and 1 instead of belongingness or non-belongingness to any set, as in crisp set theory or classical or digital logic, which operates either in 1 or in 0  for a logic to be true or false respectively. Fuzzy systems have become extremely popular in recent times for their various business applications.

Fuzzy logic on the other hand is the mathematical theory based on set theory, from which fuzzy systems have been developed. Essentially, fuzzy logic is based on fuzzy set theory which proposes that logical variables can take on continuous values between 0 and 1 instead of crisp belongingness or non-belongingness to any set, as in crisp set theory  which operates either in 1 or in 0  for a logic to be true or false respectively.

Typically, a response in real life situation is not crisp, i.e. its not in black and white. Say one is asked to judge the performance of a technology application, typically the person (judge) will think that for every specification of feature there is a degree of acceptability in performance while in certain dimensions, the performance is not acceptable. This is precisely what fuzzy logic or fuzzy sets attempts to capture.  Here, every item of a set may belong to multiple sets by a degree of belongingness and not by absolution of belongingness or non-belongingness to any set.

Today, Fuzzy sets and systems have taken a major interest from both the academia and the industry for its numerous and unlimited applicability and the scope.  The first wave of application of these systems were primarily in process control and electronics, while slowly, these have made their impact felt in information systems development and deployment in business processes and activities. The largest applications are in the area of decision sciences in business intelligence and decision making, and is being thought of as one of the biggest change creating mathematical tool.

Pricing of Information Technology

There are multiple approaches to pricing of information technology products and services.  Although pricing strategies differ based on whether the software or system is getting sold as a product or getting leased as a service, there are certain basic generic strategies for pricing the same. These strategies are being discussed in this article. Continue reading “Pricing of Information Technology”

Value Creation Strategy – Business Model

To create sustainable, long-term value for all the stakeholders of a firm, it is important to explicitly establish an appropriate stakeholder value target. However what would constitute the “success” condition for all the stakeholders of a firm would vary from the goals of individual stakeholder. For an investor in a firm, value may be seen as through higher market price of his stocks and bonds, where as, for a mid level worker, value may mean better returns in terms of satisfaction from the job, maybe in terms of pay grade improvements or in terms of job satisfaction. Although, what constitutes “value creation” may be dependent on stakeholder perception, for a generic strategic framework, there is a need to conceptualize a generic framework to achieve a target so the value may be created for the firm as a whole, in strict strategic sense.

The key to reach this target and achieve a sustainable competitive advantage is the alignment of business strategy, financial strategy, technology strategy, marketing strategy and investor strategies. One such model developed in strategic management literature is that of Strategy Maps.

In Strategic Maps framework, value is created through 3 main organizational resources, namely Human Capital, Information capital and Organization Capital.

As depicted in this model, value for a firm is essentially created through the interaction of  four processes, namely, “Operations management processes“, “Customer relationship management processes“, “Innovation processes” and “Regulatory and Social processes“. Under each process, there are lots of transaction level processes which create value. Monitoring and strategizing on the value creation of  transaction level processes is the functionality of Mid Level management in the organization which may be termed as “Ploy for Value Creation“. Focus here could be “Ploys” for improving cost structure or improving asset utilization within the firm. The objective at this level is to focus on productivity enhancing strategies.

For the executive senior management, strategy formulation for the purpose of “Value creation” would have a different focus. Their objective could be to expand the revenue opportunities through entering a new marketdecide a growth strategy for a product or market, or focus on Business Diversification strategies. In short, the role of the executives would be to evaluate various growth strategies for the firm, which could lead to huge revenues and thus economic value creation in the near future, upon realization of the plan post implementation of the strategy.

There are many other strategic frameworks for the creation of value for businesses which have their individual merits and limitations.  Another popular framework for value creation is that of Prahlad et al. (2004)

Do let us know if you have any query.

 

Product Life Cycle Management

Product life cycle management (or PLC management) is the sequential formulation and implementation of strategies used by Marketing Professionals as a product goes through its life cycle. The conditions of the market in which a product gets sold changes over time and the issues that arises with the changes must be managed as the product moves through its succession of stages. Continue reading “Product Life Cycle Management”

Supply Chain Value Management

No doubt that the efficient management of the Supply Chain is crucial for any business, but the grasping question always comes is how does it create value for the firm? More still, how can that value be better managed so as to create competitive advantage for the firm?

While the Value Chain analysis as developed by Michael Porter in 1985 argues as being efficient for creating a sustainable platform for value generation for firms so that they may achieve competitive advantage in the industry, the proposition is not without major limitations, like all other popular frameworks in strategic management literature.

Theory of Economics is one of many possible ways to define and measure value. 

While operationalizing the definition of value, it is crucial to note whether the exchange that creates this economic value is between business entities i.e.  Business to Business (B2B) – or between a firm and a consumer – i.e., Business to Consumer (B2C).

Since Supply Chain is intrinsic to creation of economic value between business entities only, we focus on B2B value creation. There are 3 forms of value that is created in B2B type economic transactions that is widely accepted in strategic management literature focusing on Supply Chains.

  1. Technical value, which is intrinsic to the resource being provided and occurs in almost every economic exchanges.
  2. Organizational value, which is built upon the context of the exchange, and may derive from a range of factors such as ethical standards, prestige, reliability, and association.  This may help the organization get more than the normal economic value from the transactional point of view, in terms of helping the same to achieve some degree of competitive advantage.
  3. Personal value, which is derived from the personal experiences and relationships involved in the exchange of resources and the benefits provided to the entities associated with the firms bounded by the economic exchange.

Value in supply chain gets created through the following processes:

  1. Supply chain modeling must be done quantitatively and objectively. Understanding of the goals objectively is crucial for its success.
  2. The major challenge in an excellent supply chain network is not to build a model but to model the sensitivity of one variable against others optimally. A simple model can work fine in many cases. However, supply chain experts (OR & Analytics Professionals) should be involved immediately when doing multi-layered inventory strategies, industrial engineers and operations.
  3. The fundamental building blocks of work are the methods and standards for the tasks. Value creation occurs when the changing business dynamics can be effectively modeled regularly to drive maximum benefits. (remember the Theories of Constraints?)

So creating value from supply chain should be a major focus for all manufacturing companies.

This is crucial to improve the effectiveness and efficiency of not only the supply chain in particular, but for the overall firm productivity.

By the way, did you read the following articles?

These are few of our highly popular articles

 

Market Entry Strategy for International Business

An international market entry strategy is defined as the planning and implementation of delivering goods or services to a new target international market. It often requires establishing and further managing contracts in a new foreign country. Few firms successfully operate their business in a niche market without ever planning to expand into new markets (mostly due to the localized nature of their Business) but most firms strive to expand through increased sales, brand awareness and business stability by entering a new market. Developing a win-win market entry strategy involves a thorough analysis of  multiple factors, in a planned sequential manner.

For a generic framework for Market Entry Strategies read our article here.

There are 2 basic Strategic Frameworks for Market Entry Strategies which are all dependent on Product type and the Product Lifecycle.

These frameworks have been developed built upon the theories of Innovation Diffusion Models in monopoly and a competitive Game Theory frameworks based on theories of Business Economics.

Market-Entry-Framework

The Waterfall Strategy

In a Waterfall strategy, the business is spread in international markets sequentially. First a firm enters a new market and establishes an identity in the same. Establishing an identity involves estimation of potential market size and revenue patterns, identification of target segment, creation of brand awareness, identification and creation of possible distribution channels and finally formulation and implementation of sales strategy. All these strategies at individual stage is dependent on the product type and the life cycle.

Once the product identity is established in the new market, the learning from the same is utilized to expand into another new market, somewhat with similar structure, sequentially. Learning is an iterative process in such a strategy formulation and it is a less risky process of expansion of business.

Typically, products with a longer product life-cycle or in the maturity phase would follow a Waterfall Strategy, for expansion into new markets.

 

The Sprinkler Strategy

Markets are approached simultaneously in the sprinkler strategy. While this is a more risky strategic framework for entering new markets, typically it is more suitable for products with a shorter life cycle (like Technology products) or are at the Introduction and Growth Stage of the Product Life Cycle. In such a strategic framework, markets are entered simultaneously and often a Skimming Product Pricing strategy is used to generate as much profits as possible from sales. Experiences from market responses are limited to individual markets and the same are not replicated in the other markets.

 

While there is a third Strategic Framework (Namely the Wave Strategy ), it is much less popular for its limitations.

Have you read the article on the Porter’s Five Forces analysis of industry competitiveness? This is a must-read article for anyone planning to get into a new market.

Ansoff Matrix

The Ansoff Growth matrix is a tool that helps firms decide their product and market growth strategy based on objective analysis of industry structure and product type. It is one of the more popular tools for strategic management analysis, in the scenario of deciding the case for a related diversification of businesses and firms, which itself is a highly risky strategic decision. Continue reading “Ansoff Matrix”

Supply Chain Management

Supply Chain Management is often defined in Operations Management literature as the integrative planning and management of all activities involved in sourcing and procurement, conversion, and all Logistics Management activities (Handfield & Nichols, 1999; Mentzer et al., 2001). Importantly, it also includes coordination and collaboration with channel partners, which can be suppliers, third-party service providers, In fact, the coordination is one of the major challenges in effective supply chain management (Thomas & Griffin, 1996). Stakeholders could be intermediaries, and even customers. At its core. Supply Chain Management integrates supply and demand management within and across companies.

Supply-Chain-Structure

Supply Chain Management can also be defined as the integrative planning and management of all activities involved in sourcing and procurement, conversion, and all Logistics Management activities. Securing one of the few respected logistics companies can be a great way to have a more efficient supply chain management.

However, selection of any supply chain partner is a multi-criteria decision making process and is extremely complex. Therefore a lot of advanced decision support systems are used for partner selection for effective supply chain management. There has been lots of studies which has focussed on the challenges and approaches for supply chain partner selection (Kar, 2009; Pani & Kar, 2011, Kar, 2014; Kar & Pani, 2014a; Kar & Pani, 2014b)

 

Supply Chain StructureThe structure and activities of a typical Supply Chain for a large manufacturing firm is displayed above.

So what does integrative supply chain management?

Integrative supply chain management consists of all the activities involved in logistics, supplier identification and management, reverse logistics, cash to cash management, service level distribution, management to demand and responding to fluctuations, manufacturing, management of e-SCM issues, management of technology, auctions, negotiations, reverse auctions, customer relationship management (to an extent), ware house management, inventory management and so on.

However the most crucial activities in proper management of the supply chain focuses on activities involving logistics management, supplier / vendor selection, procurement strategizing (make vs buy decisions), vendor management, value co-creation with partners and collaborators, and daily operational aspects. Essentially, the crux of excellence in Supply Chain Management lies in managing the Supply Chain Network, which extends from the many tiered suppliers (vendors) to the end customer through distributors or retailers.

Supply-Chain-Structure

Research on supply chain management started as early as in the late 1950s, and research issues were centered around few key themes as described by the diagram below.

Supply-Chain-Key-Activities

Thus Effective Supply Chain Management encompasses the planning and management of all the ploys and strategies, including the implementation of the same, for improving the sourcing and procurement of a firm, conversion, demand creation and fulfillment, and all Logistics Management activities. Thus, it also includes coordination and collaboration with channel partners, who can be suppliers for the firm, third-party service providers, intermediaries, and as mentioned earlier, collaborating customers on the network.

Those who feel as though they have a strong understanding of the many relationships involved with supply chain management may be able to own a franchise like Quiznos or other restaurant franchises with their expertise. The act of owning and establishing a franchise or chain restaurant in one’s area is fairly complicated, but certainly not impossible. It is also an excellent way to gain an understanding of what goes into owning and managing a business. Those who are relatively new to some of the aforementioned concepts may also find that they would have an easier time managing a franchise that is already established versus managing a business from the ground up.

By the way, did you hear about Interlink Parcel Delivery? They are a part of the UK based Interlink Express. They offer an excellent courier service, based on effective management of the logistics value chain.

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P.S. Article inspired by the presentation of my friend and colleague, Dr. Priyal Singh

References:

  • Handfield, R. B., & Nichols, E. L. (1999). Introduction to supply chain management (Vol. 183). Upper Saddle River, NJ: prentice Hall.
  • Kar, A. K. (2009). Using Fuzzy Neural Networks and Analytic Hierarchy Process for Supplier Classification in e-Procurement.
  • Kar, A. K. (2014). Revisiting the supplier selection problem: An integrated approach for group decision support. Expert systems with applications, 41(6), 2762-2771.
  • Kar, A. K., & Pani, A. K. (2014a). How can a group of procurement experts select suppliers? An approach for group decision support. Journal of Enterprise Information Management, 27(4), 337-357.
  • Kar, A. K., & Pani, A. K. (2014b). Exploring the importance of different supplier selection criteria. Management Research Review, 37(1), 89-105.
  • Mentzer, J. T., DeWitt, W., Keebler, J. S., Min, S., Nix, N. W., Smith, C. D., & Zacharia, Z. G. (2001). Defining supply chain management. Journal of Business logistics, 22(2), 1-25.
  • Pani, A. K., & Kar, A. K. (2011, January). A study to compare relative importance of criteria for supplier evaluation in e-procurement. In System Sciences (HICSS), 2011 44th Hawaii International Conference on (pp. 1-8). IEEE.
  • Thomas, D. J., & Griffin, P. M. (1996). Coordinated supply chain management. European journal of operational research, 94(1), 1-15.

Why MBA

The question “Why a MBA” is one that haunts both MBA aspirants and recruiters. Today slowly MBA is becoming a fad which often delivers much less substance to the business and is mostly about the way the little that is delivered is packaged. The problem is that this issue is also getting recognized by aspiring students and recruiters alike. And a bigger problem is all aspirants face this daunting question during the selection interviews.

So why do so many people start running after the craze despite its apparent limitations unless its from a highly recognizes institute like the IIMs, XLRI, FMS, MDI and the likes?

 

There are many perceived benefits of a MBA program from the viewpoint of the aspirants.

  1. Switching career to some other Industry or function within the same firm.
  2. Starting ones own business venture.
  3. Progressing to a higher responsibility in the same industry or function.
  4. Joining a dream company (the hottest being banking, consulting and marketing roles amongst the top business schools)
  5. Faster growth within a stipulated time in the career track.
  6. Filthy Lucre (Dirty Money) and lots of it.

So what skills MBA aspirants already posses and what new skills are developed in the programme.

  • Technical knowledge – Developed within the programme
  • Analytical skills – Strengthened from a basic level
  • Client skills – Developed a bit, further developed during post-MBA work.
  • Leadership skills – Has to be present in the aspirant’s core.
  • Business skills – Developed during the course work.
  • Management skills – Refine, but has to be in the aspirant’s core.
  • Communication skills – Must be present in the core, but presentation skills are improved.
  • Relationship skills – Further refined.
  • Problem/Contingency handling skills: Extensively developed in the programme.
  • Smart thinking – Has to be present in the aspirant’s core.

So does this justify burning that hole in your pocket and getting burdened by that huge bank loan, unless you are actually doing it from a premier institute? Think before you take the leap and invest your future in less known business schools just for the heck of it.

e-Commerce and e-Business Strategies

While there are many e-commerce and e-business models which one needs to be aware of, the dynamics of business strategies change overnight with the adoption of e-commerce and m-commerce business models. The limitations of the more popular strategic frameworks like that of the Porter’s 5 forces model was realized very soon by the researchers in e-business strategy. The generic strategy framework was also somewhat limited in its applicability in pure e-business models.

In view of these changes, there began a serious contemplation of sustainable e-commerce and e-business models for business giants. What would be the mantra for success was long deliberated and various e-business and e-commerce models started getting wider acceptance.

With increased adoption of E-commerce, firms adopted Pure-Click and Brick and Click Business Models.

  • Pure-Click companies are those that have launched a website without any previous existence as a firm. Ex: AMAZON.com
  • Brick and Click companies are those existing companies that have added an online site for e-commerce but still maintains an offline business model.  Ex: futurebazaar.com

However it was noticed that many (as high as 84%) of the business models met with disastrous results and the companies blew up (bubble burst) within a couple of years of its inception. It was at this juncture that the value proposition of e-commerce models started getting scrutinized and the importance of the complete value chain for e-business models got its due importance.

It was realized that the complete value chain needs to be analyzed before a firm selects a business model for its operations.

 

e-commerce-models

The analysis of the core of a firm is crucial for success in this increasingly information age, where business models are attempting a quick fly off the sly to generate revenue and most of which are falling flat.

By the way, have you read our article on the Growth Strategies of Web Based New Generation Firms?