Invest In BRIC Country Businesses
For another one of their strategic elements, it is suggested to invest in the BRIC countries (Brazil, Russia, India, and China) with a slight amount of harvesting due to the global recession and the need to do some profit-taking. This can take the form of acquisitions in these countries as an investment type of cost to increase 3M’s footprint in these regions to leverage future growth. Within the U.S., conversely, 3M should seek to “expense” acquisitions, and buy companies which provide immediate substantial cash flow and/or are highly synergic with core businesses or product lines. For 3M, acquired businesses must have an immediate impact on the bottom line and be a strategic fit. If there is not immediate positive cash flow “as is,” then 3M’s managers must be able to use cost reduction techniques such as Six Sigma to drive costs down until the business is profitable.

Selective “Investment” In EBO’s
It is strongly suggested that 3M “invest” selectively in emerging business opportunities (EBOs). As a consideration of the current economic downturn, EBOs must be synergic with core products lines and businesses. The other key factor for investing in EBOs is that it can be initiated as part of a key mega-trend. In this recession, 3M’s EBOs still need to see significant investment because of the internal fabric of innovation within the 3M culture. Also, it is important to be positioned advantageously emerging from this recession when consumer confidence and spending rebounds.

3M’s Management Must Look at Businesses for ROI and Cash Flow
There are four strategic elements which CEO George W. Buckley must balance properly via optimizing resource allocation. For all of these elements, 3M executives and managers must balance two critical factors: ROI and Cash Flow. 3M must examine its products as elements of a portfolio and understand s the cash flow generated by them and their respective ROIs. For the product lines and businesses kicking off a high amount of cash, look to allocate costs as expenses and favor them along a shorter time horizon. For products which provide a high return on resources allocated to them, concentrate on a longer time horizon and treat their costs as investment.

Navigating Any Kind Of Economic Weather to Keep People in Their Jobs
3M’s innovation is a trademark strength and a major part of their culture. Resource allocation is the backbone of any company, and is the enabler for its strategy. Weighing the short- and long-term expensing and investing of costs is vital to ensuring that a business weathers difficult economic seas, and opens full throttle in calm seas. These past two posts offer guideposts to 3M’s brain trust and the four key elements by which they operate their company. Ultimately, their choices keep people in jobs and protect families – these posts help toward that end.

Investing Vs. Expensing
This dilemma is symptomatic of the key issue: how to effectively allocate resources to optimize short-term revenue-generating horizons while providing a critical mass for longer-term growth. It really becomes a question of investing or expensing. To fully understand 3M’s situation, let’s examine their core corporate-wide strategy:
1) Grow the current core business
2) Continue complementary acquisitions to support core businesses and expansion into adjacent markets
3) Build new business via Emerging Business Opportunities (EBOs)
4) Significantly increase investment in international opportunities

Decide On Businesses Associated With Strategic Elements
With each of these elements, there are investment decisions to be made about the type of resources to be put into the corresponding business opportunities. For the businesses associated with these elements, they can invest and focus on longer-term growth over a greater time horizon. Or, they expense short-term costs to pull cash out of a business, and seek greater short-term profitability. This type of allocation involves focusing less on building the brand and more on marketing-oriented initiatives and slashing short-time horizon-oriented costs. Investments in a business consist of spending on improving production equipment and facilities, IT initiatives to improve production, and marketing which focuses on increasing overall brand equity.

In The Mid-Range Motorola Must Pull Marketable Products From Its Pipeline
Motorola’s mid-range goal should be to revive their brand relevance by developing and pulling new products out of the pipeline. Management should use the “utility-usage” technique which was outlined in the last article to translate utility directly into product features. Simply stated, use usage type and occasion to drive new features for new designs. Use these new models to position Motorola within specific marketspaces based on a combination of demographical, geographical, and lifestyle characteristics. At the beginning of this timeframe, Motorola should be well underway in dimensionizing the utility of key buyer groups; consider and/or use the key utility factors of Nokia cell phone buyers (Nokia is the world leader in terms of market share for cell phones) for features of new Motorola models. An extremely effective approach is to juxtapose features of new Motorola models with “missing” Nokia features – in other words, features that Nokia buyers want for their Nokia cell phones but don’t have. This is a “killer” strategy which would likely develop dominance for given buyer groups – the “trick” is to make it applicable to a widely reaching buyer group.

Recapture Share and Own Key Marketspaces For the Long Term
Motorola seems to be lacking a long-term vision for its cell phone business – which in a way is understandable given its current dire straights. But after they develop solid short-term measures to keep their cell phone business from crashing, they need to create an effective long-term strategy. This strategy should be simply this: recapture share and own key marketspaces. For a mid-range strategy, we talked about translating usage types and occasions into features to develop new designs. For Motorola’s long-term visioning, they should take it a step further and look to new benefits which fill desires and latent utility of key substantial buyer groups.

Tap Into Latent Demand
The long-term strategy for Motorola to exploit new benefits and tap into latent demand can be effective when executed by using orthogonal innovation of looking across other industries. In other words, what are the benefits accrued to customers or buyer groups in other industries which can be translated into features for Motorola cell phones? This is another point where breakthrough innovation can occur on a long-term and habitual basis. The essence of this strategy is to continually tap into latent demand for key customer groups – giving them benefits that they didn’t think about and want until they got them. This is how Motorola can own and dominate whole areas of a market space. The invention of the cell phone, iPod, and VCR are all examples of products which tapped into latent demand.

Motorola’s “Magic Show”
Motorola is in bad shape now, but given the right combination for the three-prong lock — short-term, mid-range, and long-term strategy – they can reclaim their market share, profitability, and strong brand equity. They need to minimize the bleeding in the short term by harvesting and milking revenue from their most popular current products – but without reinvesting in them. In the mid-range of two to four years, they need to “pull rabbits out the hat,” and introduce products which have features directly translated from the utility for key customer groups. Long-term, they need a “whole magic show,” impressing customers with “new tricks” that they didn’t even imagine before – features which tap into latent demand benefits. With this blueprint for success, the “motor” will rev back to life in Motorola.

Lacking Pipeline – No Good Successor To The RAZR
This slide seems to indicate a problem with Motorola’s innovation processes and pipeline. There were no new “good” products to replace the RAZR. To follow up the RAZR’s success, Motorola would have been wise to dimensionize the utility for RAZR customers, and figure out the key features and benefits which were highly valued by them. This knowledge, and more importantly, its application to the following new designs, would have clearly led them to breakthroughs to match or at least approach the RAZR’s success.

The Four Factors Needed To Dimensionize Utility
In dimensionizing utility, Motorola should not do so for a generic singular customer profile – but they should divide the market into key buyer groups. This should be based on any combination of demographics, geography, lifestyle, and usage. Put these four factors into separate two-by-two grids and have each factor occupy a quadrangle of the grid. Next, list the key characteristics of important buyer groups according to each of these factors. Pay particular attention to usage in terms of two aspects: type and occasion. To develop a set of composites, link the key demographic, geographical, and lifestyle factors to a particular usage type or occasion. This is a key step in developing a feel for what is valued by composites of different types of major buyer groups. The next step is absolutely vital: connect the usage types and occasions to product features to develop.

Translating What Buyers Value Using “Utility-Usage” Chain
By making this “utility-usage” value chain, an executive can directly translate what key buy or potential buyer groups highly value, into features which mirror their expectations and desires. This will allow Motorola compete strongly in various profiled marketspaces. If done right, it will allow them to own marketspace – just like they did with the success of the RAZR. They can replicate this success using this strategy. It should be at the heart of their innovation strategy going forward – and it’s certainly not too late to save their business.

At The Intersection Of Several Types Of Retailers
From a strategic perspective, Walgreens has a unique position in the marketplace, sitting at the intersection of Wal-Mart, small discounters, Target, and grocery store chains. The medium size and neighborhood-centric locations of typical Walgreens make them akin to small discounters. Walgreens’ scale allows it to offer low prices à la Wal-Mart. The uniqueness of some of Walgreens’ merchandise is similar in ways to Target’s offerings. And Walgreens’ offering of some staple groceries put it in line with grocery stores. The “trick” for Walgreens is to leverage some of these aspects of its offerings into targeting buyer groups which value a significant combination of many or all of them. If they can locate large pockets of these profiled consumers within given geographic locations, they will be hugely successful in this recession and in any economic climate, no matter how terrible.

How To Use Its Position To Gain Buyers
In sitting at this strategic intersection, Walgreens can gain buyers by:
1. Keeping Low Prices For Many Merchandised Items
2. Maintain and Develop Relevant Signature Brands (Non-Staples)
3. Stock Need-To-Have Grocery Items (Staples & Certain Non-Staples)

Prescription Savings Card Is A Winner
A bright spot for Walgreens is its prescription savings card which is increasing in usage and members. This offers people savings on the purchase of prescription drugs, which can be a substantial expense especially for people on a fixed income. Walgreens has a recession-proof winner here and should put more resources behind increased marketing to targeted groups. Here, they can utilize the advantage of their scale to move returns beyond other investment of resources.

Match Position With Informed Strategy And Right Tactics
Walgreens’ positioning and strategy must be “in-synch” especially during this economic downturn. They need to build solid links to key buyer groups through understanding their demographics and lifestyle preferences. This needs to be turned into pinpointing geographical locations where groups with desired demographics and lifestyles are located. Bets need to be placed in these areas – whether with a new store or upgrading an existing store. Simple line extensions of “stripped-out” non- or less value-added features will yield ultra-value private label product lines – which can counter-intuitively be branded boldly by wrapping these items into a special designated section or store-within-a-store. This is a marketer’s dream: being able to brand generic low cost items! At the intersection where Walgreens sits, what would you do?

Strategic Growth To Weather Down Economy
Walgreens must focus on strategic growth – by only opening new stores in high potential areas and remodeling stores where they get the highest jump in incremental revenue. They must first profile and target likely buyer groups according their demographics and lifestyle – and, critically, link them to geographical locations. In this down economic climate, it vital for Walgreen to lock-in above average growth for its capital expenditures on stores. They must allocate their resources on above average growth relative to their current network of stores. In order to do this, Walgreens must focus on the following factors:
1. Area Demographics of Key Buyer Groups
2. Geo-Area Micro-Trends
3. Competitor Presence Within A Geo-Location
4. Maxed -or Unmaxed-Out Store Sales Revenue
5. Overall Buyer Geo-Subpopulation Growth

Buyer Trends
The other side of the retailing coin for Walgreens which needs to be developed is its merchandising. Walgreens has commented on how well its private label items are selling. They believe that this success relative to brand name items is due to the lower price points. In fact, according to the Wall Street Journal, other drugstore chains have reported a similar trend. As a result of consumer buying trends around staple goods, Walgreens is focusing on stocking groceries and paper goods.

Ultra-Value Private Label Line – With Branding!
Walgreens can further exploit this trend by developing an ultra-value line of private label products. This line can strip out all non-value-added features, and focus on obtaining a “rock bottom” price point. They should center this line around the staples which are selling well for them during this recession: groceries and paper goods. They can take it a step further by wrapping this line around a store-within-a store concept. They can call it something like “The Save Green Value” section. In essence, Walgreens could achieve a major coup by branding low price items – which is counter-intuitive, and that’s why this is an extremely potent idea and opportunity.

Using Their Scale
In the food manufacturing industry, General Mills’ scale allows them to operate at a lower cost, and to leverage marketing practices across many brands. This will allow them to offer product benefit at a higher relative level than competitors for the same price point. For General Mills’ customers, paying a premium for a General Mills product is worth it because they get so much more benefit than a competitor’s product even at a slightly lower price!

Favorable Macro Trends For General Mills
General Mills’ brands are sitting at the intersection of many macro trends which are favorable to them. These translate into value for consumers; especially relative to their other food consumption options. The first major trend that bodes well for General Mills is that people are eating out less because typical American consumers have less money to spend due to the economic slowdown. The second major trend in the U.S. is that Americans are moving to eating healthier. This trend is impactful, and has moved people from seeking fast food to cooking healthier items at home. General Mills has many brands which can leverage this shift.

How They Can Dominate Their Categories
General Mills’ portfolio of brands is strong, and would grow to unprecedented category dominance using some the Blue Ocean Strategies mentioned in the last two articles. These are ways to win in any economic environment. With commodity prices up, consumer spending down, and value being the spending criteria of customers, General Mills and all food manufacturers must change strategy to maintain margins and combat revenue shrinkage. The good thing about General Mills is their marketers don’t remain in a silo – and their marketing efforts are holistic. They must use this pervasiveness of marketing to seek out and stay on top of consumer benefit preferences. These benefits must be linked to features – and translated into relevant messages for given targeted groups in effective media. Equally as important, General Mills should use its muscle and reach to leverage and provide disproportionate benefit for its customers – and that alone is enough buffer them from this recession and any economic downturn.

Lower Profitability
General Mills and its portfolio of strong brands are feeling the squeeze on their profitability as a result of high raw material commodity prices and recent peaks in energy costs. They are still reporting sales gains as they pass these costs to consumers by raising prices to offset these higher costs. According to MiamiHerald.com (December 17, 2008 post), earnings in the quarter ending Nov. 23 fell to $378.2 million from $390.5 million last year. However, revenue rose 8% to $4.01 billion from $3.7 billion last year during the same period. This is a clear indication of the effect that high commodity prices (such as those for grain) are having; these costs are narrowing their margins and causing them to raise prices to consumers. This is all happening in the midst of a troubled economy where consumers are spending less. Even given this scenario, the Wall Street Journal writes in the December 18th, 2008 edition that “most analysts view General Mills as a company well-positioned to weather the slowing economy because of its strong brands and a focus on cost-cutting.”

General Mills’ Marketing Strength And The Direction They Should Head
A major driver of General Mills’ strong brands and its success is their strength in marketing. Now, the pressure is on their marketing personnel to generate sales in an economy which is characterized by consumers spending dramatically less and scrutinizing purchases more tightly. General Mills marketers think in terms of reaching customers at various “touch points” and providing them with relevant messages. It is critical that they link their product’s features to key benefits for their targeted consumer audience. They must demonstrate lucidly and powerfully the link between the features of their products, such as natural ingredients, and increased healthiness. In addition, they must continually seek to understand which benefits are most important and relevant to consumers, and tie them to product features. In Blue Ocean Strategy terms, General Mills must seek to raise and create features which are directly relevant to profiled and targeted customer groups.

Why Online Presence Should Be Key
This messaging must be backed up with the selection of relevant media for a given group. General Mills should examine its online presence to reach a younger and more educated demographic. It is becoming cliché among astute marketers to leverage social networking media online – it is in its growth stage and actually can yield very substantial and positive results when executed effectively. The reason social networking media are important is because they allow a two-way conversation between consumers and a company. A marketer can gain invaluable information about what benefits customers value most – and the features which best provide these benefits. Social networking media also provide marketers with real and mostly unbiased feedback on how a product is performing, and what consumers really think about it. If a company gets all these things right, they will create customer “evangelists” who will create buzz for their products online. And, where do most consumers go first to get “real” information about a product or service nowadays? – online! This is the new “word-of-mouth” channel, and it’s exponentially explosive.

Database To Track Strategic Buyer Groups
An advanced marketing strategy for small retailers is to focus on key strategic buyer groups within their industry. This can be done readily by leveraging a small retailer’s localness to stay close to key buyer groups. Concretely, a data base of buyer preferences must be maintained and updated regularly. In this database, a retailer should record the following information about each customer:
1. All Merchandise Purchased
2. Any Special Treatment Given or Requested
3. Family and Friends Mentioned or Who Are Current or Potential Buyers
4. Relevant Changes In Living Situation
These pieces of information will help retailers identify and target groups of buyers willing to trade up, or more importantly for this economy, maintain the price for performance balance. For most small retailers, it is important for them to stay away from trying to entice Wal-Mart preferring buyer groups. They usually can not compete on price – and should not waste resources targeting buyers who trade down on price for lower quality, service, or performance.

How To Effectively Lower Prices For Maximum Profitability
There is a case where lowering prices for small retailers is effective and desirable – but without trading down price for performance. A retailer can maintain the price performance proportionality by offering small samplings of items or services for proportionately lowered price points. This accomplishes several objectives:
1. Increases Opportunistic and Incremental Sales
2. Allows Sampling of Higher-Priced Product Offerings
3. Obtains Price-Conscious Buyers W/O Competing Directly With “Big Box” Retailers

Small Retailer Example Of Lowering Price Points
Surfin’ Seafood, a Seattle-based seller of freshly caught seafood, is a great example of a small retailer offering a sampler type package to price-conscious customers. They expect to lose about 50% of their sales this holiday season as a direct result of corporations in the area cutting back on their discretionary expenditures of packaged seafood as holiday gifts for employees and customers. To regain some of this projected loss, they introduced a $50 gift package with fewer pieces versus their typical packages which sell for between $85 and $195. Surfin’ Seafood’s offering is a classic example of moving down price points to capture substantial incremental sales without disproportionately sacrificing performance, perceived quality, and the reputation that a small retailer has achieved. This kind of move can be highly beneficial and profitable – but it is tricky and must be done strategically and with care!

Three Characteristics Of Good Blue Ocean Strategy For Small Retailers
In the final analysis, for a small retailer there are three Blue Ocean characteristics of a good strategy. First, diverge from targeting price-elastic buyer groups, and understand the key dimensions of high utility for your customers – record key information about them and all customers. Second, focus on buyers willing to maintain and continue buying in a given price range even in this economic downturn – leverage your localization advantages such as closeness to key customer groups and understanding many aspects of the local market. Lastly, develop a tagline or brand motto which concisely differentiates your offerings in the market – and more importantly, among your key buyer groups. Small retailers can do better than just survive using these strategies – their businesses can prosper as their nimble boats sail the Blue Ocean Seas unfettered.

Find New Channels of Potential Business – Blue Ocean Spaces
Small retailers are going to have to look for Blue Ocean Spaces, and find new channels of potential business. While these businesses are too small to own a marketspace, they can certainly carve out profitable niches. There are three areas which small retailers can focus on to develop new business: geographic, demographic, and usage (both occasion and type). They can carry merchandise and services centered around a locale – and have offerings which are highly relevant to a given community. This is a Blue Ocean which large national chains will find very difficult to follow because many are very centralized in structure. As a smaller craft in the Blue Ocean Seas, local businesses can more adeptly cater merchandising, marketing, and operations to uniquely fit communities, towns, cities, and regions.

Look Beyond Current Buyers Demographics
Small businesses can also look outside of the demographic profile of current buyers to target additional customer groups. This can be done effectively by evaluating alternative or complementary industry buyer groups. Small retailers can look for synergic “hooks” to fulfill the needs for either of these groups. A business mentioned in the WSJ article, Charles Mayer & Company, is an up-scale boutique seller of china, crystal, and decorative accessories in Indianapolis. An example of them targeting a complementary buyer group would be to develop an interior design service which shows home- and condo-owning customers the appropriate matches of various pieces to rooms and homes being re-modeled or built. This look across industries would also yield very synergistic opportunities to bundle with partner companies. To further extend our previous example, Charles Mayer & Company could join with an interior design firm outright to provide pieces for a price discount or items which are exclusive to the given designer.

Blue Ocean Spaces Through Alternative Usage For Product Or Services
The third way a small retailer can discover or create a Blue Ocean Space is through alternative usage for their goods or service offerings. This can take the form of different types of usage for their offerings, or different or varied occasion usages for their goods and services. Possible variations on usage fit well with the previously mentioned opportunities to bundle with other goods and services. Alternative uses for a small retailer’s goods or services can be uncovered by looking at a buyer’s experience with related products or services. These retailers should observe and evaluate these buyer’s experiences before, during, and after a given product or service is used. This will yield rich insight into how to extend, alter, or retract their offerings in terms of recommended uses for their given products and the services they offer around them. For example, small auto repair shops have observed the success of “oil change only” shops such as Jiffy Lube, and now include even more discounted oil change services of their own as a front-end bundled offering when repairing other parts of a customer’s car. In this case, the usage occasion was changed from a scheduled maintenance item to an upfront service and opportunistic sale for a small retailer.