Well, the thing is in the market that I operate, people have an unending appetite for grain and hoping for them to call for an orange drink any time soon is similar to waiting for politicians to stand up and say sorry for making a mess of our world. But hey, someday that may happen and so I live in the hope that anyday I may get a call for that cold juicy orange drink.

The Christopher Columbus price is a strategy often used whereby you throw the product out at some price usually high to see who is willing to pay the price asked. Sometimes this works, but not often. It can work though if marketed properly. A certain brand of soap when it was first introduced was only sold in boxes of six, only sold through exclusive men's shops and sold for $15.00 per box. Under those conditions it was an overnight success.

The five times rule is another method often used to price a product. This is based upon taking the cost of materials and multiplying them by five. Using this method if it cost you 10¢ to make its selling price should be 50¢. This is a simple method to use, but it leaves too many unquestioned answers. It does not address whether the product is worth more or less then the asking price.

A price can be set high or low enough to discourage any competition from entering the marketplace. This price is most often set lower then the average cost of production. It is often used as a loss-leader to encourage the sale of another product manufactured by the same firm. A very good example of this is PC printers. The manufacturer purposely sets the price on the printer low because he knows that the ink is where he makes his money. In effect this was the pricing strategy used by a manufacturer of disposable razor blades, He sold the handle cheap, but made his profit selling the blades.

Pricing strategy is only a small part of the marketing process. No matter what pricing method you choose to use just remember it isn't the size of the price, it's how you use it.

Neil H Borden defined Marketing Mix through the four ‘P’s – Product, Price, Promotion and Place. These four ‘P’s essentially proposed the marketing tools for reaching the customer. The organization had to focus on these ‘P’s to make a headway with the customer and reach a particular level of success. The strategy that an organization follows by adopting the right marketing mix will help to get a larger market share and revenues. Different organizations may focus on different ‘P’s. Sony uses Product mix as its marketing tool, Coke uses Promotion, Wal-Mart uses price and FedEx uses place as a tool. Organizations do no necessarily use only one among the four. They may use different combination based on their core competencies.

Product (ion) Concept

In earlier days companies sold their products based on the assumption that customers would prefer those products that are available in plenty and inexpensive. Later they moved to concept of selling products that had many features in terms of its quality, performance or innovation. Here the companies rarely get the inputs from the customers on what they need and sell products designed by the engineers. The customers have to make do with what was available. Moreover the functional departments within the company was not integrated in that, after the R & D designed the product, Production would manufacture it, Finance would price it and Marketing would sell it. Thus there was no integrated marketing that received the inputs of the stakeholders involved.

Customer Concept

Globalization has changed the name of the game. Customer is pampered with choices as far as products or services are concerned. This has made Customer the King. Customer decides what he needs which is different from the earlier i.e. marketer decides what customer needs. In such a scenario the right marketing mix is important. The organization must get inputs from the customer and target those segments based on the 4 ‘P’s. The right marketing mix will establish the product in the minds of the customer. The Product has to be designed and marketed based on the customer inputs. If it is priced too high the customer will move to the competitor. It should be made available close where the target customer frequents for purchasing. And the promotion has to be done keeping the target in mind.

Services

Services have been available to the customers from a very long time. One can just go back to the earlier centuries when banks provided financial services to the customers. During the earlier centuries, services were not considered to be as important vis-à-vis the product. Most of the services were expected by the customers – say good food and fast response time at the restaurants. Organizations did not compete in terms of services alone. This is because when we consider the example of banks or restaurants it is a necessity for the customer. He will open account in banks for safekeeping or wants a good food from a restaurant. But this dependability on a few banks based on the necessity has changed. Again Globalization and more intense competition among the service companies has given the customer many options to choose from. He may choose a bank that provides many facilities such as ATM, International Credit / Debit cards, Net banking facility and so on. The customer prefers the service provider that provides the most facilities and the best service. Thus Services has gained prominence even more than Product in the last few decades. This is evident from the fact that countries like US, Service Industry is more than 90% of the GDP. Even in India where Manufacturing and Agriculture used to contribute more to the GDP, now Services is contributing up to 50% of the GDP.

Seven ‘P’s of Services

With the services gaining more popularity the marketing mix had to be restructured. Now three more ‘P’s were added to services along with the earlier 4‘P’s for Products. These include People, Physical Evidence and Process. People play an important role in services because customer interacts with people while receiving services. Since services are Intangible it should have some kind of Physical evidence to bring in some level of tangibility. Marriott Hotels provides the hospitality services and gives it tangibility by providing an attractive lobby and ambience. Companies can also choose different processes for differentiation such as self-service, drive-ins for restaurants.

Service Characteristic

One important characteristic of a service is its Intangibility. It not possible to quantify or qualify what a good service is. Service is not a measurable quantity. In order to overcome this issue, the service provider makes use of a “Physical Evidence” to tangibilize it. Ex: The beautiful setting and ambience inside the lobby of a hotel is one form of “Physical Evidence” to augment the service. In addition to this there are a few more characteristics that are exclusive to the Services- Variability, Inseparability, Perishability. Services being provided by the employee vary from person to person. Services are produced and consumed immediately. It cannot be stored for future sales like a product. Thus it is inseparable. And it is also perishable. These characteristics make Services more difficult to market.

Need for Redefining Marketing in terms of Prodices: Changing Times

The trends are changing with time. Customers no longer want just the Product or Service anymore. They prefer to have both and not one alone. If a customer wants to buy a car from a dealer apart from the features in the car that he is looking for – style, fuel economy, price, safety features; he will also be considering the post sales service after the purchase of the car as a criteria for buying it. The customer gets opinion from Primary and Secondary groups whose suggestions are influential. In this fast paced environment, people want efficient and fast service after they buy a car. Buyers worry about the maintenance and repair costs of the cars after purchase. So it is essential from customers’ point of view to receive an efficient post-sales service after purchasing the car. Similarly in the case of services – if we take the example of Retail services apart from the normal service of fast and efficient response time from the employees and availability of a variety of products, customers are also looking for In-House brand products. They are willing to purchase products such as clothing that are the brands of the store itself. Customer wants the whole range of Products and Services.

The change in trends has prompted the companies to offer their Products and Services under 5 main categories:

Pure good: Here the company would provide the customer with only the good i.e. the product. There is no service involved. These include products such as soaps, perfumes etc.

Good with accompanying service: These are the goods that have an accompanying service associated with it after buying. Ex: Consumer durables like Television with accompanying services such as warranty, repairing and maintenance. 

Hybrid: Here the offering of the good and services are equal in nature. Ex: Food and the service expected at a restaurant.

Major service accompanying with minor goods: Here the provider is mainly giving some services and there is some products accompanying it.  Ex: In-House branded products available at a retail store

Pure service: Here there is primarily only service is involved. There are no accompanying products. Ex: Baby-sitting

Tangibilizing the Intangible

Although Physical Evidence and the Processes can reduce the extent of the problems associated with Intangibility it is not that effective. This is because Physical evidences in the form of ambience and setting is relative. This is where a Product accompanying a service or augmenting it will help. The product will bring in the tangibility for the service and the customer can measure the service with the product. In the Retail service example the stores, the arrangement of racks and items, the ambience all serve as Physical Evidence. But this kind of physical evidence is common to almost all the big retail stores. Now if the retailer markets his brand of products including rice, apparel and others, customers who are already impressed with the services available will now visit the stores to purchase their in-house products as well. In fact this trend is fast catching up in the Retail Industry. The trend is disturbing for Organized brands like Allen Solly, Pepe or others who use the retail as a channel for sales. The retailer would obviously try to sell his own brand of products at his store.

The concept of Exclusive Show rooms on the other hand is case of Pure Product Manufacturers venturing into Services. Earlier products such as shirts and trousers were available at many smaller retail outlets. But these days we’ve exclusive showrooms where the manufacturer himself opens a store to market shirts and trousers. Thus we’ve Pepe opening ‘Pepe 1016’ stores to cater to the needs of the 10 to 16 years olds. Pepe is not only manufacturing jeans, it is also providing service through its showrooms.

Mind Share and Heart Share

The organization would use the marketing tools i.e. the 4 ‘P’s for capturing the Mind Share of the customer. The mind share of the customer can be captured through a durable product, affordable price, advertising and presence in many locations. All these measures would ensure that the customers recall the products in their minds. But merely having a mind share does not necessarily mean that customer will purchase the product. It gives an advantage in that, when the customer intends to buy a product he will consider those products first which have captured his mind share. Thus many companies which spend millions in Advertising and Promotions can capture the mind share. It is not an effective marketing tool to sign up a new customer. In addition to the mind share there is a need to capture the heart share as well. Only if the company captures the heart share, it will ensure that the customers buy the product. The heart share can be captured through the Services augmenting the product. If the customer is satisfied that the services he gets is good, he will definitely go ahead with the buying of the product and retain his loyalty to the product. Capturing mind share is efficient, but capturing heart share is effective.

Customer Retention and Loyalty

Its has been established that it costs 5 times more to acquire a new customer than to retain an existing customer.  This has made it imperative for the organizations to focus more on retaining of the customers than acquiring new ones. Organization have realized that building customer loyalty is more profitable than just blindly trying to increase the number of new customers to try its products. Globalization has increased the competition to new heights. Customers are no longer swayed by only low prices. They want value for their money; they want quality products. The purchasing power of the consumer has increased and he can afford high quality premium products and services. If he feels that the product is not up to the standard he perceived, he will switch to another supplier. But if he feels that he has purchased a high value product and service, he is willing to try out other products from the same company for his future requirements.

The marketing team in an organization can build this customer retention and loyalty through its “Prodices” strategy.  In fact it has become a necessity to adopt this strategy to beat its competitor and increase customer loyalty. In order to retain a customer and build the loyalty, organization has to not only manufacture quality products, it also has to follow it up with an efficient service.  The organization has to continuously keep in touch with the customer after its purchase. It can keep in touch with the customer with its Post-Sales service. This will ensure that customer is guaranteed of lifelong maintenance of the product from the company. His inputs are given importance by the company for improving the quality of products further or even in new product development. If the customer is happy with the service provided by the firm, he is more likely to not only go for repeat purchases of the same product, but also try out other products from the same company. An additional advantage is that the customer would suggest to his peers or friends to try out this product. Thus an effective “Prodices” strategy would not only ensure customer loyalty and retention, it would even be possible to acquire new customers through “word-of-mouth” from existing customers.

Competition

The number of competitors in a particular product category has increased in the past few decades. Globalization has added more intensity and numbers to the competition. The competition is not just between the domestic and local players. The ringside includes MNCs, national, regional and the unorganized in the fray who want to fight it out to get the attention of the potential customer and entice him to buy the product or service. A large number of MNCs from the US has entered the Indian market and trying to woo the customers. They’ve been successful in their efforts too. Chinese are manufacturing a lot of cheap products and they are dumping it to India. This is causing a lot of grievances to the domestic players who find it extremely difficult to compete with the rock bottom prices at which the Chinese goods are sold. Under these circumstances it becomes essential for the local players to redefine their marketing practices. They should realign it into Prodices to overcome the “price effect”. The Indian players are already established in the market for quite some time. They’ve good visibility with their consumers. They can enhance this visibility by following up the selling of products with an efficient service. The obsession for low prices of the Chinese products is a temporary phenomenon. The Chinese just dump their products in other countries. This is not followed up with any kind of post-sales service, as they don’t have any service centers within the country. The domestic players can exploit this chink in their armor by ensuring customer loyalty keeping in touch with the customer and providing a fast and lifetime service.

Global Prodices Strategy

The size of the world is shrinking, not literally but in terms of communication and transportation. Internet has brought the people closer. It has made possible for the customer to get in touch with the company from any part of the globe. The fast Airline services ensure that you can reach any corner of the globe in a very short time. With the advent of globalization there are no boundaries for customers. So it is possible for a customer to buy a product from US and use it in India because of some advantages. Take the case of an Indian software professional spending 3 months as a part of onshore project in US.  He buys a Canon camera from a dealer in US while there. After the completion of the project he returns back to India and continues using the camera. In most case the companies would state that the post-sales service is available only within the company they purchased. Canon is a global company with presence in many countries. Now if Canon can provide the post-sale service in any part of the world for these customers who buy the product they can develop excellent relationships with the customer. The customer will be loyal to Canon because of its global service network and depending upon their service, he will be ready to consider buying other Canon products.

The same logic can be applied to financial services as well. A Global bank such as Citibank that provides financial services also gives its specific products such as Credit / Debit cards. Citibank provides Credit card services at any part of the world. A US citizen can buy any product from India using the same credit card. Thus the “Prodices” strategy is applied in a Global level by a service oriented organization.

Thus it can be seen the re-defining the market strategy through Product plus services at a Global level will pay rich dividends.   

The age of Pure Products or Pure Services has started to fade. This is being replaced with a new hybrid phenomenon – “PRODICES”. The organization has to restructure their existing strategies and redefine it in terms of Prodices. No longer does the customer want a product or a service alone. He has dictated the terms – he wants them both. Organizations have to build resources to realign with this new strategy; because Prodices is the business concept innovation that is going to revolutionalize the world.

Neil H Borden defined Marketing Mix through the four ‘P’s – Product, Price, Promotion and Place. These four ‘P’s essentially proposed the marketing tools for reaching the customer. The organization had to focus on these ‘P’s to make a headway with the customer and reach a particular level of success. The strategy that an organization follows by adopting the right marketing mix will help to get a larger market share and revenues. Different organizations may focus on different ‘P’s. Sony uses Product mix as its marketing tool, Coke uses Promotion, Wal-Mart uses price and FedEx uses place as a tool. Organizations do no necessarily use only one among the four. They may use different combination based on their core competencies.

Product (ion) Concept

In earlier days companies sold their products based on the assumption that customers would prefer those products that are available in plenty and inexpensive. Later they moved to concept of selling products that had many features in terms of its quality, performance or innovation. Here the companies rarely get the inputs from the customers on what they need and sell products designed by the engineers. The customers have to make do with what was available. Moreover the functional departments within the company was not integrated in that, after the R & D designed the product, Production would manufacture it, Finance would price it and Marketing would sell it. Thus there was no integrated marketing that received the inputs of the stakeholders involved.

Customer Concept

Globalization has changed the name of the game. Customer is pampered with choices as far as products or services are concerned. This has made Customer the King. Customer decides what he needs which is different from the earlier i.e. marketer decides what customer needs. In such a scenario the right marketing mix is important. The organization must get inputs from the customer and target those segments based on the 4 ‘P’s. The right marketing mix will establish the product in the minds of the customer. The Product has to be designed and marketed based on the customer inputs. If it is priced too high the customer will move to the competitor. It should be made available close where the target customer frequents for purchasing. And the promotion has to be done keeping the target in mind.

Services

Services have been available to the customers from a very long time. One can just go back to the earlier centuries when banks provided financial services to the customers. During the earlier centuries, services were not considered to be as important vis-à-vis the product. Most of the services were expected by the customers – say good food and fast response time at the restaurants. Organizations did not compete in terms of services alone. This is because when we consider the example of banks or restaurants it is a necessity for the customer. He will open account in banks for safekeeping or wants a good food from a restaurant. But this dependability on a few banks based on the necessity has changed. Again Globalization and more intense competition among the service companies has given the customer many options to choose from. He may choose a bank that provides many facilities such as ATM, International Credit / Debit cards, Net banking facility and so on. The customer prefers the service provider that provides the most facilities and the best service. Thus Services has gained prominence even more than Product in the last few decades. This is evident from the fact that countries like US, Service Industry is more than 90% of the GDP. Even in India where Manufacturing and Agriculture used to contribute more to the GDP, now Services is contributing up to 50% of the GDP.

7 ‘P’s of Services

With the services gaining more popularity the marketing mix had to be restructured. Now three more ‘P’s were added to services along with the earlier 4‘P’s for Products. These include People, Physical Evidence and Process. People play an important role in services because customer interacts with people while receiving services. Since services are Intangible it should have some kind of Physical evidence to bring in some level of tangibility. Marriott Hotels provides the hospitality services and gives it tangibility by providing an attractive lobby and ambience. Companies can also choose different processes for differentiation such as self-service, drive-ins for restaurants.

Service Characteristic

One important characteristic of a service is its Intangibility. It not possible to quantify or qualify what a good service is. Service is not a measurable quantity. In order to overcome this issue, the service provider makes use of a “Physical Evidence” to tangibilize it. Ex: The beautiful setting and ambience inside the lobby of a hotel is one form of “Physical Evidence” to augment the service. In addition to this there are a few more characteristics that are exclusive to the Services- Variability, Inseparability, Perishability. Services being provided by the employee vary from person to person. Services are produced and consumed immediately. It cannot be stored for future sales like a product. Thus it is inseparable. And it is also perishable. These characteristics make Services more difficult to market.

Need For Redefining MAarketing In Terms Of ‘Prodices’ Changing Times

The trends are changing with time. Customers no longer want just the Product or Service anymore. They prefer to have both and not one alone. If a customer wants to buy a car from a dealer apart from the features in the car that he is looking for – style, fuel economy, price, safety features; he will also be considering the post sales service after the purchase of the car as a criteria for buying it. The customer gets opinion from Primary and Secondary groups whose suggestions are influential. In this fast paced environment, people want efficient and fast service after they buy a car. Buyers worry about the maintenance and repair costs of the cars after purchase. So it is essential from customers’ point of view to receive an efficient post-sales service after purchasing the car. Similarly in the case of services – if we take the example of Retail services apart from the normal service of fast and efficient response time from the employees and availability of a variety of products, customers are also looking for In-House brand products. They are willing to purchase products such as clothing that are the brands of the store itself. Customer wants the whole range of Products and Services.

The change in trends has prompted the companies to offer their Products and Services under 5 main categories:

Pure good: Here the company would provide the customer with only the good i.e. the product. There is no service involved. These include products such as soaps, perfumes etc.

Good with accompanying service: These are the goods that have an accompanying service associated with it after buying. Ex: Consumer durables like Television with accompanying services such as warranty, repairing and maintenance. 

Hybrid: Here the offering of the good and services are equal in nature. Ex: Food and the service expected at a restaurant.

Major service accompanying with minor goods: Here the provider is mainly giving some services and there is some products accompanying it.  Ex: In-House branded products available at a retail store

Pure service: Here there is primarily only service is involved. There are no accompanying products. Ex: Baby-sitting

Tangibilizing the Intangible

Although Physical Evidence and the Processes can reduce the extent of the problems associated with Intangibility it is not that effective. This is because Physical evidences in the form of ambience and setting is relative. This is where a Product accompanying a service or augmenting it will help. The product will bring in the tangibility for the service and the customer can measure the service with the product. In the Retail service example the stores, the arrangement of racks and items, the ambience all serve as Physical Evidence. But this kind of physical evidence is common to almost all the big retail stores. Now if the retailer markets his brand of products including rice, apparel and others, customers who are already impressed with the services available will now visit the stores to purchase their in-house products as well. In fact this trend is fast catching up in the Retail Industry. The trend is disturbing for Organized brands like Allen Solly, Pepe or others who use the retail as a channel for sales. The retailer would obviously try to sell his own brand of products at his store.

The concept of Exclusive Show rooms on the other hand is case of Pure Product Manufacturers venturing into Services. Earlier products such as shirts and trousers were available at many smaller retail outlets. But these days we’ve exclusive showrooms where the manufacturer himself opens a store to market shirts and trousers. Thus we’ve Pepe opening ‘Pepe 1016’ stores to cater to the needs of the 10 to 16 years olds. Pepe is not only manufacturing jeans, it is also providing service through its showrooms.

Mind Share and Heart Share

The organization would use the marketing tools i.e. the 4 ‘P’s for capturing the Mind Share of the customer. The mind share of the customer can be captured through a durable product, affordable price, advertising and presence in many locations. All these measures would ensure that the customers recall the products in their minds. But merely having a mind share does not necessarily mean that customer will purchase the product. It gives an advantage in that, when the customer intends to buy a product he will consider those products first which have captured his mind share. Thus many companies which spend millions in Advertising and Promotions can capture the mind share. It is not an effective marketing tool to sign up a new customer. In addition to the mind share there is a need to capture the heart share as well. Only if the company captures the heart share, it will ensure that the customers buy the product. The heart share can be captured through the Services augmenting the product. If the customer is satisfied that the services he gets is good, he will definitely go ahead with the buying of the product and retain his loyalty to the product. Capturing mind share is efficient, but capturing heart share is effective.

Customer Retention and Loyalty

Its has been established that it costs 5 times more to acquire a new customer than to retain an existing customer.  This has made it imperative for the organizations to focus more on retaining of the customers than acquiring new ones. Organization have realized that building customer loyalty is more profitable than just blindly trying to increase the number of new customers to try its products. Globalization has increased the competition to new heights. Customers are no longer swayed by only low prices. They want value for their money; they want quality products. The purchasing power of the consumer has increased and he can afford high quality premium products and services. If he feels that the product is not up to the standard he perceived, he will switch to another supplier. But if he feels that he has purchased a high value product and service, he is willing to try out other products from the same company for his future requirements.

The marketing team in an organization can build this customer retention and loyalty through its “Prodices” strategy.  In fact it has become a necessity to adopt this strategy to beat its competitor and increase customer loyalty. In order to retain a customer and build the loyalty, organization has to not only manufacture quality products, it also has to follow it up with an efficient service.  The organization has to continuously keep in touch with the customer after its purchase. It can keep in touch with the customer with its Post-Sales service. This will ensure that customer is guaranteed of lifelong maintenance of the product from the company. His inputs are given importance by the company for improving the quality of products further or even in new product development. If the customer is happy with the service provided by the firm, he is more likely to not only go for repeat purchases of the same product, but also try out other products from the same company. An additional advantage is that the customer would suggest to his peers or friends to try out this product. Thus an effective “Prodices” strategy would not only ensure customer loyalty and retention, it would even be possible to acquire new customers through “word-of-mouth” from existing customers.

Competition

The number of competitors in a particular product category has increased in the past few decades. Globalization has added more intensity and numbers to the competition. The competition is not just between the domestic and local players. The ringside includes MNCs, national, regional and the unorganized in the fray who want to fight it out to get the attention of the potential customer and entice him to buy the product or service. A large number of MNCs from the US has entered the Indian market and trying to woo the customers. They’ve been successful in their efforts too. Chinese are manufacturing a lot of cheap products and they are dumping it to India. This is causing a lot of grievances to the domestic players who find it extremely difficult to compete with the rock bottom prices at which the Chinese goods are sold. Under these circumstances it becomes essential for the local players to redefine their marketing practices. They should realign it into Prodices to overcome the “price effect”. The Indian players are already established in the market for quite some time. They’ve good visibility with their consumers. They can enhance this visibility by following up the selling of products with an efficient service. The obsession for low prices of the Chinese products is a temporary phenomenon. The Chinese just dump their products in other countries. This is not followed up with any kind of post-sales service, as they don’t have any service centers within the country. The domestic players can exploit this chink in their armor by ensuring customer loyalty keeping in touch with the customer and providing a fast and lifetime service.

Global Prodices Strategy

The size of the world is shrinking, not literally but in terms of communication and transportation. Internet has brought the people closer. It has made possible for the customer to get in touch with the company from any part of the globe. The fast Airline services ensure that you can reach any corner of the globe in a very short time. With the advent of globalization there are no boundaries for customers. So it is possible for a customer to buy a product from US and use it in India because of some advantages. Take the case of an Indian software professional spending 3 months as a part of onshore project in US.  He buys a Canon camera from a dealer in US while there. After the completion of the project he returns back to India and continues using the camera. In most case the companies would state that the post-sales service is available only within the company they purchased. Canon is a global company with presence in many countries. Now if Canon can provide the post-sale service in any part of the world for these customers who buy the product they can develop excellent relationships with the customer. The customer will be loyal to Canon because of its global service network and depending upon their service, he will be ready to consider buying other Canon products.

The same logic can be applied to financial services as well. A Global bank such as Citibank that provides financial services also gives its specific products such as Credit / Debit cards. Citibank provides Credit card services at any part of the world. A US citizen can buy any product from India using the same credit card. Thus the “Prodices” strategy is applied in a Global level by a service oriented organization.

Thus it can be seen the re-defining the market strategy through Product plus services at a Glocal level will pay rich dividends.   

Conclusion

The age of Pure Products or Pure Services has started to fade. This is being replaced with a new hybrid phenomenon – “PRODICES”. The organization has to restructure their existing strategies and redefine it in terms of Prodices. No longer does the customer want a product or a service alone. He has dictated the terms – he wants them both. Organizations have to build resources to realign with this new strategy; because Prodices is the business concept innovation that is going to revolutionalize the world.

What are the advantages that Companies get from a Decentralized Management Structure?

1. Flexibility

   A department operating in a foreign country has to decide whether to buy a new production. Actual one is out dated and competition has already invested in new technologies, decisions are needed fast in order not to lose grip of their loyal customers. By the time information are escalated to the top management (taking in consideration ease of communication available in today's world) customers would have already moved to the competitor when Managers would have decided that indeed an investment is needed. Decentralized Management on its side would have given Junior Managers the ability to consider the situation and act accordingly. Time saved would have saved customers from going to the Competition.

2. Human Resource Issue

   Maslow's Theory of Needs talks well about the needs of employees, after getting a contract, his salary to fulfill his basic needs, he will need to fulfill those self esteem needs. And what is better that giving the possibility to take decisions and get the all the praise for a nice performance? The staff gets a boost in motivation and next time will perform even better to get more praise for his good performance. Besides the Employee's motivation is the experience he will acquire on a long term basis. Junior Managers will be able to take strategic decisions. In short they would have been trained on the job. So some costs already cut out.

3. Marketing Issue

   It is well known that each and every region, town, country in the world has its own culture and way of life. And this takes a more important aspect when dealing with marketing issues. We have to develop the right product, the right method, the right advertising for a given culture or community. Let's take as example a Centralized Management Structure within a Business, Products development decisions are taken by the Head Department. Investment is done, product launched, unfortunately market research has been carried by Top Management and targeted country doesn't need or is not acquainted to this type of product. A big loss for the Company. However to let local Managers take decisions regarding Marketing Issues will allow to have a clear overview of what the customer needs and wants. How they should advertise? Local managers will know best about local features and characteristics.

Nevertheless adopting a decentralized management Structure over the night can bring more drawbacks than advantages, untrained staff, inexperienced would surely take catastrophic decisions rather that rapid ones.

A decentralized Management Structure is very valuable both for Employees and the business, but it should be well prepared. In terms of culture, training and financial resources.

Ben Graham is the father of two basic stock market disciplines: security analysis, and value investing.

Graham believed that stock market prices were often wrong, because of the emotional factors involved. He developed the concept of "Mr. Market", an emotional and unstable character, to explain fluctuations in the market.

Mr. Market appears every day in your office, and offers to sell you some stock. One day, he might be hysterical with glee, and the next he's morose and hopeless. The intrinsic value of the stock doesn't change, but the price varies with the moods of Mr. Market.

Graham acquired his wealth by targeting undervalued companies. He looked for companies whose stock prices were temporarily down, but whose fundamentals were sound for the long run.

Ben Graham is the mentor of investment guru Warren Buffett, and has influenced several generations of stock market investors.

Warren Buffett b.1930

Also known as the "Oracle of Omaha", Warren Buffett is the world's richest man in 2008. He uses a value investing strategy influenced by Ben Graham.

Buffett buys companies as long-term investments, at a discount to their intrinsic value. He stresses the importance of research, and looks for companies with strong management, good potential for long-term return, and an attractive price.

His investment strategy involves discipline, patience and value. While he claims no investment favorites, Buffett is currently interested in family-owned businesses in Europe, and predicts hard times for newspapers.

Buffett owns Berkshire Hathaway, whose first-quarter profit plunged 64% this year, with $991 million in investment losses. In July, Berkshire Hathaway offset the loss by announcing the sale of Anheuser-Busch to a Belgian company for $2.49 billion, earning a profit from the purchase price of 1.9 billion in 2005.

The world's richest man pays himself a salary of $100,000 a year. It's a figure that hasn't changed in twenty-seven years.

Peter Lynch b.1944

Peter Lynch bought into Automatic Data Processing (ADP) and Yum! Brands' (YUM) Taco Bell, before Wall Street noticed their existence.

Peter Lynch uses a bottom-up approach and concentrates on a company's fundamentals, instead of listening to market chatter. He invests for the long run, and pays little attention to short-term market fluctuations.

His chameleon investment style adapts with the times, but he relies on core principles. He believes that no one can predict economic fluctuations. Lynch advocates research, and warns against long shots for building wealth.

Kirk Kerkorian b.1917

Kirk Kerkorian turned 91 this year, and has a net worth of $16 billion. Known as the father of the mega-resort in Las Vegas, Kerkorian is a self-made man, who started earning money for his family at age nine. As a young man he learned to box. Under his brother's tutelage, Rifle-Right Kerkorian fought his way to the Pacific amateur welterweight championship.

In World War II, Kerkorian learned to fly with the Royal Air Force. After the war, he bought a Cessna and began flying wealthy passengers into the small railway town of Las Vegas.

He quickly saw the potential of Vegas. In 1947, Kerkorian gave up gambling, bought a local airline for $60,000, and renamed it Trans International. He operated the airline for twenty-one years, then sold to Transamerica for $104 million.

His most famous success was a piece of Vegas land, purchased for just over $960,000, in 1962. He leased the land to Caesar's Palace for four million, and sold it to them six years later, for five million more.

His fortune comes from shares in DaimlerChrysler, MGM Mirage (MGG) and Metro-Goldwyn-Mayer (MGM). He has a talent for identifying opportunities early. Kerkorian will buy, sell and then return to a company. He twice sold MGM, then took it over for a third time in 1996.

Kerkorian's recent investment in Ford Motor Co. kept stock trading at its highest levels in almost six months.

Jesse Livermore 1870-1940

Jesse Livermore made and lost millions, and once declared bankruptcy. He was notorious for short selling during the stock market crashes in 1907 and 1929, to the point that JP Morgan asked him to stop.

Livermore focused on markets as a whole, instead of on individual stocks. He would adopt a buy-and-hold strategy in a bull market, and sell when it lost momentum.

His fluctuating fortunes came from breaking two of his own rules: never listen to stock tips; and, always cut losses short.

Livermore always had an exit strategy. He committed suicide in 1940, owing more than a million dollars.

Edward Lampert b.1962

Lampert is Chairman of Sears Holdings Corporation (SHLD) and the founder of ESL Investments, Inc. Lampert created ESL at the age of twenty-five, in 1988. The company's returns average 29% a year, and Lampert is number sixty-eight on the Forbes list of 2008.

He looks for a mature business that is easy to understand, and has a strong cash flow. He targets companies with the potential to generate a large cash flow over the long run. Lampert is less focused on the management team, and willing to bring about changes in the company structure to realize a profit.

His numerous investments in the retail sector include Home Depot (HD). Other investments include CIT Group (CIT) and AutoNation, Inc. (AN).

George Soros b.1930

George Soros is a Hungarian-born American investor, speculator, philanthropist and political activist.

He's infamously known for breaking the bank of England on Black Wednesday, 1992, by selling short more than $10 billion worth of pounds.

His investment strategy revolves around the knowledge that financial markets are chaotic, and prices depend on the human beings who buy and sell. Often, buyers and sellers act out of emotion, rather than cool logic.

Soros looks for opportunities by studying value and market price of assets. He follows a theory of reflexivity, based on the idea that investor bias affects market transactions.

These days, Soros prefers philanthropy over speculation. By 2003 he had given away more than four billion dollars to help the underprivileged, in nations such as South Africa, Central Europe and Russia. In 2007 he gave $100 million to fund internet access in Russian universities.

George Soros holds shares in BUCY - Bucyrus International Inc.; ANR - Alpha Natural Resources Inc. and WIND - Wind River Systems Inc.

Carl Icahn b.1936

Icahn made headlines in 1985 with his hostile takeover of TWA. He's known as a tough negotiator and clever market strategist.

Icahn takes minority stakes in public companies and pushes for change. He does not believe in following trends. Icahn says, "... consensus thinking is generally wrong. If you go with a trend, the momentum always falls apart on you. So I buy companies that are not glamorous and usually out of favor. It's even better if the whole industry is out of favor."

In May, Carl Icahn took on internet giant Yahoo (YHOO). Icahn bought as many as 50 million shares, preparing for a proxy fight to remove Yahoo's Board of Directors. On July 21, 2008, he agreed to join the Board of Directors and end the hostilities ... at least for now.

Philip Fisher 1907-2004

Fisher was a formative thinker in the growth stock school of investing. His book, "Common Stocks and Uncommon Profits", is a standard for investors. Fisher believed in investing for the long haul, and wrote that the best time to sell a stock was "almost never".

Fisher did extensive research to help build his wealth, and preferred the technique he called "scuttlebutt" or the business grapevine, to seek out information.

Fisher bought Motorola in 1955, when it was a radio manufacturer. He held onto it until his death in 2004.

William J. O'Neil

At the age of 30, O'Neil was the youngest ever to have a seat on the New York Stock Exchange. He's the founder of Investor's Business Daily, and author of two successful books.

O'Neil uses a mix of quantitative and qualitative strategies in his investing approach.

His investment style is to seek out the growth stocks that have the highest profit potential and will show a swift price rise. He coined the acronym CANSLIM to identify such stocks.

Bill O'Neil's motto is "buy the strong, sell the weak." He seeks out companies that perform as leaders, with something new to offer, and a proven rise in current and annual earnings.

Every great investment guru has an individual approach, but all follow the same basic rules: know the company and the market; never listen to market gossip; and always keep a cool head.

Selecting Distribution channels according to product life cycle

Product Life Cycle Stage and General Strategies for choosing a channel

Introductory Stage Product has recently been launched; hence there will be fewer distribution channels.

Strategy: You may be able to accept any intermediary, which is capable to paying any product you produce. At this stage You should try to convince them to carry your product

Growth Stage

Product has gained has its acceptability; hence more distribution channels will be added.

Strategy: More resellers will be interested, so you should move on to develop an appropriate criteria, policies and procedures that should help you to choose which reseller suits the most, here you would be executing an intensive distribution strategy

Mature Stage

Product has been embraced, but competition is a threat. Primary goal should be to maintain market share

Strategy: If your product lies at mature stage, you should Offer reseller discounts, include additional marketing channels to add convenient shopping, like catalogues, internet shopping, offer coupons e.t.c.

Decline Stage

Product has been embraced, but competition is a threat. Primary goal is to maintain market share

Significance of adopting a suitable distribution channel

It is important to select appropriate channel, because the distribution channel we select can determine the Level of success our organization achieves. Incase of retail items like T.V or DVDs, Those Intermediaries that use poor promotional techniques or are unable to keep up with consumer demand can damage our products marketability and sales. Having said that, it will be adequate to mention various factors that should be considered while selecting a distribution channels

• The size of target market
• Where the target market is located
• The details of buying habits of the target segment

Only, after having above information, one could adopt a suitable strategy that would guarantee success.

What is Sales Promotion?

Simply put, sales promotion is a marketing tool that offers the consumer a temporary price cutback. It occurs in such a way that the extra volume sold will be over and above what would have been sold without advertising and packaging alone.

Researchers have come to the concussion that the reason for the increase in sales promotion is attributed to increase in competition among manufacturers and sellers.

When Do You Actually Need a Sales Promotion?

That your product is doing badly in the market is not a sufficient reason for you to embark on a sales promotion. Just like advertising cannot sale a bad product, promotion cannot sales a bad product. Sales promotion basically boils down to exploring and taking advantage of key problems and opportunities. It is necessary that you be sure that promotion is what you actually need to solve the present problem before embarking on it.

When Is Sale Promotion Effective?

Sales promotion is most effective when there is a shortfall in brand performance where the business needs to:

Boost Trial Level

This works mostly with new entrants into the market. It becomes a way of encouraging consumers to try a particular product or service, especially when you are confident about the value of the product. Once consumers become familiar or hooked to the product/service, such promotion is often discontinued.

Increase Repurchase Level

This is commonly found in fast-moving consumer goods. The idea is also replicated in other products to an extent that a buyer may even end up buying a particular product for more than one reason/use.

Knowing When Promotion is Least Effective

A lot of products have moved from being brands to ordinary commodity by virtue of the frequency the engage in promotion. That underscores what we said earlier that promotions should not be used as a solution to accepting bad products.

Sales promotion will do little or no good to bad brands and declining brands.

Promotion as Brand Reenforcer

Sales promotion is not only meant to increase sales, it also helps in re-enforcing a brand. Branding, as a rule must complement advertising notions. But must work hand-in-hand to ensure the desired image and position is achieved.

This observation certainly bears truth if you look at the spectacular growth Oracle has experienced in the last 15 odd years. However, if you closely examine the current strategies of Oracle, it appears that some key tenants of Sun Tzu's treatise has been broken, which may have negative impact on Oracle's ability to maintain its stature and growth.

Given the spectacular growth of Oracle in the last fifteen years to the database and application giant it has become, it obviously requires tremendous amount of hard work, innovation and certainly a firm understanding of the precepts of Sun-Tzu's famous canon "The Art of War". Having been so successful in the past by predominantly growing organically, yet pursuing the recent strategic shift by Oracle to embark on a mega acquisition and growth strategy seemed both peculiarly atypical and thought provoking. Spending in excess of USD $24 billion on acquiring or increasing ownership in a whopping 40+ companies in the last three years, however, sounds like something that an ultra-aggressive leader like Ellison would do.

What Do I Want to Be When I Grow Up?

The reason for Oracle to go on an acquisition binge is quite clear and understandable. For starters, Oracle clearly realizes that it has to move beyond its core database business and be serious about its applications business. The reason why the core database business needs to expand is because database technology is increasingly becoming commoditized. With industry stalwarts like IBM DB2, MS SQL on one hand and OpenSource entrants like MySQL and PostgreSQL on the other, Oracle's dominance is continually challenged and Oracle's control of the enterprise database market that it enjoyed in the last 10 or so years is being continually marginalized. And this trend is likely to continue as organizations have become smarter about their IT expenditures and competing database software vendors have become more mature, the database software continues to become commoditized and is fast loosing its cache to warrant a premium price as well as profit margin from customers.

As per a JoinVision study named "Open Source in the Fast Lane", it states “IT specialists indicated they deploy MySQL 30% more frequently than Oracle, SQL Server or DB2.”

The graphic below from the same study paints a disturbing picture if one is traditional database vendor.

From a 2006 column written by Jack Loftus in SearchOpenSource, “"In 2005, the industry witnessed great momentum around open source databases, from product enhancement, improved customer support and increased adoption to new vendors jumping on the bandwagon," Yuhanna said. "Open source databases continue to make inroads into enterprises, offering low-cost database management system alternatives to support all types of business applications." “Proprietary vendors would have to hide their heads in the sand not to see the marketplace impact of greatly improved product quality and support offered by commercial open source database vendors….that the fact that proprietary vendors have issued deeper discounts, scaled down versions and more advanced features at no extra cost have bolstered the case that OSS is having an effect.”

In addition, as requirements for quick information retrieval becomes higher, and the availability of cached information in RAM becomes greater (think Google, BI) there is more and more dependence for fast caching and retrieving data from RAM rather than constantly hitting a database for that information. Given Moore's Law, this trend has continued since the inception of microchips and is likely to continue in the foreseeable future. As knowledge workers become more sophisticated and require not just saved information, like Purchase Order or Employee Record, to be retrieved quickly but also expects derived business intelligence data and calculations to be done on fly, the use of cached data takes a more central role and database become a solid state repository. Hence database will continued to be used to save and synchronize the cached data as business events occur, rather than a active participant in creating the derived data.

Although, Oracle has had a portfolio of applications and has been partly successful in making inroads at customers who were already using Oracle's database to sell them these applications like Oracle Financials, HR, Supply Chain etc, it still lacked the market share domination, revenue share and growth in core application software that companies like SAP and PeopleSoft had enjoyed in addition to successes of new entrants like Hyperion, Siebel and Retek to name a few.

So from a strategic perspective, Oracle had to move and move quickly to expand its software offerings and improve its software to database share of its revenues in the years to come. Also, Oracle needed to move beyond its image in the application business as providing good software but not the best software in any said corporate category i.e. back office, which was the domain of SAP and PeopleSoft and front office which was the controlled by Siebel, Retek (retail).

Hence, Oracle embarked on an aggressive strategy to expand by acquiring what where termed “best of breed” software in many of the front office and back office segments and integrate it with its core software offerings. This would allow Oracle to first have a more comprehensive software offering to compete with the likes of SAP in the enterprise domain and Microsoft and increasing SAP also in the SMB space, and secondly to improve its software application's image by acquiring “best of breed”. In addition, Oracle realized that acquisition of best of breed would also allow it to consolidate the market and reduce competition. Hence by buying best of breed, Oracle tried to accomplish all three goals at the same time.

Having witnessed this, one certainly understand the reason for the move and the nature in which it was done i.e. very hostile in the case of PeopleSoft, it screamed of “the Ellison way” and seemed very Sun Tzu like to annihilate one's enemy by whatever means necessary.

Tenets of Sun Tzu

One can clearly see that some of Sun Tzu's tenets are used by Ellison quite well. However, if one looks deeper, it becomes clear that some key tenets are also broken, with disregard, which can spell trouble for the software giant. It appears as if the State (Oracle), in Sun Tzu's terminology, has decided to deal with its competition (enemies) by focusing entirely on an offensive strategy and tactics rather than depending on a combination of plays based on offensive, defensive, and forging alliances as the analysis suggests.

Sun Tzu's Tenets Followed By Oracle

• All warfare is based on deception. (18)

  Indeed, Oracle has traditionally done a good job in using this strategy to its advantage. In the past, Oracle has been charged with being liberal with truth regarding the functionality and scalability of its database vis-à-vis its primary competitor at the time, and now with the messaging around the timeline to integrate the acquired applications and deliver them on its Fusion platform. Oracle's proposed timeline, albeit ambiguous, and promises to not just integrate the acquired and core applications, but to deliver depth of functionality across an entire enterprise application footprint raises too many questions.

• Thus, though we have heard of stupid haste in war, cleverness has never been seen associated with long delays. (5)

  This one is a toss-up, but we have to give the benefit of the doubt to Oracle. Its ability to acquire this number of companies by any means necessary is quite impressive. In retrospect, not all acquisition candidates will prove worthwhile, but being able to move rapidly certainly points to a certain level of “cleverness”.

• Rapidity is the essence of war: Take advantage of the enemy's unreadiness, make your way by unexpected routes, and attack unguarded spots. (19)

  The discussion above applies here. Some of the acquisitions that Oracle did especially PeopleSoft, Siebel, Hyperion, G-log and Retek took the competition by surprised and unnerved them.

• Make forays in fertile country in order to supply your army with food. (21)

  Indeed, getting into front-office market space and other lucrative markets from core database is venturing into fertile country. Middleware is also a significant fertile territory where Oracle reaps and will continue to reap revenues and healthy margins.

• When invading hostile territory, the general principle is, that penetrating deeply brings cohesion; penetrating but a short way means dispersion. (42)

  This one sounds counterintuitive, however, here the point is that when employees and investors see incremental steps to address strategic imperatives as inadequate and eventually disillusionment sets in, however, if they see bold steps taken by the leadership, they tend to follow closely and follow strongly. This leads to loyalty and innovation by the troops that see the vision and follow the general.

• Place your army in deadly peril, and it will survive; plunge it into desperate straits, and it will come off in safety. (58)

  Certainly, taking on SAP (Enterprise Apps/Middleware), IBM (Middleware/DB), Microsoft (Enterprise Apps, DB), BI companies (Cognos, SAP etc) other database (MS SQL, MySQL) and middleware (Tibco, SAP, IBM) providers at the same time is akin to taking ones employees and investors in “deadly peril”. However, if Oracle does manage to pull it off it would be a high-risk/high-reward endeavor.

• For it is precisely when a force has fallen into harm's way that is capable of striking a blow for victory. (59)

  Desperate times requires desperate measures and Oracle's ability to constantly innovate while it is bogged down in normalizing architectures, data structures and deal with attrition will truly test its mettle.

Tenets that are Broken by Oracle

• Attack him where he is unprepared, appear where you are not expected. (24)

  Oracle has certainly stepped in the ring with full frontal assault where collectively the enemies are bigger, stronger and has better products and domain expertise then it has. Plus there is no element of surprise for the most part. Some of the acquisition plans were a smart move, however, from a macro perspective, it was expected by its major competitors like SAP, IBM and Microsoft that Oracle has to focus its efforts on brining a more mature and integrated applications and middleware product in the market. Hence, Oracle does not have a clear advantage over any of its core competitors from a timing perspective.

• Therefore the skillful leader subdues the enemy's troops without any fighting; he captures their cities without laying siege to them; he overthrows their kingdom without lengthy operations in the field. (6)

  In fact, Oracle has embarked on a full-frontal assault on its competitors, some of whom which are much stronger and better equipped to respond to the external threat. Also, Oracle has not made any strategic alliances through its acquisition marathon. Hence, not only does Oracle face threat from companies that are natural allies like IBM/SAP (services, Eclipse), SAP/Microsoft (database, Duet, customer), but also faces consternation from the ranks for the acquired company due to messy acquisition or sieges that Oracle put on its targets.

• Sun Tzu said: Whoever is first in the field and awaits the coming of the enemy, will be fresh for the fight; whoever is second in the field and has to hasten to battle will arrive exhausted. (1)

  From an application standpoint, weather it be back office, front office, business intelligence, or middleware, Oracle does not have a “first in field” advantage over any of its competitors. IBM, SAP, Microsoft, Cognos and others has a clear advantage over Oracle since they control, strategically speaking, a higher ground than Oracle given their product maturity, and integrated architecture due to organic growth.

• So in war, the way is to avoid what is strong and to strike at what is weak. (30)

  Again, Oracle has taken on both strong, weak and everybody in the middle in its quest to dominate the applications and middleware market. This presents a huge problem for Oracle as the honey moon period ends and its customers will not be happy with just seeing blueprint and expected dates but will expect a truly integrated suite based on previously “best of breed” application.

• Hence, when able to attack, we must seem unable; when using our forces, we must seem inactive; when we are near, we must make the enemy believe we are far away; when far away, we must make him believe we are near. (19)

  This again goes to the point of deception. However, Oracle still needs to provide blueprint, timelines, integration strategy, data models and guidance to customers and the Street, hence it cannot be overtly deceptive to its competitors.

• He who exercises no forethought but makes light of his opponents is sure to be captured by them. (41)

  This point speaks to the many comments and sentiments that Larry Ellison is most notorious of making. They may garner awe with the uninitiated and laughter from others, but to analysts, competitors and customers the credibility and messaging is often taken with a grain of salt.

• If fighting is sure to result in victory, then you must fight, even though the ruler forbid it; if fighting will not result in victory, then you must not fight even at the ruler's bidding. (23)

  Executive and employee attrition at Oracle and its acquired companies in the last couple of years is a clear sign that many field commanders do not agree with the General's strategy.

• It is the business of a general to be quiet and thus ensure secrecy; upright and just, and thus maintain order. (35)

  Larry Ellision is known to be many things but being quiet is certainly not one of them.

Although very smart, insightful and shrewd businessman that Larry Ellison might be, it appears that the mega-acquisition strategy is laden with acute risks.

The Ultimate Objective of a War

Notwithstanding the timelines Oracle has to share with regards to its consolidated Fusion platform rollout, by conservative estimates it may take anywhere from 6-8 years before a comprehensively integrated application will be mature enough to have a normalized core and integrated business processes. Most importantly, even after an integrated core, Oracle still will not have the depth of business rules and process automation that SAP has to offer, the competency in middleware that vendors like IBM, Tibco and has to offer and will continue to see a commoditization of its database business. And while Oracle is busy fighting multi-front battles with financially and technically strong opponents; it will have fewer resources to focus on expanding its core database business.

Also, it is important to note that what was once a “best of breed” application looses its status as such as soon as it is acquired and becomes part of a different or bigger category of software. Hence, Siebel may have been best of breed CRM application, but when it is integrated into a platform core that is much bigger than CRM then it is only as strong as the weakest link in the entire platform's footprint. In software, the benefits of one function do not overcome the deficiency in other core functions. So what used to be “best of breed” does not automatically stay best of breed ex post facto acquisition.

Ultimately, apart from all the other tenets of Sun Tzu, some of which are followed and others broken, the entire strategy of Oracle has one glaring risk, which is that it does not abide by the most basic and important tenet of Sun Tzu's cannons, which is that the ultimate objective of a war in not to fight but it is to win. And if one can win without fighting that “war” is most desirable.

So if one can win without raiding resources associated with one's State (corporation), army (employees), citizens (shareholders) and exchequer (capitalization and debt/equity ratio) are better served. However, Oracle's strategy ensures a multi-front, multi-year battle without a clearly articulated objective to claim victory.