Fall 1999, Vol. 41, No. 1

 

As managers increasingly talk about making their companies respond to markets by keeping close to customers, staying ahead of the competition, and making market-based decisions, they are finding that implementing those ideas into action is increasingly difficult. Successful change programs are rare; failures are easy to spot. George Day succinctly summarizes six factors that can help an organization align with its markets. Day relates the experiences of Fidelity Investments, Sears Roebuck, Eurotunnel, and Owens Corning as they tailored change programs to satisfy and retain customers. His prescriptions help to create a program that will quickly alter a company's focus and will also be sustained over many years.

Stuart Hart and Mark Milstein predict a new round of creative destruction as information age firms respond to new technological developments. They see many new opportunities for firms if they view the global market not just as one entity but as three economies — developed, emerging, and surviving. Each economy requires its own strategy for fulfilling the varied needs of potential consumers. Hart and Milstein offer some new metrics so managers can measure their companies' current performance and potential for new opportunities.

It turns out that merely satisfying customers isn't enough; they must be totally satisfied or delighted before companies can count on them to be loyal. Benjamin Schneider and David Bowen point to new research on customers' emotions indicating that companies must meet customers' three basic needs for security, justice, and self-esteem. The authors present a needs-based model to enable companies to retain customers and ensure profitability.

In the Winter 1996 issue, SMR published an article by David Messick and Max Bazerman on avoiding the perils of moral minefields in today's business environment. They discussed three theories — about the world, about other people, and about ourselves — intended to help executives understand their judgment calls in making decisions. Here, Michael Magasin and Frieda Gehlen apply the Messick-Bazerman framework to the decisions made by an ordnance manufacturer. The consequences of the managers' actions (or lack of action) led the firm to disaster. The authors suggest some ways for managers to avoid such devastating results.

Adam Fein and Sandy Jap provide manufacturers with a strategic primer on the consolidation of wholesale distributors. When facing consolidation, they propose that manufacturers have four options: partnering with those distributors they predict will be the winners; maintaining a network of independent distributors; building an alternative route to the market by bringing distributor functions in-house or using the Internet to gain direct access to customers; and creating and preserving new channel equity.

In our Summer 1999 issue, Robin Cooper and Regine Slagmulder presented their three-step target-costing process for launching new products. Here, John Shank and Joseph Fisher discuss how an aging paper mill applied target-costing techniques to the products it had been making for fifty years. Their case study shows the potential of using target costing as a proactive cost-reduction tool to replace ineffective standard costing.

Kusum Ailawadi, Paul Farris, and Ervin Shames demonstrate how trade promotions can increase total channel profits and the manufacturer's share of those profits as well. Using the example of a wine manufacturer, they illustrate the effects of certain promotions on the profits of both the retailer and the manufacturer. In doing so, they refute the claim that trade promotions hurt manufacturers.

— Jane Gebhart

 

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