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Core-technology-based management: The next Japanese challenge
166
J PROD INNOV MANAG 1!%4;11:162-174
The Winning Number: Consumer Perceptions of Alpha-Numeric Brand Names, Teresa M. Pavia and Janeen Arnold Costa, Journal of Marketing (July 1993), pp. 85-98 Developers of new products must select brand names, and in this effort they have the option of brand names with numbers in them. They are called alpha-numeric brand names. The alpha part may be a single letter, a nonsense set of two or more letters, or a word with some meaning of its own. The numerical part may be in digit form or written out, and may be single or multiple digits. Alpha may precede or follow numeric. One, both, or all may be capitalized or lower case. And so on. The options, in combination, are almost limitless, particularly in combination with the large supply of product categories. This report offers a review of the entire literature on the subject, and reports on many speculations and historical practices. It then describes a research method with multiple phases, from small focus groups to a large mailing to persons on auto registration lists. The method in most cases was to pose various alphanumeric brand names and then ask respondents what product category they thought each name was for. In the focus groups, respondents expanded on their opinions with many examples that led to hypotheses that were tested in the final phase. The method for the final phase was to show each respondent two pairs of brand names, each with a product category. Thus one might first be shown A-5 candy bar and asked to evaluate this choice of brand. Then the person might be shown Tash Eight lingerie. The full set of choices covered the variables of singularity, spelling completeness, etc. Here are those hypotheses. Hypothesis I. Consumers will rate the fit between an
alpha-numeric brand name and a product more favorably if the product is technical, formulated, chemical, or powerful. This was supported. The inclination to associate this way came up repeatedly in these studies. Hypothesis 2. In a product category in which consumers are comfortable with alpha-numeric brand names, as the product becomes more technical, formulated, chemical, or powerful, consumers will rate a brand name with a higher number more favorably. This hypothesis was not supported. Dehax 3000 was not considered a stronger detergent than was Dehax 3. Hypothesis 3. In a product category in which consumers are not inclined to use alpha-numeric
ABSTRACTS
brand names, consumers will rate an alphanumeric brand more favorably if the number is written rather than in digit form. This hypothesis was not supported. The application was in lingerie and writing the number out had no effect. It was noted, however that the type font was Times; they didn’t test a more “flowing” type. Hypothesis 4. In a product category in which consumers are comfortable with alpha-numeric brand names and in which the product is perceived to be “harsh,” consumers will rate a brand name constructed from an aurally harsh word and a number more favorably than a brand name constructed from an aurally sibilant word and a number. This hypothesis was supported. For an insecticide, consumers preferred Rax 8 to Tash 8. Hypothesis 5. In a product category in which consumers are comfortable with alpha-numeric brand names and in which consumers expect speed and complexity, consumers will rate a brand name constructed from a “Z” and a number more favorably than a brand name constructed from an “A” and a number. This hypotheses was supported. Consumers like the association of a number with the letter “Z.” In summary, the field of alpha-numeric branding is very complex and unpredictable. There is a web of beliefs-consumers are quite unpredictable except on several major issues such as Hypothesis 1. Products that “do things” can benefit from alpha-numeric but foods cannot, unless they are scientifically formulated, in which case they do more things than just provide pleasant taste. There seem to be few absolute rules, exceptions abound, and developers are encouraged to study carefully their product’s user, its purpose, and the way it works. If alpha-numeric fits, it offers many advantages. If it does not fit, it had best be avoided. Core-Technology-Based Management: The Next Japanese Challenge, Atsuro Kokubo, Prism (First Quarter 1993), pp. 13-2 1 Japanese firms are of many types, strategies, and achievements, but the author feels they have generally followed a commitment to “copycat” or “me-too” other firms. Their advantage arose from interdepartmental cooperation, which led to reduced manufacturing costs and sustained quality.
J PROD INNOV MANAG 1994;11:162-174
ABSTRACTS
But now, intensifying competition is forcing them to adopt new “Western-style” strategies based on proprietary technologies. They have been identifying their core technologies for some time now, geared to what they call their 2000 Visions. But, they now feel such technologies have much less value unless they are identified with core markets as well. It is in focused markets that they can achieve product innovation that in turn yields products that people want, quickly and productively. This led Nichirei to market texture-improved frozen fried chicken, which achieved a leading market share with little of the (costly and increasingly traditional) advertising known in the food industry. Ajinomoto created a machine that “arranged tiny shrimp beautifully on packaged frozen Chinese food, enabling the company to sell the attractive product at a low price.” Share doubled. The secret, of course, is to (1) have an outstanding core technology, (2) focus it on a key market, (3) set out to develop superior products for customers in that market, and (4) while those are being developed bring out intermediate products that have less breakthrough value but which capitalize on the deep knowledge the firm has in the core market. This requires the firm to take new interest in studying their core markets, watching for change that may outmode their past advantages. For example, “Matsushita Graphic Communication Systems, a leading manufacturer of fax equipment . . . recently suffered dramatic erosion of market share.” It turned out that the fax market had been shifting from professional to home users, where users wanted more friendly design. Communication capabilities were less important to them. Oddly, parent Matsushita Electric Industrial had the needed technologies, but had not transferred them to GCS. However, they had transferred them to another affiliate which had already gained a reasonable home market share. All of this is now leading to reduction of core technologies and the building of triads-each containing at least one core technology, one core market, and one core product type or line. The triads are now increasingly market-driven, although, oddly enough, managerial power is moving back from business units to central technology planning committees. They now can get far better market information from new information technologies so they are no longer dependent on the business units, which tend not to invest properly in technologies for longer-term developments, and to hoard their technologies from other business units.
167
The authors present a list of what would appear to be Canon core technologies, showing the relationship between technology and product type (the third column, user, was not shown). Note that all of the products are copier components, but need not stay that way (for example, copier engines found their way into laser printers). Components
Core Technology Areas
Photosensitive materials Aluminum diecast drum Photo-drum Optical parts Engine Paper handling Electronic circuit Microcomputer Design of operation Equipment
Specialty chemicals Precision metal parts
Carrier Binder Toner
Coating Optics products Xerography Precision machine Electronics equipment Semiconductor Software Assembly mass production Ceramics Resin Plastic compound
The information flow required for all this multiple focusing can be fostered by the establishment of companywide committees, one for each core technology. A core technology committee is “a network of professionals without redundant staff activities.” While R&D personnel remain under corporate control, the committees plan for long-range technical work, propose infrastructure and communication improvements, help in training, and generate involvement by representatives of core market departments. Several examples are given of firms succeeding along these lines, one being Kao, whose surfactant core technology paired with supermarket products, yielded a new cooking oil where the surfactants reduced the amount of oil absorbed into foods. Integrating Information from Advertising and Trial: Processes and Effects on Consumer Response to Product Information, Robert E. Smith, Journal of Marketing Research (May 1993), pp. 204-l 9. New products managers always have to consider the relationship of (1) their advertising to (2) customers’ reactions from an actual trial of that product. Advertising creates attitudes and beliefs, so does trial, so does
J PROD INNOV MANAG 1!%4;11:162-174
The Winning Number: Consumer Perceptions of Alpha-Numeric Brand Names, Teresa M. Pavia and Janeen Arnold Costa, Journal of Marketing (July 1993), pp. 85-98 Developers of new products must select brand names, and in this effort they have the option of brand names with numbers in them. They are called alpha-numeric brand names. The alpha part may be a single letter, a nonsense set of two or more letters, or a word with some meaning of its own. The numerical part may be in digit form or written out, and may be single or multiple digits. Alpha may precede or follow numeric. One, both, or all may be capitalized or lower case. And so on. The options, in combination, are almost limitless, particularly in combination with the large supply of product categories. This report offers a review of the entire literature on the subject, and reports on many speculations and historical practices. It then describes a research method with multiple phases, from small focus groups to a large mailing to persons on auto registration lists. The method in most cases was to pose various alphanumeric brand names and then ask respondents what product category they thought each name was for. In the focus groups, respondents expanded on their opinions with many examples that led to hypotheses that were tested in the final phase. The method for the final phase was to show each respondent two pairs of brand names, each with a product category. Thus one might first be shown A-5 candy bar and asked to evaluate this choice of brand. Then the person might be shown Tash Eight lingerie. The full set of choices covered the variables of singularity, spelling completeness, etc. Here are those hypotheses. Hypothesis I. Consumers will rate the fit between an
alpha-numeric brand name and a product more favorably if the product is technical, formulated, chemical, or powerful. This was supported. The inclination to associate this way came up repeatedly in these studies. Hypothesis 2. In a product category in which consumers are comfortable with alpha-numeric brand names, as the product becomes more technical, formulated, chemical, or powerful, consumers will rate a brand name with a higher number more favorably. This hypothesis was not supported. Dehax 3000 was not considered a stronger detergent than was Dehax 3. Hypothesis 3. In a product category in which consumers are not inclined to use alpha-numeric
ABSTRACTS
brand names, consumers will rate an alphanumeric brand more favorably if the number is written rather than in digit form. This hypothesis was not supported. The application was in lingerie and writing the number out had no effect. It was noted, however that the type font was Times; they didn’t test a more “flowing” type. Hypothesis 4. In a product category in which consumers are comfortable with alpha-numeric brand names and in which the product is perceived to be “harsh,” consumers will rate a brand name constructed from an aurally harsh word and a number more favorably than a brand name constructed from an aurally sibilant word and a number. This hypothesis was supported. For an insecticide, consumers preferred Rax 8 to Tash 8. Hypothesis 5. In a product category in which consumers are comfortable with alpha-numeric brand names and in which consumers expect speed and complexity, consumers will rate a brand name constructed from a “Z” and a number more favorably than a brand name constructed from an “A” and a number. This hypotheses was supported. Consumers like the association of a number with the letter “Z.” In summary, the field of alpha-numeric branding is very complex and unpredictable. There is a web of beliefs-consumers are quite unpredictable except on several major issues such as Hypothesis 1. Products that “do things” can benefit from alpha-numeric but foods cannot, unless they are scientifically formulated, in which case they do more things than just provide pleasant taste. There seem to be few absolute rules, exceptions abound, and developers are encouraged to study carefully their product’s user, its purpose, and the way it works. If alpha-numeric fits, it offers many advantages. If it does not fit, it had best be avoided. Core-Technology-Based Management: The Next Japanese Challenge, Atsuro Kokubo, Prism (First Quarter 1993), pp. 13-2 1 Japanese firms are of many types, strategies, and achievements, but the author feels they have generally followed a commitment to “copycat” or “me-too” other firms. Their advantage arose from interdepartmental cooperation, which led to reduced manufacturing costs and sustained quality.
J PROD INNOV MANAG 1994;11:162-174
ABSTRACTS
But now, intensifying competition is forcing them to adopt new “Western-style” strategies based on proprietary technologies. They have been identifying their core technologies for some time now, geared to what they call their 2000 Visions. But, they now feel such technologies have much less value unless they are identified with core markets as well. It is in focused markets that they can achieve product innovation that in turn yields products that people want, quickly and productively. This led Nichirei to market texture-improved frozen fried chicken, which achieved a leading market share with little of the (costly and increasingly traditional) advertising known in the food industry. Ajinomoto created a machine that “arranged tiny shrimp beautifully on packaged frozen Chinese food, enabling the company to sell the attractive product at a low price.” Share doubled. The secret, of course, is to (1) have an outstanding core technology, (2) focus it on a key market, (3) set out to develop superior products for customers in that market, and (4) while those are being developed bring out intermediate products that have less breakthrough value but which capitalize on the deep knowledge the firm has in the core market. This requires the firm to take new interest in studying their core markets, watching for change that may outmode their past advantages. For example, “Matsushita Graphic Communication Systems, a leading manufacturer of fax equipment . . . recently suffered dramatic erosion of market share.” It turned out that the fax market had been shifting from professional to home users, where users wanted more friendly design. Communication capabilities were less important to them. Oddly, parent Matsushita Electric Industrial had the needed technologies, but had not transferred them to GCS. However, they had transferred them to another affiliate which had already gained a reasonable home market share. All of this is now leading to reduction of core technologies and the building of triads-each containing at least one core technology, one core market, and one core product type or line. The triads are now increasingly market-driven, although, oddly enough, managerial power is moving back from business units to central technology planning committees. They now can get far better market information from new information technologies so they are no longer dependent on the business units, which tend not to invest properly in technologies for longer-term developments, and to hoard their technologies from other business units.
167
The authors present a list of what would appear to be Canon core technologies, showing the relationship between technology and product type (the third column, user, was not shown). Note that all of the products are copier components, but need not stay that way (for example, copier engines found their way into laser printers). Components
Core Technology Areas
Photosensitive materials Aluminum diecast drum Photo-drum Optical parts Engine Paper handling Electronic circuit Microcomputer Design of operation Equipment
Specialty chemicals Precision metal parts
Carrier Binder Toner
Coating Optics products Xerography Precision machine Electronics equipment Semiconductor Software Assembly mass production Ceramics Resin Plastic compound
The information flow required for all this multiple focusing can be fostered by the establishment of companywide committees, one for each core technology. A core technology committee is “a network of professionals without redundant staff activities.” While R&D personnel remain under corporate control, the committees plan for long-range technical work, propose infrastructure and communication improvements, help in training, and generate involvement by representatives of core market departments. Several examples are given of firms succeeding along these lines, one being Kao, whose surfactant core technology paired with supermarket products, yielded a new cooking oil where the surfactants reduced the amount of oil absorbed into foods. Integrating Information from Advertising and Trial: Processes and Effects on Consumer Response to Product Information, Robert E. Smith, Journal of Marketing Research (May 1993), pp. 204-l 9. New products managers always have to consider the relationship of (1) their advertising to (2) customers’ reactions from an actual trial of that product. Advertising creates attitudes and beliefs, so does trial, so does