Thank god it is not British!!!: how far does “foreign” tag work in influencing customer purchase decision

Several market researchers have identified consumer preferences for “foreign” products. Studies suggest that consumer prefer foreign shore developed or manufactured product at a cost higher than domestic companies, because of higher quality and “country-of-origin” influences. However, in markets like India and China, where domestic competitors have built substantial product and market knowledge, sticking to the “foreign” tag seems a passé. Many producers in these markets seem to be sticking to the good old “foreign tag” to push products such as apartments to toothpaste. How far does this work?. Would an American pay more for Spanish Villas in a Detroit suburb or would a Sri Lankan pay for a Hawaiian style beach house?  

Take the case of a real estate company that has been making grandiose marketing events around everything British about tagline for a middle class home project. Does a salaried Indian working in global verticals like IT and Biotech get influenced by British sounding apartment complex or the choice is made on other considerations. An average Indian, like his counterpart in Alabama or Bavaria, would buy 1 or max of 2 houses in his life time. An average Indian spends 15 times his annual salary in buying a house. It is almost always a non-impulsive purchase decision. The number of choices and research done before buying a house is always high. What research indicates is that customers buying a budget home prefer comfort over style. The decision criteria involve Spacious, quality of construction, Surrounding environment & facilities, Security and Cost.  Naming the apartments on “foreign” tag does not help in faster sale for the developer.  In fact, with a “foreign” tag customer expectation of quality and ambience is much higher than what they would have preferred in a similar costing home.

Moving on to a consumer product, a company is using “foreign” locale doctors to endorse a tooth paste. What is unique about this advertisement is the physician in the backdrop are very much “Brown Sahibs” in a foreign country. The underlying assumption seems to be the colonial fragments that still instill a sense of quality and drives want. Analysis suggests that many consumers buy this product only after a consultation and no OTC sale happens. The value of the advertisement is in its clearly positioned advantages of using the product. The “foreign” tag doctors seem to be an appendage that could have been lived without. Advertisers and manufacturers must consider the value of a foreign tag and their product fit before indiscriminately resort to this old trick. A good advertiser must know when the stew is stale and when to throw it out to brew new stock.

Result based management (RBM) for Change management

Many reports assert that about 70% of all change management efforts fail. The reasons for failure could be many. Studies cite lack of champions, inadequate or inconsistent senior management support, and top down change push without involving the people at all levels or paucity of high quality resources review and guide the change management process as contributors for failure. Many senior managers acknowledge that inappropriate balancing of expected results with resources at hand or inappropriate alignment of resources and the activities are most common reasons for failure. Aligning the individual’s role and responsibilities, ownership and accountability with the intended change or outcomes is a tough task. A change management program progress from defining strategy and setting goals at different levels of organization. Change management must include plan for identifying of appropriate departmental and individual roles and changed behavior consistent with intended results. While many approaches to change management exist, no single tool fits all companies. Common drawback of many tools is their inabilities to monitor progress and adjust activities to ensure the expected results are achieved. Many tools do not facilitate learning, documenting evaluations, changes so that important knowledge is codified and used in subsequent planning phase. Tools also have a limited capability in linking the intermediate results (lead indicators) achieved and their contribution to the expected goal.

Result based management (RBM) is a management approach that can be adopted to drive change management. RBM is aimed at improving managerial effectiveness, ownership and accountability in achieving results. Largely used in Not-for-profit sector, RBM adopts a life-cycle approach to integrating strategy, resources, process, people and results. RBM focus is on integrating measurements that can improve decision making, transparency of the case and effect, and accountability at various levels. RBM uses a logical relationship between inputs, activities, outputs, outcomes and impact.

Inputs could be financial, manpower, plant, partnerships, etc. that are required to conduct various business activities. The activities would be promotional programs, creation of new sales teams, partner program structures or marketing events which are expected to deliver certain short-term results. These short term results in RBM parlance are termed outputs. Outcomes are mid-term results that indicate the direction and scale of achievement. Impact is what the company wants to achieve by undertaking the change. For example, a company may want to achieve a state of high profitability and de-risk itself from marketing and customer segments. Towards this the company has identified 3 strategies that would yield results. For each of this program, certain resources in terms of additional manpower, investment into branding, channel development etc. may be required. The company may identify certain activities that may need to be done in the next 2 years. Let us say the company has chosen to be present in an industrial event with an investment of $25,000 showcasing its products and solutions.  It would have invested in resources including manpower, exhibits, sales and marketing collaterals, etc. Post the event, the number of walk-ins, number of product demos are output measures. Number of new customers gained is an Outcome measure that is captured over next couple of quarters. The outcome measure reflects the causal effect between resources marshalled and activities pursued to reach certain objectives. The output indicates the results in short-term. Mid-period review using output and outcome measures are useful indicators of what is working and what is not working. The company can quickly calibrate alignment between activities, resources and outputs to see the returns are on expected line.

For companies attempting business transformation over longer horizon, RBM offers certain advantages. Group and individual KPI can rightly aligned with the change management process and modified based on the level of change. RBM drives individual ownership and focus on results so that managing for results by directing right staff behaviour and initiative taking is facilitated. RBM interlinks individual, departments and program level performance with low cost of data collection and monitoring.  RBM supports management learning and decision making, emphasizing more on reporting and fixing accountability. Measurement of effectiveness, efficiency, equity and sustainability at various levels becomes easy. RBM facilitates cascading down with measures that drive and capture the status of activities and outputs (short term results) so that progress can be measured and rewarded.  Large and complex change management programs can immensely benefit from RBM to interlink at various stages of hierarchy, and aggregate data and disaggregate reporting wherever required.

 

How prepared is your company for after-you??

A strong willed founder sees an opportunity, builds clientele and services and all suddenly disappears leaving the business at risk. Academicians Sascha Becker and Hans Hvide in their study of 341 privately owned companies observed that the death of founder in the first 10 years of the establishment had a deep and profound effect on the survival of the company.  Unlisted and family owned business are awful poor at planning for future.  Many business owners and family CEO’s just do not know how to prepare for eventuality. From our consulting experience we suggest a 8 point approach. First evaluate the family’s interest and children suitability for roles and responsibilities in the company. Involve outside professionals and independent directors to provide third party neutral assessment of the children and seek their suggestions on who could possibly more suited to run the business in future. Once assessment is made, communicate the decision within the family and children, seek their opinions and arrive at consensus. Biggest challenge is preparing them for a change. Ask independent directors and family to suggest a management structure without compromising the legal and family interests. Involve the management group in creation of a succession plan and document the role of each family member, responsibilities they could carry and the possible succession plans.  Communicate the plans to all the involved parties and formalize the succession plan. Identify the competencies the successor may need, training gaps and development support needed. Hire and fill professionals in roles that may be needed in future and start implementation of the succession plan with a dry run. Take a vacation and see how the succession team is responding to the business needs.  Start stepping back over time, and allow them to learn from failure.

Right align your rewards & recognition system

Rewards and recognition is an important organizational element that used wisely can hasten the pace of business transformation and bring about the desired change in behavior and outcomes at various levels. Rewards and recognition come in many forms: monetary, prize, gifts, awards, empowerment, etc. A common fallacy in many organizations is that they tend to use the rewards & recognition programs without any consideration of life-cycle of the organization, or the stages of any change management program or the intended role of R&R systems. Role of right rewards and recognition in organizational development and change management is highly researched topic. Accordingly, in the initial stages of the company, the focus is on getting things right. For example, in a software product company the R&R must focus on “do” part. CTO would have broadly identified a product/service to develop, a software developer role is to develop the code in time without any bugs and within the accepted or budgeted number of revisions. In the initial phase, the rewards and recognition systems must be more on “directing” the required outcomes. R&R at this stage may include proficiency based pay, performance based incentives, feedback, appreciation letters, initiative to complete the work faster, extending beyond role, recognition and interdepartmental coordination.   As the organization grows the focus is on improvements that can be initiated within the teams and at individual levels to gain from efficiency, effectiveness and knowledge management. Appropriate R&R at this juncture must emphasize individual incentives to encourage incremental innovations, public recognition, town hall appreciations, employee of the year/month, sponsorship for conferences, training and higher education keeping in mind the developmental path of the employee. As organization matures, the emphasis of R&R must shift to encourage innovation as conscious efforts must be encouraged and attempted at all levels of the organization to ensure it does not become a victim of “Core rigidity”. Many successful organizations and family led businesses fail to survive longer because they tend to adhere to their core competencies and do not invest enough to diversify and de-risk the organization from technology and market changes. Hence, while continuing with some of the earlier R&R measures, more focus should be on designing measures such as gain and risk sharing incentives, team goal sharing incentives, new product or process application awards, hall of fame awards, high-priority skunk team awards,  nominations to benchmarking tours,  suggestion over-the wall award, etc.   

Analysis of successful long term change management programs also indicate the R&R scheme must change with the stages of change management. While there are many frameworks describing the change management process, most models have three common stages. First stage “Initiate”, is the preparatory stage, where the new directions are discussed to obtain buy-in across the organization, and change leaders are identified.  Few fundamental initiatives that can showcase positive outcomes in short time are rolled out to win over nay says and increase the adoption rate of change management activities. In the second stage,  “extend”, more departmental and sub-departmental level changes in line with the major changes attempted in initiate stage are deployed. Departmental integration and managing outcome becomes the focus at this stage. In the third stage, “sustain”, continued efforts are made with the changes adopted in the previous stages to gain efficiencies and productivity. Scaling up of business operations to benefit from both economies of scale and scope gains are pursued. In this stage change management focus also must shift to identification of activities to improve profitability, new revenues streams and products/services to de-risk the business. Consistent with the above stages, we argue R&R systems and their focus must vary across the change process. In the initial stage, the R&R must be a heavy mix of extrinsic measures like skill based incentives, performance based incentives, written and town hall awards. In the extend stage, the focus would be on mix of individual recognition, financial awards and appreciations to  encourage the employees to own and drive changes. In the sustain stage, the R&R measures must be a heavy mix of monetary awards, individual and group recognition and development support (training, professional development, college education, specialized courses, etc).  Such alignment of R&R systems with focus on evolutionary stage of the firm and change management will help in designing appropriate R&R systems that can be goal directive, supporting and reinforcing the behavioral changes.  

S Indupriya