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Re: [OM] [OT] Re: "Basic MBA material" (Was: discussion of Oly digital

Subject: Re: [OM] [OT] Re: "Basic MBA material" (Was: discussion of Oly digital incompatibilities w/OM System stuff)
From: "John A. Lind" <jlind@xxxxxxxxxxx>
Date: Thu, 08 Feb 2001 22:53:46 +0000
At 15:37 2/8/01, you wrote:
At 08:43 AM 2/8/2001 +0000, Thomas Clausen wrote:
>In that case, I don't give crap for MBA's. No offence, but teaching
>"Loosing customer loyality" doesn't seem to be that good of an idea. Let
>me explain below...

Well, as a guy with several degrees (one of which is an MBA), I just had to respond.

"Planned obsolescence" (which I assume is what John Lind was referring to) was a product development strategy used primarily by the automakers from the 1950s through the 1970s (and emulated by lots of other companies, of course) to support their massive capital spending. In every marketing course I ever took, it was *not* held up as some "shining example" of good marketing strategy or customer relations strategy, but was rather thoroughly lampooned as being short-sighted, wasteful and alienating. It may have been thought a good idea in the 60s, but hey! -- as one wag has so eloquently put it, "The 60s are *over*."
[snip]

It still exists . . . but not as blatant as the examples you (and I) were given and lampooned in the classroom. My thought was incompatibility creates a barrier to competition in lens sales from a supply of used OM lenses. That it might be an inconvenience for Tom Clausen, et alia, doesn't matter to a large corporation. In brand loyalty, it's sheer numbers that count; there would have to be enough Tom Clausen's. The strategic direction chosen will be the one predicted to maximize the bottom line revenue and profit.

Not considering technical feasibility, the basic business tradeoff is this:

On one hand:
There is a large base of used OM lenses. If we sell bodies that are compatible with them, we will sell fewer new lenses; some will seek used OM lenses and those transactions do not generate revenue for us. This is opportunity lost. Incompatibility creates a barrier to competition from the used market!

On the other hand:
There is a large base of used OM lenses. If we sell bodies that are compatible with them, we may sell more bodies. Some who might not buy our body may do so if it is backward compatible. This is opportunity gained. Compatibility expands the marketing base!

The business question:
Which of these two strategies will generate more revenue (profit)?
I would not dare to attempt answering this question and very likely nobody else on this list is qualified to either.

This is a simplistic presentation of first order considerations . . . there are some second order ones such as "public good will," not from an individual or a few, but by the mass market as a whole. Are there a sufficient number of OM system owners interested in digital to satisfy a business case for it? Some list members might be, and may even be passionately interested. That doesn't matter; it's the numbers (how many) that count and _don't_ underestimate how high that number might be.

[This is not intended to pick on Tom Clausen. To a corporation, an individual does not matter unless it influences a tremendously huge number of other individuals who would otherwise be customers. Is that rather cold? Yes, but it's also reality.]

-- John


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