L’ESTENSIONE DI LINEA SERVE?

ESTENSIONE DI LINEA. E’ UTILE?

[Pillole di Marketing]

L’estensione di linea è probabilmente una delle tecniche di marketing più utilizzate dai manager. Normalmente il ragionamento è questo. La marca X è molto conosciuta e gode di un discreto successo. Estendo la marca X su un altro prodotto/linea Y in modo da ottenere gli stessi risultati in termini di immagine e fatturato del prodotto ricevente la marca.

Estendere la portata di una marca contribuirebbe quindi a sfruttare sino in fondo la risorsa costituita dalla marca nonché dare origine a sinergie attraverso una accresciuta visibilità sia della marca stessa che della nuova linea/prodotti Y. In realtà l’estensione di linea nasconde delle insidie che vanno considerate per bene altrimenti il risultato sarà diluire la forza della marca indebolendola e rendendo meno chiara la linea dei prodotti offerti. L’estensione quindi è fattibile solo quando la marca si applica in ambienti in cui è adatta/serve, nei quali aggiunge valore e crea nuove associazioni/sinergie che ne aumentano il valore.

In caso di dubbi, essendo un processo non semplice, meglio lasciar perdere.

IL MARKETING. THE INVERTED COMPANY

The Inverted Company.

Medical clinics, hospital, theraupetic care-giving units, consulting companies, engineering firms provide examples of this situation.

The ideas on the concept of an inverted organization is having the point of novelty creation at the node contacting customers, not at the center. Tipically because the node is where the service is uniquely adapted and delivered to a customer. The nodes tend to be professional and self-sufficient. The loci of intellect and novelty creation are the same points. When know-how diffuses, it usually does so informally from node to node, or formally from node to center. Exactly the opposite of the other organizations. The leverage of an inverted organization is distributive. The role of the rest of structure is to provide logistics or specially requested support to the nodes and to relieve them of administrative detail. The center can also serve as a repository accessing new information from the outside and facilitating the acquisition of know-how from a limited number of other nodes through special links, such as seminars, webinars or similar techniques.

In inverted organizations the line hierarchy becomes a support structure instead of an order-giving structure. For example, the hospital Ceo does not give orders to doctors. Hierarchy continues to exist because the Ceo cannot work for each individual contact person at the same time. The function of line managers becomes bottleneck breaking, culture development, communication of values, developing special studies and consulting upon request, resource movements and providing service economies of scale. So the node can influence marketing activities and it is responsible of these at the same time but normally does not decide them. A good market positioning and a real coherence between brand reputation and company values can be missed.

The inverted organization works well when servicing the customer at the point of contact is the most important activity in the enterprise, and the person at the point of contact has more information about individual customer’s problem and its potential solutions that anyone else. Quite often this form is restricted to only certain units in direct contact with customers; however, in some intellectual companies, as law or consulting firms, medical clinics or colleges, the inverted organization may pervade all departments. It presents management with both people and systems. The loss of formal authority can be very traumatic for line managers. Furthermore this organization depends on continual professional training for contact people, great attention to personnel selection and reinforcement of organizational values. Given acknowledged formal power, point people may tend to act ever more like specialists and resist any set of rules or norms. It is difficult for contact people to stay current with the firm’s internal systems. Empowerment of contact personnel without control can be dangerous. At the same time powerful information systems and a lot of operating norms are required to support inverted organizations.

Sources: H. Mintzberg, J.B. Quinn, The Strategy Process. H.I. Ansoff. J.K. Galbraith, Organization design. Reading.

IL MARKETING. THE DOWNSTREAM COMPANY

Il marketing. The Downstream Company.

How a different organization impacts on marketing function and why is it so difficult a change in the companies.

The ideas rest on the concept of an organization having a center of gravity. This center arises from the firm’s initial success in the industry in which it grew up. The center of gravity of a company depends on where in the industry supply chain the company started. A supply chain is composed by different stages depending if the company is involved in manufacturing, retailing, service, etc. Considering a manufacturing company we could have six stages: raw materials, primary manufacturer, fabrication, product, distributor, retailer. The chain begins with a raw material extraction till the retailer where is the direct contact with the consumer. Service industries typically have fewer stages. So if you draw a line splitting the chain in two segments you divide the industry into upstream and downstream. The differences between the upstream and dowstream companies are striking. The upstream stages add value by reducing the variety of raw materials found on the earth’s surface to a few standard commodities. The purpose is to produce flexible raw materials and intermediate products from which an increasing variety of downstream products are made. The downstream stages add value through producing a variety of product to meet varying customer needs. The downstream value is added through product positioning, advertsing, marketing channels and research. Thus, the upstream and downstream companies face very different business problems and tasks. A distinction between upstream and downstream companies is necessary because the factors for success, management and organizations are fundamentally different.

Upstream Downstream
Standardize/homogenize Customize
Low-cost producer High margins
Process innovation Product innovation
Capital budget Advertising /R&D budget
Technological/capital intensive People intensive
Supply/engineering specialisation Marketing/R&D specialisation
Line driven Line/Staff
Maximaze end users Target end users
Sales orientation (push strategies) Market orientation (pull strategies)

Upstream is for the efficiency. Downstream for customization. The upstream company wants to standardize in order to maximize the number of end users and get volume to lower costs. The downstream company wants to target particular sets of end users. The competition is different. Commodities compete on price since the products are the same. It is essential for the upstreamer be the low-cost producer. Their organizations work with a minimum of overheads. Low cost it also important for the downstreamer but it works to generate higher margins. This could be done with a brand image, a patented technology, an endorsement, a marketing experience, a good customer service policy and so on. Competition revolves around product features or positioning, less on price. This means that marketing and product management sets prices. Products move by marketing pull. Instead of upstream companies that push the product through a strong sales force. The organizations are different and the way of investing financial resources as well. This permits to understand how is difficult to change organizations and why market’s approach is really different. Writing about this we normally refer to big companies but the same principles are in the small and medium enterprises. In other words a firm starts succefully from its center of gravity and that could shape its organization and its marketing behavior on the markets.

The deal between strategy and organization never ended. Much of this work consists of empirical tests of Chandler’s ideas presented in Strategy and Structure written in 1962. Most of this material is reviewed elsewhere. Galbraith, Mintzberg, Hamal, Abell, Hammond are some of more important contributors. Some recent works and ideas hold out considerable potential for understanding how different patterns of strategic change lead to different organization structures, management systems, marketing attitudes and company cultures. In addition, some good relationships with economic performance are also attained.

Sources: H. Mintzberg, J.B. Quinn, The Strategy Process. H.I. Ansoff, Corporate Strategy. H. Mintzberg, Structure in Fives. Designing effective organizations. A,D. Chandler, Strategy and Structure.