Case Studies

1.Case Study of FedEx: A Powerful Partnership of Strategy and Corporate Communication

FedEx, an international company that provides shipping by air and ground and a range of logistics and trade consulting services, must provide speed and dependability globally not only for its core businesses with customers but also in its communications with constituencies about key business objectives. Employees at FedEx work in 200 countries 7 days a week, 24 hours a day. The corporate communication function must operate in as broad a landscape with speed, high impact, and precision.

Given the company’s core businesses, communication challenges can arise in many quarters—in anything from crisis management, such as managing communications in the aftermath of a plane crash or computer outage, to e-commerce initiatives, to the rapid implementation of a new business model.

According to corporate vice president Bill Margaritis, the corporate communication function needs to add significant value to the business and must be fully aligned with those making high-impact strategic decisions for the company. But how has he accomplished this at FedEx? First, Margaritis conducts annual audits with executives to find out what they are trying to accomplish and to establish a scorecard for success. Among these are the company’s new “customer-facing go-to-market” strategies to improve growth and profit. This structure allows the team to devote complete attention to proactive opportunities rather than getting bogged down by a plethora of operational issues, which are important to manage but uniquely different. Since the company formed cross-functional groups to address these strategies, which are at the heart of FedEx’s business. Margaritis assigns corporate communication people to each of the cross-functional groups dedicated to a “go-to-market” strategy. In this way, the perspective of corporate communication on issues like messaging about a new product launch, sending out news about mergers and acquisitions, pitching to the media, and assisting in the management of government relations in the highly regulated environments in which FedEx operates, are voiced alongside concerns about finance, operations, information systems, and long-term strategic goals.

By segmenting corporate communication staff in “go-to-market” groups, that is, customer-facing functions like sales, customer service, and information technology, Margaritis achieves a significant side benefit  He has developed a multi-talented group of communication professionals who can help solve strategic-level problems that cut across functional areas like marketing, finance, sales, technology, and strategy. His team members do not just fill a narrow niche, like writing a newsletter for pilots or drafting speeches for senior executives. Instead, his staff can rotate through projects to build broader knowledge of the business and to contribute value-added counsel to those decisions.

Senior management at FedEx realizes that when the company embarks on a new strategy, such as offering new services, and makes commitments to the marketplace, the company’s brand is on the line with multiple constituencies—opinion leaders, the media, investors, employees, as well as customers. For the strategy to work, the company’s culture must also migrate in the new strategic direction; employee behavior, motivation, and emotions must change accordingly.

Using the example of a company’s need to get buy-in for a new customer initiative, Margaritis summed up the potential partnership between corporate communication and a company’s larger strategic decision making in this way:

When companies are considering transformation of their business strategies or business models at a rapid pace, the corporate communication group should play a vital role in the planning and execution process. To transform quickly, the company needs to get this news out in a compelling, multi-faceted manner quickly to key constituencies and has to get buy-in from them. If, for instance, the company makes a new pledge to customers, the organization must have a program that links employees to this new objective. A company wants the loyalty of employees to be linked with the new value proposition and to translate the new pledge into shareholder value. Employees need to deliver on the new strategy. If not, the company’s brand and reputation can suffer  One of the things corporate communication can do is corre­late research between employee behavior and actions with customer service and, hence address performance gaps with actionable communication programs. Corporate communication must play a leadership role in a change environment.

FedEx takes a holistic approach to corporate communication across all channels and audiences: from the workplace to the marketplace and from planning and executing new strategy to measuring attempts to link employee behaviors and attitudes to marketplace impact.

2.Case Study of Johnson & Johnson: Creating the Right Fit between Corporate Communication and Organizational Culture

Early in Bill Nielsen’s tenure as the director of corporate communication for Johnson & Johnson, Ralph S. Larsen, the CEO to whom he reported, told him, “I believe in sunlight about everything.” Larsen wanted to know the truth about company activities, whether good or bad, in an open way and without embellishment, and offered his assistance to Nielsen. From the start, then, Nielsen knew that the CEO would support him as long as he, Nielsen, was honest and direct.

New to the company in the late 1980s, Nielsen soon discovered that none of the bench marking studies about corporate communication could provide a model for Johnson & Johnson’s corporate communication function, because its culture is unique. As he explained to us: “Johnson & Johnson is a consensus management organization, a culture of shared understanding about how to run the business, not a culture of elaborate rules.” Building consensus—rather than imposing one’s formal authority and evoking rules – characterizes the way that work is done even at the most senior level of the organization.

Along with a culture of consensus building, Johnson & Johnson has a decentralized structure on which it places a very high value. Decentralization is so important a value that it is inscribed in one of the company’s rare written statements about the company’s strategic direction and is held in high regard as a primary source of productivity and innovative ideas. As further indication of the importance of this value, all strategic planning occurs at the operations level where senior managers make financial forecasts that are then rolled into an overarching corporate plan. How, then, is Nielsen able to help craft a cohesive voice for the company while he has no control over its parts and pieces, nearly 200 autonomous operating companies? To build consensus, Nielsen chairs a monthly Public Affairs Advisory Group. The group is composed of everyone at headquarters who has responsibility for external constituencies, the heads of the public relations groups at the major operating units and such corporate staff functions as regulatory actions, investor relations, legal, advertising, and environmental safety and health. Discussion ranges from what’s in the news that may concern Johnson & Johnson’s reputation to investor relations, corporate philanthropy, and new legislation.

In addition, despite the large number of operating companies, Johnson & Johnson has created a climate of understanding and cohesiveness among internal constituencies around a set of values stated in the Credo, including the importance of reputation. As Nielsen has described this, “The key to Johnson & Johnson’s global standing is the strength of its reputation in the United States.” He, then, gives this value a central place in the work of the division he runs. The division is in charge of tracking issues that make up corporate reputation, such as the company’s core messages about the quality and integrity of its management, products  and services; its use of corporate assets, financial soundness, and value as a long-term investment; its innovation; its community and environmental responsibility; and its ability to attract, develop, and keep the brightest and most talented people. Operating managers are encour­aged to contact the corporate communication group when issues arise in the operating unit that can potentially affect how people regard the cooperation  For any issue below that on the radar screen, Nielsen’s group does not have to be contacted; rather, the individual companies decide on their own about such matters. As he explained to us, “If we put out a rule, the whole organization would come to a crawl. It comes down to individual judgment, lots of one-on-one talk, and meetings between me and other managers.” Johnson and Johnson has taken first place in the annual reputation survey conducted by the market research firm of Harris Interactive and the Reputation Institute since the inception of the survey in 1999.In other words, Johnson & Johnson is the most highly regarded company in the United States.

Building relationships with senior management also facilitates the work of Nielsen’s group. Of the 100,000 employees at Johnson & Johnson, about 18,000 are managers. When a new operating manager comes on board, Nielsen will send a note, phone, or send an e-mail, saying  “Please stop by next time you’re in New Brunswick.” The manager soon learns that Nielsen has the ear of the CEO and can lobby for ideas internally. In addition to face-to-face communications with senior managers  Nielsen has revamped the management magazine, Worldwide News Digest, to reflect senior management’s concerns with business issues of strategic importance. Rather than presenting “show-and-tell” anecdotal information, he places emphasis on stories that affect business development.

3.Case Study on Consumer Behavior: Gillette

When most people hear “GILLETTE”, one thing comes to mind—Razors. That’s to be expected, since safety razors were invented by King C. Gillette in 1903, and the product in various forms has been the core of the company’s business ever since. Few firms have dominated an industry  so completely and for so long. Wet-razor shaving (as distinct from electric razors) is a $900 million market. Gillette’s share is 62 percent, with the remainder divided among SCHICK—15 per cent, BIC—11 percent, WILKINSON sword—2 percent, and a number of private brands.

Gillette would like to achieve a similar position in the men’s toiletries with a new line of products called the GILLETTE Series. However, its record that market is spotty at best.

One Gillette success, Right Guard Deodorant, was market leader in the 1960’s. Right Guard was one of the first Aerosols, and it became a family product which was used both by men and women. However, the product has not changed although the deodorant market  has become fragmented with the introduction of antiperspirants, various product forms and applicators, and many different scents. As a result, Gillette slipped to third position in deodorant sales behind P & G and Colgate—Palmolive.

An even more embarrassing situation is Gillette’s foamy shaving cream, a natural fit with the razor business. S. C Johnson and Sons Edge Gel have supplanted that brand as the leading seller. These experiences created frustration at Gillette. Despite its preeminence in razors and blades, the company has been unable to sustain a leading position across the full range of toiletries.

Gillette is using its most recent success, the sensor razor, as a springboard for its new toiletries. The Sensor story provides the background necessary to understand the marketing of the Gillette Series, and also offers some insight into Gillette’s marketing prowess.

Sensor- a high technology cartridge razor- was a gamble for Gillette because it ran counter to consumers’ buying preferences. Disposable razors, which were produced by the French firm BIC in 1974, had gained control in nearly 80 % of the razor market by 1990. Gillette’s analysis showed that disposables provide a worse shave than a cartridge blade, cost more to make than a blade and are sold at a lower profit margin. Despite its disdain for the product, competitive pressure forced Gillette to introduce its own disposable, Good News

As concern about the squeeze that disposables were putting on profit margins grew, Gillette began looking for a way to displace them. The company spent $ 300 million to develop a technology to significantly improve on the three attributes desired in shaving- closeness, comfort and safety. They came up with the Sensor, a razor with independently moving twin blades. The Sensor produces a superior shave, but it is also more expensive to produce than a disposable. So Gillette’s gamble was that a better shave would be enough to justify a premium price, and in the process, displace the successful but not a very comfortable disposable razor. In addition to the R & D investment, Gillette spent     $ 110 in the first year to advertise Sensor. The strategy paid off. Estimated 1992 sales for the brand was $ 390 million, and equally important, the share of the market held by the disposables has gone down to 42%.

Gillette then moved to capitalize on the success of Sensor. The company had a line of toiletries in development, and the decision was made to tie them closely to sensor. The line consists of 14 items:

1.      two shaving gels for sensitive and regular skin

2.      two shaving creams

3.      two concentrated shaving gels

4.      a clear gel anti- perspirant

5.      a clear gel deodorant

6.      an anti- perspirant stick

7.      a deodorant stick

8.      An after- shave gel

9.      An after-shave lotion

10.  An anti- perspirant aerosol and a deodorant body spray available only in Europe.

The products in the Gillette series were developed over a three year period at a cost of $ 75 million. They were tested on 70000 consumers. An indication of their newness is the fact that Gillette has 20 patents pending with them. Consideration had been given to introducing the line in 1992, but the introduction was cancelled by Gillette’s CEO, Alfred Zeien. He insisted that the line not be launched until consumer tests showed that each of the 14 products was preferred to the best- performing brand in its category.

All the products have a common fragrance that Gillette calls Cool Wave. They come in silver and blue packages like the Sensor, and the black lines on the packages match the grooved sides of the Sensor Razor handle.

The items retail at $ 2.69 each, 10- 20 % higher than the prices of major competing items. As was the case with Sensor, Gillette hopes that the products’ innovation will convince men to switch brands and pay the higher prices.

During the Gillette Series first year, the company spent $ 60 million on a joint advertising campaign with Sensor. Just like Sensor, the line was to introduce in January with ads on the Super Bowl. The campaign uses the same theme as Sensor. “ The Best a man can get”. Initial TV commercials were one minute in length. They started with 15 seconds on shaving gels, and cream, followed by 30 seconds on Sensor and 15 seconds on aftershaves. The deodorants are advertised separately.

The Gillette series faces two major problems:

·         Convincing consumers that the line is actually better and the higher price justified will be more difficult than with SENSOR. With the razor, Gillette had name recognition as the dominant firm in the industry. In addition, the design differences the sensor were visible, and a consumer can directly enjoy a closer shave. With the toiletries, Gillette does not have a strong position in the consumers’ minds, nor are the benefits provided by the products obvious. Furthermore, the men’s toiletries market is extremely competitive. Powerful firms with proven marketing skills have taken a greater interest un this category. P & G has acquired Old Spice and Noxzema; Colgate owns Mennen, and Unilever purchased Brut. It’s unlikely the rest of the firms in the market will sit back and ignore Gillette’s activity.

·         Gillette is tying, the new product line to the Sensor but using a different brand name. If consumers do not associate the Gillette Series with the innovativeness and success of Sensor, the new line may just be another brand in an already cluttered market.

According to a Gillette Vice President, one of the most compelling aspects of the Gillette series is its synergy with the company’s core business—razors. If the new line is successful, Gillette anticipates adding other men’s grooming products such as hair sprays and shampoos. The firm’s CEO, Zeien says, “ we’re already the worldwide leader in blades, Will we be the world leader in other (toiletries) or not? That’s our goal.”

QUESTIONS:

1.      How is the Gillette Series being positioned with respect to (a) competitors, (b) the target market, (c) the product class, (d) price and quality? What other positioning possibilities are there?

2.      Is Gillette making the best use of the brand equity that has been created with Sensor?

3.      What strategies do you propose to Gillette? Address the entire marketing mix.

4.Case Study of Apple Inc: “Think Different”

Steve Jobs and Steve Wozniak founded Apple on April 1, 1976.  The two Steves, Jobs and Woz (as he is commonly referred to – see woz.org), have personalities that persist throughout Apple’s products, even today.  Jobs was the consummate salesperson and visionary while Woz was the inquisitive technical genius.  Woz developed his own homemade computer and Jobs saw its commercial potential.  After selling 50 Apple I computer kits to Paul Terrell’s Byte Shop in Mountain View, CA, Jobs and Woz sought financing to sell their improved version, the Apple II.

They found their financier in Mike Markkula, who in turn hired Michael Scott to be CEO.  The company introduced the Apple II on April 17, 1977, at the same time Commodore released their PET computer.  Once the Apple II came with Visicalc, the progenitor of the modern spreadsheet program, sales increased dramatically.  In 1979, Apple initiated three projects in order to stay ahead of the competition: 1) the Apple III – their business oriented machine, 2) the Lisa – the planned successor to the Apple III, and 3) Macintosh.

In 1980, the company released the Apple III to the public and was a commercial flop.  It was too expensive and had several design flaws that made for less-than-stellar quality.  One design flaw was a lack of cooling fans, which allowed chips to overheat.  In late 1980, Apple went public, making the two Steves and Markkula wealthy – to the tune of nine figures.  By 1981, the Apple III was not selling well and Scott infamously fired 40 people on Feb 25 (“Black Wednesday”).  Scott’s direct management style conflicted with the culture Jobs and Markkula preferred, and Scott resigned in July.  Markkula stepped into his position as CEO. In August 1981, IBM released their PC. Unimpressed and unafraid, Apple welcomed IBM to the PC market with a slightly smug full-page ad in the Wall Street Journal. It would not be long before IBM’s PC dominated the market.

The Xerox Alto was the inspiration for Apple’s Lisa.  Apple employees were able to examine the Alto in exchange for allowing Xerox to invest in Apple before Apple’s initial public offering (IPO).  Apple released the Lisa in January 1983 and was notable for being the first computer sold to the public that utilized a Graphic User Interface (GUI).  Unfortunately, the Lisa was not compatible with existing computers, and therefore came bundled “with everything and a list price to match.” At $9,995 (over $21,000 in 2005 dollars), the Lisa missed its target market by a wide margin.

Jobs attempted to control the Lisa project.  Scott, unimpressed with the performance of Jobs on the Apple III project, had Jobs head up the dog-and-pony show for the pending IPO.  Jobs, looking for a project to lead, inserted himself into the Macintosh development team.  Using his considerable influence, Jobs was able to procure the resources to produce a computer that was faster than Lisa, used a GUI, had a mouse, and sold for ¼^th of Lisa’s price.  Apple introduced the Macintosh with great fanfare during the 1984 Super Bowl.  The Orwellian-themed commercial (directed by Ridley Scott, of ‘Alien’ fame) portrayed IBM as Big Brother and embodied Macintosh and Apple as freedom-seeking individuals breaking away from this oppressive regime.The commercial was largely successful and sales for the Mac started strong.  However, Mac sales later faded. John Sculley left PepsiCo to join Apple in April 1983.  He was famous for engineering the “Pepsi Challenge”, in which blinded testers tasted both Coke and Pepsi to unveil the ‘truth’ of the taste of Pepsi.  In response to lagging Mac sales, Sculley contrived the ‘Test Drive a Macintosh’ campaign.  In this promotion, prospective users could take home a Macintosh with only a refundable deposit on their credit card.  While lauded by the public and the advertising industry, this campaign was a burden on dealers and significantly impeded the availability of Macs to serious buyers.  In 1985, Apple tried to have lightening strike twice with their ‘Lemmings’ commercial during the Super Bowl.  In what was becoming Apple’s typical patronizing fashion, this commercial insulted current PC users by portraying them as witless lemmings, unthinkingly doing harm to themselves.  Although Jobs attempted to overthrow Sculley, the board backed Sculley.  Jobs left Apple to form NeXT computer. After Jobs left in 1985, sales of the Mac “exploded when Apple’s LaserWriter met Aldus PageMaker.” Apple dominated the desktop publishing market for years to come.  Under Sculley, Apple grew from $600 million in annual sales to $8 billion in annual sales by 1993.  Apple introduced Mac Portables in 1989 and the first PowerBooks in 1991.  By 1992, PC competition ate into Apple’s margins and earnings were falling.  Sculley was under pressure to have Apple produce another breakout product.  He focused his energy on the Newton – Apple’s introduction of the Personal Digital Assistant (PDA).  Despite Sculley generating substantial demand for Newton, it did not live up to the hype due to it being severely underdeveloped.  Sculley resigned in 1993 and Michael Spindler replaced him.

Spindler spent most of his time and energies on regaining profitability, with the end goal of finding a buyer for Apple.  Over the next several years, Spindler shopped Apple to Sun Microsystems, Eastman Kodak, AT&T, and IBM.  Meanwhile, Apple was unable to meet the growing demand for its products due to supplier problems and faulty demand predictions.  To add insult to injury, Microsoft released Windows 95 with great fanfare in 1995.  After significant quarterly losses in 1996, the board replaced Spindler with Dr. Gil Amelio, CEO of National Semiconductor. Dr. Amelio tried to bring Apple back to basics, simplifying the product lines and restructuring the company.  One of Apple’s most pressing issues at the time was releasing their next generation operating system (code named “Copland”) to compete with Windows 95.  Amelio and his technology officers found that Copland was so behind schedule that they looked outside the company to purchase a new OS.  Ultimately, and somewhat ironically, they decided to purchase NeXT computer from Jobs.  Naturally, Apple welcomed Jobs back into the fold.  The board became increasingly impatient with Amelio due to sales not rebounding quickly enough.  Apple bought out Amelio’s contract after just 1 ½ years on the job. Jobs eventually claimed the CEO position.  Then, he cleaned house by revamping the board of directors and even replacing Mike Markkula (who had been with the company since the beginning).  Jobs simultaneously put an end to the fledgling clone licensing agreements (which created a few Mac clones) and entered into cross-licensing agreements with Microsoft.  On May 6, 1998, Apple introduced the new iMac, a product so secret that most Apple employees had never heard of it.  The new iMac was a runaway success with its translucent case, all-in-one architecture, and ease of use.  It brought Apple to a new market of users – those who had never owned a computer before.  Jobs further simplified the product lines into four quadrants along two axes:  Desktop and Portable on one, Professional and Consumer on the other.  Apple completed the matrix with the introduction of the consumer-based iBook in 1999.

The year 2001 was an important year for consumers of Apple products.  Apple opened their first 25 retail stores (totaling 163 stores in 4 countries as of May 2006).  In September 2001, Apple introduced the new iMac featuring a screen on a swivel.The new iPods (portable music players) were a tremendous success.  Apple sold so many that Apple’s dependence on Mac sales was significantly less.  This was no small feat considering that the 2001 iMac became Apple’s best-selling product “by a long shot”. Apple offered iTunes (a free application) to help their consumers organize music on iPods and Macs.

In 2003, Apple expanded iTunes by 1) opening the iTunes music store to allow Mac users to purchase music online and 2) expanding iTunes to Windows users.  Sales of iPods skyrocketed and currently provide the bulk of product sales to Apple. In 2005, Apple announced that it would start using Intel-based chips to run Macintosh computers.  In April 2006, Apple announced Boot Camp, which allows users of Intel-based Macs to boot either Mac or Windows OS.  This functionality allows users who may need both OSs to own just one machine to run both, albeit not simultaneously.

The three major competitors of Apple are Dell, Hewlett-Packard and IBM, however Apple also competes with Microsoft in software industry. Dell is the largest computer manufacturer with extremely low cost production strategy. Dell has entered the in the line of music against Apple by its Jukebox. Hewlett Packard is a big brand name and leading provider of technology. Apple combined with IBM enjoyed profit jointly but now Lenovo took over IBM and become a competitor of Apple.

Apple’s new products like speech recognition program will help take industry into a new age of computers and is according to the company’s motto and it is hoped that it will double the profit margin in the near future. Overall, Apple is continuously growing and its future seems bright. With the slight change in their strategies, they can become giants in technology industry.