LESSON 1: 4MS OF OPERATION AND NEW PRODUCT DEVELOPMENT

The 4Ms of operation in relation to business opportunity means that the four
critical domains, usually attributed to manufacturing, those are: man, machine, material
and method work together. These four critical domains are also applicable to business
opportunities since business is essentially tied to manufacturing as well. When putting up
a business, manpower is critical as well as the other elements. The businessman must take
all of those into account. Let us look at each one in detail.

A. Method

Method refers to the system and step by step process in the business. Without a
scalable process, it would be difficult to expand the business. This means that the
methods used in the main branch must be documented and must be replicated as well in
other branches. If it is difficult to implement at another site, find what needs to be
improved. These are the process, schedule, and procedure.

B. Manpower

This is the worker. When setting up a business, finding honest and capable people
is always a challenge. People can be honest but may not be capable or competent and
some are capable but not honest. It is a rare to find someone with all the ideal qualities.
So for a businessman, they must be able to treasure their employees who are both capable
and honest as they are integral to the growth of the business. These are the skills,
technology, organization, resources.

C. Materials

Sourcing raw materials is critical in any business endeavour as the businessman

would want to have the cheapest possible at the highest quality. These are the
information, raw materials, consumables, and quality.

D. Machines

Machinery is also important. Without the proper equipment, you will not be able
to perform the needed tasks efficiently. You may be able to use the manpower to do it but
it is usually more efficient if machines are able to automate the work. These are the
equipment to make the work faster.

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4Ms and IPO (Input-Process-Output)

The idea of 4M & IPO model is to simply give you a systematical and total point
of view on what individual factor as well as what factor-to-factor interaction able to
influence on the expected Output (final results).

Figure 1: 4M’s and IPO

Figure 1. For a long time using the 4Ms method, not only for root cause analysis (cause-
and-effect) but also for many purposes, this method is connected to the IPO (Input –
Process – Output) model. The first M (Material) corresponds to the I (Input), the three
other Ms (Man, Machine, Method) are components of the P (Process), and the O
(Output) represent not only for the effect, but also for every results we can get from the
concerned process.

Figure 2: A factory.

Figure 2. In this situation, Man are the workers, Method is the process of putting
materials together to create a product, Machine is the automated moving machine that
transfers the product, and Materials are the parts needed to create a product.

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Figure 3: In an office

Figure 3. Man, Machine, Method in the service environment where Man is the woman
giving service (Method) is the use of technologies and (Machine) are those around her.

In many situation, companies which their manufacturing process have primarily

machine or automated equipment, tend to narrow their focus on the machine and
underestimate impact of factor Man. Their continuous improvement framework focus on
improving the equipment efficiency as much as possible. Meanwhile, companies which
their manufacturing depend on operator’s skills tend to narrow their focus on the people
productivity, and lack focus on the potential of the machine and technology.

NEW PRODUCT DEVELOPMENT

Successful new products springs from the convergence of : (1) the creative mind;
(2) the technical mind; and (3) the business mind. All three minds come together in the
entrepreneurial mind.

But reality, however, the three minds are seldom found in one entrepreneur.
However, the entrepreneur is certainly the orchestrator of the three minds.

THE ENTREPRENEURIAL MIND

The creative mind conceptualizes and designs a product that consumers find some
use for. It likewise produces a product that is pleasing to see, touch, smell, hear, and taste.

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It also produces a product that creates emotional attachment and eventually becomes a
significant personal expression of the consumer.

The technical mind is the technology originator. The entrepreneur may not
necessarily possess the technical mind but this is what drives him or her to covert new
knowledge into something highly functional and operational. The technical mind is also a
human endeavour. Finally, the technical mind is a technology renderer. He or she
resolves to make a new product work for the product creator by configuring and
reconfiguring the technical design of the new product.

The business mind harness the potentials of new products by creating the market
space for them. It also organizes sufficient forces and resources to develop, launch, and
commercialize the new product in order to maximize its market value. The business mind
also manages the external and internal business environment of the new product, which
goes beyond the product development process itself.

For a better appreciation, let us give example of how the creative mind, the
technical mind, and the business mind are used in developing a new product.

The Lampturn

Two MBA students embarked on their venture thesis. They were Ronaldo
Pingol and Christina Pastrana. They developed a new product called Lampturn.

Essentially, this new product was a desk lantern that reflected colorful
moving images onto the lantern screen. The product was positioned as a novelty
night lamp for children’s bedroom or a mood lamp for living rooms. The images
were illuminated on the lampscreen by an electric bulb of small wattage. As the
lamp was lit, the heat of the lamp cause the lamp to turn. While the screen
revolved around the four sides of the rectangular lamp, an illusion of changing
shapes and sizes was created while the images moved from one end of the screen
to another.

The creative minds of Pingol and Pastrana were activated as they searched for a
novelty product for their venture thesis. They were intrigued by the reflector/projector
lanterns in three movies: The Little Mermaid, Up Close and Personal, and Eye for an Eye.

Their technical minds were challenged, they had no technological backgrounds.

They did not possess the skills to fashion such lamps. They had to figure out how to make
the lamps turn, how to make their screens and how to make the images mesmerizing for
both children and adults alike.

Their business minds were also put to the test. Who would be their best target
market? How would they market the lamp? Who could make the lamp for them once they
produced the lamp at a cost that would generate profits for them?

PRODUCT DESCRIPTION

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 In this section, describe your product offering. This will include details of product
features and an overview of unique technology or processes. But don’t stop there and
don’t focus too much on technology. You must also describe the product benefits and
why customers will want to buy.

For most businesses, the products/services are not totally unique. If yours are,
take advantage of this while you can and plan for the competitive battles that will come.

If your products/services are not unique, you must find a way to position your
products/services in the mind of your customer and to differentiate them from the
competition. Positioning is the process of establishing your image with prospects or
customers. (Examples include: highest quality, lowest price, wider selection, best
customer service, faster delivery, etc.)

Basic Questions:

1) What products/services are you (will you be) selling?

2) What are the features and benefits of your product?

3) What Position do you have (or want to have) in the market?

4) How do your products/services differ from the competition?

5) What makes your products unique and desirable?

6) Why do (will) customers buy from you?

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LESSON 2: SWOT analysis

A SWOT analysis is an incredibly simple, yet powerful tool to help you develop your
business strategy, whether you’re building a startup or guiding an existing company.

SWOT stands for Strengths, Weaknesses, Opportunities, and Threats.

Strengths and weaknesses are internal to your company—things that you have
some control over and can change. Examples include who is on your team, your rights
and intellectual property, and your location.

Opportunities and threats are external—things that are going on outside your
company, in the larger market. You can take advantage of opportunities and protect
against threats, but you can’t change them. Examples include competitors, prices of raw
materials, and customer shopping trends.

Strengths and weaknesses are things that you can change in your business (think
location, employees, and marketing), while opportunities and threats are things outside
of your business that you can't change (think competitors or changes in customer buying
habits).

A SWOT analysis organizes your top strengths, weaknesses, opportunities, and

threats into an organized list and is usually presented in a simple two-by-two grid.

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These questions can help explain each section and spark creative thinking.

A. Strengths

Strengths are internal, positive attributes of your company. These are things that
are within your control.
a. What does your business do that is better than others in a similar field?
b. What assets do you have in your team, such as knowledge, education, network,
skills,
and reputation?
c. What physical assets do you have, such as customers, equipment, technology,
cash,
and patents?
d. What do people in your market see as your company’s strengths?

B. Weaknesses

Weaknesses are negative factors that detract from your strengths. These are things
that you might need to improve on to be competitive.
a. Are there things that your business needs to be competitive?
b. What factors affect the loss of your business sales?
c. Are there tangible assets that your business needs, such as money or
equipment?
d. Are there gaps among your team members?
e. Is your location ideal for your success?

C. Opportunities

Opportunities are external factors in your business environment that are likely to
contribute to your success.
a. Is your market growing and are there trends that will encourage people to buy
more of
what you are selling?
b. Are there upcoming events that your company may be able to take advantage of
to
grow the business?
c. Are there upcoming changes to regulations that might impact your company
positively?
d. If your business is up and running, do customers think highly of you?

D. Threats

Threats are external factors that you have no control over. You may want to
consider putting in place contingency plans for dealing them if they occur.
a. Do you have potential competitors who may enter your market?
b. Will suppliers always be able to supply the raw materials you need at the prices
you
need?
c. Could future developments in technology change how you do business?
d. Is consumer behavior changing in a way that could negatively impact your
business?
e. Are there market trends that could become a threat?

Example of a SWOT analysis

To help you get a better sense of what a SWOT example actually looks like, we’re
going to look at Starbucks, the world’s largest American coffeehouse chain that
operates in 31,256 stores worldwide. It was founded in Seattle, Washington in 1971.

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 With the invigorating vision of Howard Schultz (current Executive Chairman), it
became more than a coffeehouse, a third place between work and home. Kevin
Johnson is the current CEO of Starbucks.

Starbucks offer coffee, handcrafted beverages, fresh food, non-food items,

packaged goods, mugs and accessories, and gifts. Their competitors are Costa Coffee,
McDonalds’ McCafe, Dunkin Donuts, Café Coffee Day, Tim Hortons, Costa, and
Panera Bread.

STRENGTHS WEAKNESS
(Internal Strategic Factors) (Internal Strategic Factors)
 Strong brand image  High prices
 Strong financial performance  Imitability of products
 Growth in stores  Generalized standards for most products
 Extensive international supply chain  European tax avoidance
 Acquisitions  Procurement practices
 Moderate diversification  Recall of products
 Quality, taste and standardization
 Efficiency, strategic planning, and
reinvestment strategy
 Employee treatment
 Strong loyalty program
 Gender neutral restroom

OPPORTUNITIES THREATS
(External Strategic Factors) (External Strategic Factors)
 Expansion in developing markets  Competition with low-cost coffee sellers
 Business diversification and product specs  Competition with big outlets
 Introducing new products  Imitation
 Partnerships or alliances with other firms  Coronavirus
 Exploit latest coffee trends and technologies  Global recession
 Adopt price differentiation  Rising prices of raw coffee beans
 Strengthen online channels
 Coffee delivery service
 Coffee subscription
https://bstrategyhub.com/swot-analysis-of-starbucks-starbucks-swot/

Key Points

SWOT Analysis is a simple but useful framework for analyzing your

organization's strengths, weaknesses, opportunities, and threats. It helps you to build on
what you do well, to address what you're lacking, to minimize risks, and to take the
greatest possible advantage of chances for success.

It can be used to kick off strategy formulation informally, or in a more

sophisticated way as a serious strategy tool. You can also use it to get an understanding
of your competitors, which can give you the insights you need to craft a coherent and
successful competitive position.

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LESSON 3: MARKETING VS. ADVERTISING

Marketing is a business practice that involves identifying, predicting and

meeting customer needs. Effective marketing strategies help businesses isolate how
best to serve their client base, while maximizing revenue at the same time.

In business-to-consumer (B2C) marketing, marketing efforts are directed

toward consumers. In business-to-business (B2B) marketing, marketing efforts are
directed toward other businesses.

In both B2C and B2B efforts, there are several important factors to
consider when developing a marketing strategy. More specifically, practical marketers
will evaluate:

a. Orientation —refers to the guiding principles of the business itself, often

referred to as business philosophy or corporate culture. Typically,
organizations will decide to orient around product, sales, production or
marketing.
b. Mix — functions as a decision-making guide for a company’s marketing
efforts. A modern marketing mix will usually focus on the four Cs:
client/customer, cost, convenience and communication.
c. Environment — refers to every factor that could impact a company in the
execution of marketing strategy or decision-making. In this vein, companies
should consider the internal environment within their organization. External
factors—such as macro and micro environments—are also important to
consider.
d. Market — refers to the characteristics of a company’s ideal client case.
Research and segmentation efforts can help isolate the geographic and
demographic factors that will help a company market and sell its products or
services.

Traditionally, marketing efforts relied upon four different channels to connect

with customers: print, mail, TV, and telephone. Businesses could engage any or all of
these four channels to deliver corporate messaging and enhance branding efforts.
Throughout the 20th century, the dominant marketing approach revolved around print and
broadcast media combined with effective messaging and advertising.

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 As the world turned to the 21st century, however, marketing strategies have
evolved to account for the rise of the internet and e-commerce. With the transition to life
and commerce online, digital marketing transformed the way business
communication works with their clients. New messaging platforms, such as social media,
enable a two-way communication between business and client. From a marketing
standpoint, specifically, modern technology has made it much easier to gather
information on customer behaviors, needs, wants, etc.

Common Types of Marketing Include:

a. Digital Marketing — refers to application of marketing strategies to electronic

communication devices, such as computers or smartphones. Digital marketing
strategies often leverage search engines, email, websites, blogs and other
techniques to reach customers.
b. Social Media Marketing — A subset of digital marketing - uses social
platforms such as Facebook or Twitter to reach potential clients. This style of
marketing allows companies to take advantage of earned media from individuals
outside of their organization. An evolving part of social media marketing is
influencer marketing, where popular users are compensated for promoting a
company’s products or services.
c. Global Marketing — Between globalization and the internet, some of the
world’s largest companies have developed global brands. Accordingly, global
marketing enables these companies to employ a unified strategy to reach
customers at the local, regional, national and international levels at the same
time.
d. Relationship Marketing — avoids invasive strategies such as commercials or
ads and relies on customer happiness instead. Relying on strategies that help
retain and satisfy customers, relationship marketing strives to establish a long-
time and loyal client base.
e. Brand Management — Brand management attempts to create a bond between
customer and a particular company’s brand. To do so, it is necessary to evaluate
a company’s products or services as well as logo, design, packaging and other
elements. Brand management also assesses aspects of the target market, direct
competition and existing customer relationships.
f. Product Development — is the process of transforming a business opportunity
into a sellable product or service. Development can occur with existing products
or new products. Successful product development involves many marketing
concepts, including identification of client needs as well as market research and
analysis.

Advertising is a business practice where a company pays to place its

messaging or branding in a particular location. Businesses leverage advertising

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 to promote their products and services for sale as well as establish corporate
culture and branding. When employed properly and strategically, advertising can
drive customer acquisition and boost sales.

Advertising establishes a one-way channel of communication,

where companies can broadcast non-personal messaging to a general audience.
Unlike other types of marketing or even public relations, companies have total
control over advertising. When a company pays to place an ad, it has complete
control over how the content involved is promoted.

There are countless benefits to a successful advertising campaign.

In common practice, businesses can leverage advertising to:

a. educate customers on the nature of products or services;

b. convince customers that products or services are superior;

c. improve customer perception of brand or culture;

d. generate customer need or want for products or services;

e. exhibit new applications for products or services;

f. publicize new products or services to potential customers;

g. attract new customers to purchase products or services; and

h. retain the existing customer base.

Common Types of Advertising

As with marketing, advertising has evolved significantly in the 21st

century. The digital age has opened new advertising avenues for companies to take
advantage of, from search engines to social media and websites of all shapes and
sizes. In this new reality, businesses can achieve advertising goals and reach potential
customers just about anywhere, particularly with the prevalence of smartphones.

Within the realm of common advertising techniques, many businesses

prioritize any or all of the following methods:

a. Traditional Advertising — refers to ad placement in traditional print and

broadcast media. Common examples of traditional advertising include
newspaper ads, TV commercials and radio infomercials.

b. Retail Advertising — refers to ad and placement within retail stores to

maximize sales. Common examples of retail advertising include product
placement within stores, ads on shopping carts and featured product displays.

c. Online Advertising — refers to ad placement on the internet in media and

other websites. Common examples of online advertising include contextual ads
in search engines, banners on websites, promotional videos and sponsored
content.

d. Mobile Advertising — refers to ad placement on mobile phones and

smartphones. Common examples of mobile advertising include automated
diallers, banners to download apps and click-to-call ads.

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 e. Outdoor Advertising — refers to ad placement on outside structures,
generally in heavily trafficked areas to attract the most attention. Common
examples of outdoor advertising include billboards, banners on the outside of
buildings and branded vehicles.

f. Pay Per Click (PPC) Advertising — refers to online ad placement designed

to drive traffic to a company’s website. Companies derive extensive customer
data from these ads, only paying when users click on the link.

Difference between Marketing and Advertising

The main difference between these two business practices is that

advertising is a part of marketing. A successful marketing strategy typically dedicates
resources to advertising at multiple levels, placing corporate marketing
communications in various types of media.

To dig a little deeper into this question, it be helpful to review the

differences between paid, owned and earned media:

a. Paid Media — involves a company paying a publisher to place marketing

communications. Examples of paid media include billboards, broadcast and
print ads, search engine ads, social media ads and direct mail or email.

b. Owned Media — involves a company using its own channels to place

marketing communications. Examples of owned media include retail
merchandising, websites and business blogs, brochures, corporate social
accounts and press releases.

c. Earned Media — involves external communications about a company from

third-party actors. Examples of earned media include online reviews,
newspaper or magazine articles, social media endorsements, customer
demonstrations and types of external publicity.

Types of advertising

A. Newspaper
Newspaper advertising can promote your business to a wide range of
customers. Display advertisements are placed throughout the paper, while classified
listings are under subject headings in a specific section.

You may find that a combination of advertising in your state/metropolitan

newspaper and your local paper gives you the best results.

B. Magazine
Advertising in a specialist magazine can reach your target market quickly

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 and easily. Readers (your potential customers) tend to read magazines at their leisure
and keep them for longer, giving your advertisement multiple chances to attract
attention. Magazines generally serve consumers (by interest group e.g. women) and
trade (industry/business type e.g. hospitality).

If your products need to be displayed in color then glossy advertisements

in a magazine can be ideal — although they are generally more expensive than
newspaper advertisements.

Magazines do not usually serve a small area such as a specific town. If

your target market is only a small percentage of the circulation, then advertising may
not be cost-effective.

C. Radio
Advertising on the radio is a great way to reach your target audience. If
your target market listens to a particular station, then regular advertising can attract
new customers.

However, sound has its limitations. Listeners can find it difficult to

remember what they have heard and sometimes the impact of radio advertising is
lost. The best way to overcome this is to repeat your message regularly — which
increases your costs significantly. If you cannot afford to play your advertisement
regularly, you may find that radio advertising does not generate strong results.

D. Television
Television has an extensive reach and advertising this way is ideal if you
cater to a large market in a large area. Television advertisements have the advantage
of sight, sound, movement and colour to persuade a customer to buy from you. They
are particularly useful if you need to demonstrate how your product or service works.

Producing a television advertisement and then buying an advertising slot is

generally expensive. Advertising is sold in units (e.g. 20, 30, 60 seconds) and costs
vary according to:

a. the time slot

b. the television program
c. whether it is metro or regional
d. if you want to buy spots on multiple networks.

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 E. Directories

Directories list businesses by name or category (e.g. Yellow Pages phone

directories). Customers who refer to directories have often already made up their
mind to buy - they just need to decide who to buy from.

The major advantage of online directories over print directories is that if

you change your business name, address or phone number, you can easily keep it up
to date in the directory. You can also add new services or information about your
business.

If your target market uses print and online directories, it may be useful to
advertise in both, although print directories are being used less.

F. Outdoor and transit

There are many ways to advertise outside and on-the-go. Outdoor

billboards can be signs by the road or hoardings at sport stadiums. Transit advertising
can be posters on buses, taxis and bicycles. Large billboards can get your message
across with a big impact. If the same customers pass your billboard every day as they
travel to work, you are likely to be the first business they think of when they want to
buy a product.

Even the largest of billboards usually contain a limited amount of

information; otherwise, they can be difficult to read. Including your website address
makes it easy for customers to follow up and find out more about your business.
Outdoor advertising can be very expensive especially for prime locations and
supersite billboards.

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 G. Direct mail, catalogues and leaflets

Direct mail means writing to customers directly. The more precise your
mailing list or distribution area, the more of your target market you will reach. A
direct mail approach is more personal, as you can select your audience and plan the
timing to suit your business. A cost effective form of direct mail is to send your
newsletters or flyers electronically to an email database. Find out more about direct
mail.

Catalogues, brochures and leaflets can also be distributed to your target

area. Including a brochure with your direct mail is a great way to give an interested
customer more information about your products and services. Learn more
about leaflet marketing using letterbox drops and handouts.

H. Online

Being on the internet can be a cost-effective way to attract new customers.

You can reach a global audience at a low cost. Many customers research businesses
online before deciding whom to buy from.

A well-designed website can entice customers to buy from you. There are
a number of ways you can promote your business online via paid advertising or to
improve your search engine rankings. Learn more about doing business online.

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 The Purpose of Advertising

Advertising has three primary objectives: to inform, to persuade, and to remind.

a. Informative Advertising creates awareness of brands, products, services, and ideas. It

announces new products and programs and can educate people about the attributes and
benefits of new or established products.

b. Persuasive Advertising tries to convince customers that a company’s services or

products are the best, and it works to alter perceptions and enhance the image of a
company or product. Its goal is to influence consumers to take action and switch
brands, try a new product, or remain loyal to a current brand.

c. Reminder Advertising reminds people about the need for a product or service, or
the features and benefits it will provide when they purchase promptly.

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