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Direct-to-consumer (DTC) brands such as Allbirds, Casper, Peloton, and Warby Parker have creatively found a weakness in the marketing citadel of incumbent brands. By using data gleaned from daily interactions with customers, these brands have been able to adapt how they serve their unique customer communities across a start-to-finish purchase journey. The best of them have parlayed that ability into a profitable business model applied across multiple channels and customer segments. But as successful DTC brands mature, they must recognize the need to evolve. The authors offer four principles for continued success: (1) Focus on deepening customer relationships, not just making comparisons with competitors. (2) Accompany the customer beyond the initial transaction. (3) Omnichannel is about value addition, not cost reduction. (4) Strengthen the core first; consider extensions later. [ABSTRACT FROM AUTHOR]

Senior managers of most of the companies involved in moving goods or services from suppliers to end users would agree: Their distribution channels are outdated and unwieldy, serving neither customers [...]

It is widely acknowledged that a constant supply of new products and their successful commercialization are key to a firm's survival. But studies by Booz Allen and Hamilton (1982), among [...]

This article challenges the conventional belief that product commoditization is inevitable, and accompanied by deteriorating profits. Four generic strategies to avoid commoditization are suggested. The article describes firms that have successfully implemented strategies. (Reprinted by permission of the publisher.)

A Model for Managing System Conflict During Franchise Expansion A model is proposed that assists the business-format franchisor in its decision to approve a proposed new outlet, and in determining [...]

The bottom of the economic pyramid is a risky place for business, but decent profits s can be made there if companies link their financial success with their constituencies' well-being. To do that effectively, you must understand the nuances of people's daily lives, say Rangan and Chu, of Harvard Business School, and Petkoski, of the World Bank. Start by dividing the base of the pyramid into three segments according to people's earnings and related personal needs:• Low income: 1.4 billion people,$3 to $5 a day• Subsistence: 1.6 billion people,$1 to $3 a day• Extreme poverty: 1 billion people,less than $1 a day Next, consider the roles of various groups in the value-creation relationship: consumers, coproducers,and clients. Specific strategies work best with people in certain roles and at particular income levels.Success requires appreciating the diversity at the base of the pyramid and the importance of scale in undertaking ventures there. Witness Manila Water's success in the Philippines and Hindustan Unilever's in South Asia. Failure to appreciate those elements can foil base-of-the-pyramid ventures, as Microsoft and Procter & Gamble each discovered. INSETS: Where Private and Public Value Intersect;Which Value-Creation Strategies Work Best at the Base of the Pyra. [ABSTRACT FROM AUTHOR]

This article contains summaries for articles that appear in the July 1992 issue. Titles include "The New Era of Eurocapitalism," by Herbert A. Henzler, "High-Performance Marketing: An Interview with Nike's Phil Knight," by Geraldine E. Willigan, and "U.S. Industrial Policy: Inevitable and Ineffective," by Kevin P. Phillips.

When a gray market develops in an industry, there is always enough blame to be spread around. Distributors blame manufacturers for inertia in clamping down on the offending resellers, the manufacturers blame distributors for moving excess merchandise sideways to unauthorized channels. "Stamp 'em out!" is the cry everybody raises. But maybe gray markets are the result of natural forces like maturity in a product life cycle--when price emerges as the key factor in purchases--or dislocations in foreign exchange rates. Moreover, gray markets are convenient channels for distributors and producers, and so represent opportunities too. That isn't to say that a manufacturer hurt by a flood of cut-rate goods swirling over its carefully cultivated distribution network is powerless to act. But the manufacturer would do well to examine the phenomenon and ask whether the ultimate arbitrator, the customer, isn't making a statement about the company's marketing and logistics strategies. As for actions to take, maintaining a steady flow of up-to-the-minute data is the first necessary step. Another is deciding what distributors to cultivate and protect for their value-added capabilities and what distributors to leave more or less to their own devices. The manufacturer can also set pricing schedules--with special attention to quantity discounts--that limit the incentive to over-order. Coordinated control of bid and book pricing is also essential to reduce arbitrage opportunities. Yet another step is a new look at the company's franchise agreements with an eye on the possibility of shifting positions of channel service support elsewhere. INSET: Situation in Flux. [ABSTRACT FROM AUTHOR]

Will high sales volume automatically mean high profits? Too many companies have found, unfortunately, that the answer is no. Geography, order size, extra attention to keep the account--these factors, among others, affect customer profitability. Some customers simply cost more to serve. Others will pay any price to get a certain product. If you want profits and not just sales, start by understanding the differences among your customers. According to the authors, customers usually fall into one of four categories: the carriage trade, which costs a lot to serve but will pay top dollar; bargain basement customers, who are sensitive to price but not so sensitive to service and quality; passive customers, who cost less to serve but will accept high prices; and aggressive customers, who demand quality and the best service but who also insist on low prices. This kind of careful analysis of your customers and products will steer you into more profitable markets. Here are some steps to take: Know the exact amount and origin of your costs. Understand your profitability dispersion, and set prices according to the value your customers place on each product. Focus your strategy according to your knowledge of customers and your own strengths. Install information and other systems to support your chosen strategy. Analyze your profit dispersion, and rethink strategy continually. [ABSTRACT FROM PUBLISHER]