Saturday, May 06, 2006

If you're not selling to consumers, you're selling dog food. / By industry / Consumer industries - P&G upbeat over Wal-Mart strategy

Sorry but the FT only lets you read the first graph for free

The dog food business is a catch phrase for business that have revenue streams that are not connected to the value of their product to the consumer.

Some dog food businesses are very profitable, and have been very stable. But in an era of rapid change, they have a special problem. Like any well run business, dog food businesses (most of the B to B market) will be pushed to innovate primarily to better serve their customers. If their customers are not consumers, they are locked into the level of innovation demanded by their organizational customers.

The problem is that they are then dependent on sometimes a very slow moving intermediary. A good example in the automative space might be Delphi. Locked into GM, they are now being penalized for that symbiotic relationship. Perhaps they would have been better off if they were part of the Toyota value chain.

The printing industry has a similar problem. Some publishers get it, many don't. But if you're customer is a publisher, the only responsible thing to do is to produce what the publisher is asking for. The problem arises when the publishing business model changes.

Wal-Mart and P&G are more exposed to the consumer market than most businesses. They both are driven towards ever imporving efficiencies, by competing in an open, transparent marketplace.

In The GME, business models that make their money from consumers are most incented to sustainable innovation..

Make things people want, and make it fun to buy it.

Let them eat bread.

Panera Bread, one of the leading "fast casual" restaurant chains in the US, will on Friday unveil plans for 25 per cent long-term earnings growth, marking the first time it has committed to such a target since going public in 1991.

...Its business model is based on growing demand for “speciality” or “artisan” breads, for which it can charge a premium price as consumers increasingly trade up from cheaper chains.

Panera bakes all of its bread at each of its almost 900 stores, which the company claims have more average sales per unit than Starbucks or dining chains such as Outback Steakhouse.

They place to watch for leading developments in the GME are the companies whose primary revenue source is consumers.

They have to satisfy the folks who are suppying the revenue stream. Those that find or create a profitable niche will do just fine.

Thursday, May 04, 2006

World's Simplest Marketing Plan

Guy Kawasaki nails this. Note: This is a link to an MS-Word document.