Innovate to compete

Gone are the years in which after a successful product, companies are assured years of success and leadership. Innovation became a basic variable, if not change, we perish.
Without doubt the technological advances made shorter the life cycle of products, and in this situation there are two options: we see as a major threat to the continuity of the company, or consider it a great opportunity to compete and grow by innovation.




In this context, the development process of new products becomes a competitive advantage for those who are well oriented. The companies with efficient innovation processes and are able to introduce new products geared to the wishes of customers in the shortest period of time, have an important advantage over its direct competitors. A short development cycle allows the company ahead of its competitors in the market, so that the speed of innovation is one of the basic skills for success or failure of new product or service.

You can not argue the fact that the company has to learn to live with the challenge of innovation. The key to successful innovation is not so much have the technology and the direction of the innovation process. The real advantage is that the company displayed its ability to distinguish signals from the environment to warn you about opportunities and threats, understand the changes and define a strategy.
The management of innovation, it becomes a management tool that leads to success in the field of business.

Quality as Strategy

What has been talking about quality? Undoubtedly much and for too long. Now, we as consumers, do you perceive?

Some companies have invested heavily in quality plans, so that their products comply with certain standards, very demanding indeed. Other processes have been considered and even have license to access the required companies.

Beyond good intentions, the mystery remains as "perceive that quality? Studies indicate that not perceived in its exact extent. I can assure you this is because these companies have put the focus on internal operations, neglecting the importance of the next step: the perceived value to the customer.

It's useless to invest in quality if our customers do not notice differences. To achieve this we must focus on the market and do better than our competitors in the relevant attributes evaluated by the consumer.

Easy to explain, but complex in implementation.

Companies that are able to understand the needs of your target market and to establish quality standards tailored to these needs, taking the lead over the competition, made it to the final stage, in which the quality and perceived value to become part of the corporate strategy. The important thing, based on a product or service quality, is to get the market noticing. Not enough to be, but must be sound.
The risk of error or delay decisions on this subject may generate a poor positioning of our brands, very difficult, and costly to reverse.
In business, perception is the only reality.

Changing rules in the music business

Sudden technological changes, are accompanied by uncertainties, risks and changes in rules.
Take for example the music market. In recent times, the advance of the sale of online music is advancing steadily. Within this market we found today, three different models:

• The buying unit where people decide to buy a track or entire album, and only pay for it.
• That is done by subscription, where you pay a monthly fee and in return you can download a certain number of songs
• The real-time playback, which pay a monthly fee and you can hear the entire quantity of items you want (but no transfer of ownership).





What will be the dominant model?. We must not neglect the sale of music through traditional channels and formats, much less a free trade possibilities (namely, Kazaa, eMule, Morpheus, etc.).

We must also consider changes in actors. As technology advances and allows authors to produce their own albums, what is the role that they will comply with the record companies?, Do they have the same power as the current one?, "Will also compete with current players selling music online?

It is clear that the business is transfigured by the day. This implies a major strategic challenge for those involved, because of uncertainty about the dominant design that will prevail in the near future.

Many more questions remain unanswered. If there is anything we can ensure, is that the technological changes, as mentioned in the example, come to change the rules forever.

Flexible pricing

In the previous note Is it the best pricing strategy? , Addressed the topic "Pricing." I leave something I wrote in relation to the pricing issue.

Flexible pricing
Precios flexibles
If we talk about pricing strategies, it seems a fairly simple issue. Is it?
The pricing work focusing on the costs (the more common practice than you think), we realize that is not complex. The complexity is given by the good management of costs. Needless to say, that this methodology is far from ideal, since at no time is considered the consumer.

The current short life cycle of many products, makes an error in pricing becomes insurmountable.

Today it is common practice to work with a flexible pricing policy, but not in the strict sense of business manuals, where flexibility was given by the quantities purchased or geographic location. Today is flexible depending on the type of customer. It appeals to get the maximum benefit from each customer, as you are willing to pay. The drawback is given by the technological advances that led to a price transparency unimaginable years ago. If a company offers discounts to new customers, to expand its share, is almost certain that today's customers know and have generated some conflict.

This does not imply that we put aside the targeted pricing, but to apply it must be very cautious, examining not only the benefits but potential complications.
Tip: Do not take pricing strategies lightly. Do not imitate your competition and work only in terms of cost. Analyze your segments and positioning. Be creative.

MySpace beats Yahoo and online advertising

While the statistics provided by comScore highlights the rapid growth of MySpace, analysts say the social networking site has struggled to get ad rates and the highest possible price similar to Yahoo.

Yahoo! lost the top spot of advertising presence in the U.S. market at the hands of MySpace and companies to which it belongs, Fox Interactive Media for News Corp, according to new data reveal the industry.

The cluster of sites of Fox Interactive, led by MySpace, recorded 56.8 million advertising views in June compared to the Yahoo group sites, which totaled 53.1 million views, according to data released this week by the firm of Internet audience measurement comScore.



publicidad onlineBut while the statistic highlights the rapid growth of MySpace in terms of audience advertising, analysts say the social networking site has struggled to get ad rates to the highest possible price similar to Yahoo, famous for attracting major advertising rates.

"Social media gets all these ad impressions but not necessarily with the dollars," said Colin Gillis, analyst at Canaccord Adams. The cost per thousand (CPM) page views are significantly lower than that of Yahoo, said.

A MySpace executive said they are closing the gap with rivals such as Yahoo, AOL Time Warner and Microsoft Corp's MSN after the renovation of its home page in June, which has attracted sponsors like Sprite renowned and Wendy's.

"Our CPM has grown significantly," said Jeff Berman, president of sales and marketing at MySpace, on the surging growth in June. "Category by category, year after year, we grow in double digits," celebrated.

According to comScore data for advertising impressions, June was the first month that Fox Interactive beats Yahoo, whose views of advertising fell nearly 12 percent since May.

While it may be too early to conclude definitively that MySpace surpassed Yahoo, comScore data shows that Yahoo's stock on the market for displays has trended downward since July 2007.

Yahoo questioned comScore's measurement methodology.

"We believe that there may be problems with the measurement that could be distorting to Yahoo and we are reviewing comScore's methodology and working with them to solve these problems," said a statement by spokesman Adam Grossberg.

Innovation: invest more, is it better?

A study by Booz Allen Hamilton said that investment in R & D does not mean innovation. It casts doubt very established that investment in R & D is a good indicator of innovation success and, therefore, it automatically has to innovate more to think about spending more. Further details of the study are:

Be quinnovacionand invests less bad, but being the most, gives no security to be good. Of the 1,000 companies surveyed, 10% with the lowest investment rate out clearly hurt sales in gross margins, profits and returns for shareholders. On the other hand, 10% more investment in R & D is slightly better than the rest, but was not statistically significant.

At one point, the number of innovations that a company may develop commercially is limited. Why not hold a patent with the results. Probably there is a limit beyond which the benefit of the projects be used by others.

Yes there is an association between the ratio of R & D on sales and gross profit, although profit is reached. Firms with greater R & D sell higher margin products, but after deducting general and administrative costs, marketing, etc ... are not significantly more profitable.

Against the common belief that smaller firms are better able to innovate for its flexibility, the results indicate that economies of scale are useful. Larger companies invest a smaller proportion of their sales on R & D, without necessarily having significantly worse outcomes.

Teens and Internet

Sulake Corporation, the creator of Habbo.es one of the sites most popular teen world, has published the results of an international study conducted in 22 countries (42,000 users) which shows that 90% of teenagers around the world feel that the Internet is the medium that most used and most valued services of the network are instant messaging and email.


Blog de negociosInternet is the most important means of communication.

According to the results from the study, the main reason for using Internet is socialization, being able to get in touch with friends is also important. Instant messaging is the most popular service among teenagers between 14 and 18, while the use of e-mail is more valued among those over 20 years.

66% of users think that television is an important communication and fewer than half see the radio as such.

54% of teens think that magazines are an important means of communication but not so with newspapers, less than 40% of respondents are considered of interest. The importance of newspapers grows with age, surpassing radio and magazines as they are reaching age 22.

Mobile phone use

85% of users have their own mobile. The study demonstrates that in addition to making calls, almost all adolescents who have also used wireless phone to send SMS household goods. The SMS are used in Europe than in the United States and Canada. In addition, more than half of young people also use their mobile phones to take pictures through its integrated camera. Nearly a third of Habbo users listen to MP3 music through their phones.

In Britain and Italy is extremely popular use of cameras integrated into mobile phones and the ability to play music in MP3 format. Browsing the Web with the mobile is still somewhat rare, except in Japan, where 43% of teenagers use mobile phones for this purpose. Only 6% watch TV through these terminals.

Cultures and subcultutas

While the youth of the world is about values, beliefs and attitudes similar, however, form an extremely heterogeneous group. In fact, the major subcultures identified in the study, just under half of adolescents. The results show that, in general, young people have a positive self image, become identified in some cases with the success and popularity. More than half of consumers consider themselves as some "adventurers", reflecting the importance to adolescents around the world to get new experiences and fun times. Only in Norway and Japan, the number of "adventurers" was slightly lower than in other countries, but even so, 40% of them belonged to this group.

Half of teens are considered "athletes." According to survey data, 46% of Habbo users create "staying on top", 40% feel "artists" and 36% are "interested in the environment." More than a third of young people consider themselves "technology geek" and only 16% underestimate their personality. 14% consider themselves "hippies" or "Gothic."

Pubs, Inns, Wi Fi and Stowaways

I approached an interesting note written by Mariano Pantenetti especially for the blog.



May have noticed (or suffered), at some point (usually urgent) when they needed to sit in a bar to do some urgent work, or enter your Wi Fi Notebook, which all seats were occupied, even those which whom used does not have any drink in front of him to justify the use of facilities, or otherwise, are on the table the remains of a lean to the clear coffee was drunk at the very least makes some long hours.

The dilemma of the stowaway is the enjoyment of public property by individuals who use them either on their part fair share as paid or avoiding the cost of their share.

Although the case arose in the first paragraph, we are clearly looking at a private good, use that gives the time over which provides the service seems to be analyzed from the perspective of the free rider problem.

The existence of stowaways leads inevitably to a loss of productivity, since many more individuals are "fed" a well thought originally to fewer participants.
It takes an excessive use of common property.

Trying to be Pareto efficient is that I consider as far as the comfort of who first occupied the chair does not conflict with the convenience of those who come second and (after a logical time) starts to pay the cost of discomfort.
Find another bar also has a cost for those who came second.
These costs, eventually moving to the owner of the establishment because the customer alerted of this situation will certainly look for an open bar, efficiently avoiding being the second.

Find a balance then represents a potential improvement in the outcome of any situation that arises as Pareto-efficient, where the improvement of one of the agent is not possible without harming the other. A situation that is optimal from the standpoint of utility.

Getting in the skin of who should manage a bar, restaurant or similar, ask to what extent it is efficient to give free will to decide who will occupy a table for a long period of time, so that others with the intention to consume are far from the place or simply do not enter.
Are these first considered stowaways?
It could be argued that the former may present long-term profitability (are customers of the house), while the latter only have occasional use and is difficult to quantify their income in perpetuity.

Some retailers like Havanna coffee seem to have realized this and delivered a limited service (in time) of Wi Fi, forcing the start following products for more time consuming or simply leave.
This does not limit the time of those who read all the newspaper, every magazine, they receive visits and make your office coffee, for the modest sum of about ten pesos in 6 hours.

On this situation, seem to have more experience that bars restaurants, experts often drive the customers to have on board.

I think this is a new consumer and a new way of delivering service, so I do not see a clear answer to the dilemma posed.
Therefore it seems best in this first instance to perform some testing activities, analyze, think about trying not to neglect the customer above all else. But which one? Which is two hours ago with your coffee and newspaper or waiting.

The differentiation is essential to escape the price war

When a person has a business idea because it senses that there is great potential in it often makes the mistake of wanting to copy the entire competition, to be near her to grab their customers and offer a lower price to enter and win them all .

This pathway probably leads to the competitor, in turn, lower theEstrategia de diferenciacions prices and this becomes a cycle, in a price war that ultimately led the two to charge the least for their products and not getting expected profits.

Columbia Ideas at Work Business School published an article on the studies currently performed by the business and economics professor at the university, Michael Riordan, using game theory to know how to react to business owners when new firms enter the market to compete .

Riordan sums it up this way: "The key issue is to design products to avoid direct competition, so that there is a substantial number of consumers in the market that are more or less indifferent between their product line and its competitor . Because if any, will be tempting to draw them through lower prices. "




Enter the market without causing a price war

Riordan says that if it is known to enter the market with a well differentiated product that is not interchangeable with the competition and, therefore, not so sensitive to price changes, it is likely that prices, rather than lower, increase because everyone will be getting the most out of your segment.

This may be clearer with the example mentioned in the article by Columbia Ideas at Work, under which an aspiring entrepreneur coffee business is a very crowded near a college where many people walk, and decides to open a coffee business the entire front, across the street.

The reaction of the old business is to reduce prices to fight for their customers, leading to the new employer also decrease, obtaining much lower profit margins than expected.

But the proposal discussed in the article is that if the new owner decides to enter differentiated, can open a tea shop looking to attract that segment of customers in the coffee shop they prefer the new product and that does not change from differences in the price, which would provide incentives to the former business owner to lower their prices, and, conversely, could lead to upload them to maximize earnings from coffee drinkers.

According to Riordan, "The profit-maximizing price of the establishment of coffee depends on the price charged by the establishment of tea, and vice versa" and it will be agreeing to stable prices.

Product differentiation strategies

According to these studies, before entering a market, there are three questions that must be considered in order to create a product differentiation strategy that maximizes profits:

1. Is there a customer segment that is not well served by existing firms? There are consumers of all kinds, some are willing to pay more for certain other products undecided driven by lower prices. If you can create a product with added value for those customers who are willing to pay more for it, you can capture some of that value through higher earnings.

2. How much difference should be within their own product line? Advanced segmentation creates value for customers because they feel they are offered something to measure, but be careful with the way in which this segmentation affects other products and the level of variety to another profitable.

3. How will existing firms respond to new business entry into the market? If many customers see the new product as a possible replacement of the former, the owner of the latter will lower prices. But to avoid this, you can segment the product so that customers prefer one or the other, regardless of price.

The key is to offer a unique product that meets specific consumer needs and have added value for which they are willing to pay, as this is what ensures the success and permanence of the product without relying on other bids.

In the words of Riordan "What makes the entrance, ideally, is to reorganize the consumer in the market, so that the new consumer segmentation among firms, they are less price sensitive."