Customize products to create Customers loyalty: Pirelli Tyres

Pirelli & C. SpA is a diverse multinational company based in Milan, Italy. The company, the world’s fifth largest tyre manufacturer, is present in over 160 countries, has 20 manufacturing sites around the world and a network of around 10,000 distributors and retailers.

Power is nothing without control is the well known slogan of Pirelli Tyre Company, and is featured in numerous television and print advertisements.
Pirelli's activities are still primarily focused on the production of tyres and cables (for energy and telecommunications).
In 2005, Pirelli sold its cable division to Goldman Sachs, which changed the new group's name to Prysmian.

During Christmas period they launched a very interesting initiative that powered their brand, increase customer loyalty , sales and profitability.

They created a special kit to customize motorbike tyres. Consumers could buy through web site, at a quite good value price (€ 150=90% profit) the kit to make unique their motorbike tyres.

They are able to personalize motorbike tyres with their name, only initial of name or  a small picture...

The skit could be used only with Pirelli tyres: customers loyalty, brand awarness and huge profits were got with this innovative campaign.

I think this initiative should be considered Innovative as Pirelli sell something different from technology, power, outstanding performance , that represent its core business; they sell something for life-style and differentiation of people.

Blue Ocean Strategy

<Something outside of our industry>
The 1st example written on the book called "Blue Ocean Strategy" is Cirque du Soleil.
Cirque du Soleil made a big success under the decling market, which was the circus industry.
They did not take the other companies' market share to make a big growth but attracted a new customer.
They do not use animals during their performace, which could cost a lot to maintain a good condition and whose usage is often critisized as an animal abuse.
Their customers pay more than they used to pay for the conventional circuses, because they change the concept of circus to have one whole artistic story during their performance. 
When I lived in Canada, I also went to see the Cirque du Soleil performances several times, even though I did not go to see the conventional circus show even once.

<Something inside our industry>
About 15 years ago, I was a marketing manager of home appliances at Panasonic Canada.
The microwave oven industry was also decling every year and the avearge selling price was decling every year.
However, when we introduced the stailess steel microwave oven with the stainless steel built-in trim kit for the wall mounting, we were able to increase the price more than double with a decent profitabilty at the Domain, the sales company & the dealers.
The reason behind is that if end users' purpose to buy a microwave oven is just for reheating their left-over foods, they are very sensitive about prices, but if their main purpose is to renovate their whole kitchen with all of other major appliances, they do not care about a sigle piece of microwave oven price so much.

<How to apply to our current situation>
Most of the Panasonic products we sell now are facing the same sitation. 
The unit price is declining every year, and the competition is getting tougher. 
If we look at our market just by comparing competitors' specs & lookig at the Gfk data, ideas which lead us from Red Ocen to Blue Ocean can not come up with.
In our industry, a bright idea often comes up when we visit at the stores, listen to what store owners are saying, and listen to what end users are talking about at the stores.  
The Domains' product planninng is most likely located in Japan, and therefore, it is crucial that each sales companies located in the market initiate an innovation in terms of product planning.

KITAZAWA (PPS), who is to create a blog for the 1st time

IKEA as a High Culture Institution , Global Cult brand

The IKEA Concept began when Ingvar Kamprad, an entrepreneur from the Småland province in southern Sweden, had an innovative idea.
In Småland, although the soil is thin and poor, the people have a reputation for working hard, living frugally and making the most out of limited resources. So when Ingvar started his furniture business in the late 1940s, he applied the lessons he learned in Småland to the home furnishings market.
Ingvar's innovative idea was to offer home furnishing products of good function and design at prices much lower than competitors by using simple cost-cutting solutions that did not affect the quality of products.
The vision was to create a better every day life for the most people by offering a wide range of well designed function  home furnishing products at price so low that as many people as possible will be able to afford them. (no big difference with Panasonic founder Vision:-)
Fundamental activities such as eating, sleeping, storing items, socialising and so on create a demand for furniture and practical products that solve essential human needs. Furthermore, the vast majority of people have limited budgets and limited space in their homes. The IKEA range includes products for every part of the home.
Without Ikea many people couldn't have approached contemporary design and the main reason is cheapness.
To sell nice products (created by designers) with a cheap price Ingvar used every opportunity to reduce costs, and he scraped and saved in every way possible except on INNOVATION of ideas and Quality.
Today, the IKEA trademark represents the leading home furnishings brand in the world with more than 300 stores in more than 35 countries and more than 130,000 co-workers.
Ikea sell not only furnishing products but more than 7000 different items (from dishes to toys) and some pieces of swedish culture and identity: In almost every shop there is a restaurant with swedish tipical dishes and Furniture are named with sweden toponysm.

IKEA Culture is based on:
1.Lack of hierarchy: In some special weeks all Senior Manager work in the shops; everybody (also Top Managers) fly in economy class; Ikea employees don't grow rich but they work autonomously in flat organization and in a friendly atmosphere. 

2.Competitiveness: Always try to improve in cutting price (sofa "Klippan" price decrease of 40% from 354 to 202$ from 1999), selecting best suppliers of materials and purchasing huge quantity of goods and materials at global level.

3.Design: The big challenge is to draw and create nice products, cheap and both pretty and practical. But each design is approved only if production cost is affordable (product test could last until 3 years).
While most retailers use design to justify a higher price, IKEA designers work in exactly the opposite way. Instead they use design to secure the lowest possible price. IKEA designers design every IKEA product starting with a functional need and a price.
Then they use their vast knowledge of innovative, low-cost manufacturing processes to create functional products, often co-ordinated in style. Then large volumes are purchased to push prices down even further.

Most IKEA products are also designed to be transported in flat packs and assembled at the customer's home. This lowers the price by minimising transportation and storage costs. In this way, the IKEA Concept uses design to ensure that IKEA products can be purchased and enjoyed by as many people as possible.

4. Customers cooperation: Sales strategy has a specific focus on Customer cooperation.
IKEA customers also contribute to keeping prices low. They select and pick up the products themselves, transport them home and then assemble them themselves. And they can enjoy them already later that day.

Internal company conditions to unable successfull innovations By Sara

I think there are some basic favourable conditions to make Innovations and They are not related to materials, suppliers, quality of services or product features but to Company "soft" environment :

1.Challenging attitude and freedom to propose new Ideas

2.Indipendence : unable people to take decisions

3.Dynamism: How many plans/projects are followed

4.Trust others

5.To have time to experiment

6.Lack of internal conflicts

7.Concrete support and committment to unlikely ideas

8.Take risks  (our face, money, time..)

9. Humor =possibility to “play” and have room to make some mistake  

 

Do you recognize all of some of the above definitions as peculiarity of our Company?

Innovation Spaces

The first thing we think about when we talk of Innovation: is Products and Technology.. may be because we work for a Multinational Hi Tech company, product oriented.
Starting my conversations on "Innovation" I realized that most of innovation today is linked to process, organization structures, roles and competencies, in one single word: Culture.
Italy is one of the most creative country but not so good in implementing Innovation. Having good and unique Ideas is not enough to innovate. we need methodology and first of all New leaders profile.