New Frontiers for Professional Managers (Part 2)

What follows is an excerpt from the 1956 book New Frontiers for Professional Managers by Ralph Cordiner of GE Corporation.

Within our own country, the lag between theory and practice is reflected in wasteful frictions and antagonisms between government, business, unions, education, and other institutions. Because of the national obsession with concepts that are no longer relevant—concepts of old world capitalism and old world socialism—each of these groups finds much of its own work frustrated or attacked on the basis of wholly obsolete assumptions as to the nature of economic life in the United States today.

This situation is increasingly recognized by educators, businessmen, and other informed people. It will require the efforts of all to bring an adequate resolution. The McKinsey Lectures, by recording the experiences and philosophies of men engaged in the management of large enterprises, may be helpful in reducing the gap between economic theory and practice.

Let us begin with some commentary on the rise of large-scale economic enterprises.

Whenever a society industrializes, one of the most important characteristics is a great increase in the scale of its undertakings. The drive toward more complex technologies, toward more massive use and guidance of the forces of nature, toward mass production and mass distribution, necessarily results in the development of large-scale economic organizations. England has them, Russia has them, Germany has them, other industrial nations have them, and the United States has them. Their size is generally related to the size and technical capacity of the national economy in which they operate. Without these large-scale economic enterprises, a nation today is a second-rate power and its people suffer both lower standards of living and greater vulnerability to attack by aggressive nations.

In the United States, with its deep dedication to human liberty and its competitive economic system, the characteristic form for these large-scale economic enterprises is the modern corporation, of which General Electric is an example. In other countries, with other traditions, they may take the form of state-owned or state-regulated organizations, with all that is implied in terms of state control of the life and work of the citizens. In Russia, for example, we see the strange distortion of a state which can produce thermonuclear explosions and advanced jet aircraft, yet is unwilling to provide enough bread, shoes, and housing for its people. It appears that freedom is required to assure that these large enterprises will serve the people most effectively.

The modern American corporation certainly poses problems of its own, both social and political. But on balance, most observers agree that it has delivered the goods more abundantly than any visible alternative anywhere in the world.

When I say delivered the goods, I mean that the people have in their hands, not promises, but an abundance of the material things that are desired by this country's citizens. As a consequence of this abundance, people in the United States have awakened to new opportunities for cultural and spiritual attainment, new dimensions of freedom, that become possible in an economy where the basic physical needs can be taken almost for granted.

ROLE OF LARGE ENTERPRISES

Because these lectures deal specifically with the management of large enterprises, it might be worthwhile to summarize, briefly, their role in our national life. It is a creative role which might be characterized in three points:

First, the large enterprise is a source of innovation. It operates on a scale large enough to afford the staff of managers, scientists, engineers, production men, marketing men, employee and public relations men, financial men. and other functional specialists required to create—continuously—new knowledge, new products, and new markets. Out of these innovations come that stream of new industries which we take almost for granted these days, the new industries that provide fresh business opportunity for small and large companies and provide employment for our expanding population.

Second, the large enterprise is a source of mass production and mass distribution. It has the capacity to take new-product ideas out of the research and engineering laboratory and, in a relatively short time, make them generally available to the people. Here again, it is important to remember that smaller companies always do much of the work involved in processing materials, making components, providing supplies and services, performing sales and distribution functions, and carrying on other profitable portions of the over-all business flow. But generally it is the large enterprise that energizes the great flow of work involved in serving a mass market. Without the human and material resources of the large enterprise, and its ability to take large, long-term risks, these mass-production and mass-distribution processes simply would not get started and probably would not even continue to operate successfully.

Third, the large enterprise is a source of advanced technical capacity. It is the developer, designer, producer, and distributor of the complex, advanced products and systems of our age: the turbines, the atomic-power reactors, and even the advanced defense-weapons systems that cannot be produced with limited resources either of men or facilities.

One might add other categories in describing the role of the large enterprise, but these three—innovation, mass production and distribution, and advanced technical capacity—indicate how the large enterprise serves as an energizer of business activity. It sets up a dynamic flow of work and money which moves swiftly through the nation's highly integrated economy and provides much of its living, expansive power.

I have spoken in terms of the large manufacturing company, but the description applies with equal force to the large financial and service institutions, the large power-supply and transportation enterprises, or any other large economic organization. The large enterprises provide innovation, mass service, and advanced technical capacity.

This is not the place to take up the distinctive contributions of other segments of the economy— the smaller enterprises, the professions, universities and colleges, the unions, the government, and others. But it is important to see their interdependence, each relying on the other to perform some necessary function in getting the nation's work accomplished.

The purpose of this prologue on the nature and function of large enterprises has been to indicate why it is in the public interest that the large corporations continue to be expertly, profitably, and responsibly managed. They are business enterprises. They must serve, survive, and grow in a competitive business system. They must therefore make healthy profits, as an incentive to investors to risk their savings, and as a resource for the forward-driving work of innovation which provides so much of the vitality of our expanding economy.

New Frontiers for Professional Managers (Part 1)

What follows is the 1956 book New Frontiers for Professional Managers by Ralph Cordiner of GE Corporation. I will break the book up into chapters which will be included in following posts.  What has interested me so far in this book is its emphasis on the integration between the corporation and the society in which it operates. Although the figures in the book are very out of date, the concepts and practices are as applicable now as when written.

New Frontiers for Professional Managers

By: Ralph J Cordiner

PREFACE

Our modern society is characterized by large organizations. Their effective and democratic management is of vital concern to all of us. Particularly in the field of business, the importance of achieving the efficient voluntary association of men and women in large and rapidly growing corporations gives a new and perhaps unexpected significance to the subject of the management of large organizations.

Aware of this significance, the McKinsey Foundation for Management Research, Inc., founded and supported by the partners of the management consulting firm of McKinsey & Company, made an initial grant to the Graduate School of Business to organize and sponsor a continuing series of distinguished lectures by men of conspicuous accomplishment in the management of large organizations. The reflections and thoughts of men of action, often too busy to organize and place on paper the rich usefulness of their experience, will thus be made available to present and future students of management.

In inaugurating the McKinsey Foundation Lecture Series at the Graduate School of Business, Columbia University, we were fortunate to be able to present one of the most thoughtful and effective of our contemporary business executives, who gave us a close-up picture of his approach to the problems of managing a large organization. This kind of authoritative interpretation of modern management methods is close to the heart of a real understanding of the American business system.

Mr. Ralph J. Cordiner, President of the General Electric Company, as the first McKinsey lecturer, afforded our students, our faculty, and our distinguished guests from the business community an intimate interpretation of his and his associates' managerial philosophy. His prompt grasp of the real spirit of the lectures can perhaps be best described in his own words:

"As I understand it, one of the purposes of the lectures is to coax us businessmen out of our offices and into the arena of public thought where our managerial philosophies can be put to the test of examination by men trained in other disciplines. At the same time, it is hoped that in describing our personal experiences in managing today's corporations we will help bridge the disturbing gap between academic theory and the living realities of the new American economy."

"Within our own country, the lag between theory and practice is reflected in wasteful frictions and antagonisms between government, business, unions, education and other institutions. Because of the national obsession with concepts that are no longer relevant—concepts of Old World capitalism and Old World socialism—each of these groups finds much of its own work frustrated or attacked on the basis of wholly obsolete assumptions as to the nature of economic life in the United States today.

"This situation is increasingly recognized by educators, businessmen, and other informed people. It will require the efforts of all to bring an adequate resolution. If the McKinsey Lectures can help in this process of reducing the gap between economic theory and practice, they can make an important contribution to our national life."

These lectures provide one of the ways in which the Graduate School of Business expects to respond to this opportunity to achieve a perceptive and accurate interpretation of the American business system.

The initial lectures were presented to a group of prominent businessmen and scholars on the Columbia campus and are now made available to a wider audience through the publication of this volume. The lectures are reproduced here substantially as they were given, in three parts, during late April and early May, 1956. With the editorial assistance of Professor James W. Kuhn of the Graduate School of Business and Mr. Robert L. Fegley of the General Electric Company, some additional material has been added from the tape recording of Mr. Cordiner's responses to questions and problems raised in the after-dinner discussions which followed each lecture.

Courtney C. Brown

Dean
Graduate School of Business
Columbia University
June, 1956
NEW FRONTIERS
FOR PROFESSIONAL
MANAGERS

The Role of Leadership in Promoting Business Ethics

MBA Party at All-Bar-One

Now that the semester 1 business simulations have run their course, its time to celebrate the season.  The event will be held at All-Bar-One off of Lothian Road starting at 7PM.

Full Time MBA Schedule (Semester 2a)

Business Simulation Week (Simon Earp)

Organizational Design for Intrinsic Employee Motivation

 Organizational Design for Intrinsic Employee Motivation:
  A Review of Mori Seiki’s Team-Based Structure

By: Eric Holmes

      The design of a business organization plays a major role in its ability to motivate its employees.  The software company Google continues to encourage creative employees by granting them a high degree of autonomy which leads them to engage their work with high intrinsic motivation.  According to Google spokesman Matt Furman, Google employees have a chance to engage in “constant and often amazing innovation” which keeps their morale high (WSJ, 2009).  This need for creative fulfillment is described by Herzberg’s “two factor theory of motivation” which proposed that intrinsic motivators such as an employee’s sense of accomplishment outweigh extrinsic “hygiene” factors such as increased salary (Buchanan and Huczynski, 2010: p280).  What organizational structures help to foster intrinsic employee motivation?  What balance must be made between autonomy and central control in order to maintain the performance of such organizations?  The answers to these questions will be investigated in this essay.  Organizational structures will be described at the Japanese machine tool firm Mori Seiki through the lens of intrinsic employee motivation.  The author’s experience and related literature will be cited to support the claim that a certain level of autonomy is necessary to stimulate intrinsic employee motivation, but that certain organizational structures are required to maintain a company’s focus.  Organizational structures which promote collaborative competition, team empowerment, and individual development will be shown to strongly affect levels of intrinsic employee motivation.  Drawbacks to autonomy in the organization are discussed with the goal of identifying how Mori Seiki balances team autonomy with sufficient central control to ensure that its company objectives are achieved. 

Figure 1: Mori Seiki Japan's Matrix Organizational Form

      Mori Seiki is a Japanese machine tool manufacturer that supplies lathes and machining centers to Toyota, Boeing and other top tier manufacturers.  The author was a member of Mori Seiki’s design department which is a division within the organization’s open matrix structure shown in figure 1.  In this organizational structure, design teams act to develop a new product in coordination with specialist departments such as purchasing, manufacturing, and quality assurance.  Teams are the smallest functional group at Mori Seiki, and typically consist of six employees.  Working in small teams creates a sense of camaraderie and boosts employees’ desire to contribute.  Each design team member is tasked with a crucial function, and must interface with other team members’ contributions.  This requires a large degree of information sharing among team members, and hence all design teams are clustered in a single open floor plan without cubicles or dividers.  The absence of cubicles means that each member can quickly speak to other members and what is said can be heard by everyone.  Because each member works as a specialist in a certain design area, they are given responsibility and autonomy.  As a balance to the large amount of responsibility, designers have a ready support network to rely on through their team, and because each team member is faced with a shared challenge of creating a common product, they share a common frame of reference.  Teams meet socially outside of the workplace to celebrate a new member’s entrance or a current team-member's exit from the team.  These social functions allow teammates to engage in more candid exchanges than are possible within the highly structured workplace.  By firmly supporting and enabling each employee, and by creating a strong sense of team identity, Mori Seiki's team-based structure promotes continuous individual and team learning, a key factor in maintaining employee intrinsic motivation.
In order to manage its open, team-based matrix structure, Mori Seiki has established mechanisms for maintaining central control.  Design teams are required to gather in morning meetings in which they review management communications and discuss common design problems.  Morning meetings are preceded by radio exercises which build a sense of common organizational purpose.  In between the military-like radio exercises and the morning meeting is a company-wide public announcement.  In the announcement, the number of visiting customers and a daily company slogan are announced.  Before the morning meeting commences, each employee is given the chance to discuss issues that may affect other teams, such as their interest in solving a certain design problem.  Employees take turns in presenting design issues to their department, and in this way, the wider organization can incorporate team experiences.  These organizational structures promote the cohesion of teams into departments, and similar structures preserve the cohesion of progressively larger groups until the upper management level is reached.
      Mori Seiki's team based structure is a major factor in promoting intrinsic employee motivation, but there are also drawbacks to this approach. Design teams are required to be in frequent contact with many other teams throughout the organization.  The management of these relationships is a considerable challenge, and especially the act of prioritizing the multitude of requests which are received.  Mori Seiki team leaders have no assistants to arrange their schedule and must sift through and organize a vast volume of data.  Consequently, workplace stress levels are high, and this can become a barrier for employee motivation.  There are also benefits to the high workplace stress level.  Because of the enormous work load assigned to teams, employees who are not suited for their job discover this quickly.  The rigorous work load filters out unsuitable employees.  During the author's sixty day work assignment at Mori Seiki, four employees were transferred out of their design teams in order to work in different parts of the organization.  These flexible personnel practices are a key aspect of Mori Seiki’s ability to continually refine the match between employee and job function.  By matching the right employee to the right team, Mori Seiki's is able to retain its most intrinsically motivated designers.  Employees unmotivated by design tasks are shifted into other key areas such as manufacturing.  To gain a design team assignment is a sought after privilege, and for the right type of employee a life-long learning opportunity.  High pressure team conditions also create a fertile environment for identifying and training the company’s future leadership.  Good team leaders at Mori Seiki attain a respect similar to that given to Honda’s shusa (project leaders) as described below (Womack, 1990: p113):

“Oddly, while we’re used to thinking of dedicated teamwork as the ultimate sublimation of individuality, new products inside the Japanese auto industry are commonly known by the shusa’s name: ‘That is Fuji-san’s car’ or ‘Akoika-san has really stamped his personality on that car’ are phrases commonly heard within Japanese companies.”
 
Such personal identification with ones work, coupled with the high probability for career advancement intrinsically motivates the team leader in spite of the challenges.   The motivation which results from product development authority is one of the strongest aspects of the team-based approach.  The idea of refining a worker through difficult assignments and of providing employees with necessary autonomy is not unique to Japanese culture.  Henry Kaiser, the productive American industrialist stated (Kaiser Engineers, 2011):
 
"You find your key men by piling work on them. They say, 'I can't do this anymore and you say: 'Sure you can. ‘So you pile it on and then they're doing more and more. Pretty soon you have men you can rely on absolutely. You have an organization that really can get things done." 

Finding individuals who enjoy the work at hand and then giving them as much work as they can handle is the model for developing leaders at Mori Seiki.  Although this organizational methodology derives many customs from Japanese culture, Mori Seiki’s organizational structure is capable of reaching across cultural lines as the next example will illustrate.

Figure 2: Mori Seiki's US Subsidiary (MSUS)

      Mori Seiki has a US subsidiary in California whose organization is structured in a different way from the parent company.  Although the team-based structure from the parent company is still theoretically used, in practice the work flow proceeds in a different manner due to factors such as the geographic and cultural separation.  The author’s conception of Mori Seiki’s US office organizational structure is shown in figure 2.  The separation of Mori Seiki’s US design teams led to a lack of intrinsic employee motivation, and a dramatic drop in employee productivity.  Aside from the geographic separation, the US design team was unable to directly communicate with their Japanese counterparts due to organizational barriers.  One barrier was the involvement of a separate US management structure (labeled “Admin.” in figure 2) that moderated communication with the Japanese office.  This barrier led to serious problems in achieving the US design team’s milestones.  When measuring the extent of these difficulties, Japanese management discovered that the US design team’s pace was roughly half that of similar teams in Japan.  A large part of the problem lay in the US employee’s lack of motivation due to their inability to effectively steer their project’s outcome.  In addressing this organizational and personnel problem, Mori Seiki’s Japanese management determined that a drastic approach was required to bring US designers into their existing organizational structure.  The US based design team was instructed to travel to Japan and join their Japanese counterparts in order to be part of the team-based structure there.  This solution alleviated many motivational problems among US employees, who could now speak directly with specialist teams, and develop crucial working relationships.  The responsibility of US management was removed from the organizational structure, and Japan managers supervised their US employees directly.  Although cultural and language problems remained, the effect of incorporating US designers into Mori Seiki’s organizational structure was indeed dramatic.  Productivity increases were realized as designers gained knowledge that had been difficult to obtain in the previous arrangement.  Detailed communication with vendors, a crucial part of a designer’s feasibility studies, became possible.  US designers, motivated by their increased ability to affect the success of their project, responded to the organizational shift in a surprising manner.  Many began to adopt Japanese cultural practices such as deferring their opinions in the face of higher authority and bringing up their concerns during informal “drinking sessions” after work.  One employee in particular brought whiskey to present as an omiage, or ritual gift, for their Japanese team.  Team morale was boosted as individuals gained intrinsic motivation, and project progress continued to accelerate.
      The importance of integrating human resource considerations into the design and manufacturing process cannot be overstated.  In Mori Seiki’s case, the use of “lean design” principles dictated that wasted effort in mis-matching employees with job functions leads to wasted effort in the design process.   Similar statements could be made for other job functions including manufacturing, sales and product procurement. In viewing human resources in this way, a certain realism and practicality permeates Mori Seiki’s management approach.  A 2002 survey conducted by PricewaterhouseCoopers suggests that Japanese managers are ahead of their Western counterparts in understanding what motivates their employees (Brislin et al, 2005).  In the survey, Japanese managers ranked what they considered as motivational factors for their employees, and employees ranked what motivated them.  From the list of twelve factors, only one ranking differed by more than two places between managers and employees.  Although the homogeneity of Japanese culture can be cited as an explanation for Japanese manager’s motivational understanding, in Mori Seiki’s case, management was able to effectively motivate its US designers alongside its Japanese designers.  The important common factor was the ability to enforce an organizational structure which provided autonomy with support, and that matched the right individuals into the right functions.  Similar to Womack’s proposal for non-Japanese manufacturers to adopt waste-reducing practices (Womack, 1990), non-Japanese employers can take note of motivating organizational structures like those described at Mori Seiki.  The common elements of employee empowerment, access to necessary expertise and fostering of employee pride are fully transferrable given the correct organizational layout.  In a future of diminishing resources, every effort must be taken to remove waste wherever it exists.  Like maintaining any piece of manufacturing line equipment, maintaining the drive of an organization’s employees should remain a management’s central focus.  Ultimately it is people who compose an organization, and it is quite logical that any discussions regarding organizational structures should begin and end with their effect on people.

References:

1.    Wall Street Journal, 2009. Google Searches for Staffing Answers. [online] Available at <http://online.wsj.com/article/SB124269038041932531.html>
2.    Buchannan, D. and Huczynski, A., 2010. Organizational Behaviour. Essex: Pearson Education Limited.
3.    Womack, J., Jones, D., and Roos, D., 1990. The Machine that Changed the World. New York: Ralston Associates.
4.    Kaiser Engineers, 2011. Henry J. Kaiser: The Legacy Continues. [online]  Available at <http://home.earthlink.net/~peterferko/keweb/aboutke/history.htm>
5.    Brislin et al., 2005. Evolving Perceptions of Japanese Workplace Motivation: An Employee-Manager Comparison. International Journal of Cross Cultural Management, 2005 Vol5(1): pp87-104.
6.    Rehu, M, Lusk, E, & Wolff, B 2005, 'A PERFORMANCE MOTIVATOR IN ONE COUNTRY, A NON-MOTIVATOR IN ANOTHER? AN EMPIRICAL STUDY', Academy of Management Annual Meeting Proceedings, pp. K1-K6, Business Source Premier, EBSCOhost, viewed 30 October 2011.

Strategic Analysis: Virgin Group

1. 2011 PESTLE analysis
1. Political:
1. austerity in Euro-zone
2. governments (and US states) desperate to court big business for tax revenue
3. anti capitalist protests in US and UK
4. 2012 US election will involve the most money ever spent on campaigning
5. New governments in the Middle East, Europe and Asia (Tunisia, Egypt, Libya, Italy, Spain, Kazakhstan, South Sudan, Thailand, Japan, North Korea)
6. Reform possible in Syria, Bahrain, Saudi Arabia, Morocco
7. Rebalancing of influence in Asian South Pacific Region and Eastern Europe
1. New US base in Australia
2. US Missile Defence abandoned in Poland
2. Economic:
1. high unemployment in US, UK and wider Europe
2. evolving consumer behaviour away from high personal debt load
3. slowly recovering US economy, rapidly growing Chinese middle class (approx. 250m)
4. large Government measures to continue QE into 2012
5. limited bank lending, very distressed European bond market. Even German bond yields are climbing
3. Social:
1. General feeling of new global order (F. Zakaria's book: Post American World)
2. US hegemony waning, Chinese consumer beginning to replace US as target market
3. Border-free communication through the internet, price transparency
4. Technology:
1. IT evolving rapidly, and software becoming easier to use.  This has the effect of raising consumer expectations.  Companies such as Google offer many useful tools for free.
2. Phone service is now less important to many consumers than internet service
3. Mobile applications and content are preferred by many (especially younger) consumers
4. Facebook is the de-facto standard for social networking, and most companies are marketing through its interface rather than "reinventing the wheel" with their own offerings.
5. Twitter messaging allows millions to share information rapidly, including deal and promotion information.
5.  Legal:
1. IT legislation, British Rail Law, Airline regulation (eg. FAA in US)
2. Increase in anti-corruption legal watchdogs in recent years (eg. SFO in UK)
6. Environmental:
1. Consumers are aware of climate change and environmental degradation
2. Many consumers select businesses based on perceived "clean and green" image
2. Assessment of Virgin Group

1. Too much autonomy among some businesses leading to a lack of consistency in the Virgin portfolio.  Does Virgin need a Cola? Did you know they sell wine also? More organizational "learning" could be shared between operations.  Look to GE to structure an improved talent search, retention and indoctrination process.
2. Succession plan must be developed.  R. Branson will continue for another decade, but what then?  A successor must be trained and prepared for the group CEO role, or the organizational structure must evolve.
3. Follow GE or PG's strategy and divest businesses which don't fit or are not profitable.  Welch famously strove for number 1 or 2 in industry.
4. Focus on transportation and entertainment industries. Customers are willing to pay a premium for good service here.  Even Virgin Galactic can be considered transportation of a sorts (my favorite of the Virgin brands ;))
5. One core competency of Virgin has been the brand itself, and attaching it to the various businesses has added value in the minds of customers who know that a certain innovative approach will be taken on their behalf.  Care should be taken that this brand doesn't get associated with Richard Branson the man, but rather the vision that will outlive him.  Disney can be cited as an example of a Brand that outlived its founder.  Just as Levitt noted that the railroad was in the transportation business and not trains, Branson must realize that Virgin is in the creative brand licensizing business, whereby the company continually identifies promising talent to run new businesses and then allows them the autonomy to do so.  In another analogy, Virgin Group resembles Ryan International (not to be confused with RyanAir) which employs pilots and crew, but doesn't own its planes.  Branson has been effective in identifying prime talent to run what are in effect, serial entrepreneurial ventures.  Branson himself is like an angel investor, and he has shown a keen ability to find the right people to run each business. In this way, the group is more like a HR recruitment and deployment firm than a centrally administered hub for all businesses.    
6. Perhaps the most bizarre Virgin businesses, which probably makes more sense upon further study, is this one:  Virgin Health Bank

Review of Strategy Literature

1. 1930 PG promotes interbrand competition
2. 1962 Alfred Chandler 
3. 1963 Alfred Sloan: My Years with General Motors
1. "From decentralization we get initiative, responsibility, development of personnel...
2. "From centralization we get efficiencies and economies
4. 1970's Chandler, Wrigley, Rumelt
5. 1971 Galbraith 
6. 1978 Davis, Lawrence
7. 1980 Porter's generic strategies, competitive positioning
1. low cost
2. differentiation
3. focus
8. 1986 Miller
9. 1990 Pascale: "inherent tension within organizations is the primary, if not the only, vehicle for self-regeneration"
10. 1992 Senge: The fifth discipline : the art and practice of the learning organization
11. 1993 Prahalad, Hamel 
12. 1994: Ghoshal, Mintzberg "pendulum swing"
13. 1998 Ghoshal, Bartlett: "portfolio of processes" along with competencies 

Review of Strategy (Brad Mackay)

1. Final Assessment based on two case studies:
1. IBS Case: Virgin Group: Richard Branson's Business with Flamboyance
2. IBS Case: The Virgin Group in 2005
2. servant-leadership: defined by Robert Greenleaf in 1970: 
1. "The servant-leader is servant first… It begins with the natural feeling that one wants to serve, to serve first. Then conscious choice brings one to aspire to lead. That person is sharply different from one who is leader first, perhaps because of the need to assuage an unusual power drive or to acquire material possessions…The leader-first and the servant-first are two extreme types. Between them there are shadings and blends that are part of the infinite variety of human nature."
3. Publicity Stunts:

1. Glenn Rifkin: "How Richard Branson Works Magic"
2. 1998 Virgin Cola Promotion 
3. Distinctive Red branding color consistent throughout businesses (from cola to rail)
4. Philanthropy:
1. 1991 Gulf War aid, and hostage rescue
2. HIV-Aids campaign
3. 2006 Clinton Global Initiative
1. $3 billion renewable energy investment pledge
5.  Virgin Business Ethos
1. Focused on motivating people
2. disrupt industry norms
1. target industries with poor service (eg: airlines, bank, rail, internet, phone, etc) 
2. compete on quality as well as price (two tiered attack on incumbent businesses)
3. military operation
1. "In a sense, you are ultimately directing the war, and the critical thing is constantly being in touch and motivating your troops and helping people if they've got a problem"
4. 5 Criteria:
1. high quality
2. innovation- VA seat back video claims
3. value- Virgin Atlantic offered First Class experience at Business class price
4. challenge status quo- VA took on BA and other established trans-Atlantic carriers
5. have fun-brands reflect Branson's personality-led to a culture driven organization
6.  Public Perception
1.  
   
2. Strong focus of Virgin on public perception and PR campaigns
3. Will Whitehorn, PR Communications Director is the highest paid Virgin employee
4. Branson spends 25% of his time on PR activities
7.  Employee Perks
1. Employees offered a Virgin card for discounts on Virgin products and services
2. Branson dropped in on Virgin businesses
3. Branson hosted exceptional employees at his private island as a reward, learning opportunity
4. annual summer party
5. "It's much nicer paying the bills when everybody is having a good time."
8.  Recent history review and Future Development:



1. cross company use of talent (Will Whitehorn example: later became CEO of Virgin Galactic)
2. varied performance of Virgin Businesses
3. 1996 Branson bought EBA-Euro Belgian Airlines
4. 1998 Virgin Cola launched in the US; relaunched in 2004
5. 1998 Virgin Express registered in the Republic of Ireland for tax purposes 
6. 1999 Virgin Mobile launched in the UK
7. 2000 Virgin sold 49% stake in Virgin Atlantic to Singapore Airlines for £600m 
   
8. 2004 Virgin sold stake to SN Brussels Airlines and in 2006 Virgin Express became Brussels Airlines
9. 2004 Financial Assessment of Virgin Group
10. Virgin Trains have a punctuality problem
11. 2005: Virgin Group Comprised 350 companies 
12. Virgin Group and some subsidiaries are private, and therefore financial data reporting isn't mandated by law. 
9.  Reference Readings:

1. UK: At the court of King Richard.

   By Chris Blackhurst. Wednesday, 01 April 1998

   UK: At the court of King Richard. - Branson's success is founded on marketing flair - and a talent for picking senior managers.

   At 10 o'clock on a Friday morning, one of the imposing cream stucco villas that adorn Holland Park in west London is buzzing with activity.
   Through the front door on the left of the house in a living room that covers half the entire ground floor, two men are deep in conversation. On the right, in the dining room, sitting around a huge table, a group of dark-suited Americans are opening their briefcases and producing files in readiness for a business meeting. In two smaller rooms at the back, a team of secretaries answer a non-stop stream of telephone calls. Upstairs, it is the same: more meetings and more staff hard at work. Even the conservatory in the garden is being used by a visitor, pacing up and down, making calls on a mobile phone. Only the bedrooms and the swimming pool in the basement of the house are silent.
   This is corporate management Richard Branson-style. This villa is the nerve-centre of his sprawling Virgin organisation. From his home he oversees an airline, holiday company, train operator, record stores, music company, cinema chain, television production, financial services, soft drinks, bridal wear, cosmetics, model agency and radio empire. The man himself is not at home. As is so often the case, Branson is away - in this instance, on a whistle-stop visit to a far-flung outpost of his empire, but his absence could just as easily be explained by his desire to fly round the world in a hot-air balloon, a family holiday, or, as occurred earlier this year, being tied up for weeks in libel litigation against an aggressive competitor.
   In his absence, at his house it is business as usual. Upstairs, in between the paraphernalia of Branson's children, Holly and Sam, in the press office his faithful aide-de-camp, Will Whitehorn, fields yet more requests for interviews with Britain's favourite tycoon. Downstairs, surrounded by pictures of Branson with his wife, Joan, and children, with his heroes like Nelson Mandela and awards for his airline, Brad Rosser, responsible for targeting new Virgin ventures, listens intently to yet another business proposition. This is the court of King Richard, a curious mix of informality and - the deadly earnest.
   
   Virgin employs 15,000 people, producing a turnover of £2.4 billion a year from operations in 24 countries. Yet this corporate giant is run, not from a skyscraper with the Virgin logo on its roof, but from here, a house in a residential road in west London. This appearance of shoe-string informality, of course, is much of the Branson appeal. There are conglomerates run by faceless individuals stuck in ivory towers and there is Virgin, controlled by this role model for the Swampy generation. Once ranked only second to Mother Teresa as an icon by the young, Branson has no business equivalent.
   Critical, though, to the ongoing success of the organisation are his deputies. These are the people who have the run of his house-cum-office, who run the day-to-day operations of Virgin, who enable him to seek new ventures, to garner publicity for the group, to ride in his balloon. The public thinks of Virgin and sees one man. Behind the scenes, the reality is different: directly below Branson is a raft of high-calibre executives who would grace any business. Often sober-suited and armed with heavyweight credentials, they supply the ballast to Branson's casual air.
   Two outstanding qualities have propelled Branson to pre-eminence. While his success is based on marketing flair it is also founded on another virtue, of picking senior managers. 'Richard's skill is in finding people to do things for him,' says Whitehorn, Branson's spokesman and increasingly these days, his closest aide. 'He has a very lively mind with an ability to switch from one thing to another and he is very good at delegating.'
   Senior Branson executives speak in terms of their group being a keiretsu, a Japanese-style umbrella organisation like Sony or Mitsubishi, of 20 businesses devolving to 200 individual companies, most of whom bear the name Virgin. Others are rather more disparaging, calling it a glorified franchising operation with Branson the linchpin and Virgin the brand.
   The truth would appear to lie somewhere in between. Virgin companies are of two kinds: a wholly-owned subsidiary or one in which Virgin is a partner. Into the first category come the airline and megastores, into the second come the insurance and drinks businesses.
   'You must remember that Virgin grew out of the music business,' says Whitehorn. 'Running Virgin is like managing artists. Richard sees each of his different companies as a different artist - we are like a management company.'
   The mistake people make, says Whitehorn, is to view Virgin as any other company. 'Virgin is not one com-pany. The public perceive it as a company but more and more we act like branded venture capitalists with Richard as a business angel.' Even the businesses he does not wholly own are managed by trusted Branson lieutenants. Just because he is not the majority shareholder does not mean he will allow the operation to be run by someone he does not personally know, and has vetted and appointed. His reasoning is simple: to do otherwise is to risk not only damaging that individual operation but also the whole Virgin name. Just as whenever Branson himself appears on television or in print there is usually a knock-on positive effect across the whole empire, so too, if one part is weak and prone to negative publicity, the rest suffers.
   Typically, Branson will be heavily involved in the idea for a new venture.
   Once the new business has been launched, usually in a blaze of publicity with Branson at its heart, he will leave it to a hand-picked deputy. The only one of his operations where he has maintained a close executive brief is the one dearest to his heart, the airline. Otherwise, he is available if required. Employees, even relatively senior ones, rarely encounter Branson. 'I never saw him in two and a half years, apart from at his summer party,' recalls a former senior manager in Virgin's publishing offshoot.
   She adds: 'I did meet people higher up, usually when we were allowed to use the Holland Park house for a specific launch, but otherwise nothing.'
   Like many Virgin employees she was attracted by the idea of working for Branson, a man she had long admired. What she found, however, was 'a wheel, with lots of spokes and him in the middle. I was on one of the spokes.' What surprised her was the lack of access to Branson - she only found out what he and Virgin were doing next from reading about them in the newspapers and watching television - and the lack of contact between the individual Virgin components. 'The spokes did not talk to each other either - many of the senior executives felt restricted and bored,' she says.
   There was also, she maintains, the feeling that any one of the 'spokes', apart from the airline, could be sold at any moment. It's wrong, she says, to imagine Virgin as one giant happy ship buoyed along by its beaming captain. There was little sense of unity of purpose and direction. Individual businesses would carry on in their own sweet way from their own head offices - most of them are dotted around West London - occasionally reporting to the Virgin administration centre based in Campden Hill Road, while the people in the house around the corner in Holland Park did their own thing.
   Lately, admit senior Virgin executives, more effort has been made to engender corporate togetherness.
   Staff are offered discounts on other Virgin products, parties and get togethers are held more frequently and people are moved around the empire.
   'One of the things happening more and more,' acknowledges Whitehorn, 'is that we are growing up as an organisation.'
   Within Branson's court, some executives are closer to the throne than others. Around Branson is a handful of senior managers who range across the whole empire. Then there are the heads of his most important individual organisations, like the airline and retailing. They, too, form his inner circle of deputies. With his courtiers, he can behave as he pleases, granting audiences to anyone who takes his fancy, publicising himself and Virgin, going on jaunts, indulging his passions and whims, and plunging into new ventures. But without them, very simply, he would not be king.
   
   Chris Blackhurst is deputy editor of the Independent
   
   WILL WHITEHORN - CHIEF COURTIER
   Hired originally as Branson's press spokesman, Whitehorn's role has evolved over the years and he is now effectively the number two at Virgin. Originally, Robert Devereux, Branson's brother-in-law, Simon Draper, his cousin and first business partner, Don Cruickshank, who took Virgin public and Trevor Abbott, Virgin's first financial controller, were far ahead of Whitehorn in the pecking order. But they have gone or, in the case of Devereux, their influence has diminished, while Whitehorn has stayed, earning Branson's trust and respect. Whitehorn worked in PR for Thomas Cook and British Airways Helicopters - the latter a useful training during its 'dirty tricks' spat with Virgin - before joining Branson's close friend, Chris Wright, the head of Chrysalis Records. It was there that Branson came across Whitehorn, whom he asked to join him. Within Virgin, he operates as a sounding board for Branson, while outside he is widely judged as one of the best public relations men around. No major decision is taken without Whitehorn's involvement but, at the same time, he is totally loyal to his boss. With Branson's wife, Joan, showing little interest in the business side of Virgin, it is now assumed that if anything happened to the king, his chief courtier would step in, to mind the shop for the Branson children, Holly and Sam.
   
   ROWAN GORMLEY - CLASSICALLY TRAINED
   One of the notable features of Branson's court is that while he is self-taught, operating to an individualistic, home-spun philosophy, he has surrounded himself with people who have enjoyed a classic business training.
   Branson takes care of the razzmatazz and showbiz, they keep the group on the straight and narrow. One such is Rowan Gormley, managing director of Virgin Direct.
   A South African, Gormley is a qualified accountant, nurtured by Arthur Andersen. He then moved into venture capital with Electra, one of the leading quality players. It was there he was spotted by Branson who asked if he would come and head corporate development. It was in that role that he oversaw the successful push into financial services. Again, like many of Branson's inner circle, he is young - still only 35.
   
   BRAD ROSSER - TOUGH OPERATOR
   Proof that an astute business brain lies behind the bearded grin and jeans comes with Branson's hiring of Brad Rosser, in 1994, as Virgin's corporate development head. Effectively, the group's new-business manager, it is Rosser who is charged with maintaining Virgin's relentless quest for pastures new. Hundreds of new business proposals cross his desk annually.
   Fiercely bright, he graduated with a double first in accounting and finance from the University of Western Australia and won the university's highest award for academic achievement. Similarly, for his MBA from Cornell, he won the programme's top honour. He then worked for Alan Bond, the Australian tycoon, ending up in effect as his closest aide. After Bond's empire collapsed he went to work for McKinsey, where he identified possible takeover targets and carried out strategic and management reviews for a large retailer and a consumer products group. Rosser is tough and uncompromising. Intensely focused, he will only put ideas forward to Branson if, in his words, they meet certain criteria: 'The products must be innovative, challenge authority, offer value for money, be of good quality and the market must be growing.' Rosser is one of the handful of senior executives capable of taking an overview of the whole Virgin Group. He defines his role as 'identifying new opportunities and when selected, to implement them'.
   By implement, he says he means, 'source funds and possible partners, find a management team and take a non-executive directorship'. Rosser sits on the boards of several Virgin subsidiaries, ranging from fashion to bridal wear to helicopters to the London Broncos, the Rugby League team owned by Branson. All this and yet Rosser is still only 34.
   
   SIMON BURKE - NUMBER CRUNCHER
   When Branson devoted much of his time and money to getting his airline right, his retail business remained solid. For this he has to thank Simon Burke. An accountant with Binder Hamlyn and then Coopers & Lybrand, he cut his teeth on flotations and corporate rescues. Burke joined Branson as corporate finance manager in 1987, aged just 29. Almost his first task was helping Branson buy back Virgin from the stock market in 1988. He then moved on to restructure Virgin's retail operations, selling a raft of underperforming record stores and by the time he was finished, Virgin's retail division comprised just 10 Megastores. He then expanded the operation, overseeing the merger with WH Smith's Our Price chain. This entailed Burke leaving Virgin for WH Smith. Significantly, he is now back, heading Virgin's entertainment group, pushing ahead with new store openings in Japan and guiding Branson's successful move into cinemas. Within Virgin, Burke is regarded as exceptionally bright and viewed with something approaching awe by even fairly senior managers. When asked why, one ex-employee explained it was because he was regarded as having brought order out of chaos, of having saved Virgin's retail reputation when it appeared to be fading. He is a calm, number-crunching foil to the more emotional, impulsive Branson and Whitehorn.
   
   DAVID CAMPBELL - MEDIA STAR
   Glasgow-born Campbell arguably has one of the worst or best jobs in media, depending on your point of view: running Ginger Media Group, Chris Evans' radio company. Though Branson has scaled down his radio interests with the sale of the radio station to Evans, he still holds 20%. More importantly for the brand name, the radio station is still called Virgin. Campbell remains close to Branson and is predicted to return to the fold full-time once Evans has found his feet. Further evidence that Branson is no slouch when it comes to picking people is Campbell's impressive credentials. He went to university in the US and went on to become Pepsi Cola's youngest marketing manager. Again, like several of Branson's closest team, he has been with him a long time, over 10 years, since joining in 1986. Before taking over the radio station he was a project manager for the communications division and acted as a troubleshooter in more than 30 countries.
   
   MICHAEL HERRIOT - HOTEL OPERATOR
   When Branson wanted to go into hotels and leisure, he simply recruited a seasoned manager - Michael Herriot, who has been with Virgin since 1989.
   Older than many of his senior Virgin colleagues, Herriot, 55, was a hotel manager then an operations executive for Grand Metropolitan. Again exhibiting that Branson knack for picking people from a heavyweight City background - with all the experience of tight budgets, detailed reporting and the need for profits growth that entails - Herriot spent 10 years working for a hotels subsidiary of Mercury Asset Management before joining Virgin.
   
   RORY McCARTHY - KINDRED SPIRIT
   Rory McCarthy is the nearest there is to a Branson kindred spirit - a superb entrepreneur and multi-millionaire who also loves daredevil exploits. Branson's balloon partner, McCarthy left school at 18 and started his own motorcycle despatch company. Within a year, in 1979, the company was sold and he moved to the Caribbean. He returned as a professional hang-glider pilot and set the world hang-gliding altitude record by dropping from a balloon at 36,700 feet. Bored, he turned to the City and became a trainee with W I Carr, the stockbroker, but left to start his own company Siam Trading, now the McCarthy Corporation. This company holds 33% of V2, Virgin's new record company and 50% of Virgin Helicopters. McCarthy is a mixture of business partner, best friend and soul-mate for Branson.
   
   JONATHAN ORNSTEIN - AVIATION WIZARD
   Ornstein is straight from the Branson mould, a proven wizard at making air travel exciting and profitable. He runs Virgin Express, Branson's low-cost carrier in Europe. Most of his career has been spent in the cut-throat world of domestic US airlines, where he turned round West Air, then transformed the fortunes of Mesa, growing its revenues from $11 million to over $350 million and its workforce from 165 to over 3,000. In 1994, he was asked by Continental to head its shuttle operation, which had just posted annual losses of more than $40 million. Within six months, he had the company breaking even and 12 months later, it was in the black. So impressive was his achievement in turning round the shuttle carrier that the board of Continental decided to postpone its planned sale, preferring to keep it - at which point, at the end of 1995, Ornstein accepted an offer from Branson to develop a budget operation for Virgin. In April 1996, Virgin bought the low-fare carrier, Euro-Belgian Airlines, which formed the basis for Virgin Express.
   Since then, twice the number of routes and passengers have been added.
   Based in Brussels, Ornstein is said by Virgin insiders to be at the forefront of Branson's future aviation plans.
   
   SIMON GLASGOW - RETAIL STAR
   Like Rory McCarthy, Simon Glasgow is fairly new to Branson's court and like McCarthy he comes with a proven genius for making money. After working as salesman for IBM he moved into sports retailing, developing a small chain in Switzerland. He became co-owner of ATOC, a company that imported Timberland shoes into the UK. At the time, Timberland had only one customer, Harrods. When he sold ATOC to Timberland in 1988, the shoes were sold in 250 outlets. Branson swooped and Glasgow is now charged with launching the Virgin Clothing brand.
   
   GORDON McCALLUM - NEW BOY
   The newest recruit to the top team, Gordon McCallum is group strategy director. Another McKinsey product, like Brad Rosser, he has been asked by Branson to take Virgin into banking. His recruitment, like Rosser's, illustrates that for all Virgin's glitz and glamour there is a strategically managed business in the background - staffed by people capable of making as much money from the staid world of financial services as from records and travel.
   
   VIRGIN ATLANTIC TEAM - THE SIX PACK
   The running of Virgin Atlantic, Branson's pride and joy, is entrusted to six people all of whom work closely together. The most senior is Roy Gardner, executive director, flight operations. In 1984, Gardner was recruited by Randolph Fields, a US-born barrister, to help him run a budget airline.
   Fields, who had just seen Laker collapse, was convinced there was room for a cheap fare service across the Atlantic. Gardner had been Laker's technical manager. But when Fields later revealed his choice of Branson as business partner, Gardner thought he was mad. He was convinced that Branson was too unconventional a figure for the industry which had already seen off another in Sir Freddie Laker. Fields convinced Gardner to stick with Branson and he has done so, making him one of the airline's longest-serving employees. Another one in at the start is David Tait, in charge of overseas operations and, like Gardner, another Laker veteran. The six operate from the airline's headquarters near Gatwick and are more independent than the rest of Virgin.
   The other four are: Paul Griffiths, who looks after Virgin Atlantic's commercial side; Nigel Primrose, its finance director; Steve Ridgway, customer services and Frances Farrow, corporate services. Of the six, only Farrow, previously a commercial solicitor in a City law firm, has a wider role, acting as Branson's in-house legal adviser across the group. 
2.  

Marketing Question Bank

Chapter 1:

1. It is more expensive to attract new customers than to retain existing ones
2. Customer Value= Perceived benefits minus perceived sacrifice
3. How do customers form expectations?
1. Customer expectations are formed through pre-buying experiences, discussions with other people, and suppliers’ marketing activities
4. When does customer satisfaction occur?
1. Customer satisfaction occurs when perceived performance matches or exceeds expectations
5. What makes up the Marketing Mix?
1. Product Price Place and Promotion
6. Which of the following combination of conditions apply to a company which is likely to survive but no necessarily thrive?
1. effective and inefficient
7. Service Marketers have advocated the 7-P's.  What are they?
1. Product, Price, Place, Promotion, People, Process, Physical Evidence
8. What are distribution channels?
1. Retailers or wholesalers through which goods pass on their way to customers
9. Which of the following is required for successful marketing implementation?
1. Proximity to the customer
10. What are the four features of marketing mix?
1. match company resources
2. match customer needs
3. consistent, well blended theme
4. mix creates competitive advantage
11. There is a positive relationship between marketing and performance.
12. Marketing should be viewed not as a departmental function but as a guiding philosophy for the whole organisation.

Chapter 2:

1. What makes up the marketing environment?
1. Macro and Micro environments
2. Microenvironment consists of:
1. Suppliers, competitors, customers and distributors
3. Recyclable and non-wasteful packaging is a
1. physical force
4. Which of the environmental forces is most likely to impact on how well-off consumers feel?
1. economic force
5. Demographic forces affect which of the following?
1. population changes
6. What does NAFTA stand for?
1. North American Free Trade Agreement
7. Values, beliefs and attitudes that is possessed by a national group or sub-group is called:
1. culture
8. What is CSR?
1. Ethical principle that a person or an organisation should be accountable for how its acts might affect the physical environment and the general public.
9. Which brand is perceived as the most ethical in the UK?
1. Co-op
10. The process of monitoring and analysing the marketing environment of a company is called:
1. Environmental Scanning
11. If environmental scanning is poor and a company responds by continuing to do business as usual in spite of environmental forces which might affect future performance; the company would be said to be responding through:
1. Ignorance
12. What is marketing myopia?
1. Marketing myopia is where management is product focused rather than customer focused.

Chapter 3:

1. Five generic questions which can help a marketer to understand consumer behaviour:
1. who is important (in the buying decision)?
2. what are the choice criteria?
3. where do they buy?
4. how do they buy?
5. when do they buy?
2. Blackwell, Miniard and Engel described five roles in the buying decision-making process, which of the following role do they describe as ‘the individual with the power and or authority to make the ultimate choice regarding which product to buy’?
1. decided
3. The organisational buying process has two more steps than the consumer buying process. Which of the following steps are not considered as part of consumer buying process?
1. Selection or order routine
2. performance feedback and evaluation
4. In a consumer buying situation, when a purchase is capable of providing a high degree of pleasure, the factor most likely to be affecting levels of involvement is referred to as:
1. hedonistic influence
5. Status is an example of:
1. social choice criteria
6. What name is given to the type of purchase which involves little or no evaluation of alternatives?
1. habitual problem solving
7. According to Maslow motivation can be grouped into 5 categories. Which category is described as “the fundamentals of survival” ?
1. physiological 
8. In organisational buying MRO stands for
1. maintenance, repair and operation
9. If an organisation aims to minimise stocks by organising a supply system that provides materials and components as they are required they will be engaging in which of the following purchasing practices? 
1. Just In Time
10. In a straight re-buy situation, which of the following best describes the members of the decision making unit?
1. purchasing officer
11. Mainstreamers, reformers and transitionals are examples of:
1. lifestyle patterns
12. ______________ is the complicated means by which we select, organise and interpret sensory stimulation into a meaningful picture of the world. Which of the following is the missing word?
1. Perception
13. If a consumer has concerns about whether they have just made the right purchase decision they could be suffering from:
1. Cognitive dissonance

Chapter 4: (not tested)

Chapter 5:

1. Which of the following are the three broad groups of consumer segmentation criteria?
1.  Psychographic, demographic and behavioural variables
2. What is the purpose of segmentation?
1. To identify differences in consumer or organisational behaviour that has implications for marketing decisions
3. In the UK, social class is usually measured according to which of the following?
1. Occupation
4. Which of the following is not a useful base for segmenting organisational markets?
1. perceptions, beliefs
5. A company who develops a single marketing mix for the whole market and doesn’t segment the market uses which of the following marketing strategies?
1. Undifferentiated Marketing
6. A differentiated target marketing strategy exploits which of the following?
1. Exploits the differences between marketing segments
7. Convenience, performance and status are examples of ______________ variables?
1. Benefits sought
8. Positioning is a choice of which of the following?
1. The target market & differential advantage
9. If a company is planning a segmentation strategy, and in doing so is considering using variables like age and occupation, which of the segmentation success criteria is the company considering?
1. Measurability
10. If a company is aiming to reposition its market offer by taking the same product into a different market the strategy would be called:
1. Intangible repositioning
11. Which of the following are all Profile segmentation variables?
1. Age, Gender and income
12.  The technique used by marketers to get to grips with the diverse nature of markets is called market __________________?
1.  Segmentation

Chapter 6:

1. Branding is the process by which companies:
1. satisfy the customer through product offerings.
2. distinguish their product offerings from competitors
3. select product ranges.
4. plan marketing communication strategies
2.  Which of the following is not a benefit of branding?
1. Sustaining high and stable sales and profits through brand loyalty
3. The strength of a brand’s position in the marketplace is built upon six elements. Which of the following is not one of these elements?
1. Brand domain
4. The element that makes the brand distinctive from other competing brands such as symbols, features, images and relationships is referred to as which of the following?
1. Brand assets
5. Family brand names are sometimes referred to as which of the following?
1. Umbrella brands
6. Brand stretching is which of the following?
1. established brand name is used for brands in unrelated markets
7.  Pan-European or global brands have which of the following advantages?
1. Match various cultures
8.  According to the BCG matrix, “Cash Cows” are described as which of the following?
1.  High market share in low growth markets
9.  Which of the following is the correct order of a product life cycle?
1. Introduction, Growth, Maturity, Decline
10. Which of the following is the correct order for the seven-step new product development process?
1. Idea generation, screening, concept testing, business analysis, product development, market testing, and commercialisation.
11. If a new product is sold in a limited but representative geographical area which part of the new product development process is the company engaged in?
1. Test marketing
12. Which of the following best describes the U2 and Apple iPod co-branding strategy?
1. ingredient

Chapter 7:

1. Which of the following type of company does not mainly offer services?
1. toy retailer
2. If two Café Nero restaurants provide different levels of service encounters due to one establishment having a very good local management team and the other having a bad local management team, which of the characteristics of services marketing best helps define what is happening?
1. Variability
3. Which of the following is not a unique characteristic of services?
1. acceptability
4. Which of the following methods helps tackle the problem of service variability?
1. service standardization
5. Which of the following are key characteristics of the extended service marketing mix?
1. Physical evidence, process and people
6. Research on service organisations has identified four characteristics of successful brand names, which of the following is not one of the characteristics of a successful brand name? (distinctiveness, relevance, flexibility, memorability)
1. Variability
7. Which of the following statement about the use of the marketing mix in relation to services is not true?
1. Word of mouth is irrelevant
8. Failure to select, train and motivate employees contributes to which of the following barriers to service quality:
1. inadequate delivery
9. Which of the following are key dimensions of service quality?
1. Reliability, responsiveness, assurance, empathy and tangibles
10.  Staff appearance, décor and layout refer to which of the following dimensions of service quality?
1. tangibles
11. Which element of the marketing mix is the Petshotel chain in the USA using when they provide floral soft furnishing, comfortable armchairs and doggie biscuits in the reception of their hotels?
1. process
12. Service quality is about understanding and meeting customer expectations. If a hotel has a notice in the reception which states that lunch times are “middayish” which of the following evaluation criteria is the hotel failing to meet?
1. communication

Chapter 8: 

1. Which of the following is not a method of setting prices? (Competitor-oriented pricing,

   Market-led pricing, Cost-based pricing, full cost pricing)

1. Sales-focused pricing
2.  Where companies set their prices at levels either above, the same as or below their competitors, this is called?
1. Benchmarking
3. Which of the following is a weakness associated with competitor-oriented pricing?
1. Competitor-oriented pricing is risky where a firm’s cost position is weaker than its competitors
4. Trade-off analysis is also known as which of the following?
1. conjoint analysis
5. Experimental pricing research uses which of the following?
1. Test marketing to determine prices
6. A combination of high price and high promotion expenditure is called which of the following?
1. Rapid skimming strategy
7. A skimming strategy is most suitable where:
1. Consumers are less price sensitive
8. Price can be used to convey differential advantage and to appeal to certain market segments. When launching new products, price should be carefully aligned with promotional strategy. If a company was using a low price and a low promotional spend the launch strategy would be called:
1. slow penetration
9. Which of the following circumstances may indicate a price increase?
1. harvest objective
10. When products destined to be sold in an international market are re-imported back into the home market and sold through unauthorised channels at lower levels than recommended by the producer, this practice is know as:
1. parallel importing
11. The amount a customer would have to pay to make the total life cycle costs of a new and a reference product the same, is referred to as which of the following?
1. Economic value to customer
12. “Break even analysis” is used to estimate which of the following?
1. Sales volume

Chapter 9:  

1. The distribution of products, information and promotional benefits to target consumers through interactive communication in a way, which allows response to be measured, is called which of the following?
1. Direct Marketing
2. A pull strategy involves which of the following?
1. Bypassing intermediaries to communicate to consumers directly
3. If a complex technical argument were required, which of the following promotional methods would be the most suitable?
1. personal selling
4. Which of the following is not a part of the communication process model? (source, receiver, feedback, noise)
1. Clutter
5. The acronym “AIDA” stands for which of the following?
1. Awareness, Interest, Desire, Action
6. Which of the following is an example of a media vehicle?
1. The Daily Telegraph
7. Which class of media is most suited to providing detailed factual information?
1. Print
8. If the effectiveness of an advertising campaign is measured using marketing research and subsequent payment to the advertising agency is based on how well communications objectives have been met, the method of payment is called:
1. Payment by results
9. Which of the following is a type of trade promotion?
1. Allowances
10. “Publicity” is seen to be:
1. more credible than advertising
11. Which of the following describes a company engaging in a number of activities in order to try and associate itself with an event without paying any fee to the event owner?
1. Ambush marketing
12. Which of the following are possible objectives of exhibitions?
1. Gathering competitive intelligence

Chapter 10:  

1. A marketing data base consists of many different types of information. Which of the following is not a valid source of information: (Product, Transaction, Promotion, Geodemographic)
1.  company employee information
2. Customer Relationship Management is becoming increasingly important, which of the following is an example of a success factor for a CRM system?
1. adopting customer orientation
3. Catalogue marketing, door-to-door leafleting and in-bound telemarketing are all examples of:
1. Direct marketing
4. If an advertising campaign is designed to trigger a potential customer to place an order, the technique is called:
1. Direct response advertising
5. Which of the following is an advantage associated with catalogue marketing?
1. Opportunity to display a wider range of products than could feasibly be achieved in a shop
6. Which element of the marketing mix is considered to be more transparent as a result of using the Internet?
1. Price
7. Which of the following is not necessarily a customer benefit of Internet technologies?
1. Security
8. Asking for an order, summarising the key points for the order, or offering a special deal for placing an order are all examples of techniques which might be used at the _________ stage of the selling process.
1. closing
9. The process of bypassing traditional intermediaries such as travel agents is known as which of the following?
1. disintermediation
10. _______ marketing can be described as: the passing of information about products and services by verbal or electronic means in an informal person-to person manner.
1. Buzz
11. Where publicity is generated from word of mouth recommendations on the Internet or email, this is referred to as which of the following?
1. viral marketing
12.  Key Account Management is likely to be used when a company has:
1. small number of large volume buyers

Chapter 11:  

1. Avon Cosmetics and Tupperware are examples of companies which have only two types of organisations in the distribution channel. These organisations are:
1. producer and consumer
2. Intensive distribution is a practice which involves:
1. Using all available outlets to provide saturation of the marketplace
3. A legal contract in which a producer and a channel member agree each member’s rights and obligations is called a:
1. Franchise agreement
4. Own-label brands are used by retailers to:
1. Extract more profit
5. Which type of retail operation has a narrow product focus but an unusually large width and depth to the product range?
1. Category killers
6. RFID stands for:
1. Radio Frequency Identification
7. JIT inventory control ensures:
1. Low inventory levels are maintained
8.  There are fewer limitations on the size of online retailers inventory because:
1. There are no physical space restrictions
9. A key success factor for Müller yoghurt was that they convinced Tesco to stock the brand. In this case what role in distribution management was Tesco playing?
1. channel intermediaries 
10. A manufacturer, through its size and strong brands, dominates a market and may exercise considerable power over intermediaries even through they are independent. This power may result in:
1. An administered vertical marketing system
11. Store location is critically important to retailer success. When Starbucks considered where to locate its coffee shops they looked carefully at behaviour patterns of the commuters who were the key target market and decided to locate the stores:
1. on the side of the street most favoured by the commuters
12. An example of scrambled merchandising is:
1. Sauces, Fruit juice, Meat, Jumpers, Toys

Marketing Readings 2: Roland Rust

Source Reference:

RUST, R., MOORMAN, C., and BHALLA, G. 2004. Rethinking Marketing, Harvard Business Review, [online] Available at: <http://hbr.org/web/special-collections/insight/marketing-that-works/rethinking-marketing> [Accessed 5 August 2012].

Rethinking Marketing

Because companies can now interact directly with customers, they must radically reorganize to put cultivating relationships ahead of building brands.
 

Imagine a brand manager sitting in his office developing a marketing strategy for his company's new sports drink. He identifies which broad market segments to target, sets prices and promotions, and plans mass media communications. The brand's performance will be measured by aggregate sales and profitability, and his pay and future prospects will hinge on those numbers.

What's wrong with this picture? This firm--like too many--is still managed as if it were stuck in the 1960s, an era of mass markets, mass media, and impersonal transactions. Yet never before have companies had such powerful technologies for interacting directly with customers, collecting and mining information about them, and tailoring their offerings accordingly. And never before have customers expected to interact so deeply with companies, and each other, to shape the products and services they use. To be sure, most companies use customer relationship management and other technologies to get a handle on customers, but no amount of technology can really improve the situation as long as companies are set up to market products rather than cultivate customers. To compete in this aggressively interactive environment, companies must shift their focus from driving transactions to maximizing customer lifetime value. That means making products and brands subservient to long-term customer relationships. And that means changing strategy and structure across the organization--and reinventing the marketing department altogether.

Cultivating Customers  

Not long ago, companies looking to get a message out to a large population had only one real option: blanket a huge swath of customers simultaneously, mostly using one-way mass communication. Information about customers consisted primarily of aggregate sales statistics augmented by marketing research data. There was little, if any, direct communication between individual customers and the firm. Today, companies have a host of options at their disposal, making such mass marketing far too crude.

The exhibit "Building Relationships" shows where many companies are headed, and all must inevitably go if they hope to remain competitive. The key distinction between a traditional and a customer- cultivating company is that one is organized to push products and brands whereas the other is designed to serve customers and customer segments. In the latter, communication is two-way and individualized, or at least tightly targeted at thinly sliced segments. This strategy may be more challenging for firms whose distribution channels own or control customer information--as is the case for many packaged- goods companies. But more and more firms now have access to the rich data they need to make a customer-cultivating strategy work.

B2B companies, for instance, use key account managers and global account directors to focus on meeting customers' evolving needs, rather than selling specific products. IBM organizes according to customer needs, such as energy efficiency or server consolidation, and coordinates its marketing efforts across products for a particular customer. IBM's Insurance Process Acceleration Framework is one example of this service-oriented architecture. Customer and industry specialists in IBM's insurance practice work with lead customers to build fast and flexible processes in areas like claims, new business processing, and underwriting. Instead of focusing on short-term product sales, IBM measures the practice's performance according to long-term customer metrics.

Large B2B firms are often advanced in their customer orientation, and some B2C companies are making notable progress. Increasingly, they view their customer relationships as evolving over time, and they may hand off customers to different parts of the organization selling different brands as their needs change. For instance, Tesco, a leading UK retailer, has recently made significant investments in analytics that have improved customer retention. Tesco uses its data-collecting loyalty card (the Clubcard) to track which stores customers visit, what they buy, and how they pay. This information has helped Tesco tailor merchandise to local tastes and customize offerings at the individual level across a variety of store formats--from sprawling hypermarts to neighborhood shops. Shoppers who buy diapers for the first time at a Tesco store, for example, receive coupons by mail not only for baby wipes and toys but also for beer, according to a Wall Street Journal report. Data analysis revealed that new fathers tend to buy more beer because they can't spend as much time at the pub.

On the services side, American Express actively monitors customers' behavior and responds to changes by offering different products. The firm uses consumer data analysis and algorithms to determine customers' "next best product" according to their changing profiles and to manage risk across cardholders. For example, the first purchase of a upper-class airline ticket on a Gold Card may trigger an invitation to upgrade to a Platinum Card. Or, because of changing circumstances a cardholder may want to give an additional card with a specified spending limit to a child or a contractor. By offering this service, American Express extends existing customers' spending ability to a trusted circle of family members or partners while introducing the brand to potential new customers.

American Express also leverages its strategic position between customers and merchants to create long-term value across both relationships. For instance, the company might use demographic data, customer purchase patterns, and credit information to observe that a cardholder has moved into a new home. AmEx capitalizes on that life event by offering special Membership Rewards on purchases from merchants in its network in the home-furnishings retail category.

One insurance and financial services company we know of also proved adept at tailoring products to customers' life events. Customers who lose a spouse, for example, are flagged for special attention from a team that offers them customized products. When a checking account or credit-card customer gets married, she's a good cross-selling prospect for an auto or home insurance policy and a mortgage. Likewise, the firm targets new empty nesters with home equity loans or investment products and offers renter's insurance to graduating seniors.

Reinventing Marketing  

These shining examples aside, boards and C-suites still mostly pay lip service to customer relationships while focusing intently on selling goods and services. Directors and management need to spearhead the strategy shift from transactions to relationships and create the culture, structure, and incentives necessary to execute the strategy.

What does a customer-cultivating organization look like? Although no company has a fully realized customer-focused structure, we can see the features of one in a variety of companies making the transition. The most dramatic change will be the marketing department's reinvention as a "customer department." The first order of business is to replace the traditional CMO with a new type of leader--a chief customer officer.

The CCO. Chief customer officers are increasingly common in companies worldwide--there are more than 300 today, up from 30 in 2003. Companies as diverse as Chrysler, Hershey's, Oracle, Samsung, Sears, United Airlines, Sun Microsystems, and Wachovia now have CCOs. But too often the CCO is merely trying to make a conventional organization more customer-centric. In general, it's a poorly defined role--which may account for CCOs' dubious distinction as having the shortest tenure of all C-suite executives.

To be effective, the CCO role as we conceive it must be a powerful operational position, reporting to the CEO. This executive is responsible for designing and executing the firm's customer relationship strategy and overseeing all customer-facing functions.

A successful CCO promotes a customer-centric culture and removes obstacles to the flow of customer information throughout the organization. This includes getting leaders to regularly engage with customers. At USAA, top managers spend two or three hours a week on the call-center phones with customers. This not only shows employees how serious management is about customer interaction but helps managers understand customers' concerns. Likewise, Tesco managers spend one week a year working in stores and interacting with customers as part of the Tesco Week in Store (TWIST) program.

As managers shift their focus to customers, and customer information increasingly drives decisions, organizational structures that block information flow must be torn down. The reality is that despite large investments in acquiring customer data, most firms underutilize what they know. Information is tightly held, often because of a lack of trust, competition for promotions or resources, and the silo mentality. The CCO must create incentives that eliminate these counterproductive mind-sets.

Ultimately, the CCO is accountable for increasing the profitability of the firm's customers, as measured by metrics such as customer lifetime value (CLV) and customer equity as well as by intermediate indicators, such as word of mouth (or mouse).

Customer managers. In the new customer department, customer and segment managers identify customers' product needs. Brand managers, under the customer managers' direction, then supply the products that fulfill those needs. This requires shifting resources--principally people and budgets--and authority from product managers to customer managers. (See the sidebar "What Makes a Customer Manager?") This structure is common in the B2B world. In its B2B activities, Procter & Gamble, for instance, has key account managers for major retailers like Wal-Mart. They are less interested in selling, say, Swiffers than in maximizing the value of the customer relationship over the long term. Some B2C companies use this structure as well, foremost among them retail financial institutions that put managers in charge of segments--wealthy customers, college kids, retirees, and so forth--rather than products.

In a customer-cultivating company, a consumer goods segment manager might offer customers incentives to switch from less-profitable Brand A to more-profitable Brand B. This wouldn't happen in the conventional system, where brand and product managers call the shots. Brand A's manager isn't going to encourage customers to defect--even if that would benefit the company--because he's rewarded for brand performance, not for improving CLV or some other long-term customer metric. This is no small change: It means that product managers must stop focusing on maximizing their products' or brands' profits and become responsible for helping customer and segment managers maximize theirs.

Customer-facing functions. As the nexus of customer-facing activity, the customer department assumes responsibility for some of the customer-focused functions that have left the marketing department in recent years and some that have not traditionally been part of it. CRM. Customer relationship management has been increasingly taken on by companies' IT groups because of the technical capability CRM systems require, according to a Harte-Hanks survey of 300 companies in North America: 42% of companies report that CRM is managed by the IT group, 31% by sales, and only 9% by marketing. Yet CRM is, ultimately, a tool for gauging customer needs and behaviors--the new customer department's central role. It makes little sense for the very data required to execute a customer-cultivation strategy to be collected and analyzed outside the customer department. Of course, bringing CRM into the customer department means bringing IT and analytic skills in as well.

Market research. The emphasis of market research changes in a customer-centric company. First, the internal users of market research extend beyond the marketing department to all areas of the organization that touch customers--including finance (the source of customer payment options) and distribution (the source of delivery timing and service). Second, the scope of analysis shifts from an aggregate view to an individual view of customer activities and value. Third, market research shifts its attention to acquiring the customer input that will drive improvements in customer-focused metrics such as CLV and customer equity.

Research and development. When a product is more about clever engineering than customer needs, sales can suffer. For example, engineers like to pack lots of features into products, but we know that customers can suffer from feature fatigue, which hurts future sales.

To make sure that product decisions reflect real-world needs, the customer must be brought into the design process. Integrating R&D and marketing is a good way to do that. Few companies have done this better than Nokia in Asia, where its market share exceeds 60%. In an industry where manufacturers must introduce scores of new offerings every year, the group's ability to translate customer input about features and value into hit product offerings is legendary. Among its customer-focused innovation tools is Nokia Beta Labs, a virtual developer community that brings users and developer teams together to virtually prototype new features and products, inviting even "wacky ideas" that may never make it to the marketplace. (Nokia adopted a different strategy in the United States, using far less customer input, and has seen its market share slide.)

Examples abound of companies that create new value through the collaboration of users and producers: Mozilla's Firefox in the web browser category, P&G's Swiffer in the home cleaning category, and International Flavors and Fragrances' partnership with B2B customers like Estée Lauder in the perfume market. In a world in which the old R&D-driven models for new product development are giving way to creative collaborations like these, R&D must report to the CCO.

Customer service. This function should be handled in-house, under the customer department's wing--not only to ensure that the quality of service is high but also to help cultivate long-term relationships. Delta Airlines, for example, recently pulled out of its call centers overseas because cultural differences damaged the airline's ability to interact with North American customers. Delta concluded that the negative impact on the quality of customer relationships wasn't worth the cost savings. Now, when customer service gets a call, a representative immediately identifies the caller's segment and routes her to a customer-service specialist trained to work with that segment. The interaction is captured in the customer information system and used, in turn, by the customer department to divine new customers' needs and create solutions.

If customer service must be outsourced, the function should report in to a high-level internal customer manager, and its IT infrastructure and customer data must be seamlessly integrated with the company's customer databases.

A New Focus on Customer Metrics  

Once companies make the shift from marketing products to cultivating customers, they will need new metrics to gauge the strategy's effectiveness. First, companies need to focus less on product profitability and more on customer profitability. Retailers have applied this concept for some time in their use of loss leaders--products that may be unprofitable but strengthen customer relationships.

Second, companies need to pay less attention to current sales and more to CLV. A company in decline may have good current sales but poor prospects. The customer lifetime value metric evaluates the future profits generated from a customer, properly discounted to reflect the time value of money. Lifetime value focuses the company on long-term health--an emphasis that most shareholders and investors should share. Although too often the markets reward short-term earnings at the expense of future performance, that unfortunate tendency will change as future-oriented customer metrics become a routine part of financial reporting. An international movement is under way to require companies to report intangible assets in financial statements. As leading indicators such as customer-centered metrics increasingly appear on financial statements, stock prices will begin to reflect them. Even now, savvy analysts are pushing firms to understand customer retention rates and the value of customer and brand assets.

Third, companies need to shift their focus from brand equity (the value of a brand) to customer equity (the sum of the lifetime values of their customers). Increasing brand equity is best seen as a means to an end, one way to build customer equity (see "Customer-Centered Brand Management," HBR September 2004). Customer equity has the added benefit of being a good proxy for the value of the firm, thereby making marketing more relevant to shareholder value.

Fourth, companies need to pay less attention to current market share and more attention to customer equity share (the value of a company's customer base divided by the total value of the customers in the market). Market share offers a snapshot of the company's competitive sales position at the moment, but customer equity share is a measure of the firm's long-term competitiveness with respect to profitability.

Given the increasing importance of customer-level information, companies must become adept at tracking information at several levels--individual, segment, and aggregate. Different strategic decisions require different levels of information, so companies typically need multiple information sources to meet their needs.

At the individual customer level the key metric is customer lifetime value; the marketing activities tracked most closely are direct marketing activities; and the key sources of data are customer databases that the firm compiles. At the segment level the key metric is the lifetime value of the segment (the lifetime value of the average customer times the number of customers in the segment); the marketing activities tracked most closely are marketing efforts targeted at specific customer segments, sometimes using niche media; and the key sources of information are customer panels and survey data. At the aggregate market level, the key metric is customer equity; the marketing activities tracked most closely are mass marketing efforts, often through mass media; and the key sources of information are aggregate sales data and survey data. We see that firms will typically have a portfolio of information sources.

Clearly, companies need metrics for evaluating progress in collecting and using customer information. How frequently managers contribute to and access customer information archives is a good general measure, although it doesn't reveal much about the quality of the information. To get at that, some firms create markets for new customer information in which employees rate the value of contributions.

LIKE ANY other organizational transformation, making a product-focused company fully customer-centric will be difficult. The IT group will want to hang on to CRM; R&D is going to fight hard to keep its relative autonomy; and most important, traditional marketing executives will battle for their jobs. Because the change requires overcoming entrenched interests, it won't happen organically. Transformation must be driven from the top down. But however daunting, the shift is inevitable. It will soon be the only competitive way to serve customers.

Building Relationships

Product-Manager Driven  

Many companies still depend on product managers and one-way mass marketing to push a product to many customers.

Product Centric Model

 

Customer-Manager Driven  

What's needed is customer managers who engage individual customers or narrow segments in two-way communications, building long-term relationships by promoting whichever of the company’s products the customer would value most at any given time.

Customer Centric Model

Reimagining the Marketing Department

The traditional marketing department must be reconfigured as a customer department that puts building customer relationships ahead of pushing specific products.

Reimagining Market Development

To this end, product managers and customer-focused departments report to a chief customer officer instead of a CMO, and support the strategies of customer or segment managers.

New Metrics for a New Model  

The shift from marketing products to cultivating customers demands a shift in metrics as well.

OLD APPROACH               NEW APPROACH

PRODUCT PROFITABILITY      CUSTOMER PROFITABILITY
CURRENT  SALES             CUSTOMER LIFETIME VALUE
BRAND EQUITY               CUSTOMER EQUITY
MARKET SHARE               CUSTOMER EQUITY SHARE

HBR Reprint R1001F

PHOTO (COLOR): SPOTLIGHT ON REINVENTION | Spotlight: Michel de Broin, Encircling, 2006, Asphalt, yellow paint, road sign, 14.8 x 21.9 m, Scape Biennale, Christchurch, New Zealand

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By Roland T. Rust; Christine Moorman and Gaurav Bhalla

Roland T. Rust (rrust@rhsmith.umd.edu) is a Distinguished University Professor and the David Bruce Smith Chair in Marketing at the University of Maryland's Robert H. Smith School of Business. Christine Moorman (moorman@duke.edu) is the T. Austin Finch, Sr., Professor of Business Administration at Duke University's Fuqua School of Business in Durham, North Carolina. Gaurav Bhalla (gaurav.bhalla@knowledgekinetics.com) is the president of Knowledge Kinetics, based in Reston, Virginia.

Idea in Brief

Companies have powerful technologies for understanding and interacting with customers, yet most still depend on mass media marketing to drive impersonal transactions.

To compete, companies must shift from pushing individual products to building long-term customer relationships.

The marketing department must be reinvented as a "customer department" that replaces the CMO with a chief customer officer, makes product and brand managers subservient to customer managers, and oversees customer-focused functions including R&D, customer service, market research, and CRM.

These changes shift the firm's focus from product profitability to customer profitability, as measured by metrics such as customer lifetime value and customer equity. This organizational transformation will uproot entrenched interests and so must be driven from the top.

What Makes a Customer Manager?

In a sense, the role of customer manager is the ultimate expression of marketing (find out what the customer wants and fulfill the need) while the product manager is more aligned with the traditional selling mind-set (have product, find customer).

Jim Spohrer, the director of Global University Programs at IBM, hires what UCal Berkeley professor Morten Hansen calls "T-shaped" people, who have broad expertise with depth in some areas. Customer managers will be most effective when they're T-shaped, combining deep knowledge of particular customers or segments with broad knowledge of the firm and its products. These managers must also be sophisticated data interpreters, able to extract insights from the increasing amount of information about customers' attitudes and activities acquired by mining blogs and other customer forums, monitoring online purchasing behavior, tracking retail sales, and using other types of analytics. While brand managers may be satisfied with examining the media usage statistics associated with their product, brand usage behavior, and brand chat in communities, customer managers will take a broader and more integrative view of the customer. For instance, when P&G managers responsible for the Max Factor and Cover Girl brands spent a week living on the budget of a low-end consumer, they were acting like customer managers. The experience gave these managers important insights into what P&G, not just the specific brands, could do to improve the lives of these customers.

We'd expect the most effective customer managers to have broad training in the social sciences--psychology, anthropology, sociology, and economics--in addition to an understanding of marketing. They'd approach the customer as behavioral scientists rather than as marketing specialists, observing and collecting information about them, interacting with and learning from them, and synthesizing and disseminating what they learned. For business schools to stay relevant in training customer managers, the curriculum needs to shift its emphasis from marketing products to cultivating customers.