Chapters 10

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Chapters 10 12Production Consumer Behaviour
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A brief history of production

• Until 1700s artisans
• mid-late 1700s Industrial revolution

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A brief history of production THE EARLY 1900s

• Assembly line
• Scientific management

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A brief history of production THE MID 1900s

• Large corporations economies of scale
• Why do economies of scale exist? That is, what
  enables large factories to produce at a lower
  average cost than small factories (in some
  industries)?
• Industrialized countries

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A brief history of production 1970s and 1980s

• Japanese manufacturing
• Increased customer-focus

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A brief history of production THE 1990s

• The Asian Tigers
• Korea
• Singapore
• Hong Kong
• Taiwan
• Also
• Malaysia
• Thailand
• and CHINA

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A brief history of production NORTH AMERICAN
TRENDS IN THE 1990s

• Manufacturing ? Services
• Mass customization

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A brief history of production - 2006

• Outsourcing services to India
• In todays competitive world businesses must
  perform their production activities very well!

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Todays Class - PRODUCTION

• Elements of production
• Planning
• Scheduling
• Managing inbound materials
• Quality

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Planning - CAPACITY

• What is the main disadvantage of maintaining more
  capacity than is needed for normal production?
• What are the advantages of maintaining extra
  capacity?

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Planning - LOCATION

• When deciding on where to locate a manufacturing
  plant, what factors should a company consider?
• Have technology improvements (such as the
  internet and telecommunications) changed the
  degree to which facility location matters?
• Does it make sense to put a manufacturing plant
  in PEI, if the markets for the product are
  throughout Canada and the US?

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Inbound material handling

• Materials and components are large part of COGS
• Recent years
• reduce number of suppliers and component designs
• e.g. Westjet uses only Boeing 737s. What is the
  advantage of using only one kind of jet?
• Auto companies common platforms

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Inbound material handling - JIT

• Just-in-time
• suppliers usually close
• information sharing
• Why is it expensive to hold a lot of inventory?

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Quality

• Old way
• inspect incoming materials
• inspect finished goods coming off assembly line
• New way
• build quality into production in the first place

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Total quality management (TQM)

• W. Edwards Deming
• First 7 of his 14 points
• Create constancy of purpose.
• Take the lead in adopting the new philosophy.
• Cease dependence on inspection to achieve
  quality.
• End the practice of awarding business on the
  basis of cheapest costs.
• Improve constantly.
• Institute modern on the job training.
• Institute supervision to develop inspired
  leaders. Create constancy of purpose.

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Total quality management (TQM)

• Last 7 of his 14 points
• Drive out fear and instill learning.
• Break down barriers between departments.
• Eliminate slogans, exhortations, and targets.
• Eliminate management by numbers, and management
  by objective. Substitute leadership.
• Remove barriers to pride in workmanship.
• Institute education and self-improvement.
• Put everybody to work to accomplish the
  transformation.

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Benchmarking

• study methods of firms that have the best
  practices
• e.g. and
• sources
• consultants
• arrangements with other companies
• publicly available info
• customers suppliers

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Re-engineering ISO 9000

• Business process re-engineering
• Fundamental rethinking and radical redesign of
  business processes
• e.g. IBM credit
• ISO 9000
• Documentation of processes designed to achieve
  quality

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Modern production

• Quality is critical to survival
• Cost is too!
• Practice efficiency and effectiveness here at
  university!

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Chapter 12Marketing I
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Marketing expenditures
Coca-Colas Operating Income
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Todays Introduction to Marketing

• What is marketing?
• Shift towards customer orientation
• Four Ps
• Marketing in a competitive environment
• Data collection
• B2B
• Segmentation

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Marketing is

• Much broader than advertising whole process of
  generating sales
• Includes
• Identifying target market (research)
• Designing product that meets needs of target
  market
• Choosing appropriate price
• Research into message conveyance
• Other promotion (e.g. shelf presentation)
• Make product available

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Increasingly Customer Oriented

• Old days
• Focused more on style rather than substance
• Planned obsolescence
• Nowadays
• Quality matters
• Whole experience
• Reasons
• Japanese showed North America up
• Increased competition
• Better Information e.g. Amazon.com

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4 Ps

• Product
• Promotion
• Price
• Distribution Place

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Competitive Issues

• Why competitors matter
• Want to fill need that no-one else is filling
• If possible want to be very different
• Coke and Pepsi are very similar to each other and
  compete hard against each other. Yet both
  companies are very profitable. Why do you think
  they succeed so well despite intense competition?

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Data Collection
marketing

• The three most important things in real estate
  are
• Location
• Location
• Location

Research
Research
Research
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Primary Sources

• Observation
• .
• .
• Survey experienced any?
• Focus groups
• Experimentation
• Test markets
• Winnipeg?

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B2B

• Less visible
• Relationships are critical
• Even accountants do it
• Usually big dollars
• Customers usually evaluate value they dont
  impulse buy

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Segmentation

• Way of identifying market
• Who is in Starbucks target market?
• Why do businesses bother to identify a target
  market? Why not try to reach everybody?

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Segmentation in the Automobile Industry

• Suppose you are marketing cars. How would the
  following bases of segmentation affect your
  marketing?
• AGE
• GENDER
• INCOME
• EDUCATION

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