A quote from Steve Jobs

Do you think its time your product needs a make over to create demand like Mazda.

NANJING — Chinese car sales have barely got out of first gear this year, yet a shift in consumer behaviour has sent Mazda Motor Corp hurtling out of the pack, posting records and struggling to keep pace only with demand.

Japan‘s fifth-biggest automaker has found its sporty design philosophy clicked with an emerging class of drivers who have abandoned copycat buying and the widely held perception that only long-established leaders, notably Volkswagen AG , make decent cars.

“Other cars are either too round or stocky, but the CX-5 has more of a flowing character,” said Nanjing office worker Xu Duo, 27, who bought Mazda’s sport utility vehicle last year.

China car sales grew 1.4 per cent in the first half of 2015, the weakest in six years. An industry body last week said a stock market slump exacerbated consumer concern about prospects in an economy expanding at its slowest in over two decades.

Yet Mazda logged its best-ever first half at 17 per cent, boosted by sales of the CX-5 as well as sedans Axela and Atenza. Demand has been so strong that supplies have failed to keep up for some models, a Mazda spokesman told Reuters.

Mazda’s market share nevertheless remains under 1 per cent and the number of cars it sells each month is a fraction of those of rivals like Volkswagen. The German automaker built a leading share of about a fifth over the past 30 years, while Mazda’s first major push was as recent as 2007.

Sporty design

But the market has been shaken in recent years as more drivers gain experience of cars from a wider variety of makers, and learn firsthand that German vehicles do not necessarily excel above all others as is commonly believed, analysts say.

An influential annual consumer TV show added to the doubt when it picked on Volkswagen in two of the past three years for issues with quality and service, said Yale Zhang, head of researcher Automotive Foresight. Sales practices at Daimler AG’s Mercedes-Benz were also targeted.

“The German myth is being broken,” said Zhang.

The changing perception has given Mazda the chance to rapidly gain ground while remaining a niche player with its streamlined, sporty design philosophy, dubbed kodo.

“It’s impossible to convey our kodo design to all of China‘s 1.3 billion people,” Norihiro Matsuo, president of Changan Mazda Automobile — one of Mazda’s two Chinese joint ventures — said in a group interview in Nanjing last week.

“For now, we are focused on increasing our core client base,” Matsuo said. “This approach is something Volkswagen or General Motors Co cannot take because they are out to control market share.”

As the market matures, drivers will choose cars based on design or perceived uniqueness, rather than the view that certain brands are somehow inherently superior, Matsuo said. Mazda is targeting that segment of the market, he said.

Sidestepping price wars

First-half sales may have spiked, but Mazda is maintaining its full-year target growth at 4.3 per cent to 220,000 vehicles. Senior company executives have also repeatedly said its strategy is not to rapidly expand in China but to focus on branding.

To boost brand appeal to Chinese consumers, automakers have localised features and aspects of design. Ford Motor Co revamped its Taurus for China in April, meeting a preference for a spacious backseat and conservative exterior.

Mazda’s China-focused features include air-conditioning vents for the backseat and double horns given the heavy usage in the country. But the automaker will not compromise its exterior design philosophy to cater to local tastes, said Matsuo.

On pricing, Mazda is similar to its rivals, with the 115,500 yuan (RM70,662.96) starting price of its Axela compact comparing with the 109,900 yuan of General Motors’ Chevy Cruze. But a niche approach allows Mazda to step back from price wars.

The likes of General Motors and Volkswagen have started to lower prices to counter market slowdown while dealers offer steep discounts to stop inventories building up.

Mazda, however, is not offering discounts and is supervising dealers’ inventories to ensure price stability, Matsuo said.

“We are too small a company to get involved in a price war,” he said.

Understanding product value

Its the service that makes or breaks an organisation

Innovation from Volkswagen - the levitating car

Developing winning products for emerging markets

A large automaker designed, developed, and—with appropriate fanfare—launched a commercial truck in India’s burgeoning and highly competitive market. The vehicle was engineered to let owners in a range of emerging markets run the trucks longer and faster, and at a relatively low operating cost. Higher asset utilization, company leaders believed, would improve profits for truck owners and, ultimately, the automaker.

The truck was a disappointment. The company hadn’t adequately accounted for India’s poor roads and infrastructure, which often prevent vehicles from maintaining the most efficient operating speeds. Even though the truck’s price was competitive against local offerings—and half that of a comparable vehicle in developed markets—in the buyers’ eyes the potentially higher utilization wasn’t worth the expense.

Think this was a ham-fisted multinational dabbling in a market it didn’t fully understand? Think again: the automaker was based in India. To be sure, multinationals tend to suffer such setbacks more often than local players do, but this company’s example underscores the difficulty of understanding customer needs in fast-changing emerging markets.

Indeed, around the same time, another domestic competitor suffered a similar fate. That company’s commercial vehicle, offered at an even lower price, was also tailored for India; it featured a lower-capacity, low-cost engine well-suited to run efficiently on the country’s grid-locked roads. Yet it too proved a letdown. The cause: an unfairly earned reputation for unreliability that the company ultimately attributed to owner–operators who, to maximize profits, overloaded the trucks far beyond recommended weight limits. Within a couple of years, the overloaded engines began to malfunction, customers became angry, and the vehicle’s sales plummeted.

Such cases underscore the challenges of designing, developing, and manufacturing products for fast-changing emerging markets—environments where customers are both extremely price conscious and demanding. Against this backdrop, a growing number of companies find that they must reexamine their traditional approaches to product development and tailor them to these realities. We call this process “design to value.” In some cases, designing to value means applying traditional tools in new ways, in others adopting a new mind-set about what customers want and how to deliver it.

It’s still early days in this space, and no organization has yet mastered the challenges. But a look at the practices that leading product developers use offers at least three lessons for companies wrestling with the extremes of competition in emerging markets. The urgency to adapt will only increase as consumption in these markets contributes a growing share of global economic growth in the decade ahead.¹

1. Shake up your thinking

The combination of rapid change and heightened competition in emerging markets puts a premium on useful customer insights, even as they become harder to get. Indeed, poor infrastructure, vast distances, and fast-changing customer segments make traditional fact-gathering approaches (such as ethnographic research or even focus groups) expensive and time-consuming. Therefore, top companies don’t pass up any opportunity, however modest, to sharpen their understanding of customer needs.

Collision workshops—which might include customers but primarily convene suppliers, marketers, product engineers, and other company representatives— can help. They offer a low-tech way of quickly generating and discussing customer insights and a forum to identify hypotheses that companies can later test more traditionally. To some extent, these meetings represent a cheaper and more flexible way of generating the kinds of insights that R&D pioneers such as Bell Labs and IBM’s Watson Research Group achieved through formal, multidisciplinary R&D labs. As with these venerable examples, an important goal of collision workshops is to challenge ingrained habits of thought by pulling together representatives from functional groups that normally don’t interact.²

The resulting insights can be quite useful. An automotive-parts manufacturer in a fast-growing Asian market used a collision workshop to identify a new niche in its wheel business. During a discussion about products for passenger vehicles, a marketer mentioned that the company’s wheels were heavy—an observation he’d heard from a customer. This comment, made in passing, intrigued the engineers in the room, who went on to sketch out a counterintuitive proposal that the company ultimately refined and adopted: using a slightly higher grade of steel to make wheels lighter and more fuel efficient. Even though the new steel was more expensive, the company lowered its total costs because the wheels now required less steel than they had before.

A large telecommunications and data-services provider used a collision workshop to discuss how B2B customers in smaller, tier-two and -three cities differed from those in the largest urban areas. The “aha moment” came when marketing and pricing experts teamed up with product engineers to ask whether the company might offer price discounts to some customers in smaller cities in exchange for slightly lower network uptime than the near-100 percent guaranteed to commercial customers in major metropolitan areas. The company ultimately found it could lower its price for some customers in tier-two cities, making its offer highly competitive there, while slashing the cost to serve by a factor of four through the use of a different network architecture and a simpler, redesigned version of its standard network-switching equipment.

Another way companies shake up their thinking is to look beyond traditional competitors for design ideas. A low-cost appliance maker learned of a more high-tech approach for coating its fans by studying painting techniques developed in the automotive industry. The fan maker’s executives had always resisted technological solutions, preferring to substitute labor for capital because of low workforce costs. But after studying the automakers’ approach, which kept the thickness of each coat of paint to specified levels, the executives changed their minds. Ultimately, a 4 percent savings in paint costs more than offset the expense of new equipment.

Similarly, a global farm-equipment manufacturer looked to an adjacent vehicle category in which it didn’t compete to create a simpler, cheaper design for the claw mechanism in a new low-cost rice-transplanting machine. By applying this thinking to other products, the company also identified comparable improvements in a different low cost product line.

2. Start from scratch

By now, most companies recognize that trying to interest discerning emerging-market consumers in stripped-down, low-cost versions of the products they sell globally is a recipe for letdown. Yet many companies still aren’t fully aware of how far they must go to differentiate their products for these customers. Top companies, by contrast, are highly disciplined, even relentless, about setting priorities and putting aside existing assumptions. Leaders start by identifying the most important feature or two and focusing heavily on them (exhibit). This approach is quite different from the one that many companies tend to have: regarding all features as equally valuable and preferring more rather than fewer of them—an attitude deeply ingrained in some engineering cultures.

Exhibit

• Enlarge

The farm-equipment maker started with a feature that its analysis showed mattered most to small-scale farmers: the durability of tires. Farming in one region required considerable back-and-forth driving in mixed terrain (tar roads and soil). By redesigning tires to maximize their useful life, the company made its vehicle far more appealing to local customers. This company’s crucial willingness to challenge its assumptions ultimately led to a broader set of improvements.³

By contrast, companies that fail to reexamine the assumptions inherent in their product designs risk making ill-informed decisions. A global maker of electrical products learned this the hard way when it introduced a mini-circuit-breaker system to offer customers in India better protection from the country’s frequent power fluctuations and brownouts. The product, adapted from a comparable developed-world model, was technically sound and arguably superior to the alternatives. Yet sales suffered as customers turned to products from competitors offering an older—and cheaper—“use and throw” fuse technology. Not until the company started over with a new design incorporating the older technology did the product became competitive.

A handful of leading companies extend this thinking further still, approaching their product portfolios with a “zero-based design” mentality. The benefits can be profound. A global consumer-products company, for example, was losing share in an important Asian market to a domestic competitor offering a lower price for a common personal-care product. Instead of responding with a marketing push or a price cut, the consumer-goods maker ran a head-to-head comparison of the two products—including a sophisticated analysis of chemical ingredients. This investigation showed that the low-cost company, using a formulation that was half as costly as the global player’s, was achieving the same levels of efficacy. What’s more, the rival’s pump bottle maximized margins by delivering 10 percent more “product per pump.” After receiving this wake-up call, the global company redesigned its product from the ground up, ultimately changing the formulation, packaging, and even design of its pump bottle. The rejuvenated product, vastly cheaper to produce and no less effective than its predecessor, generated a 40 percent margin improvement.

Similarly, the telecommunications and data-services provider recognized that its mobile-phone towers were overdesigned compared with those of its competitors. By starting over from scratch, the company lowered its cost to build each tower by almost 30 percent, while still meeting or exceeding local safety regulations.

3. Design for manufacturability

A final way top product makers separate themselves from the competition is to go on challenging their assumptions well into the manufacturing process. Surprisingly, perhaps, though most global companies have manufactured products in emerging markets for years, they typically don’t go as far as they could to design them with emerging-market customers and workers in mind. By contrast, clever product makers look for easy opportunities to tweak their products and processes further and thereby lower their capital costs. To be sure, this is good practice anyplace companies operate, but an especially important one in emerging markets given the fierce levels of competition there.

For example, a large producer of engines and industrial equipment recognized that by making straightforward design changes to one of its drive-shaft assemblies, it could reduce the complexity of the machines needed to build them. Just allowing for more generous radii and bends in a few key spots would make it possible to produce the components with hot forging hammers, a cheaper technology than the high-speed cold-forging machines the company used at home. The changes helped reduce costs for materials by 10 percent, in part by enabling the company to source more goods and equipment from local suppliers.

The farm-equipment maker lowered its costs in a similar fashion by identifying places where its frontline workers could replace expensive fasteners with cheaper welds during product assembly. This reduced not only the company’s manufacturing costs but also the cost of maintenance for farmers, who otherwise had to replace the fasteners as they fell off.

Traditional approaches to product development are coming under strain as emerging markets start to dominate the global economy. Companies that learn to shake up their thinking and effectively challenge the assumptions about how they design, develop, and manufacture products are more likely to master the extremes of this new competitive landscape.

Source:

Sauri Gudlavalleti is a consultant in McKinsey’s Delhi office, Shivanshu Gupta is a principal in the Bangalore office, and Ananth Narayanan is a principal in the Chennai office.

How A Marketing Company Convinced Chinese Women They Were 'Too Hairy'

FROM staying slim to the quest for perfect skin; a woman's list of beauty concerns is endless. But for ladies in China - who typically have little body hair - remaining fuzz-free was not top of their list of priorities.

 

That is until a canny marketing campaign from the manufacturers of a hair removal cream successfully fostered a fuzz phobia among the country's women - and sent its Asian sales soaring as a result.

 

When Veet hair-removal cream first hit the shelves in China in 2005, sales were sluggish among local women blessed with relatively hair-free skin.

 

So the manufacturers launched a new marketing campaign aimed at city women linking smooth, fuzz-free skin to health, confidence, and 'shining glory'.

 

As a result, many well-groomed women in China are now as preoccupied by stray hairs as their western counterparts.

 

Asian sales of hair remover are rising by 20 per cent annually - almost double the rate of women's razors - according to research carried out by Euromonitor International. And Veet is now the fastest-growing brand in China for British manufacturers Reckitt Benckiser.

 

Aditya Sehgal, the firm's China chief, told Business Week: "It's not how much hair you have, it's how much you think you have. If your concern level is high enough, even one hair is too much."

 

The campaign is certainly not the first time a manufacturer has played on women's preoccupation with perceived flaws. Beauty giants Estee Lauder and L'Oreal both sell skin-whitening creams in China, where many women perceive lighter skin as preferable.

 

Mr Sehgal said the firm's role was not to remind Chinese women how much hair they have, and insisted its customers were too 'independent-minded' to be persuaded to buy a product they didn't really need.

But Benjamin Voyer, a social psychologist and assistant professor of marketing at ESCP Europe Business School, likened Veet's Chinese marketing to 'the apple in the Bible'.

 

"It creates an awareness, which subsequently creates a feeling of shame and need," he told Business Week.

 

PR consultant Maggie Li, 29, said had been using Veet since receiving a free sample in the summer, and added that the product's marketing 'makes Chinese women more aware of their body hair issue'.

The manufacturers targeted flooded university campuses with free samples and enlisted glamorous actress Yang Mi as a spokesmodel as part of its efforts to target female students and cosmopolitan city women.

 

While Chinese sales of the product have noticeably increased on the back of the new marketing approach, it is still not a familiar brand outside of cities and is yet to benefit from a national advertising campaign.

 

But if the strategy continues to work its magic there could be plenty of room for growth, as a study showed that just 0.6 per cent of Chinese women remove body hair.

 

The tricky issue of trademarks

In a broad sense, most of us are comparable to salesmen.  Throughout our lives, we concentrate our efforts on persuading others to give us a favourable response to our endeavours.

The aim of the politician, diplomat, professional or the man who proposes marriage is all the same, that is acceptance of our offer of services or compliance with demands subtly made.  In preference and often in competition to others in the same field.

Is competition good?  Andrew Carnegie says, "While the law of competition may be sometimes hard for the individual, it is best for the race because it ensures the survival of the fittest in every department.  We accept and welcome, therefore, as conditions to which we must accommodate ourselves, great inequality of environment, the concentration of business, industrial and commercial, in the hands of a few and the law of competition between these, as being not only beneficial, but essential for the future progress of the
race."

In the words of Adam Smith: "Every man, as long as he does not violate the laws of justice, is left perfectly free to pursue his own interest in his own way and to bring his industry and capital in competition with those of any other man or order of man."

In our economic system which has relied on competition to keep down prices and improve the quality of products, the policy of the common law is not to run the risk of hampering competition by providing civil remedies to everyone competing in the market who has suffered damage to his business or goodwill in consequence of inaccurate statements by rival traders.

Exaggerated claims by a trader about the quality of his wares, assertions that they are better than those of rivals, even though he knows this to be untrue, have been tolerated in the past (perhaps still so) by common law as venial puffing which gives no cause of action to aggrieved rivals.

The law has now provided progressively and cautiously some remedies against dishonest rival traders by implementing copyrights, trademarks and patent laws and by developing the tort (civil wrong) of "passing off."  A civil action for passing off will lie where a trader marks his goods in such a way as to create the impression  that they are the goods of another trader, thereby "cashing in" on the latter's goodwill.

A trademark is any visible sign or device used by a business organisation  to identify its goods and distinguish them from those made or carried by others.  Trademarks can be in many forms, such as words, logos, letters, numerals, devices, names, the shapes or other presentation of products or their packages, wrappings, colour combinations with signs and so on.

In any case, the trademark should display some distinctive marks to distinguish the goods of the proprietor of the trademark from those of other persons.  The trademark protects manufacturers/traders against unfair competition where a person or business represents or pass for sale his goods as the goods of the trademark owner.

Customers are protected from imitations of the goods for which they have known preference.  For those who are interested in knowing more of trademark protection, please visit the website http://www.malaysia-trademark.com/index.html

When does one commit infringement of trademark which makes him liable in criminal and civil law?  Under Section 38 of the Trade Marks Act, a registered trademark is infringed by a person who uses a mark which is identical  with it or so nearly resembling it as likely to deceive or likely to cause confusion.

The above provisions have been subject to numerous interpretations by overseas and local courts the only safe conclusion of whether an act constitutes infringement depends upon the facts of each case.

In the leading Supreme Court case of Tohtonkee v Superace (M) Sdn Bhd (1992), the court made an important decision.  In that case, one of the main points was whether condoms sold under the "Sister" trade mark infringes those sold under "Mister" trade mark.  The answer was "no" based on the totality of evidence before the court.

The court said: "There is similarity in the second syllable but, as a whole, the similarity is not close enough as to be likely to cause deception or confusion.  Further, the get-up of the intervenor's product is a green background with the picture of a lady whereas the get-up of the applicant's product is a white-lue-grey background with a picture of a lady and a man.

Similarly, in a recent case, the Kuala Lumpur High  Court held that there was no basis for the plaintiff's allegation that the trademark "Comelku" had infringed the trademark "Anakku".

In conclusion, there is no legally recognised category of unfair competition as such although it is not unlikely that a more flexible approach to traditional concepts will be adopted in future to meet new tricky situations and circumstances.

Below are two videos, "How to trademark your logo design" and "Trademark Protection" which will give you some insight on trademarks and how to ensure your trademarks receive adequate protection.