Metis Strategy helped clients develop international market-entry strategies and identify potential acquisitions and partnerships in target markets.
A professional employer services organization asked Metis Strategy to investigate the feasibility of transferring the its U.S. business models, partially or completely, to its target markets in Europe. The client also wanted to understand which potential target countries in Europe would align best with its growth strategy.
In the second case, a Fortune 500 wine and spirits company, hoping to increase its growth in China, hired Metis Strategy to research and analyze consumption trends and preferences there.
Used the Metis Strategy International Expansion Framework to help clients define their strategic objectives, improve or develop their international expansion strategy, and decide on target countries and entry modes.
In both cases, Metis Strategy uses its International Expansion Framework to help clients achieve their goals (see image below).
Helped a leading professional employer services organization identify the most promising overseas market and develop business models suited to that market. Also helped a client identify growth opportunities in China.
Metis Strategy helped the professional employer services client identify and develop feasible business models in accordance with unique legal, cultural, and regulatory conditions in the its target markets. Additionally, Metis Strategy identified the client’s most promising target market, based on country-specific risk-reward analyses and country-by-country comparisons, and developed various market entry options, including potential acquisitions or partnerships.
In the second case, Metis Strategy provided the wine and spirits company with a detailed breakdown of the differences between its traditional markets and China, including contrasts in business climate, regulatory environment, and consumer preferences. The insights helped the client consider its growth scenarios for the Chinese market and evaluate new ways to capture market share.
396: E. & J. Gallo Winery CIO Sanjay Shringarpure elaborates on the changes the company has made to achieve its transformational vision. One of the major changes has involved transitioning IT toward supporting four verticals supporting each of the business functions of the company. We also discuss the cultural changes necessary to realize this vision, Sanjay’s take on blockchain and the cloud, the Wine OS platform the company has created, and a variety of other topics.
Podcast: Play in new window | Download
Subscribe: Apple Podcasts | Spotify | Amazon Music | Android | Podcast Index | Deezer | Youtube Music | RSS | More
Xerox recently announced the appointment of Naresh Shanker as senior vice president, chief technology officer, effective May 6. He will report to John Visentin, vice chairman and CEO of Xerox, and will serve as a member of the company’s Executive Committee.
“Naresh is a proven innovator with an impressive record of leading large-scale, digital transformations that help business growth and profitability,” said Visentin. “His experience and expertise will be essential as we execute on our innovation roadmap and reposition Xerox for long-term, sustainable growth.”
Shanker, who joined Xerox in January, will succeed Steve Hoover and will be responsible for research and product development and an increasingly digital information technology operation.
379: Estee Lauder CIO Michael Smith stresses the importance of talent and culture. On the talent side, Michael has brought in business leadership from several Fortune 500 companies, and he has helped open a new technology hub in Long Island City, New York, which is part of a two-campus model in New York that has formed after consolidating down from nine location. Michael notes that culture is Estee Lauder’s number one asset. We discuss how consumer expectations will change as technology evolves, the benefits Michael gets from being a consumer of his own products, among other topics.
Price matters, a lot. In an era of hyper price transparency, the subtlest price discrepancies will drive consumers to purchase on channels with the lowest price. Often consumers make buying decisions in two steps: first, what they want to buy; second, where they will buy. Especially for goods and services that are not substantially differentiated in terms of quality or features, your average consumer will naturally gravitate towards the lowest price. This has been felt in an especially acute manner for retailers such as Best Buy, where consumers go to window shop, but complete their purchases on lower priced ecommerce alternatives (i.e., Amazon, eBay, Jet, etc.). Best Buy has since woken up to the fact that without differentiating the customer experience, they were unable to create stickiness to convert foot traffic. When selling a commodity, or a good/service with a comparably substitute, price parity is arguably the most important driver in decision making. The challenge, of course, is that the manufacturers of a good, or a provider of a service, don’t always own the end touch point with the consumer. Many companies rely on a network of distribution partners to help market and sell their products. While this approach allows companies to scale revenue without the risk of building a massive salesforce, it also means that the manufacturer/provider will not be able to control all the variables that influence consumer’s buying decisions.
To strike the right balance, many companies develop a distribution strategy that comprises two dimensions: direct and indirect sales. Direct distribution focuses on selling directly to customers, while indirect distribution depends on intermediaries to complete a transaction. A distribution strategy needs to be married with a robust approach to inventory management, which may mean different things to a manufacturer than a service provider. Manufacturing firms typically have robust Sales & Operations process (referred to S&OP), during which they forecast sales and ensure there is enough inventory produces and physically distributed to distribution centers or shelf space to meet consumer demand. Service providers tend to look at inventory as an expiring asset: once time has passed, you can no longer sell that service (e.g., once a plane takes off with an empty seat, or a tee time passes without a foursome teeing off).
Although hospitality was one of the first industries to create robust distribution channels and networks through Online Travel Agencies (OTAs) to capture additional business, one of the consequences of that arrangement is that customers were conditioned to view hotel rooms as a commodity where price was the primary decision factor. While OTAs let reviews and minimal merchandising try to differentiate hotels, consumers also got lost in the noise of the difference between one chain versus another.
Over the past 5 years, intermediaries successfully crafted a narrative that they had the consumer’s best interest at heart by negotiating with the hotels, and only the OTAs could be trusted for the lowest price. Some of this was true; you could find lower prices for last minute deals, and there was benefit to both the OTAs and hotel operators that did not want to see a bed go empty. However, as OTAs further influenced the customer experience, and ate into profits with a greater share of bookings, the hospitality, airline, and other industries recognized that they would have to take decisive action to remove price disparity as the primary reason a consumer would purchase products or services on any indirect channel.
One compelling example is Icelandair and El Al who have begun experimenting with displaying sample prices of their competitors on their own websites, to show how competitive their direct prices are, and to hopefully prevent customers from “clicking” away to competitors and other price aggregators. With the explosive growth of options in the online distribution environment, there are two primary factors that companies should concentrate on: Price Integrity and Price Parity.
Price integrity is the concept of a customer being confident that they are purchasing a product of a certain value. While a customer may be willing to pay more or less, depending on the time and place of their purchase, there is a psychological range that they base their expectations on.
Price parity is the practice of maintaining a consistent rate for the same product across all distribution channels, including both owned and partnership channels. Nothing destroys trust more than being able to find a cheaper price on another website, or worse, when a company’s website is cheaper than its stores.
For industries that rely both on direct channels and distribution channels, there is a “co-opetition” relationship in which it is not uncommon for a firm to be competing with their distribution partners for sales. On the one hand, if a consumer wasn’t going to come to AlaskaAirlines.com, they would be more than happy with a referral from KAYAK, or a booking through Expedia to fill an empty seat. But if there was a chance that customer could have booked directly with Alaska Airlines, they would have fought hard to win that booking.
Hospitality and travel companies are in the middle of an ongoing competition with their distribution partners (OTAs and Metasearch engines – METAs) for the future of guest bookings. According to Hitwise, hotel direct booking only made up ~30.56% of online booking market share in 2017, at the same time OTAs continued to eat away further at market share, growing 60 basis points from 2016 to 2017.
While OTAs and METAs have become an invaluable component of hospitality marketing and distribution campaigns, there are contractual violations that stress the trust necessary for heathy “co-opetition” Some OTAs and METAs may display available prices that undercut contracted prices. Often these discounted prices are provided to the OTAs and METAs by wholesalers in violation of price-parity contracts, but the complex web of distribution relationships and flash-speed of online pricing engines makes it difficult for hospitality companies to really hold their distribution partners accountable.
Despite the challenges, companies must maintain a vigilant eye on how inventory and experiences are being displayed by distribution partners to ensure that consumers that may have the inclination to purchase on direct channels are not actively dissuaded from doing so. A successful distribution strategy must be aggressive and can quickly be implemented and maintained by following these six critical steps:
Metric tracking allows you to better understand if your chosen distribution partners are worth their distribution costs. For example, “NRevPAR” (Net Revenue per Available Room) is the industry standard in hospitality for calculating the revenue generated per available room, net of any discounts or commissions paid to intermediaries. Through the re-evaluation of their NRevPAR, hoteliers can evaluate their current distribution partnerships across their current distribution channels to ensure that their distribution costs are harmonized with their expectations for each partner. A significant drop in a key metric is a telltale sign that it is time to either renegotiate with your current distributors or start looking for replacements.
It is imperative that you monitor how and where your inventory is displayed across your distribution partners’ platforms. You want to have the ability to confirm that your partners are playing by the rules as well as ensuring that your offering is not appearing unofficially on other public channels with rogue prices that undercut you and your partners. If a partner determines that your inventory is floating around the public space at prices that undercut their contracted prices, it won’t be long before you observe your inventory being pushed to the bottom of their display pages—if they don’t remove you altogether for being out of parity.
Andrew Sheivachman of Skift pointed out that in 2017, global digital travel sales were projected to reach $189.6 billion in 2017, of which 40 percent was to be attributed to purchases made through mobile (4% gain over 2016). With such a rapid rise in the adoption of mobile booking and shopping, you cannot let your mobile channel development lag. You must work proactively with your distribution partners to refresh user interfaces and user experiences to optimize their mobile shopping experience. Rich content, descriptions, and high-quality photography also allow you to differentiate your product when it is sitting on a digital shelf with comparable products.
Dynamic yield pricing allows you to base your pricing relative to demand and other variables. Dynamic pricing is being employed across various industries to match supply and demand to move expiring inventory: preventing waste in grocery stores, ensuring that there are enough drivers on the road for ride-sharing platforms, or driving loyalty by generating customer-specific fares for airlines. Within the hospitality industry, dynamic pricing allows for inventory to be priced appropriately in response to the timing of a booking, local events, or any occasion that could cause fluctuating demand. Just make sure that your dynamic price is not undercut by a distribution partner or cached by that distribution partner and out of date when prices go back up.
While channels you directly manage (a website, a social presence, in-store), may not be the first point of interaction between you and your prospective consumer, you still can convert customers to complete their purchase through your owned direct purchase channels as you get to know them and earn their attention. In 2015, of booking journeys that were initiated on OTAs – over 34% of bookings were completed through supplier websites. Bolstering your available offers for customers through loyalty programs, subscription email campaigns, and social media can help drive customers from your distribution partners to your direct-booking channels.
Legacy backend systems may cause you millions of dollars in system outages and will almost certainly inhibit your ability to proactively adjust your distribution network. These legacy platforms cause transactional friction during the process in which a supplier’s prices are sent out to the systems of distribution partners, which in turn forces revenue managers to spend hours a day manually validating that prices and inventory are being migrated accurately to various distribution channels and partners. Rate monitoring platforms are now available that allow for revenue managers to monitor the behavior of their distribution partners using automation. The use of these platforms also increases transparency of your distribution partners’ networks. These platforms can be used to not only monitor the integrity and parity of pricing for your own inventory, but they can be used to quickly determine if you are competitively priced across the globe. With our earlier example of Icelandair and El Al, technology can also automatically allow revenue managers to know when their rates are being advertised by competitors (either accurately or inaccurately).
While your distribution partners can help you reach new customers and markets, you must ensure that their role as an intermediary does not equate to them “owning” the customer. It’s the incentive of your distribution partners to provide you revenue, but they are unlikely to share customer information that can be used to convert a customer into a loyal patron (i.e. personal email address, mailing addresses, etc.). Providing an amazing customer experience is the best way to overcome a consumer’s bias to make decisions based on price. If a company can pair a differentiated customer experience, with an enticing loyalty program that rewards purchasing goods or services through direct channels, there is still hope to maintain a balanced distribution strategy.
Skincare client’s IT organization struggled to plan for and prioritize projects in line with the strategic objective of the business.
A top selling skincare company was growing so quickly that they struggled to scale their IT Strategic Governance and Portfolio Management capabilities. As a result, IT and the business rarely consulted each other which led to projects being completed in siloes with limited resources and visibility. In order to maintain its position as a leader in skincare and digital products, this company reached out to Metis Strategy to improve their IT Strategic Governance process and to ensure IT and the various business units were delivering value for the organization.
Create a repeatable, scalable Strategic Governance process that ensures collaboration between IT and the business throughout a project lifecycle.
Metis Strategy set out to create a repeatable and scalable process to ensure the organization was making the right investments aligned to the strategic direction of the organization.
A bolstered Strategic Governance process enabled the organization to deliver projects on time, on budget, with faster time to market.
Communication between IT and the business increased as projects were brought to the Strategic Governance Board at ideation and continued to be monitored with IT-business touchpoints which led to:
376: Ocado CTO Paul Clarke has guided the company to differentiate itself by focusing not on how fast they can innovate, but on how fast they can innovate their system for innovation. Paul discusses the broad and deep technology estate that has enabled Ocado’s online grocery business to operate with scale, sustainability, and profitability. Through a focused but balanced approach to innovation, the company has developed a unique end-to-end operating solution for online grocery retail that includes massive automated warehouses and an e-commerce, fulfillment, and logistics platform. In a strategy that resembles Amazon’s AWS, Ocado is now making its technology available to other retailers through the B2B-focused Ocado Solutions arm. We also discuss Ocado’s roadmap for a frictionless customer experience, the advantages of its business model, its culture of disruptive innovation, among other topics.
Paul is the Chief Technology Officer of Ocado, the world’s largest online-only grocery retailer. In this role, Paul heads up Ocado Technology, whose 950+ engineers develop the cutting-edge technology that power Ocado’s operations and the Ocado Smart Platform. Given its vision of “powering the future of retail through sustained disruptive technology innovation,” Paul has guided Ocado to differentiate itself by focusing not on how fast they can innovate, but on how fast they can innovate their system for innovation. Before becoming CTO, Paul was Head of Routing, Simulations, Mobile, and Robotics. Paul has a Masters of Arts in Psychics from the University of Oxford.
Honest Tea co-founder Seth Goldman discusses the origins and growth of Honest Tea, how they overcame the company’s 2003 bottling crisis, and the unique equity structure that put them in a position of strength when they sold to Coca Cola. We also discuss Seth’s board membership with Beyond Meat and Bethesda Green.
Seth is the co-founder, President, and CEO of Honest Tea, the nation’s top selling ready-to-drink organic bottled tea. As CEO. Seth is responsible for overseeing the company’s mission to be the first organic and Fair Trade brand in the world’s largest beverage distribution system. Seth has degrees from Harvard and Yale. He is Chairman of the Board at Beyond Meat, and a board member of Ripple Foods and Bethesda Green.
Ann is the Senior Vice President and Chief Information Officer at Southern Glazer’s Wine and Spirits, North America’s largest wine and spirits distribution company with revenues exceeding $16 billion. As CIO, Ann is responsible for a wide variety of areas such as infrastructure, information security, the supply chain, and digital.
Prior to Southern Glazer’s, Ann was the Vice President of Consumer Products, Retail, and Distribution at Capgemini Consulting. Before Capgemini Consulting, Ann was the Vice President of the Fresh Dairy Direct and Supply Chain at Dean Foods. Ann additionally has held a variety of roles at The Coca Cola Company.
Ann received her Bachelor of Arts in Economics from the University of Georgia and her Masters in Executive Education and Business from Harvard University.
Among other topics, Manjit discussed the following issues with Metis Strategy:
Manjit is the SVP and CIO of The Clorox Company, a consumer packaged goods company with $6 billion in revenue. As CIO, Manjit is responsible for the company’s information technology organization and directing the company’s strategic technology initiatives. Manjit is also on the Clorox Executive Committee.
Manjit joined The Clorox Company in November 2014. Prior to joining The Clorox Company, Manjit led the industry solutions group at Box Inc., where he was responsible for aligning strategies with key customers across different industries. Prior to Box Inc, Manjit served as CIO for Las Vegas Sands, and was CIO of Chiquita Brand International before that. Manjit served as a regional CIO for Gillette in Singapore. Early in his career, Manjit worked for Procter & Gamble, where he pioneered the company’s digital marketing footprint and set up early e-commerce capabilities.
Manjit received a Bachelor of Science degree in mathematics and computer science from the State Univeristy of New York at Binghamton and a Master of Science degree in computer science from Indiana University.
Manjit is an Advisory Board Member at several organizations including Greylock Partners, DocuSign, CipherCloud, among others.
I recently caught up with Manjit by phone from his office in Oakland, California, and our conversation covered World Class IT Principle One, People, as Manjit discussed the importance of upgrading Clorox’s skill mix by bringing in people with new skills and perspectives from both inside and outside the CPG industry; and Principle Four, IT and Business Partnerships, as Manjit highlighted IT’s central position in Clorox, and the ways in which they collaborate with various departments to connect dots and identify opportunities that others may have missed.
