Fish Bone Model/ Cause-Effect analysis

Cause and Effect Analysis/ Fish-Bone Model

Cause and Effect Analysis gives a person a useful way of doing problem analysis. This diagram-based technique, pushes a person to consider all possible causes of a problem, rather than just the ones that are most obvious.

Cause and Effect Analysis was devised by professor Kaoru Ishikawa, a pioneer of quality management, in the 1960s. The technique was then published in his 1990 book, "Introduction to Quality Control." The diagrams that you create with Cause and Effect Analysis are known as Ishikawa Diagrams or Fishbone Diagrams (because a completed diagram can look like the skeleton of a fish). Cause and Effect Analysis was originally developed as a quality control tool, but you can use the technique just as well in other ways.

For instance, one can use it to:

-          Discover the root cause of a problem.

-          Uncover bottleneck in the processes.

-          Identify where and why a process isn't working.

There are four steps to using Cause and Effect Analysis.

-          Identify the problem.

-          Work out the major factors involved.

-          Identify possible causes.

-          Analyze your diagram.

Steps to solve a problem with Cause and Effect Analysis/ Fish-Bone model:

Step 1: Identify the Problem

-          First, write down the exact problem one is facing. Where appropriate, identify who is involved, what the problem is, and when and where it occurs.

-          Then, write the problem in a box on the left-hand side of a large sheet of paper, and draw a line across the paper horizontally from the box. This arrangement, looking like the head and spine of a fish, gives space to develop ideas.

Example:

In this simple example, a manager is having problems with an uncooperative branch office.

Figure 1 – Cause and Effect Analysis Example Step 1

Figure-1

Tip 1: Some people prefer to write the problem on the right-hand side of the piece of paper, and develop ideas in the space to the left. Use whichever approach you feel most comfortable with.

Tip 2: It's important to define the problem correctly. Look at the problem from the perspective of Customers, Actors in the process, the Transformation process, the overall World view, the process Owner, and Environmental constraints.

By considering all of these, one can develop a comprehensive understanding of the problem.

Step 2: Work Out the Major Factors Involved

Next, identify the factors that may be part of the problem. These may be systems, equipment, materials, external forces, people involved with the problem, and so on.

Example:

The manager identifies the following factors, and adds these to his diagram:

-          Site.

-          Task.

-          People.

-          Equipment.

-          Control.

Figure 2 – Cause and Effect Analysis Example Step 2

Step 3: Identify Possible Causes

Now, for each of the factors one considered in step 2, brainstorm possible causes of the problem that may be related to the factor.

Example:

For each of the factors he identified in step 2, the manager brainstorms possible causes of the problem, and adds these to his diagram, as shown in figure 3.

Figure 3 – Cause and Effect Analysis Example Step 3

Step 4: Analyzing Diagram

By this stage one should have a diagram showing all of the possible causes of the problem that you can think of.

Depending on the complexity and importance of the problem, one can now investigate the most likely causes further. This may involve setting up investigations, carrying out surveys, and so on. These will be designed to test which of these possible causes is actually contributing to the problem.

Example:

The manager has now finished his Cause and Effect Analysis. If he hadn't looked at the problem this way, he might have dealt with it by assuming that people in the branch office were "being difficult."

Instead he thinks that the best approach is to arrange a meeting with the Branch Manager. This would allow him to brief the manager fully on the new strategy, and talk through any problems that she may be experiencing.

Branding

Branding

Global Brands

A global brand is branding products with a single brand worldwide. A firm may look at launching the products worldwide with a single brand logo, slogan. In the practice, we see some brands such as Coca Cola, Apple etc. are familiar to us irrespective of the cultural differences and the geographical boundaries we deal with in day to day life. This is where the global branding has come out in action. However a firm needs to carefully analyse the conditions that favour using a same brand name worldwide.

Global brands will have same product attributes, product formulas core benefits, values, same product positioning across the globe. Firm may enjoy high economies of scales through maintaining global brands and the brand awareness effort is less to a firm in the case of global branding. Global brands add prestige and image to the firm in across the globe, and this helps in gaining the market leadership position in both home and foreign countries.

Local Branding

Some firms go by the basis of local branding to mitigate with the cultural barriers, language differences, etc.. For an example, if the local industry is using a similar brand name, then its disadvantageous for the company to go on the global branding, therefore a localised version needs to come up as local branding.

This will help the firm to create a customer mindset, that they are purchasing a local brand that will help them to capture the market.

Whether to use global branding or local branding is a tricky question that needs to be answered by a firm carefully. Maintaining and acquiring well known local brands are a mode of generating access to the local channels, distribution network and established staff. It is more advisable to maintain a local brand by a company after an acquisition as this will help a firm to establish the product in the foreign market more successfully.

Private – Label Branding

This is in increasing threat to most of the large MNCs. They are high frightening competitors who provide the retailer with high margins to gain preferential shelf spare and strong in store promotion. Most of these brands are quality products with low prices, that will get immediate consumer attention, rather than the manufacturer brands that are premium priced.  Therefore, the MNCs will need to compete with these private brands in the international marketing platform.

Brand Name Changeover strategies:

Fade-in/ Fade-out: This is where the new global brand will be tied up to a local brand which is existing in the host market. Once the transition is done, the old name will be dropped out.

Combining the local brand with the name of the new partner. This is another branding strategy used to achieve successful change over of the brands in international markets.

Transparent forewarning- this alert the customers about the brand name change through communications, in-store displays, using the product packing.

Summary Axing: The old brand name will be dropped overnight and the new brand name / global brand will come to use. Suitable for situations where the market competition is high and the competitors are gaining the market share through the development of global brands.

Co – Branding: Co branding will be carried out by linking two products to obtain advantage of the equity of each brand.

Example:  Unilever Ice cream company co-branding together with Mars in the USA.

Umbrella Branding: A single banner brand will be used across the globe, with the support of a sub brand name for the total product portfolio of the company. The company name goes with the whole product portfolio. The brand name will be reflected through each and every product.

Companies with a positive brand name will benefit through umbrella branding in international marketing context as the customers will have a trust on the umbrella brand and therefore the product offered to foreign markets will too be highly accepted.

Corporate Social Responsibility (CSR)

Corporate Social Responsibility (CSR)

Corporate Social Responsibility is concerned with treating the stakeholders of the firm ethically or in a responsible manner. Ethically or responsible means treating stakeholders in a manner deemed acceptable in civilized societies. Social includes economic and environmental responsibility. Stakeholders exist both within a firm and outside. The wider aim of social responsibility is to create higher and higher standards of living, while preserving the profitability of the corporation, for peoples both within and outside the corporation. (Hopkins, 2007)

How CSR is relevant in today’s world?

Corporate Social Responsibility has become an element of strategy and increasingly important for today/s businesses. Due to its effectiveness in 21^st century importance of CSR is  growing day by day as competitive advantage among the business rivals.

            There are five identifiable trends that are continuing to grow their importance, they are-

                        Growing affluence,

                        Ecological sustainability,

                        Globalisation,

                        Free flow of information,

                        Brands. (Wertner and Chandler, 2011)

Value-Chain Analysis

Value-Chain Analysis

Value-Chain Analysis is identifying and exploiting internal and external linkage with the objective of strengthening a firm’s strategic position. The exploitation of linkages relies on analysing how costs and other non-financial factors vary as different bundles of activities are considered. Also, managing organizational and operational cost drivers to create long term cost reduction outcomes is an important input in value-chain analysis when cost leadership is emphasized.

Why value chains?

Value chain analysis provides researchers with a tool to ask important questions about the distribution of power and value across the chain and is therefore eminently capable of addressing the agency of workers and small producers. This analysis can identify the scope for improving incorporation into the market- increasing returns and reducing risks.

The value chain is supported by four activities as follows:

1.      Procurement: This is the function of acquiring the inputs used in the value chain and applies to inputs used at any stage. In other words, procurement is not only connected with the inbound raw materials or components, it is also concerned with anything used in the course of providing marketing inputs, sercicing inputs, or materials used for outbound logistics.

2.      Human resource management: This is the function of recruiting, training and rewarding staff members in the organization.

3.      Technology development: This includes know-how, research and development, product design and process improvement work.

4.      Infrastructure: This includes the working spaces (factories, offices, mines, etc.) the organizational structure of the firm, the financial and operational control systems and the feedback systems used by management.

Primary activities

1.      Inbound logistics: It is the study of movement of factors of production. For example, a manufacturer of outbound motors needs to ensure that stocks of component parts are always on hand. A failure to have sufficient carburetors in stock means that production would cease, even if pistons, propellers, cylinder blocks, gears and everything else needed where ready at hand.

2.      Operations: These are the processes which convert inputs into finish products. For the outboard motor manufacturer, this would mean machining raw castings, manufacturing engine covers, painting, assembling motors, testing the finished motors, packaging the products.

3.      Outbound logistics: It is concerned with the movement of finished products. It involves the shipping of products in a timely manner to customers in order to meet their needs: in the case of the outboard motor company, this means ensuring that boat builders are supplied on time, since they are in turn unable to complete the boat unless they have the motors. It also means ensuring that boat chandlers and repair yards have suppliers of replacement motor as necessary.

4.      Marketing and sales: These activities ensure that customers are aware of the products and favor them over competitors’ products. For the manufacturer this falls into two phases: firstly, the company needs to persuade boat builders, repair yards and the like that their motors are best, but also they need to persuade the final consumer, the boat owner, of the same thing in a sense this is part of the same process: boat builders are unlikely to specify a motor that boat owners have never heard of or distrust.

5.      Service: After-sales activities for an outboard motor manufacturer would include supplying spare parts as necessary (and preferably promptly), warranty work on failed motors, training of service engineers at boat repair yards and helplines for boat owners.

Distribution in organisation

Distribution Channel:

A set of interdependent organizations involved in the process of making a product or service available for use or consumption by the consumer or business users.

Distribution Channel Functions:

Information: Gathering and distributing marketing research and intelligence information about actors and forces in the marketing environment needed for planning and aiding exchange.

Promotion: Developing and spreading persuasive communications about an offer.

Contact: Finding and communicating with prospective buyers.

Matching: Shaping and fitting the offer to the buyer’s needs, including activities such as manufacturing, grading, assembling and packaging.

Negotiation: Reaching an agreement on price and other terms of the offer so that ownership or possession can be transferred.

Others help to fulfill the completed transactions:

Physical distribution: Transporting and storing goods.

Financing: Acquiring and using funds to cover the costs of the channel work.

Risk taking: Assuming the risks of carrying out the channel work.

[ Channel level: A layer of intermediaries that performs some work in bringing the product  and its ownership closer to the final buyer.]

Direct marketing channel: A marketing channel that has no intermediary levels.

Indirect marketing channel: Channel containing one or more intermediary levels.

Intensive distribution: Stocking the product in as many outlets as possible.

Exclusive distribution: Giving a limited number of dealers the exclusive right to distribute the company’s products in their territories.

Selective distribution: The use of more than one, but fewer than all, of the intermediaries who are willing to carry the company’s products.

Physical Distribution (or marketing logistics): The tasks involved in planning, implementing and controlling the physical flow of materials, final goods, and related information from points of origin to points of consumption to meet customer requirements at a profit.

Distribution Center: A large, highly automated warehouse designed to receive goods from various plants and suppliers, take orders, fill them efficiently and deliver goods to customers as quickly as possible.

Pricing strategy

a.    Cost-based pricing:

Cost-plus pricing: Adding a standard markup to the cost of the product.

Break-even pricing: Setting price to break even on the costs of making and marketing a product; or setting price to make target profit.

Value-based pricing: Setting price based on buyers perceptions of value rather than on the sellers cost.

Value pricing: Offering just the right combination of quality and good service at a fair price.

Competition-based pricing: Setting prices based on the prices that competitors charge for similar products.

b.    New-product pricing:

Market-skimming pricing: Setting a high price for a new product to skim maximum revenues layer by layer from the segments willing to pay the high price; the company makes fewer but more profitable sales.

Market-penetration pricing: Setting a low price for a new product in order to attract a large number of buyers and a large market share.

c.     Product Mix pricing:

Product line pricing: Setting the price steps between various products in a product line based on cost differences between the products, customers evaluations of different features and competitors prices.

Optional-product pricing: The pricing of optional or accessory products along with a main product.

Captive-product pricing: Setting a price for products that must be used along with a main product, such as blades for a razor and film for a camera.

By-product pricing: Setting a price for by-products in order to make the main products price more competitive.

Product bundle pricing: Combining several products and offering the bundle at a reduced price.

d.    Price-adjustment Strategies:

Discount and allowance pricing:

Cash discount: A price reduction to buyers who pay their bills promptly.

Quantity discount: A price reduction to buyers who buy large volumes.

Functional discount: A price reduction offered by the seller to trade channel members who perform certain functions such as selling, storing and record keeping.

Seasonal discount: A price reduction to buyers who purchase merchandise or services out of season.

Allowance: Promotional money paid by manufacturers to retailers in return for an agreement to feature the manufacturer's products in some way.

Segmented pricing: Selling a product or service at two or more prices, where the difference in prices is not based on differences in costs.

Psychological Pricing: A pricing approach that considers the psychology of prices and not simply the economics, the pricing is used to say something about the product.

Reference prices: Prices that buyer carry in their minds and refer to when they look at a given product.

Promotional pricing: Temporarily pricing products below the list price and sometimes even below cost, to increase short-run sales.

e.    Geographical pricing:

FOB- origin pricing: A geographical pricing strategy in which goods are placed free on board a carrier; the customer pays the freight from the factory to the destination.

Uniform-delivered pricing: A geographical pricing strategy in which the company charges the same price plus freight to all customers, regardless of their location.

Zone pricing: A geographical pricing strategy in which the company sets up two or more zones. All customers within a zone pay the same total price; the more distant the zone, the higher the price.

Basing-point pricing: A geographical pricing strategy in which the seller designates some city as a basing point and charges all customers the freight cost from that city to the customer location, regardless of the city from which the goods are actually shipped.

Freight-absorption pricing: A geographical pricing strategy in which the seller absorbs all or part of the actual freight charges in order to get the desired business.

Segmentation, Targeting and Positioning

Marketing Process:

The process of 

- analysing marketing opportunities

- selecting target markets

- developing the marketing mix, and

- managing the marketing efforts are collectively called marketing process.

To succeed in today's competitive marketplace, companies must be customer centered, winning customers from competitors, then keeping and growing them by delivering greater value. Each company must divide up the total market, choose the best segments, and design strategies for profitably serving chosen segments better than its competitors do. This process involves three steps - market segmentation, market targeting, and market positioning.

Figure: Factors influencing company marketing strategy.

Market segmentation: Dividing a market into distinct groups of buyers on the basis of needs, characteristics or behavior who might require separate products or marketing mixes.

Market segment: A group of consumers who respond in a similar way to a given set of marketing efforts.

Market targeting: The process of evaluating each market segment's attractiveness and selecting one or more segments to enter.

Market positioning: Arranging for a product to occupy a clear, distinctive and desirable place relative to competing products in the minds of target consumers.