Subjects - Business

American Eagle Outfitters and Wet Seal Stores have issued statements about company turnarounds needed to cut sales loses. This kind of story occurs far too often: a business disconnects from their customers because the company either wants to sell to a larger customer base or they wa

According to USFDA, a combination product is one composed of any combination of a drug and device; biological product and device; drug and biological product

nt to upgrade to a more prestigious look.

The Strategy:

The strategy may seem initially correct. Here are some examples:

==> Three years ago American Eagle decided to shift from its targeted customer, the high school teen, to the college student body by offering more sophisticated

; or drug, device, and biological product and fixed dose combination would include two or more combinations of drug.

Examples of combination products may in

styles. Their intent was to grow up with their customers.

==> Wet Seal felt they had to react when competitor Forever 21 started to offer more trendy items. Wet Seal decided to distinguish itself by upgrading the quality of the products.

==> In an attempt to end a downturn in marke

lude drug-coated devices, drugs packaged with delivery devices in medical kits, and drugs and devices packaged separately but intended to be used together.

t share, McDonald's decided to upgrade their menu selections. They introduced higher priced specialties, super sizes, and upped prices on their traditional favorites.

==> Remember when Farmer Jack closed their stores for several days to go to everyday low pricing? It was their attem

here is enormous increase in the number of combination products entering the market in the recent years. Combination products have proven advantages but fixe

pt to recapture the value-minded customers they had lost to Wal-Mart and Meijer. At the same time, Kroger, which was always positioned on quality and variety, was upscaling to compete with Whole Foods Market and other specialty chains.

==> Unlike Wal-Mart where Sam Walton and his co

d dose combinations are still in the process of convincing regulatory authority on their advantages over the single ingredient formulations.

Combination pro

mpany leaders understood the low-price business, Kmart executives moved into the posh suburbs of Detroit. While Sam continued to relate to his customers, even driving his own ancient pick-up truck, Kmart's CEO had a driver behind the wheel of his luxury car. It is no wonder he becam

ucts have become life saving products for the pharmaceutical companies who doesn’t have many innovative molecules in their product pipeline and have been inc

e uncomfortable running a discount store chain and wanted to impress his upper-class friends by upscaling the stores.

The Mistakes:

Each of the these five organizations made a fundamental mistake in changing their strategy.

==> American Eagle overlooked the fact that as youth grow

easingly used in the product life cycle management. Even the companies having product patents are trying to extend their product life cycle through the combi

into adulthood, they want to leave behind the things of youth. Although a favorite among adolescents, the college customer wants to move from high school and show they have grown up. American Eagle is one of those things they want to leave behind. American Eagle needed to concentra

nation products and maximize the revenues. But the companies involved in this practice are overlooking that they are burdening the patients both economically

te on building their high school business.

==> Wet Seal was disconnected from their customer. When they differentiated from Forever 21 with higher quality and prices, they forgot that their customer base was more disposable. They wanted new swimsuits through the season, not one sui

and physically. They need to rightly judge the benefits of the combination products and they have to even look at the risks involved when combining the produ

t that will last a couple of years, especially because the trend cycle is shorter.

==> McDonald's decision to upscale ignored their marketposition as a low-cost fast food retailer. They struggled until they developed the dollar menu, which has brought back their base customer. Keepi

ts. Some of the combination products were well accepted by physicians while others suffered. Companies involved in development of combination products are fi

g the upscale menu items, the chain is able to address the desires of a changing national diet while retaining the customers that made them strong.

==> Although Farmer Jack's move was probably the right thing to do, the corporate executives at parent A&P did not understand the margin

ding difficulty in defining their combination products and facing various challenges from selecting a combination to marketing it.

Following aspects would a

structure for everyday low pricing, raising prices to the previous high-low strategy. By abandoning ELP, Farmer Jack returned to poor results, sealing the death of the chain. However the Kroger strategy worked because it did not change the customer base.

==> Kmart's move was a disa

dd to the challenges in developing combination products:

Which markets to tap where the combination products can do fairly well?
Which combination prod

ster at the check-out. To further kill the company, the executive was replaced by a new CEO. This CEO was from an exclusive suburb of New York City and owned upscale "The Museum Company". Although financially astute, there was no chance he would relate to the Kmart base customer th

cts are meaningful and rational?
Which therapeutic categories to select?
Which Combinations can address unmet needs of the patients?
Do combin

at craved Big Red chewing gum instead of Altoids. The company entered a downward spiral that would end in bankruptcy.

Underlying Principle

Let's shift for a moment to corporate culture. The number one problem with changing a corporate culture is that the current corporate leaders

tions increase the patient compliance?
What would be the developing cost?
How to tackle the risks encountered during combination product developmen

see the culture as a comfort zone. The existing culture is what made them successful, therefore it works (at least in their minds). The idea of changing a corporate culture, even for improved productivity or bottom-line results, takes the executives out of their comfort zone - there

t?

As combination products don't fit into the traditional categories of drugs, medical devices, or biological products, the USFDA is in the process of devel

fore they do not embrace a changed culture. In fact, most will undermine or be outright hostile to a change in corporate culture.

To prove the point, how many executives do you know that have taken their company to casual attire yet still wear a tie? If you know of even one you know

ping new procedures for reviewing their safety, efficacy and quality.

Professional from academic institutions, pharmaceutical industries, health care indust

too many. Although they may make great sounding excuses as to why they need to wear the tie, the reality is that they have not bought into the changed culture.

The Core Problem

Back to the idea of knowing your company roots, these same "culture-change-fearing" executives will quick

y and representatives from various regulatory agencies are working out to design the regulatory requirements for manufacture and sale of combination products

ly embrace an upscale strategy that ignores the existing customer base. Why? The new strategy is in some way close to their comfort zone. The customer perspective becomes unimportant as the comfort-zone factor kicks in.

This is what the unsuccessful companies above did. In one form

.

As there is an increasing trend of the combination products companies manufacturing such products should be able to tackle the problems involved in the de

or another, they tried to change their customer base. Executives will make this product or service change because these high-paid executives are attempting to take their customers to a place more in line with their own shopping desires or where their acquaintances will give them the m

elopment. They need to be wiser in analyzing the market trends and the regulatory requirements.

Companies that provide selfless information through particip

ost admiration.

Three Vital Steps to Refining Your Strategy

There are three vital steps to take if you want to successfully change your stategy to add more value to your customer. To receive these steps, request the FREE PDF file at www.getmaximpact.com/RequestArticle-Strategy.html

tion in industry events and feedback to regulatory authorities would be able to face the challenges and will be successful in developing combination products

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Big money isn't as much in winning customers as in keeping customers. Think of them as individuals-each individual customer's perception of your company will determine how well you do this. Here are some easy, down-home steps-to-remember when you want to keep 'em coming back!

Keep the design simple as this is the element that will attract people. In fact studies conducted fort his has found out the people identify and connect more with the message if this is put across in a simple manner. A picture can speak thousands of words despite being silent. All you need to do is find a picture that will suitable reflect what you want to say to people. Make sure that you make a good choice about the picture as this is that element which will appeal most to customers.

Effective leadership is all about enabling employees to choose to change in ways that ensure organizational and personal success. Leaders create processes where employees can gain the skills required by our changing environment. They explain the whys behind specific change initiatives and they allow employees to learn from failures. Enabling others to survive change results in productive teaching-learning relationships and strengthens the organization.

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