Temp-To-Hire

There is a practice I have noticed is becoming increasingly common in businesses today. When there is an entry level position open the business will opt to search for a temp-to-hire instead of simply hiring a person outright. I understand the rationale they have for this but I don’t fully agree.

The first argument I have heard in defense of this is that it allows you the opportunity to essentially test drive an employee. They will see how well they work, see if they fit into the company culture, basically an observation period. On the surface this makes sense, you should know these things before committing to a person for the possible long term situation.

However, isn’t this what the interview process is for? Depending on the structure of the company you may have multiple interviews with different people in the company. The combination of these people should be able to gauge how well the candidate’s personality will fit in. Also the manager themself should have a good idea after meeting the person and grilling them in the interview.

To know how they work and their work ethic you don’t have to rely on their resume which hopefully is accurate but may have embellishments in it. Ask them for references. Hopefully you get an accurate picture by talking to these people and looking over their resume. If there are inconsistencies between these sources then the candidate may not be the best option for your company, move on to the next one.

Most places I have been hired, when a new employee first arrives they are on a probation period of sorts. It may be a couple weeks, maybe a month, maybe 90 days. This should be a sufficient amount of time to make an accurate assessment.  Furthermore, unless you have signed a contract, you are an at will employee in most states. This means you are employed at the free will of the employer and yourself. At any time either party can end this arrangement for any reason or no reason at all. There are common courtesies involved but they are not always followed. So if the company doesn’t think it’s working out so well they have every right to tell you to pack your things. It seems as though many companies are scared to fire people because they are afraid of being sued. They seem to try to build a case against someone before letting them go just in case. This isn’t a bad idea but I do not feel it is necessary and often times just delays the inevitable. If it’s not working you might as well cut the ties quickly and move on.

So the first point now seems void in the argument in favor of temp-to-hire.

The second defense I have heard is that it is less expensive. I do not work in HR so I don’t have exact figures on this. Companies feel that using a temp agency they will get people in the door at a lower rate than they would otherwise. These people often times are workers who could not secure employment through their own methods. Maybe they are fresh out of college or maybe they had been working in one place for a long while and got suddenly laid-off. Whatever their reasoning they are using a temp agency because they were likely unsuccessful in their search on their own. It doesn’t imply that they are any less qualified or desirable.

Let’s say for example a company is looking for a new person in Accounts Payable. They have the criteria they are looking for and they get the person through a temp agency. they pay the temp $12 to $15 an hour maybe more depending on their background. Assuming they work 40 hour weeks, over the course of a year that person would get between $25,000 and $31,000 roughly. Seems pretty cheap, especially if they are good at what they do. But don’t forget the temp agency doesn’t do all this work for free.

Briefly, the way temp agencies work is they get paid by the hiring company and then the temp agency pays the employee out of that.

In this example let’s say the hiring company gives the temp agency $15 to $20 an hour. The employee gets the $12 to $15 out of this so the temp agency would get $3 to $5 for every hour the employee works. Extrapolate this over a full year and the temp agency stands to make between $6,000 and $10,000. So the total price tag for the temp worker is $31,000 to $41,000 for a year. Typically these temp-to-hire arrangements last between 3 and 6 months. The temp agencies typically make between $1,000 and $5,000 but there is obviously a great deal of variance in this. Now, the national average salary of an entry level accounts payable worker is under $35,000 a year. This arrangement doesn’t seem as cost effective anymore. Once you add in possible bonuses or benefits the number may increase a few thousand roughly. It may end up being less expensive for the hiring company to just offer $34,000 outright and cut out the middle man.

Let’s say you do get a temp in and it will save the company $1,000 or $2,000. The agreement is for one month. A wise temp worker will still be looking for a permanent position and it they find one they are gone. Maybe they don’t. the company likes the temp, the temp doesn’t like the company. If the temp is good they will get other opportunities with other companies. If the company hired them from the beginning instead of using a temp agency they would already have made a commitment the company and likely wouldn’t continue their search.

In my mind, the temp has the upper hand and this is not a position any company wants to be in if they are hiring. It makes more sense to me to put in the effort to find the right person for the job and not pay someone else to do that work for you.

If the temp doesn’t fit then you are back to square one and lost all that time you just spent hiring and training.

The third, less used argument I have heard is they use a temp because they don’t know or they don’t think they will need someone for more than the short term. There may be a new project that came up or an increase in volume that needs to be covered. You think this will dissipate in a few months so why hire someone full time and carry the unneeded salary?

First off, a company should have a small analysis done of what their realistic staffing needs are now and what they will be in the future. This will make for less guess work and more decision a business can act on.

If a company really won’t need another person after two or three months when the volume subsides then why not really cut costs? Get an intern! If there is a college or university or even a community college nearby then there will no doubt be young eager individuals looking for an internship. Most will work for free. They are going to school and mom and dad or their loans are paying for most things. They will get the experience anyway they can. Even if they are offered just $100 or $200 a week to cover transportation and food, the company will still save much more money than with a temp. Talk to the career center or other people that work for the school to find a good student to get as an intern. No, the intern is not being taking advantage of. The arrangement is mutually beneficial. Best case scenario for the intern, the company really does need more help and now they have found a permanent job after graduating while the company saved a great deal of money. Worst case scenario for the intern, they work for a few moths gain experience that they didn’t have before and go out to look for a job like everyone else but with more experience under their belt. 

Sometimes the temp-to-hire arrangement works well. I feel it is somewhat inefficient. A company can find the right fit for the position on their own. Temp-to-hires don’t always save the company money. If the company truly wants to save money there are far better ways to do this.

This is my opinion. Feel free to share yours. Share what you have seen or if you think this is an issue.

Problem Solving

There is a practice that takes place every day in companies around the nation and I hate. You should too, especially if you are a manager. In my position it happens time to time and I imagine the higher you go the more it has the possibility of happening. Do you ever have someone come into your office or email you about a problem they have noticed? I do. I don’t mind that, even if it’s a mistake that I made that needs to be corrected. I’m not perfect and I don’t expect others to be. However I hate when it is presented to me like this “The price for this product in XYZ location is wrong”. Some of you may be asking yourself what is wrong with that some of you may be saying to yourself yup that’s what I do.

Let me explain what my problem is with this and why you should have a problem with it too. I will not go into too many specifics about when I run into this so it was stay general to the role you may be in. I’m not sure where I was or who said it but they told me “Remember, when you bring up a problem also bring up a solution.” Too often people in the corporate world, managers especially, get problems dumped on them. People will say here’s the problem but they won’t say why it’s a problem or how it should be.

In my example above “The price for this product in XYZ location is wrong”. Ok that’s great, it’s good to know that’s it’s incorrect but why is it incorrect. What should it be and what’s the proof to back it up? It will take me twice as long to pick this problem out, decipher it, and then find out the solution. I may even misinterpret the information you give me and waste my time chasing ghosts.

How could this be done better? Say the price for ABC product in XYZ location is wrong based on this spreadsheet. The price is currently $x.xx but it should be $y.yy. Perfect, I know what the problem is I know what it should be changed to and if the information you have is incorrect I at least know where you are getting it from so I can correct you.

This is obviously a small and simple problem compared to many other potential examples. The principle should stay the same. Don’t dump a problem on someone regardless if they are a above you or below you in the company. Present the problem, present a possible solution or more if needed and maybe even assist them in fixing it.

I assure you this will get you further. If you are a manager delegating, it will help you employees feel valued and not like one of you minions but a meaningful piece of the problem solving puzzle. If you are raising the issue to a level above you it will help them do their job and not over load their already full plate. For me, if someone gives me a problem and a solution I will typically take care of it right away but if they don’t and they just dump it then I will just dump it to the bottom of my to-do list.

Simple as that. Don’t bring a problem unless you have a solution or suggestion.

Trent and the Browns

Hello Readers,

Today I would like to talk about a topic that is a little outside of the typical post I put here. As I said in my short bio, I am a big sports fan. I also almost worked for the Browns. This is where I would like to take the discussion today. Surely 1,000 different media outlets will cover this topic and I highly doubt you will get any ground breaking information from me that you haven’t heard or seen elsewhere. What I can offer is a unique perspective of this topic and the business and marketing impact.

ESPN

For those of you who haven’t heard, The Cleveland Browns traded running back Trent Richardson to the Indianapolis Colts for the Colts first round pick in the upcoming draft. Some of you may not know football or the NFL well and some may not know Trent Richardson well so I will try my best to explain as I go but I am not giving a scouting report on the guy or explaining what football is. Trent Richardson was the 3^rd overall pick in the 2012 NFL draft. The Browns trade up in the draft to get him which usually is very costly. The only players taken before him were Andrew Luck and Robert Griffin III. That alone says quite a bit about the type of player you have in Trent.

I will admit, I am a little biased. Trent Richardson is probably my favorite running back in the entire league and one of my favorite players. I love complete running backs. I hate when a back is one dimensional and thus a team must employ a platoon or dual running backs to take advantage of the strengths of one and not allow the weaknesses to be exploited. Trent is a complete back. He is seen as a big back but stands just 5’9’’. However he weighs 225lbs of pure power packed muscle. He is a bruising runner who has the speed, running the 40 yard dash in 4.45 seconds prior to being draft (I dare you to try to beat that time at 225lbs). He is also a capable pass catcher. On top of all of this, Trent can block very well for a running back.

People will point to Trent’s lack of long runs as proof that he is not an elite back. To this I say look at where he plays. Cleveland’s passing game is sub-par at best. Defenses understand the talent that is Trent Richardson and they key on the running game. He faces a loaded box with great regularity and still ran for over 1,000 yards as a rookie. Watch him at Alabama. Sure it was college and he was a man among boys but this will show you his pure speed and breakaway ability on a team that can attack in both the passing and running game.

And he has more than enough power to break tackles.

 

 

Trent is a beast, plain and simple. One of my best friends is a huge fan of Alabama Football. I talk to him about player there regularly. We disagree at times about the abilities of a player. We do not disagree about Trent. We both say he is the best back to come out of Alabama since the ‘90s and possibly ever (I’ll admit I am not knowledgeable enough on Alabama history to say that definitively). Shaun Alexander came out years before Nick Saban took over the team. Alexander had a couple of good years in the NFL and on great game where he broke the record for touchdowns scored. The next prominent back was Glenn Coffee. I remember watching him while visiting my grandmother in her retirement community and watching that game I said he’s good but the kid behind him is better. That kid was Mark Ingram and he went on to win a Heisman Trophy Award. While Ingram was doing what he was my friend was telling me “Yeah, he is good but that kid behind him, Richardson, HE is unbelievable.” So I started watching more closely when Ingram was not in the game and I was blown away. For the second time I thought the backup was better than the starter at Alabama. Behind Trent was Eddie Lacy. I like Lacy but he could not hold a candle to Trent. Sure Lacy was big and powerful but Trent did it all. Then behind Lacy was T.J. Yeldon and I said boy he is better than Lacy but he is still no Trent. Yeldon is considered better than Ingram by some but still he is no Trent.

 

 

Now that you understand how I feel about Trent (you can call it a man crush if you would like), let’s talk about the Browns. They traded up to get Trent. They must have liked him A LOT. However, they didn’t win and that group that decided to get Trent was replaced. Evidently, the new decision makers do not feel the same way about Trent. Some people may say that they are clearly rebuilding but I disagree. First off you have to have been good recently to rebuild and the Browns have not been good for a long, long time. Also, typically when a franchise rebuilds they trade away their older players in the end of their career for younger players or draft picks. Trent is in his second NFL season and is just 22. So this is not a move in the rebuild process. You can say the Browns are trying to retool or get a team that fits the style they would like to play, that’s fair.

This was just a bad business decision, though. You used the 3^rd overall pick in the draft to get Trent. He is now on the Colts who could now earn a wild card spot in the playoffs and I see their pick being in the 20s or so. The better they do, the worse the pick and with Trent they will do better. So you traded a known player who was selected 3^rd for an unknown player selected 25^th? That makes no sense. It’s not that simple, though. The Browns will likely be worse now so their pick will be higher. Even if they don’t get the first or second pick in the draft, they could try to use their pick and the Colts pick to get the first or second pick. The fans can only hope this will be a quarterback. I’ll talk about the Browns Fans later. Clearly the Browns have very little hope for Brandon Weeden, I can’t blame them. But he was selected the same year as Richardson. You might as well ask the NFL for a do-over if you are giving up or giving away both first round picks. Some may say “hey cut your losses and move on.” And this is clearly what they are doing, but why not adapt a plan around what you have instead of trying to make a square peg fit in a round hole until you and give your square pegs away for pennies on the dollar and try to buy round ones.

Trent was the Browns. He was the star of the team. Now who do you have? Brandon Weeden? He’s on the way out so no one is buying his jersey in Cleveland. Joe Thomas? He’s a great player but who has an offensive lineman as their star player? Fans want to see their star in highlights on Sports Center and I can’t remember seeing many highlights focusing on the O-line. Maybe Barkevious Mingo. He’s a rookie and he plays on the defensive side of the ball. A Linebacker is not always the most exciting and Mingo is not Ray Lewis, DeMarcus Ware, or Von Miller. So the search continues. Joe Haden? Same as before but he’s a cornerback. He’s a good cornerback but he’s not a statesman like Champ Bailey and he isn’t as good as Patrick Peterson or Derelle Revis. Let’s try the offensive side again. How about a wide receiver. The first that comes to mind is Greg Little but he’s not even the top wide out in town. He has been a bit disappointing. He’s sort of a less talented version of Bryalon Edwards. So the search goes on. For now fans will have to wear their Jim Brown jerseys. If you want a new one I recommend leaving it blank. Your odds of picking a player that will still be there in two years and be good are about the same as winning on a scratch ticket.

When I was in college I took a sport marketing class and we read the book “On Being Brown” which discussed what is was like to grow up as a Browns fan. You hear all the stories of the greatness that once was and you have eternal hope that those days will return and you get dirt thrown in your face consistently. At least they have the largest fan base of any sports team in the world so you have plenty of people that share your pain. In the 90s they lost the team to Baltimore and then came back to draft the savior, Tim Couch. We all know how well that worked. They have had promise during the draft recently just to fumble it when they put it all together and forget one or two key pieces. Now this, they lost arguably the best offensive threat they have had since Jim Brown.

The fans can only hope for Teddy Bridgewater to be the outcome of all this. He is not a guarantee though. You knew what you had in Trent. A rookie QB could be Tim Couch or Andrew Luck. And they are not guaranteed to be in position to get him. Or they could decide they want to highlight their defense and draft Jadavion Clowney. That should not be too exciting for the fans. In today’s NFL you must score to win and defense does not do that.

How do you market this team? If they are honest they can say “cheer for us, we will always let you down!” Ouch, that’s good if you are a self-loathing individual but I think most fans want to see good things from their team. Maybe they should make a better attempt at getting LeBron James to come back to Cleveland.

 I can’t imagine they will sell many jerseys. I can’t imagine they will sell many single game tickets either. At least they have a steady stream of season ticket holders to fill more seats than the Jacksonville Jaguars.

It is a sad day in Cleveland for sure, but happy times in Indianapolis. The Colts are saying “Trent is better than what we would have gotten with that pick.” And he addresses a need. Sure they had a promising back in Vick Ballard but he had his limitations so they got Ahmad Bradshaw to sure things up but he’s at the end of his time and has injury issues. Trent is young, promising, improving, health, and better than most backs as it is now. The Colts can use their other picks to get good defensive players of offensive line help and they will be very competitive for a long while. Good work by the Colts! Browns, we will wait and see where the franchise goes from here.

Who Am I

As I promised weeks ago, I wanted to post a little background about myself.

My name is Jake. After completing this course I have just two more courses left to finish my MBA! I graduated from WNE (at the time WNEC) in 2010 with my undergraduate degree in Sport Management and I began my MBA program the following fall.

 

I am a big sports fan, especially basketball and football. Unfortunately, God didn’t give me the great gift of superior athleticism so after High School my days of playing organized sports were over. I still enjoy playing sports whenever I have that opportunity and the free time.

During my time at WNE I participated in many various activities including clubs and intramural sports. The summer after my sophomore year I interned for the Men’s Head Basketball Coach at Plymouth State University in my home town of Plymouth New Hampshire. This opened my eyes to the career I had initially planned to pursue. I enjoyed my time in this role, but after the internship I decided that I would prefer to make my career in a different role inside a sport organization. The same summer I traveled to China with a group from WNE for the Beijing Olympics. This experience was nothing short of life changing. I could go on forever about the trip but I want to try to keep this brief.

 

Toward the end of my junior year I took an internship with an Arena League football team in Manchester New Hampshire. This role was much closer to where I hoped to take my career. I was involved in a great deal of the promotional and marketing activates with the team and I had a great time while working very hard. As the summer came to an end I was offered a chance at another internship at Harvard University working with their Athletics Marketing department. This was a very similar role but in Division I college athletics. I worked with the department at football games, both men’s and women’s hockey, and men’s and women’s basketball. This made for a very busy but fun beginning to my senior year. In the second semester I took an internship with the Springfield Armor. This was much more convenient for me and the team was in their first year so I was able to see a lot get built from the ground up.

 

As graduation came closer and I was applying to everything I qualified for in the sports industry. I landed one interview for what I thought at the time was my dream job with the Cleveland Browns. I was a finalist for the position but they chose a local candidate over me. I was crushed but decided this would give me the chance to get my MBA. I started taking courses while working as a bank teller in Chicopee, MA at PeoplesBank. About a year later I took a job as an Investor Relations Associate at SS&C in Windsor, CT. Roughly a year into that job I found a much better fit in my current position as a Cost Analyst at Sun Gro Horticulture in Agawam, MA.

A few other fun facts about me:

-          I LOVE Christmas!

-          I also like shoes, a lot. I think I have more pairs than my wife. I started with basketball sneakers and now have various kinds of sneakers as well as a good number of “dress shoes”. However, I am a bargain hunter so I try to keep my costs down.

-          I like shopping in general, much to the pleasure of my wife. This kind of goes hand in hand with my love for Christmas and my enjoyment of shoes.

      -     I like to travel. I have been to a number of different places inside the United States but I have only traveled outside of the United State 3 times to Canada, Turks & Caicos, and China. I plan to travel much more in the future.

The End has come....or has it?

Hello Readers,

My Marketing class which I created this for has come to an end but does this mean the blog must come to an end as well? Nope. I have decided to keep this blog active. I also have decided to start another blog. My other blog will be about Christmas. Here is the link http://thechristmasblogjaker.blogspot.com/

As for this blog I will post here about anything relating to business. If I find an article that I find interesting I'll post it and share my thoughts. If I have a opinion about something I am seening then I will post that as well. I encourage everyone to participate as well. If you have comments or suggestions then please share them.

Later today I will also post a short bio about myself as I had promised weeks ago.

Week 11

Hello Readers. This is the last week. It’s bitter sweat. Being the last week of the marketing course we were asked to contemplate this question, “What is Marketing?” In class this week our professor shared a quote with us and the piece that stuck with me was very relevant for this question. Marketing is intuitively simple but deceptively difficult. We all know what marketing is when we see it. We buy various products every day and we know what our reasons are for buying the products we do. But what is it that the companies actively and purposely do to impact our decisions? This is the difficult part. When you are in a position in a company to implement these practices it may be overwhelming. We intuitively know why we would or wouldn’t buy something but we have to figure out how to convey this people we don’t know in different cities, states, or event countries. This is the difficult part.

 

Marketing is truly a focus on customers, both new and existing. We have to evaluate customer’s values and their goals. In some cases we must understand the customers sort term goals or long term goals or a balance in between. What we in the company see as quality may not matter to the customer so we have to determine what does matter to them and fulfill their needs.

 

Marketing is not sales. This is a common misconception and it can confuse people. Drucker explained this in depth. He said that if marketing is done properly there will be no need for sales people. This is nearly impossible to achieve however. Marketing also is not focused on products, it is focused on the customer.

On a large scale marketing is essentially creating a brand. As it is said in Cohen’s book about Drucker’s thought on marketing, “Because the purpose of business is to create a customer, the business enterprise has two–and only two–basic functions: marketing and innovation. Marketing and innovation produce results; all the rest are costs. Marketing is the distinguishing, unique function of the business.” With this in mind Drucker also says, “Marketing is too important to be left to the marketing people.” What he means is it needs to be reflected throughout the company. Everyone should be concerned with marketing or at least mindful of what the brand is from a marketing standpoint.

 

This is my last posting for this course but in the days to come I will update all of the readers as to my future plans. So this is not good-bye.

Week 10

Hello readers. The semester is quickly coming to an end. The finish line is in sight. For the week we focused on our revisions. Based on the first 7 periods we are now making any changes we would like to our strategy. We made only small tweaks. We like where we are going. We are refocusing on a few aspects we think are our keys to success. I don’t want to give away too much but we are excited about the future.  Only time will tell how well we do but so far we haven’t done too badly and we think we will improve with our adjustments. Next week will be my final update for the class as it is our last week. This does not me you will not hear from me again. Stay tuned for news on the future of the blog!

Week 9

Welcome back readers. This we had to execute periods 3 through 7 in the simulation. This was the focus of our week and I assure you, it was not easy.  In the first few periods we tried to adjust to reverse course for any negative trend while staying in our strategy. This did not work very well. We also had planned to release a new allergy product that the simulation did not allow us to release. We chose instead to release a new product at all until later when we could introduce an allergy product. A part of our strategy was to consistently increase our price based on inflation and competitor pricing. A couple times we forgot to do this however so we left potential profit on the table. As we released our new product and we saw the overall market begin to shrink we saw our cash flows significantly decrease. To offset this, we had to reallocate resources while staying true to our strategy. Our allergy product did very well but as we reallocated our budget from Allround to our allergy product we saw a decrease in sales for Allround which cut into our revenue.

We feel confident about where we are currently but it was a struggle. We can see the potential for where we can go and the future looks positive for our company. As we have stopped looking so deeply into the statistics and trying to focus more on our strategy implementation we have seen promise. Hopefully all the potential we see will soon be realized.

Week 8

Hello readers. This week’s post will be fairly short. My team and I have been working diligently on our marketing strategy for the simulation we are working with. Right now we are entering into period 3 and will be going to period 7 of the total 10 periods.

We are looking to launch a new product this next period. In addition to our currently cold medication we will offer an allergy medication. After looking at the market we felt it was a growing market with few competitors that we would likely be able to beat. We will look to maintain our market sure in the cold market and in the long term we will look to turn this medication into our cash cow to fund the newer projects we develop.

Toward the end of this section of the simulation we will look to reformulate our cold medication. We may not end up changing it but this would be when we would make those changes if we make any changes. Also near the end at this time we will look at another product to launch. We are thinking of offering a nasal decongestant at this time.

This is the broad view we have for our company without getting into too many specifics. It took us some time to come to these conclusions. Some people in the team, myself included, wanted to reformulate now but after discussing it we all came to the decision to wait. There were talks of offering the nasal decongestant first and the allergy medication second. These and many other discussions took place over Skype. Some team members were traveling so it became necessary to meet virtually. I think the process would have been more efficient if we had met in person. Hopefully in future meetings we will be able to meet in person.

Week 7

Welcome back to all the readers. I am posting much earlier than usual this week because The next few days I will be working to finish my situation analysis for the simulation. For the same reason, this will be a shorter post than usual.

I would like to say that I enjoyed the quick reference to Vince Lombardi reference. I find it ironic that I had actually included a picture of Coach Lombardi in my post last week. Maybe a I have a little more of the talent Drucker had to accurately predict future events.

For this post I would like to focus on the metrics that I feel would be best for evaluating performance in the simulation and a short explanation as to why I think each of these would be best. These are going to be presented in no particular order. I do not think any one of these is any more important than another.

 

Units sold we be a good figure to look at. This will give us a good idea of how we are doing compared to our competition. If we are doing great in this area but our profits are lagging we may need to increase our prices but have high units sold will tell us that our product is selling.

Market share would be a good metric to keep track of. This will show us similar information as units sold. We will be able to see who is in control of the market or at least who is attracting the majority of customers.

I would like us to look at brand awareness. By looking at brand awareness we will be able to tell if customers know our brand. If we have low brand awareness we need to increase our advertising and/or our promotions and educate the customers who we are and why they should buy our product or products.

Customer satisfaction will be important to note as well. This metric will tell us if customers are happy with their purchase. If it is low we may have an issue with buyer dissonance. We need to make sure this does not take place. Satisfied customers are more likely to become repeat customers and customer loyalty will ultimately determine our success in the long run.

Along the same lines as customer satisfaction, brand effectiveness perception will give us valuable information. This may be an objective statistic but ultimately the customer’s perceptions dictate our reality. If folks suffering from symptoms feel our product will best treat their symptoms then they will buy it. If they don’t think it will help they will choose a competitor. We want our product to be effective and to be perceived as effective.

 

Also, I think stock price would not be a very good metric. While this number is important to many people and should not be discarded entirely it can lead us down the wrong path. We are not solely in business to increase our profits. There are other ways we can tell if we are making money without focusing on this figure.

Week 6

I would like to start by saying hello and thank you to all the readers. A couple classmates had mentioned that their blogs were being viewed by people other than just those in class. To add to this fact, some individuals are in different countries across the globe. I was surprised to see this is the case for my blog as well. Hello and thank you for reading my blog.

This week we began our live simulation. We made decisions for the first two rounds. Each round we faced a special decision to make. The first round we were asked if we would like to enter our company into the world of social media. Our company would create a presence on sites such as facebook or twitter. We decided this would be a good idea. At the same time we reduced our advertising budget. Our social media did well but this did not make up the difference in our reduced spending on advertising. We lost a little ground in the marketplace. The next period we were informed that distributors would not accept product within 12 months of expiration. We had a batch within 6 months of expiration. Our choices were to send the batch out and hope they would not notice but if they did we would have to pay for return shipping and producing a new batch. We could sell it to a “jobber” who would not mind the expiration date and we would pay an additional $50,000 to get our product on the shelves without any issues. Our final option was to pay $100,000 to ditch the batch and produce a new batch and avoid any issues. We chose to ditch the entire batch. We figured that if we tried to get it out without being noticed but it was that it was a gamble that may cost more money in the end and we also did not want bad press that would make customers question our brands quality and company’s ethics. We didn’t see any impact positive or negative but I guess this was the intent in making the decision we made.

Overall, the first rounds were good to get some experience under our belts but we did not make decisions that led to gains by our company. We are hopeful that after doing our situation analysis we will have more information to create and implement a successful strategy.

Also this week I got some interesting bits of information. Once again we were given examples of Drucker’s skill in predicting future events. I’m not saying he was a fortune teller. He said that to him it wasn’t difficult. He just took into account what has taken place in the past and took assessment of what was currently taking place to determine what would come. It sound simple but the true skill is to see how certain events impacted each other. This also showed me how valuable experience is. It is important to understand what is happening so you can sort of see around the next corner in business. This will allow you to take advantage of advances or new markets before your competition. Some people may have great instincts and a this will help them but experience is incredibly important.

Another bit that I got out of the readings this week had to do with leadership. Cohen made that point that good leaders don’t quit. They lead by example. If they come into the office early and leave late it shows that they feel what they are doing is important. If they don’t at least act like it is important why would their subordinates feel the business is important? I think of a coach in sports.

 

The good ones are the first in the building. Regardless of it being for a game, a practice, or coming back from the offseason they are the first there and the last one to leave. Their players see their dedication and for most of them they realize how important their preparation is in order to win or achieve their goals.

We also read about abandoning a product. In the life cycle of a product it may be necessary to abandon a product that was successful. There are different reasons you may need to abandon the product. I tried to think of a product that I had seen take place but I couldn’t. I did a little research of products this had happened to and found some examples but none that I was familiar with. Can any of my readers think of an example?

Week 5

This week we discussed customer analysis. This is a very important portion of the marketing process. In order to effectively market your company you must first understand who your customers are and what they are looking for.

One issue that came up was the topic of emotional and psychological benefits of products to customers. In this discussion we talked about brand loyalty. There are some people who are very committed to a particular brand’s product or maybe even their entire product line. I hate to continuously bring up Apple in all of my blog posts but they are once again a great example of what I am talking about. Some customers own an iPhone, iPod, iPad, and a Mac Book. This same tie can be formed with pharmaceutical products. Customer may prefer to buy a name brand over the generic alternative. The two may very well have the same chemical makeup but just have different names on the packaging. Buying Nyquil instead of the generic brand may give a consumer a higher sense of security knowing that they bought a quality product. But just because the name on the package is a trusted name, does this mean the product inside deserves the same trust? Could Advil be more effective than a generic for some people because they think it is? It makes me wonder if these emotional and psychological benefits we discussed create more of a placebo effect and are not based fully on benefits delivered by the product.

 

The answer to this question would likely take more time and resources to fully answer than it is worth. Advil and Nyquil can charge more for their product because they are Nyquil and Advil. They have put the time and money into marketing and product development to get to this point. Some people will choose the less expensive alternative and they have their reason, while others will stick with the name brand and they also have their reason. These factors make a difference in the marketplace and they are difficult to measure but they matter and cannot be overlooked.

Another aspect that we read about is the difference between buyers and users of products. Some products are bought and used by the same individual while other are not. A great example of this would be toys. Toys are bought by adults but used by children. This is important for a company to understand.

 

This will help the company create an appropriate marketing plan to achieve their goals. If you do not have this understanding then you will be promoting your products to the wrong market and will not create buyers.

During the week we discussed the different types of sales companies make. There are business to customer sales, customer to customer sales, and business to business sales. This was nice to talk about because it had to do with my role in my company. I help with business to business sales predominantly. In this I assist with modified rebuys. Essentially, an existing customer will want to rebuy a product but they will want to make a few changes. Maybe they will want to change to formula slightly to better suit their needs or they may want a different quantity, just to name a few changes that can be made. I enjoy reading about concepts that directly relate to my current role. It helps me see where I fit in the larger scheme of the company. Sometimes we can get bogged down by the mundane aspect of our jobs but when you see how you contribute to your organizations execution of its goals it help you to keep perspective of why you do what you do.

A big topic of discussion this week was customer dissonance. This is the post-purchase displeasure a customer has with their decision. We discussed how customers can avoid this by taking measures including researching properly before making a purchase. I questioned whether the majority of the burden to avoid customer dissonance should be placed on the company. I think that by pricing products properly, providing great customer service, and accurately describing products along with other actions customers will not have to worry about this as much. Customers should take their time and make well informed decisions either way but companies should be conducting their business honestly and ethically regardless.

Week 4

This week we explored competitor analysis. The word analysis bring up images of studying spreadsheets and long boring days or nights. Analyzing your competitors is a crucial step in that marketing plan process. Without this you will not know what you are up against in the market place which can be disastrous.

In the Lehmann and Winer book we are given an example in chapter 4 competitor analysis in the cell phone industry. At the time this book came out MP3 cell phones were the newest thing on the market. Things have changed quite a bit since then but the illustration was still relevant. In the book they compare Nokia, Motorola, and Samsung. We already know how these companies have done since this time. At the time Nokia was the leader but has not been able to hold onto the lead. Motorola needed to find a new phone after the Razr. Now they have a line of Razr phones that are doing well. Samsung’s vertically integration and “cool” factor were highlighted and these have both contributed to their success. Today Samsung and Apple are in a cutthroat battle for the top spot in this market.

Not too long ago Apple was head and shoulders above the rest of the market. When Lehmann and Winer put together this analysis Apple wasn’t even in the conversation. They came out of nowhere by making a huge innovation and giving customers what they wanted. Fast forward to 2013 and Apple is no longer the clear leader. Samsung has caught up and the two companies are in an all-out brawl to attract customers

 

With the more recent phone being produced by these companies, Samsung looks determined to see what is not available currently and work to give that to customers. Apple has been more concerned with improving on what they did with their last phone. It is this inward focus that I believe is leading them down the wrong path. While it is wise to fix or improve things that were not the best on your own product, that is not enough to stay ahead. They need to look outside of their own four walls. Samsung is beginning to introduce phones that are still small and sleek as their regular phones but also water resistant. They offer a feature where you can answer your phone without touching it or unlocking it by looking at it only your unique eyeballs. It’s hard to know exactly what Apple is coming up with right now because they shroud themselves in so much secrecy you would think they were producing military weaponry. There has been some leaks that have led to speculation that they will improve their sub par antenna with their next phone. It looks like they are also making a slightly slimmer looking phone and a larger screen. These are all aspects that Samsung is ahead of Apple in. Samsung’s Galaxy Note II has the largest screen on that market, is about the same thickness as the iPhone, and has a slightly better antenna design.

It seems that Apple is using more resources battle copyright infringement in court than they are in creating the next ground breaking phone. They have been working on an item the doubles as a wristwatch and a phone, think Dick Tracey.

 

Other companies are working on similar projects though. Even if Apple is the first to market with this, it won’t be long before another company has theirs available as well. I am an iPhone user and I like my phone. It is simple to use and already does more than I need it to do. There may be a time that I need more out of my phone and I’m not sure my loyalty to Apple is strong enough to stop me from getting a different brand phone. Time will tell, but this will be an interesting marketplace to follow the next few years to see who is watching their competitors and factoring their competitors’ actions into what they are doing.

I was surprised to read about how easy it can be for a company to obtain valuable information on their competition. Lehmann and Winer outlined over 20 good, legal, and ethical sources of data a company can use when researching its competition. Some of them seem obvious like talking to your customers and sales team or hiring consultants. They also talked about some less conventional, outside the box ideas. By becoming a shareholder, preferably a small one, you are given annual reports, 10k statements and a great deal of other information that would otherwise be unavailable. It seems so simple but also fruitful and fairly inexpensive. When you think that Samsung could have one of its employees buy a few shares of Apple stock which are currently trading at $440.99 per share and gain all of this information it seems like a no brainer. It is certainly less expensive than the 6 figure salary you will give to a consultant.

 

Another way to gain information is by taking plant tours. This is not a common anymore. Companies are not as willing to show people around their production facilities. When I was a sophomore I was taking a marketing course. We had a large group project in which all groups in class looked at the same local company that was facing some challenges and discussed what the issues were, how to fix the issues, and ways to innovate or grow. My group decided to take a tour of the production facility to gather more information for our analysis. The company was very hesitant to allow us to come in and take pictures. We gave them our names, the name of our professor who they knew well, and our course information. They were still a little skeptical. They did let us look around and they showed us a few things. During our visit one of the people at the plant called our professor to confirm with him that we were his students. We did not think for a second that it would cause any issue to look around the plant but our professor explained their why they were hesitant. A plant can tell you a lot about a company and also give you ideas of how to produce things more efficiently or how to do it better than your competition.

Week 3

As we continue to “play” with PharmaSim we were asked to also look at the cost of the reports. In Period 1 the total of all reports was $458,920 which sounds like a lot but when you compare that to the $4.5 Million you have available it really isn’t that expensive. The first time through I actually bought every report by accident. Luckily this did not make any sort of an impact financially on the other decisions I was making. In period two the reports total rises to $482,786 and the money you have available also increases to $4.7 Million. It looks like the reports continue to rise in cost but as long as the company does well, purchasing the ones you would like should not be an issue at all.

While playing I wanted to try to create a new product to add to our line of medicine offered. I could not figure out how to do this so I assume we are not able to make such changes. I also was remembering the simulation that I used during my undergraduate degree. In that one each team in the class had a company that all started at the same point. We would compete against each other which made it challenging because you could not easily predict what our competitors would do.

I am having fun “playing” with this simulation and all of its complexities. I know I’m not ready to go live yet but I am looking forward to it.

A few other points I wanted to make from this week. In Cohen’s book the concept of tracking customer purchases came up. I immediately thought of customer loyalty card programs. Stores like Big Y and Stop & Shop give you a card that will make you eligible to certain discounts in the store and they can then collect data based and what you purchase, when you purchase items, and many other bits of information. They can use this information to make informed decisions on sales, product selections, and much more.

 

Some people are bothered by these companies having and using all this information, I personally don’t mind it.

In the class discussion this week we talked briefly about the video gaming industry. I did not realize that when Microsoft introduced the Xbox they were making very little money off of it. They had a long term strategy that they would penetrate the existing market and later see profit. In the next year they will be releasing their third system which will reportedly cost around $500. To me that seems unreasonable but I know people who play their Xbox a little bit too much in my opinion that are preparing to purchase the system and then other games to go along with. It seems that Microsoft has executed there plan just how they had originally intended.

This week I enjoyed many of the education Portal videos. Most of them brought up interesting examples that I hadn’t thought about before. The examples of market analysis were particularly helpful. I find that these videos help cement in the information we cover over the week.

Week 3 - Student Blogs

This week we were also asked to comment of two other student’s blogs. I should have asked which aspects of the blog we should look at but it’s a little too late for that now. I tried to take a look at the blog as a whole and offer some critiques or constructive criticism. Being new to blogging I am not sure how far my opinion will go with some but that’s the beauty of blogging. I can put my opinion out there and you can chose to accept it or reject it.

First, I looked a Brian M’s blog. I liked his blog. He makes effective use of pictures which is always nice to break things up visually. I like that he added a section that told us a little about himself too. I think I will try to incorporate that in mine too. He also relates some of his posts back to his own personal interests. I’m trying to work on doing this more too. I tend to get off topic easily when I do this but practice makes perfect. His blog is informative but he also tries to have a little fun with it.

I have also enjoyed looking at Aleena’s blog. Her blog was in the blogging Hall of Fame for the first week and after looking at it I said to myself “oh, that’s what I should be doing.” Aleena uses great use of images to reinforce the points she is making. She doesn’t add a lot of personal aspects to it like Brian does but she still does approach it like a book report so it’s not bad to read. She keeps her posts to the point which I like. They are not too long but she gets her message across.

Week 3

This has been another week where I find myself full of new knowledge. In fact, I thought the reading I had done last weekend had been done in a week prior. Maybe it’s just all this heat, I can’t be sure. Anyway, Prof. Spotts asks us to add a couple things to our blogs this week in addition to our typical posts so I think I will start there.

First, I wanted to look at another student’s question they posted. This question came up in many postings this week, including my own.

‘According to Druker, “Don’t do the market research for something that is not yet on the market.” This statement is a confusing to me. How this works with innovation, which Druker previously said was a corner stone of business? How does one know what to create without market research? Especially if Druker also discredits expert opinions.’  – Megan M

This became a little more confusing because it seemed to contradict some of the videos we watched this week. Drucker also states that quantitative data should not replace a marketers instincts and their gut feeling. I think basically Drucker is saying that a marketer has to know what they are doing to make good decisions consistently. You cannot replace a marketer with a number crunching computer.

He does not say to discard market research altogether. I think some quantitative research can be helpful even for new products. Conducting a focus group that you show the new product to can give some great feedback to assist in the decision making process.

 

Reality testing is another form of testing that may be useful. We were given the example of the Chrysler Company making a prototype convertible and driving it around town to gauge the reaction the public has to the vehicle. This seemed to work well for them. It may not also be practical with every product but when possible it may be very valuable.

We were also given the example when IBM passed on the opportunity to enter the market of personal computers but they decided this new market was too small and was not worth the investment. The same opportunity was not passed by Apple and they saw great success. IBM relied too heavily on research compiled for a market with a product that did not yet exist. Apple on the other hand relied more on instincts and they had a strong feeling that this would be a hit.

 

This is also an example of how important it is to ask the correct question. If you ask the wrong question then you will get data to support a wrong answer. IBM asked how large the market for home computers is. They did not ask what a home computer can replace that is currently on the market. Eventually the computer replaced the type writer which had a large captive market that liked this new technology.

Week 2

Where to begin? I don’t know where exactly to start. I suppose I will start where it seems most of the questions are coming from, the confusion between sales and marketing. In Cohen’s book he even confesses that his own confusion led him to turn down a very good job opportunity as the vice president of marketing. It is very important to understand the difference in sales and marketing.

Drucker explained by saying that sales focuses on the needs of the seller and thus the need to convert a product into cash, while marketing focuses on the needs of the buyer and the need to satisfy the customer through the products produced. I think this is the best way to state it. Marketing is really trying to create a customer base and brand value. We began talking a little about branding and that is exactly how I think of marketing. You are creating your brand identity and protecting your identity in the marketplace.

I think a great example of this that is taking place today involves the New England Patriots. In case you are not familiar with the story the here is a quick overview. Aaron Hernandez, a fairly prominent young player on the Patriots, was part of a murder investigation for about a week before police took him into custody on charges relating to the same murder case. About two hours after he was arrested the Patriots released him for the team and began doing everything thing in there power to make it known that they had no idea about this side of Hernandez’s life and even their owner Robert Kraft went as far to say they were “duped” by Hernandez. In the week following they offered their fans two days in which they could bring back any Aaron Hernandez jersey and exchange it for any other player’s jersey at no cost.

The Patriots were actually losing money by doing this. They also were sending a clear message to their fans that this is not what their organization is all about. They do not want Hernandez and his actions associated with the team. They are protecting their brand as an organization that conducts itself as outstanding members of their community and society. As the sage continues, I have been impressed by the marketing efforts from the top of the organization to the bottom.

I also think of the difference between retailers like Macy’s and JCPenny. Rarely do I see any promotional materials for Macy’s stating the prices of items. However JCPenny regularly does the opposite.

JCPenny uses its advertising dollars to help increase sales. While Macy’s tries to promote their brand. In the last year they have had ads showing all the celebrities whose items they offer all in the store together.

They try to send the message that they have everything you could be looking for at Macy’s. But also they look like they are having a little funny while they are working. Macy’s is a place you will go and be treated like a friend would treat you, or at least that is how they are marketing themselves. During the holidays they run TV commercials displaying scenes from recognizable movies throughout the years where people are asked where they got an item and they respond “I got it at Macy’s” or other ways Macy’s has appeared in countless movies. Every year they also hold the iconic Macy’s Thanksgiving Day Parade.

They are making themselves a part of your holiday tradition and by doing so they are tying themselves to feelings of family togetherness and holiday cheer. I can’t imagine how much it costs Macy’s to do this each year but the brand value that is added by doing it is likely just as high. Macy’s also offers a special mailbox during the holidays for children to drop off their letters to Santa.

They also offer a free smart phone app to track your holiday cheer and add to the “Believe Meter” they have in all their stores. None of these actions bring in money directly. However, they add to the overall impression the brand leaves on families.

 

JCPenny is known for their door buster sales and coupons the day after thanksgiving. This is a day that has become viewed in a slightly negative light, especially recently and JCPenny is tied closely to it in customers minds.

The other tradition JCPenny has been known for over the years is their Christmas Catalog. I know I looked at these for countless hours and made lists tirelessly to show my parents EVERYTHING I wanted that year for Christmas.

Likely these catalogs have caused countless headaches for parents and similar amounts of heartaches for you children.

Marketing can help sales when done effectively. Macy’s is certainly a profitable company. But when sales is the focus it can be troublesome for the image of your brand.

Also this week we talked about the vision of an organization and their mission statement. We learned that you do not want to make your organizational vision too narrow. I immediately thought of Cornelius Vanderbilt. Vanderbilt made a great deal of his fortune by shipping goods and people via water ways. He had countless boats in his fleet. If in his visions he limited himself to travel by sea then he would have missed the business that he is best remembered for. Vanderbilt sold his fleet and invested everything into the emerging railroads. One of his greatest achievements was building the iconic Grand Central Station in New York City.

Vanderbilt would have been successful without the railroads. But by seeing himself as a transporter of goods and not a sea transportation company, he allowed himself to stay open to a great opportunity that made him a legendary businessman.

Also this week we began looking at our PharmaSim simulation. I was excited when I heard we were doing this. I used something similar while finishing my undergraduate degree. My team was fairly successful with the simulation but the biggest take away was how much your strategy really means to your success. Many groups in our class had difficulties because they were constantly changing their approach to the market. As I continue to practice and “play” with the simulation, it seems this is the case with this simulation too. I will explore more as the next few weeks come but so far it looks like your success is dependent largely on the strength of your strategy and your execution of that strategy.

This week has been full of information but it has all been useful. I am looking forward to the following weeks and especially eager to continue reading Cohens book on Drucker.