Customer Relationship Management

Introduction of the company

This research paper analyses the case of Indigo and the implementation and effects of Customer Relationship management (CRM) tools in the organisation. Indigo was started in 1977 as a first mover in the market, providing high quality digital printing press and the organisation remains as one of the leading innovators in the digital printing solutions industry.

Hewlett Packard acquired indigo in March 2002 and the company now operates as an independent division in the larger organisation, by the name of Indigo Digital Press.

Indigo is an international company employing over 150 direct sales representatives spread over a global territory. The primary products offered by Indigo are high quality digital printing presses distributed chiefly in markets across Europe and America. The organisation also deals in proprietary ink (consumed majorly by commercial print shops); industrial solutions such as packaging, plastic cards and labels among others. Operating in over 40 countries, Indigo sells products like commercial printers, personal use quick printers, packaging and labelling plants.

The subject of this paper is concerned with the implementation of CRM in the organisation prior to its acquisition by Hewlett Packard.

Pre CRM state analysis of the company

Indigo already had in place, an application to support its manufacturing, logistics and supply chain operations; however, the organisation had a serious support technology issue in the marketing and sales department.

The year 1998 brought forward an increasing concern for monitoring and increasing the productivity and effectiveness of the organisation’s sales force. The company faced a plethora of obstacles and challenges such as the ones under mentioned:

1.       The organisation lacked any capability to monitor its sales processes and was thus incapable of identifying various barriers and bottlenecks in the process. This stifled all efforts to shorten the sales cycle and close sales faster. Hence, long time taken to close sales was a serious issue at the time.

2.       As already briefed Indigo is an organisation that has had a wide geographical spread over countless global territories. This lead to another major problem; sales managers couldn’t clearly monitor the actions of their subordinates and gauge whether the sales force was investing time wisely in the correct prospects or not.

3.       The management noted that sales representatives were being forced to waste time in gathering information (much of which was irrelevant) from the front office; hence, a need was felt to provide condensed relevant information and tools to the work force in order to increase its productivity.

4.       Indigo was a company fast expanding into new markets. This required the recruitment of new people in the organisation. However, the company’s existing training and orientation programme was so slow that it made impossible, the quick transfer of leads to the new representative quickly.

5.       The lack of a system prompted sales representatives to keep sales logs, forecasts and leads on excel sheets or hand written notes. These notes were then passed on to the sales manager over phone or email; who in turn communicated the same to the higher management. This system was more or less like a Chinese whisper leading to a lot of discrepancies in the information communicated. There was an urgent need to keep an organised consolidated record of leads and sales forecasts in order to expedite marketing and sales operations.

All these challenges combined, prompted the top management of Indigo, to integrate an automated tool which could streamline marketing and sales function thus, increasing organisational efficiency and profitability.  

SWOT Analysis

Given the above brief of Indigo’s scenario, the SWOT facing Indigo at the time can be summed up as under:

Strengths

1.       As a fast expanding company, Indigo possessed the resources and the base that enabled it to better its sales and marketing programs.

2.       Given Indigo’s experience with CRM applications in the field of manufacturing, logistic and supply chain management, the organisation already possessed relative comfort and experience in implementing such automated applications.

Weaknesses

1.       The cost of implementing such a system could have been a major hindrance.

2.       Reluctance of parties involved in using the new system could have lead to a failure of the operation.

Opportunities

1.       Increasing sales figure and market dominance provided a ready platform for the company to improvise on the existing systems.

2.        Availability of various CRM software applications from various companies, meant healthy competition in the software industry; thus enabling procurement of the best fit technology at competitive prices.

Threats

1.       Use of similar mechanisms by competitors was a major threat to Indigo; this could seriously jeopardise the market leadership Indigo had secured.

2.       Failure to implement the system in accordance with the requirement of the organisation and non compliance by the user staff.

CRM program objectives

Gauging from the Pre CRM tool implementation state, managers at Indigo had the following objectives in mind regarding the CRM program:

1.       Closing Sales/ Customer Acquisition- Managers at Indigo required a tool that could shorten the total time involved in the sales process. A CRM tool was needed that could help in shortening the total time involved in closing a sale thus increasing the sales turnover of the organisation.

2.       Monitoring team efforts- The management at Indigo also wanted to establish an automated tool that could help sales managers to monitor the activities of the workforce assigned to them and enabling them to guide the sales force in the right direction.

3.       Processing information/ Customer Retention- The CRM to be established by Indigo was to be dexterous enough to summarise and condense information relevant for the marketing and sales people helping to save precious time that can be employed in turning over a profitable sales.

4.       Expediting training- The CRM was also aimed at establishing a quick training and orientation schedule that could minimise loss of information and leads, in the process of transferring them to the new recruit.

5.       Forecasting- The CRM would also help in consolidating records and figures to punch out forecasts prepared by the help of expert monitoring from the select group of specialists appointed on the system.

CRM Vendor Product

Selecting a CRM tool vis-à-vis other options available

While managers at Indigo were planning to implement a CRM system in the organisation a variety of options were available to the company to choose from. The top management appointed a small vendor selection task force to shortlist or suggest, from prospective vendors, an optimal CRM solution.

One of the prime options available to Indigo was lotus notes since, it was the cheapest option given the company had already paid for the purchase of the software two years ago. However, the software needed heavy customisation to fit the organisational needs with regard to marketing and sales.

Research conducted by the Gartner group and Forrester research had arrived at the conclusion that Siebel was the market leader in the CRM solution provider industry; the vendor selection task force was quick in assimilating this information and began weighing Siebel as a strong prospect vis-à-vis lotus notes.

The task force arrived at the following understandings by evaluating the systems provided by Siebel:

1.       The license costs of Siebel software were comparable with other software in the market.

2.       The Siebel software specifically provided focuses support to sales functions.

3.       The software provided had a richer user interface making it easily operable.

4.       Unlike lotus notes (which needed heavy customisation), Siebel systems were a precise fit to the organisation’s needs.

Given the above mentioned learning, managers at Indigo were quick in accepting Siebel as a better and more adaptable Customer Relationship Management system fitting Indigo’s sales and marketing needs due to its top end functionality, and an up to date, easy to use, intuitive user interface.

The Team

The top management at Indigo set up a committee, which included senior management from the marketing, sales and IT departments (the focus areas for the CRM projects). Additionally the team recruited Director of Marketing (Europe) as the project leader; and Ronnie Ben Zion as the IT project manager and analyst for the software implementation. In the US and the European market, the team appointed two marketing professionals for training activities; also a database administrator was hired to administer CRM database. In addition to this team Siebel extended a helping hand by offering the services of a technical account manager, who helped in the actuation of Siebel’s Rapid Action Deployment (RAD) methodology.

Implementation

The team outlined an approach to implement the new CRM system and undertake the change management process. The implementation was a step by step process, explained under:

1.       The team focused on keeping the CRM application easy and simple to use; this was done to reach at desired results faster and ensure that concerned people accept the system readily. This was extremely crucial to gain acceptance from users who were not very keen on sharing information, or weren’t tech savvy or couldn’t perceive the benefits of the application.

2.       The team also resolved on minimising customisation in order to make the application easily manageable and keep it upgrade friendly in the future. This in turn also helped in keeping within budget (by utilising what is already there rather than customising) and timelines.

3.       The project team also decided against an all at once implementation strategy; rather they opted for a phased approach in order to minimise the risks involved in implementation and making the task manageable (by not letting all the pressure come at once). It was agreed to that the new system would be rolled out region by region; starting with North America and proceeding to Europe. This helped in building a checkpoint where the new system could be tested and results assessed and verified before proceeding on to investing more in the software’s license fees.

4.       The team also decided on an inclusive approach to involve all the users in the actuation of the implementation process. The team regularly consulted sales representatives and managers to secure their feedback in order to ensure that the system was functioning as per the requirements of the job it is set to service. This also helped in the application gaining easy acceptance by its target users.

5.       Lastly the project leaders zeroed in on the objectives of the training; they were to be to educate the sales representatives, managers and other users about the importance and the logic of having the CRM application in the organisation rather than merely training them on how to use it.

 Infrastructure requirements

The implementation of the CRM application required the establishment of critical knowledge, information and hardware infrastructure. The project team began with utilising Siebel’s RAD methodology. Under this method the first task was to establish the scope of the main issues; the major issues highlighted by such an approach were:

1.       Creating a closed loop sales process

2.       Enhancing the productivity of the sales force

3.       Obtaining reliable sales forecasts.

A decision was reached to of not adapting the software system to current sales and marketing processes in the organisation. This required a complete process re design and re architecture and establishing a common sales process in territories across the globe. 

A major challenge facing infrastructure modelling at the time was to adapt to a system that uniformly defines sales territories. Until then all territories were defined by area sales managers; some were known by city names, other by countries and even some were known by routes and highway numbers. The project team felt a need that territories be defined by their zip or postal codes and this be used as a universal reference while noting in sales records.

The new application infrastructure also focussed on eliminating irrelevant information from the screen view and consolidating other useful information which was earlier unwieldy due to being spread over and being incomprehensible.

Parallel efforts were being made to create a user manual and a training system that could be used to train the users on the new sales process system implemented by the CRM application.

After running a brief pilot program in the October of 1998 and adjusting for minor modification, the team embarked on the process of data migration. This process was concerned with importing existing data – accounts, contacts, activities among other data fields. This exercise revealed data duplication and redundancy in various places hence the need to employ the services of the software Dataflux was necessitated to identify and filter out duplicate records.

In the following month of November, phased roll outs began. The implementation was done for a new branch every week in order to map branch territories, import data from data sources , installing application on the user’s computer and individually training the user on the application making them adept on the operation of the software.

The last part in the creation of the infrastructure for the implementation of the CRM application was concerned with creating a conducive environment wherein all members of the organisation readily accept and promote the new system. The chief operating officer at Indigo issues the dictat that if data weren’t presented on Siebel, its existence wouldn’t be considered; hence initially apprehensive members were also made to experience the system. Along with this, middle management adapted and expanded to include the new company policies and procedures to motivate the work force in the organisation.

360 degree program

Along with creating the required infrastructure the IT team of Indigo worked on consolidating the CRM report from all the data already available in the pre existing system. This enabled a 360 degree view of the audience of the company. Customer information such as target audience identity, customer behaviour and identifying varied target segments and customer profile identity became easier under the new architecture of the Siebel CRM application.

Thus in all these years of the CRM application roll out the software has become an integral part of Indigo’s organisational culture.

Training

The project management’s philosophy regarding training was that users of the interface should not only learn how to use the system but also learn the logic and reason behind the system so that they are aware of its functioning and can fully accept it as a part of their work life.

The project managers opted for a phased roll out of the CRM application so that:

1.       Stage wise feedback can be noted and corrections made as the program was being implemented.

2.       Individual attention was paid to each user so that complete acceptance could be assured and all doubts could be resolved.

Establishing a timeline

The project team established a 3-6 months deadline to implement the Siebel CRM program.

1.       The project planning started in the mid of 1998.

2.       By October of 1998 the architecture and designing of the Siebel came in force.

3.       By November of the same year the project team started rolling out the new CRM application.

Hence, the project managers were able to keep the project implementation in time thus, keeping within budget too.

Establishing a budget

In this section the researcher has attempted at making a rough estimate of the budget that would have been employed in changing to Siebel’s marketing and sales function CRMs.

The cost heads are listed below:

Implementation costs

1.       Consultation costs

2.       Siebel license costs

3.       Data Migration

4.       Training costs

5.       Establishing corporate culture

6.       Dataflux license costs

Recurring/Annual costs

1.       Software maintenance fees

2.       Ongoing training and orientation program

Estimated total cost per user $1000 per user per year.

Given that number of users in the first year was approximately 150; total estimated costs in the first year were approximately $150,000.

Production and Operations Management

Introduction

The researcher by the way of this essay uses the example of “Turbo Exhausts” (A company specialising in custom high performance exhausts) to highlight the importance of production and operations management in the smooth functioning of an organisation especially a manufacturing one.

The study of production and operations management concerns itself with observing and designing methods that utilise the resources available to add value to them and transform them into a good or service that becomes the final offering of the organisation. This process of production and operations management helps produce goods which are centred on consumer preferences and attempts to deliver them in time and at the right place.

This essay will attempt a technical analysis (rather than providing the solution) of the case presented. The researcher will observe the production and operation processes of the organisation, Turbo Exhausts in context of its recent partnership with “The Performance Shop”, its day to day operational issues and the broader operational problems of this growing firm.

Manufacturing Process at Turbo Exhausts

The manufacturing process at Turbo exhausts is primarily concerned with processing the resources available in to goods that fit the demands of the target market. Turbo Exhausts deals in producing custom automotive extractors and exhausts which are chiefly consumed by the Australian auto racing sector and the automotive aftermarket; therefore, the organisation’s processes are made to suit the requirements of producing the specialised products.

Turbo Exhausts maintains a singular production facility at Black Town which is utilised to manufacture both customs as well as off the shelf products. The facility employs high tech engineering equipment which is general purpose in nature; this provides the flexibility to produce the custom equipment. Also, the factory has a layout divided into four sections. The first section employs tube cutters, the second one employs tube benders, the third one employs welders and the last one has dynamo fitted bays to test and fit the custom equipments. The work is this facility is executed by high trained and skilled technicians who work on both custom and off the shelf products (both of which are produced at the same facility).

Since both the production lines are produced at the same facility it often happens that both of them compete for processing time. Often custom equipment is given preference over off the shelf products since the former yields higher profit margins; this results in the off the shelf equipment being left unprocessed on the factory floor. The company has also hired an expensive warehousing facility nearby which is falling short of fulfilling the increased requirements of the business and the current factory floor cannot be further expanded. It can be best summed up that the production processes of the firm are equipped to serve the old requirements of the firm; that is, they can serve the custom production line better than off the shelf product line. Hence, the processes need an updation to the new requirements of the business. Since, it is established that production and operation process management deal with the conversion of resources into output which caters to the market of an organisation, it is critical for turbo exhausts to remodel its current processes to the new market it has expanded into.

Contract with the Performance Shop

As mentioned in the case Turbo Exhausts is a company that specialised in the production of custom extractor and exhausts. Once it entered into a contract with The Performance Shop the requirements of managing the supply chain changed drastically. Before the contract the firm’s processes were singularly concerned with producing equipment tailor made to the requirements of a specific engine or car make. However, post signing the contract the firm felt the need for a process to cater to the production of a more standardised equipment. The original processes were relatively simple. Especially processes like inventory management, procurement and production did not require a lot of planning or forecasting. However, once the firm entered into a contract with the Performance Shop, a need was felt to change and adapt the processes to the new requirements; for instance once the flow of goods to the new outlet began a need was felt to stock up as against the earlier rule of producing according to order. Definitely the supply chain management also needed to accommodate a standardised structure to produce off the shelf products.     

The contract with the performance shop has opened up a new market segment for Turbo exhausts. Accordingly the firm started requiring a process that could keep pace with the steady demand flow brought in by the new tie up. Since the old processes of the firm did not require any forecasting or inventory management as production was more or less immediate need based the new product line required a drastic change. An increased focus on elements like inventory management, forecasting demand and planning procedures and stocking was needed. The lack of this planning culture was the primary reason behind the issues faced by Turbo Exhausts – especially that of work in progress lying idle on the factory floor for prolonged periods of time. Since the plant capacities and procedures were suited to only one production line that is custom equipment, the introduction of the new product line burdened the processing system and there started a competition between the custom and off the shelf goods. It was quite obvious that custom products were given preference since they yielded high margins however the supply to The Performance Shop suffered (that is these products were kept as work in progress on the factory floor for long periods, ignoring the volumes this product line could generate)

A general observation indicates that the symptoms to the problems currently faced by Turbo Exhausts emerged when the demand from The Performance Shop increased; this resulted in an irregular supply by Turbo Exhausts. A careful analysis of this symptom lead to certain broad definition of the various problematic issues faced by the organisation. These issues are, less space on the factory floor, capital locked in inventory, need for warehousing, irregular production schedules, increased lead time and late deliveries. All these problems indicate that Turbo Exhausts has failed to align its supply chain and production processes to its changed needs. To maintain the efficiencies and economies the managers at Turbo Exhausts need to pay an immediate attention to the issues surfacing and align its processes to fit in seamlessly into the processes of a larger supply chain system.

The irregular production schedules, increased lead times and lead deliveries, all point in the same direction; the firm is lacking in planning and managing its demand, inventory and scheduling procedures. The lack of space on the factory floor and the exhaustion of warehousing facilities indicate that the current layouts and facilities are being overburdened by the growing demand and production lines. An immediate redressal of these broad issues is needed to function smoothly and profitably.

Operational Decisions at Turbo Exhausts

A study of the issues faced by Turbo Exhausts it can be said that there are certain operational elements that the firm needs to address and adapt immediately. A modified perspective in viewing daily operational decisions can do the trick for Turbo Exhausts. Since the contract with The Performance Shop necessitates the establishment of a standardised procedures it is essential to view the two production lines as separate entities and take operational decision for both of them separately (and commonly in some areas). Unlike the custom manufacturing procedures earlier followed the firm will now require a strong system of inventory management and especially that of forecasting wherein, one can estimate the future demand and the raw material needed to meet that demand. This will help in scheduling processes in a manner so as not to conflict with another production line and freeing up capital tied in inventory.

One of the core elements of any production process are daily operational decisions. These are the decisions which shape up the success or failure of the organisation. Therefore it is of key importance that these decisions are aligned with the overall strategy of the business. This will help the managers to steer the organisation in an intended direction on a daily basis; and will also keep progress measurable and deviations correctable due to the presence of established measurable goals.

 Since the intentions of managers at Turbo Exhausts is to maintain the two business lines it is important to take daily operational decisions in such a manner so as to minimise conflict between the two production lines and to strike a balance between the processes of the two. This is a difficult to achieve objective; however, the managers at Turbo Exhausts can achieve the target by establishing a transparent information system. A culture where there is free flow of information, will promote sharing of information helping support informed decision making – procurement and scheduling. This will enable maintaining optimal inventory and reducing lead times to cater to the client.

The production issues faced by Turbo Exhausts are related to inventory management; which are leading to overstocking or shortages at times. The supply too, is turning out to be irregular therefore, it is critical to address the operational/production problems on a priority. This can be achieved by daily forecasting of procurement and processing based on past figures and future expectations. Also the scheduling need to be done with careful planning and foresight in order to reduce the work in progress lying idle (and promoting faster investment turnover). A working balance need to be reached between the production functions of custom equipments and The Performance Shop produce in order to promote the growth of both the business lines.

Financial effects of the Off the shelf products

It has been clearly stated that the off the shelf products did not result in a financial gain as was expected out of them. The standardised equipment has not resulted in profits comparable to that made by the custom products. However, the management also cannot deny the importance of the off the shelf equipment in future expansion. Therefore the processes have been forced to take the increased burden of the new production line although it does not generate much of an income. One critical issue that has surfaced due to the accommodation of the new product line, is that of maintaining inventories. Since inventories have to be maintained in anticipation of demand, it leads to a lot of capital being locked up in stock reducing the profitability or profit potency of the business (since such capital could have been used otherwise in a more profitable venture). Planning procurement and process scheduling with dexterity will lead in faster capital turnover hence increasing the profits.

Another financial burden that has cropped up due to the new production line is that of work in progress. As already stated in the case, a lot of unfinished work in progress is lying idle on the factory floor. This means a lot of investment is being tied up in this unfinished lot which is worth almost nothing – this implies an increased need for funds to finance other functions of the business. One way the financial structure of the company can be freed up is by means of reducing the bottlenecks in the production process; that is giving the production of off the shelf products equal importance as that to custom products (by trusting in the future viability of the standardised lot).

It is quite obvious that the new production line has resulted in a sudden drop in profitability. The firm has been slow in adapting to the new requirements hence, the new production line has only burdened the existing capacities of the production facility. Although the profit margins are low in the standardised equipment there is great scope for expansion and increased volumes in the future; therefore, Turbo Exhausts should invest in inventory management and establishing information systems in order to enable informed and planned decision making and implementation in the organisation. The financial health of the company is currently negatively affected and it may continue to be the same for a while; however, efforts in bettering inventory and supply chain management may help Turbo Exhausts to improve its long term financial health.

Conclusion

The essay has helped in developing an informed perspective about the organisation in question. Also it has been material in helping to analyse in detail the problems affecting the organisation.

Turbo Exhausts, originally a custom manufacturer of exhaust and extractor systems (chiefly used in auto racing), diversifies into a new production line. However, the growing firm is slow in adapting to the requirements of the new business. This results in several problems like, overburdened production capacities, long lead times and delayed deliveries. The researcher by the way of this essay has been able to unearth the financial implications of such issues. Also pointing in the direction of what is lagging in the current system and what can be improved to smooth the operational systems of Turbo Exhausts.

The essay has also been material establishing the importance of organisational goals and the need to align day to day decision making with such goals; so as to establish a step by step process to achieve such strategic objective.

Summing up, the essay has provided perspective, detail and understanding about the importance of production and operations management by studying it in context of a real world organisational problem.       

Marketing Management and Planning

Introduction

Started in 1886, the Coca Cola Company has since been the market leader in the aerated beverages market around the world. With little or no close substitutes and limited competition, the company has maintained its formidable market share and its status as one of the most valuable brands in the world by implementing flawless management acumen and an aggressive marketing strategy around the world.

In the early 80s the company launched an innovative product - Diet Coke, to address to the demands of an aging population of baby boomers (who were increasingly becoming health conscious). The product has since attracted masses in developing and developed markets worldwide, where there’s a growing trend in health awareness. The diet coke formulation caters to a similar market in Australia.

The usual aerated soft drink dominates the market share with 40% beverage consumer consuming it, however, diet coke sales have quadrupled in recent years and show better prospects for growth as against sugary soft drinks. This is enough reason for Coca Cola Australia to design such a marketing plan which helps it to take a lead in this market as well; and help retain as much market share as possible.

Brief Situation Analysis

A situation analysis (in context of Diet Coke) of the company’s current internal and external environment revealed that the company’s strength lies in its strong brand recognition and loyalty, financial capabilities and management acumen. However, its weaknesses too stem from its strengths. That is, Coca Cola today is viewed as a seller of an unhealthy product detrimental to the health of millions of its customers. It is often labelled a bully (given its financial strength) who coerces governments and exploits resources at the cost of common welfare in order to make profit. This puts Coke in a bad light – among societies it operates in. Also, there are growing debates about the safety of aspartame, which is a key ingredient of Diet Coke.

The opportunity for the product lies in the growing concerns for a healthy lifestyle and healthy food choices. Diet Coke being a low calorie substitute for regular Coke, appeals to people who love Coke but, also want to move to healthier food options in order to maintain general well being. The threat to Diet Coke arises from the growing popularity of healthier beverage options as fruit juices, energy drinks and tea.

Given the current situation of Diet Coke, it is only advisable for the marketing management at Coca Cola to build upon its strengths however, attention must be paid to developing healthier formulations such as those using Sucralose.

The company should work towards benefitting from the opportunity present by growing health awareness; and developing a positioning that communicates taste and health at the same time, in order to counter the threat posed by substitutes.

Marketing Objectives

The marketing objectives for Diet Coke (Australia) brand can be derived from its current situation analysis as well as its global marketing objective and vision and mission statement. It is states as under:

‘The marketing plan would focus on creating a distinct brand personality that is relatable to the target customer and results in positioning the brand such that it is a preferred choice over substitutes (and competition); creating value in the customer’s lifestyle. This will be measurable by the sales produced and the market share retained after such an exercise.’

Thus, the marketing objective provides for exploiting the opportunity available (in the form of healthier trends) and countering competition. Also it fulfils the mission statement objectives by providing a product that refreshes, spreads optimism and happiness, and creates value to make a difference.

This is in line with the vision statement of providing quality beverages, maximising long term profitability and at the same time fulfil its duty as a responsible world citizen.

Armed by these core philosophies and marketing objectives that directly address the current concerns, the marketing managers for Diet Coke can now embark on a process to achieve the objectives.

In the sections to follow a step by step approach is undertaken to arrive at the unique positioning, targeting and marketing mix approach, to formulate a sound marketing plan for the product. 

Target Market(s) and Positioning

Target Market

The target market of Diet Coke is one which will go the extra mile to make a health conscious purchase decisions. This type of consumer can be easily found in the age group of 17-25 (both male and female). These are young people who value their health a lot. Looking good and staying fit is one of their primary agenda in life hence their purchase decisions are in line with their health awareness and knowledge. This is the primary target market.

The secondary market that Diet Coke will target in Australia is an age group of 10-40 (excluding the ages 17-25). The buying decisions for the younger half are either made by parents, influenced by peers or are emulative (derived from public figures, peers or younger adults). The other half of the spectrum is either health conscious or moving towards it or sporadically makes an effort to stay fit (given the realisation of a waning youth). This is a market which may or may not choose Diet Coke as a purchase option at each purchase incidence.

Positioning

Positioning is a process by which the marketer aims to create a particular image of the product in the minds of the target consumer. The concepts of creating a brand personality and an appropriate promotional mix are covered under this head.

The personality of Diet Coke should be such that if the product is imagined as a person, he/she should be someone whom the target market aspires to be after consuming the product. In case of Diet Coke the brand personality should be of a physically agile youngster, who never compromises, is a go-getter and is always on the move.

The appropriate punch line to communicate this positioning could be, “Just for the taste of it”. The same punch line has been used to promote Diet Coke in 1982 and at various intervals until 2009 (in the US and European markets). The line still holds its relevance in communicating that someone who drinks Diet Coke is choosing a tasty drink which also happens to be healthy; rather than a healthy drink which is tasty. This effectively communicates that a Diet Coke consumer does not compromises on his/her tastes for staying healthy. The positioning if communicated effectively by choosing the right marketing mix, will easily distinguish the product from its substitutes and competitors.

Approach to Marketing Mix

Marketing Mix is a composition of various strategies concerning key elements of a product, to determine the final offering of a producer to the market. In context of Diet Coke (in the Australian market), the 4Ps of marketing mix are elucidated below:

1.     Product

The physical attribute of the product offered is a unique beverage formulation by the Coca Cola Company which retains the taste of the regular Coke but, contains only one calorie. To the psyche of the target consumer this offering is communicated as, a tasty drink (one which tastes exactly as the drink the consumer used to prefer but is shifting due to health concerns) with minimal calories. Thus, the value offered by the product is the retention of the same taste preferences and maintaining health too without having to undergo a change of habits. 

2.     Price

Price is the money amount that a consumer pays to purchase the product. Setting this price will determine the final purchase decision as well as the profitability and sustenance of the product. When setting the price, the reference pricing (price of competing products) and comparative pricing (the difference in value of the attributes of the product and that of its competitors) must be paid attention to, to arrive at the best price.

In context of Diet Coke, pricing done by close competitors such as Pepsi (for a similar product) and price of other substitutes must be observed. Since a product like Diet Coke doesn’t have much close competition and functions in oligopolistic conditions, the price will be referential (that is in relation to its closest competitor’s offering). Diet Coke should maintain its prices in line with that of Pepsi Max to appear more lucrative to the consumer.

3.     Promotion

While promoting the Diet Coke brand in Australia, marketing managers should keep in mind that the world has moved past 30 seconds TV commercials. The new age promotion utilises “distribution” technologies such as Facebook and Twitter. The content of such promotional undertaking should be dynamic storytelling rather than one way; it should involve people in creation of relevant content (coherent with the theme of the intended product positioning).

The central idea of Diet Coke’s promotion should be to create ideas which are contagious and spread like a viral campaign (on their own). Secondly, the content on various promotional platforms should be interlinked so as to present a unified coherent idea. Thirdly, while the majority efforts should be towards building engagement and communicating the product idea, certain allowances should be made for experimentation and alternative thinking (so as to develop faster approaches to growth).  

Apart from social distribution technologies, the brand can rely on traditional methods as TVCs and billboard advertisement. Also, publicity activities such as sponsoring sports events, personalities, special endurance events and the like will also go a long way in communicating a favorable brand image and a relatable brand personality.

4.     Place

This point refers to the place where the product can be physically offered to the prospective consumer. The Diet Coke brand can benefit from the existing distribution network of the Coca Cola Company in Australia; thereby placing it within arm’s reach of millions of consumer already experiencing and satisfied with the company’s products.

The management can follow an ‘intensive distribution’ strategy for the product since its prospect consumer is available at almost every place in the nation’s territory and the product managers follows a penetrative referential pricing.

Also special efforts can be made to make the product available at specific places frequented by the target consumer. These could be stadiums, movie theatres, shopping malls, college cafeterias, gyms, health clubs and the like.

Links between Marketing Plan Elements

A fluid approach has been followed while preparing an outline of a marketing plan for Diet Coke (Australia). The marketing objective determined for the brand is in line with the mission and vision statement of the company, and also addresses the threats, weaknesses and opportunities unearthed in the current situation analysis of the product.

The target market of the product, as presented by the opportunity of growing health awareness, is one which is shifting towards healthier choices in life. The product is to be positioned among this set of people by portraying an offering which is does not compromises on taste and still is a healthier option.

The price of the product is to be penetrative, so as to suit the pockets of a young population as well as maximise sales volume, capture a larger market share and ensure profits for the company.

The promotion is in line with the recent trends in communication embraced by the youth. It utilises the flexibility and increased engagement provided by virtual social media to reach out and involve the prospects. Also, other promotional efforts targeted specifically at a young target market are used.

The place strategy is one that utilises the existing network thus, providing economies in distribution and promoting volume sales.  

Hence, it can be summed up that the elements of the marketing mix closely follow the requirements of positioning in a given target market and to fulfil set objectives of a marketing plan.

Conclusion

Concluding from the marketing plan brief outlined in this essay, it can be stated with reason that a marketing plan is essential in determining the needs and objectives of undertaking any marketing effort and then devising methods to achieve these objectives.

In case of Diet Coke, the marketing plan has been successful in setting up certain concrete measurable parameters and pointers that will give direction and vision to any marketing effort undertaken for the brand, by providing clear cut goals to be achieved by such efforts. Thus, providing a scope for monitoring and corrective measure.

References

1.       http://www.coca-colacompany.com/our-company/mission-vision-values

2.       http://www.coca-cola.com.au/index.jsp

3.       http://www.jeffbullas.com/2012/01/30/5-lessons-from-coca-colas-new-content-marketing-strategy/

4.       http://bilaras.hubpages.com/hub/Coca-Cola-0

5.       http://www.coca-colacompany.com/stories/we-needed-a-big-idea-the-extraordinary-story-of-how-diet-coke-came-to-be

HRM Strategy and Implementation

Contents

Executive Summary. 2

Introduction. 2

The Issue. 2

Case. 2

Annualised work hours. 3

Resistance against the Annualised working hours system.. 3

1.      Employees who are exploiting the overtime work wage rate. 3

2.      Some employees may have family commitments. 4

3.      Lack of knowledge. 4

Old management’s strategy in light of the Strategic Negotiation’s Framework. 4

1.      Introduction to the Strategic Negotiation Framework. 4

2.      Old management’s Position in the model 4

1.      Determinants. 5

3.      The process employed. 5

4.      Outcomes. 5

3. Rating the choice of the strategy adopted. 5

1.      Desirability of the objectives. 5

2.      Feasibility of change. 5

4. Accounting for the poor performance of the strategy. 5

1.      Strong labour market. 6

2.      Parties involved. 6

3.      Forcing the issue. 6

Company’s new employee relation attitude/position. 6

1.      Managing irksome issues. 6

2.      Inclusive discussions. 6

3.      Using tools which are mutually trusted. 6

4.      Managing implications of negative actions. 7

1.      Managing internal differences. 7

2.      Shaping attitudes. 7

Recommendations. 7

1.      Relations with employees are commitment oriented. 8

2.      Relations with unions and elected work councils. 8

1.      Due attention to previous mistakes. 8

2.      Planning. 8

3.      Discussion. 8

Conclusion. 9

 

Executive Summary

This essay studies the case of a utility business organisation which has struggled to implement a change process concerning employee relations.

The researcher has employed tools such as Strategic negotiations framework and framework of voice systems and managerial styles to unearth factors such as high control, low trust and withholding information by the management under a distributive negotiation process (that too against a workforce which has a high bargaining power) as causes which lead to a loss-loss scenario.

The same models and theories have been utilised to analyse the corrective measures taken by the new management and suggest a future course of action for the organisation.

The conclusion reached is, following an indirect/direct voice enabling system which fosters co-operation and partnership for mutual growth can only lead to smooth strategy implementation and, long term sustenance and stability of the employee relations in an organisation. 

Introduction

This report presents the case of a large utility business based in a wealthy region of the country. The case presents a classic problem in Human Resource Management, wherein the importance of good employee relations and voice management strategies is highlighted to ensure smooth and profitable operations.

In this essay, the researcher endeavours to analyse a change management process (in context of Human Resource Management) using the Strategic Negotiations model developed by Walton, Cutcher-Gershenfeld and McKersie. The recent happenings in the organisation are traced on the relating section of the model and then the probable reasons behind such a situation are unearthed.

Further, the researcher also tries to contrast the differences in management style of the current and past leadership; highlighting the differences in approach and the reasons behind the success or failure of a particular leadership.

Also, a study is made of the framework of voice systems and management styles to suggest a future course of action in order to achieve efficiencies. Focus here being, the detailing of an implementation plan (in addition to providing a theoretical framework).

In the sections to follow, the issue, its analysis, contrasts between leaderships and recommendations are studied using a structured approach.

The Issue

Case

The issue is broadly concerned with a ‘change management’ process gone wrong.  Five years ago, the key management of a large utility business (employing 4000 people) realised that its employee relations program needed a review to meet the current industry standards and efficiencies. This thought was inspired by benchmarking the success of a firm in the same industry, which was highly successful in cutting down costs and increasing profitability by adapting to a system of ‘annualisation’ of employee pays. However, the management of the business in purview remained ignorant of the exact change management process that the bench marked firm took.

The HR director in consultation with the CEO, initiated talks regarding the implementation of the new process, with the full time union official (at the regional union office). However the HR director failed to note that the real influence over the workforce rested with the workplace union delegates thus, excluding them from discussions.

These union delegates becoming wary of change initiation, became hostile towards the management’s efforts labelling such moves having an ulterior motive of profiteering at the expense of the worker by exploiting the workforce.

Ultimately the management has to give in to the resistance of these delegates by providing a raise to the salaries (as the labour market becomes strong the management loses bargaining power). However, in the ensuing years the change efforts still fail and profitability declines, forcing the CEO and HR Director to resign from their position. The new management in place is trying to win over the union’s confidence and some positive efforts have been actualised however, the management still lacks a clear approach to achieving full efficiencies.

Annualised work hours

Every industry especially manufacturing, experiences certain periods of demand peaks and falls. This alternation between high and lows requires the employment of more labour/work hours when the demand is on the rise and less working hours when the demand is on the decline.

This characteristic of business has entailed a system of overtime wages and special compensations in times of emergency call outs. However it was noticed that certain workers tend to abuse the overtime wage norms leading to greater costs to the company at relatively no output being produced or needed at certain times. Thus, HR and Operations researchers worked on to find a system which could counter this abuse problem, adjusted well to the industry highs and lows (thus serving the business efficiently) and also take care of employee’s welfare.

The result of such a find was the Annualised work hour approach. This approach entails that salaries remain the same over each give out period (that is usually a month); employees work over time/put in extra effort in periods of high demands and emergency call outs – at the same pay; however, this extra effort gets compensated by holidays and lesser working hours in periods of low demand. Thus employee’s pay remains unaffected (as it was before the adoption of Annualised work hours) and the firm can ensure proportionate supplies according to demand, without having to run the hassle of lay off, re-hiring or contract recruitment.

Resistance against the Annualised working hours system

Usually employees and unions will accept the stability that an Annualised system promises. However, there are a few quarters who will resist such change for certain vested interests. These particular reasons and sources are:

1.      Employees who are exploiting the overtime work wage rate will be against such moves. As they are already earning more than the basic pay by working overtime even in periods of low demand. Thus, getting a pay not proportional to the effort made.     

2.      Some employees may have family commitments or other time commitment issues which may hold them from participating in ‘emergency call outs’ and over time working hours.

3.      Lack of knowledge about the operations of the annualised working hours system may be a limiting factor for some unions or employees. Lack of a clear understanding of the process and the general tendency to resist change may muster resistance from various quarters of the workforce of the organisation.

By now we have a clear understanding about the issue. In the following sections we will analyse ‘what went wrong’ and ‘how to go about it’ with the help of various models and theories formulated by leading researchers in HR, psychology and related fields of knowledge.

Old management’s strategy in light of the Strategic Negotiation’s Framework

1.     Introduction to the Strategic Negotiation Framework

Walton, Cutcher-Gershenfeld and McKersie’s Strategic Negotiation Framework is a model that provides a behavioural approach to managing Human Resources and especially employee relations in an organisation.

The model studies the relations management systems in an organisation under the light of the determinants of a negotiator’s choices, the approach a negotiator uses to interact and negotiate with the concerned group and the outcomes of such negotiation.

Given the various motivations and choices made by the HR managers in an organisation the final approach can be of three possible types; firstly, a ‘Fostering’ approach which will involve total commitments from all the parties to the agreement and will provide the best possible solution to a problem hence, a win-win situation; Secondly, the ‘forcing’ approach, which follows distributive bargaining tactics. This process is followed when the negotiator realises that the other party is at a weaker bargaining position and can be forced to submit by the policy of divide and rule. This is an exploitative win-lose strategy, unhealthy for long run as it does not secure total commitment and cannot achieve full efficiencies. It merely achieves the short term needs. The last approach is that of ‘escape’. This approach is utilised by managers who are scared or unskilled to manage the inhibitions and oppositions arising while managing change. Such an approach is one of an escapist who runs away from the problems neither by implementing policies which do not achieve any real goals nor in consultation from other parties involved. Such a loss-loss approach does great damage to the organisation by undercutting relationships and non-achievement of organisational goals.

2.     Old management’s Position in the model

By studying the model it can be aptly said that the management followed the ‘Escape’ route. The researcher’s position on the same is substantiated by the following factors:

1.       Determinants- the old HR manager’s choices were influenced by substantive objectives. He/ She viewed the change as a mere revision of employment contract (restructuring employee salaries) to improve profitability.

Also, the manager failed to take into account or ignored the change management process followed by the organisation bench marked for such a move. Also the manager was ignorant about the proper chain of command/ influence that could shape employee behaviour. In this case, he consulted only with the full time union officials rather than the workforce union delegates who held actual control over employee relations.

3.       The process employed- is one of escaping the real issue. The HR manager merely stated that the annualisation would not affect the earning levels of the employees, and ignored the importance of explaining the why and how of the process; and to understand the workforce’s point of view and their concerns regarding the change. Also, the management bargained with the wrong authority as it failed to take note of the levels of authorities employed in the process.

4.       Outcomes- As the HR manager looked for substantive outcomes, giving precedence to compliance over commitment, the change management process failed miserably ending in further loss to the company (in form of a raise, without any change to the employment terms) and loss to the workforce (by reduced profitability and high vulnerability and stability issues of the organisation due to inefficiencies).

3. Rating the choice of the strategy adopted

The researcher has reached a sufficient understanding regarding the factors that influence the choice of the strategy. These factors being:

1.       Desirability of the objectives- the management desired revising the employment terms of the current workforce so as to reduce the abuse of overtime pay rates by some employees and increase profitability by proportional distribution of the working hours according to demand volumes (annualised work hours). This goal motivated the change management process.

2.       Feasibility of change- the management viewed this as a substantive goal that is merely modifying the employment terms and hence followed a substantive approach bringing the policy proposal as a mere notice to the union officials; ignoring the importance of explaining the issue and securing commitment to it by open discussion with parties going to be affected (workforce and its delegates).

By keeping such a limited view of the issue the management was following a policy of compliance and containment; forcing workforce agreement to a certain issue and then ensuring achievement of certain ends. However, it failed to take notice of the increased bargaining power in the labour market and the union delegates’ and employees’ strict resistance to change since they were unaware of its implications and it adversely affected a fraction who were earning due to overtime pays. Thus, the business’ choice of strategy can be rated as extremely undesirable given the state of affairs the business functioned in.

4. Accounting for the poor performance of the strategy

Since the choice of the strategy was undesirable, it lead into a dismal performance and complete failure. The reasons for non performance are listed below:

1.      Strong labour market

The labor market was quite buoyant at the time the change management process was initiated. This left a lot of bargaining power at the hands of the worker. The management did not take note of this and proceeded to try and force its decision (which concerned the employees critically) on the workforce. This alerted the representatives of the union, of the organisation’s ulterior motives to exploit the staff to increase profits and hence they resisted.

2.      Parties involved

The HR director involved the full time union officials in the proposal and implementation of the annualised work hours scheme. The director was either ignorant or oblivious of the influence, the workplace union delegates held as opinion leaders of the employees. Thus the issue was addressed to the wrong party, leaving the workforce angry and reproachful about the motives of the managers.

3.      Forcing the issue

The HR director tried to force the change on the workforce rather than involving them in a joint decision making process winning their partnership in addressing organisational problems and ensuring their commitment to organisational growth. Moreover by continually pursuing the issue (in a similar fashion) next issue, the management seemed desperate in its zeal to exploit and profiteer.

Company’s new employee relation attitude/position

The new management follows an approach of partnership and internal differences management when it comes to maintaining employee relations. The same is evidences by the following steps of the new management:

1.      Managing irksome issues

The new management wanted to avoid the ongoing confrontation in collective bargaining so as to gain a breather for ‘thinking’ a better approach to solve the problem. The new management tried to do away with all the issue that were bothering the workforce and their representatives. Moreover the management sorted out pays at the going rate and declared that it will not pursue the plan to move towards annualisation, any further. This was a very necessary step, to start with the process of building employees’ confidence in the new management team and the corrective policies they intended to take up.

2.      Inclusive discussions

Although the new management declared that it wouldn’t proceed with the change to annualised working hours process, it certainly did need to make amends in order to cope up with the rising costs and the growing inefficiencies of the current systems. Hence, the management communicated and discussed with the union delegates the need to conduct an efficiency study, in a private meeting. Since the parties to be affected were directly involved in the consultation process, confrontations were reduced to a mere ‘wait and watch’ attitude of the delegates.

3.      Using tools which are mutually trusted

The efficiency study to be commissioned was conducted by a third party consultancy. The choice of the consultancy was such that it enjoyed the confidence of both the workforce and the management. This went a long way in securing employees’ willingness in being part of the survey as well as establishing trust on the consultant organisation and credibility of the report produced; thus, ensuring minimum obstacles in implementing the recommendations of the reports.

4.      Managing implications of negative actions

The recommendation of the consultancy with regards to the efficiency report required to lay off an excess of 10% of the workforce in order to restore efficiencies and cut costs. This would have been a difficult to implement step had the management not included the representative of the workforce itself in the change process entailing surveys and then chalking out terms of such lay off by explaining the problem and devising an amicable solution. The end result was to promote voluntary resignation (subject to management’s approval) and compensating out going employees at the best rates in the industry. Thus, a change which could have gathered great resistance as it was concerned with employee welfare directly, was implemented smoothly by sharing the ownership of the decision making process with the party going to be affected by the decision.

1.     Managing internal differences

The new management has followed a fresh approach in dealing with employee relations. It seeks to address the issues and differences in the organisation rather than ignoring them (as was the case with the old management) by holding an all inclusive discussion and decision making process. Addressing and accepting internal differences will provide better understanding to special organisational needs and lower resistance, while designing a change management process in future.

2.     Shaping attitudes

The current management also follows a policy of shaping attitudes rather than that of coercing a policy on the concerned parties. The managerial attitude towards change is that of forging partnerships to ensure mutual benefits and ensuring dedication and commitment to work. As against earlier management, the new one is not resisting any ideas from the workforce; rather it is spearheading a discussion which will forge ideas and shape opinions which are weighed with reason.

Recommendations

In this section the researcher aims to provide certain recommendations for future course of action, utilising the framework of voice systems and managerial styles.

The framework of voice systems and managerial styles studies a mix of various types of relations with the employees and types of relations with the unions the intermingling of which gives birth to different managerial styles and voice systems in an organisations.

There is a continuum of various voice systems and managerial styles at either end of which are two extremes. On one end is a no voice, no trust, high control and avoidance system; and on the other is a direct/indirect voice system, high trust, high commitment, cooperation based organisation. The movement from the first to the second is not a direct leap but rather a process which entails risk, dedication and goal orientation.

The previous management team in the organisation operated somewhere towards the first extreme, showing needs for control and exhibiting low trust by withholding sharing of information; but, the current management is trying to move to the other side of the continuum to an ideal state of partnership, trust, commitment, open to all voice systems and mutual ownership. This is only going to happen if:

1.       Relations with employees are commitment oriented- This will involve gaining back the trust of workforce by committing to the cause of their welfare. All material developments in the company should be shared with its workforce, its implication explained to them ensuring understanding of the issue. All efforts are to be made towards securing the people of the organisation from any negative outcomes. Putting the people first will go a long way in winning their trust ensuring long lasting commitment and self motivation from the workforce.

2.       Relations with unions and elected work councils- The relations with such representatives should be based on co-operation. This will only happen when the attitude of the management is that of inclusive growth rather than of undermining the authority of such councils (as was the case with the old management). By making such unions part of the discussion, debate or, decision making process a partnership can be established instilling a sense of ownership in all the members of such a process. By forging a positive association with the opinion leaders in the organisation, it becomes easy to steer change.

Once these optimal relationship dynamics are achieved the new management can once again think of moving towards adapting annualised working hours system to meet bench marked industry standards in order to restore the long term sustainability of the organisation.

The recommended approach to change management for adopting annualised working hours system is as follows:

1.      Due attention to previous mistakes  

Mistakes such as discussing the issue with the wrong party and failing to take into account sections which are likely to react negatively (such as those profiting from overtime rate provisions and those having prior time commitments) should not be committed again.

2.      Planning

A business plan must be written laying down the exact requirements and the manner in which they are to be fulfilled. This will help in bringing to surface all material issues which may bring criticism and resistance.

3.      Discussion

After the business plan is made, a discussion must be initiated with all concerned parties. Especially with those it is going to affect critically. For example, in case of annualised working hours, shift patterns must be discussed with employees to design them according to employee willingness and their prior commitments. Also, terms such as emergency call out premiums and abolition of overtime rates must also be discussed at this stage.

The aim of discussion is to reach a thorough understanding of the issue and let all concerned parties make a consensual decision for mutual benefit, backed by sound logic and reason.

Conclusion

This report has carefully studied the role of human resource management techniques in managing changes and employee relations in an organisation. The report has even utilised the strategic negotiations framework and the framework of voice systems and managerial styles to analyse the situation presented in the case; that of a blunder committed by the old management of the company by following a loss-loss escape route in managing change and how the new management in the same organisation is now trying to restore the stability of the organisation.

The report makes some valuable suggestions on how the new management can work towards winning back the trust of the workforce and forge partnerships to gain the commitment of the staff on achieving organisational goals and growth objectives.

Summing up, the essay has been helpful in establishing the importance of a people first attitude in ensuring long terms sustenance and growth of any organisational machinery.   

References

1.       http://www.core.org.cn/NR/rdonlyres/Engineering-Systems-Division/ESD-141Spring-2006/11BC1E11-4D72-45F3-BB41-22D7939247AF/0/session2.pdf

2.       http://www.moderntimesworkplace.com/good_reading/GRLabor/FeatureArticle.pdf

3.       http://www.hnlr.org/print/wp-content/uploads/2008/09/275-280.pdf

4.       http://www.google.com/imgres?hl=en&biw=1366&bih=659&tbm=isch&tbnid=ChZDIoA6JrXuuM:&imgrefurl=http://www.emeraldinsight.com/journals.htm/journals.htm%3Farticleid%3D1753812%26show%3Dhtml%26WT.mc_id%3Dalsoread&docid=NGm1FiNSm5w4sM&imgurl=http://www.emeraldinsight.com/content_images/fig/0050381002001.png&w=1062&h=580&ei=WmxJUb_lAYnJrQe0oYGQCw&zoom=1&sa=X&ved=0CJgBEIQcMBU&ved=1t:3588,r:21,s:0,i:152&iact=rc&dur=1243&page=1&tbnh=166&tbnw=304&start=0&ndsp=25&tx=219&ty=58

5.       www.erudit.org

6.       www.ims-productivity.com