The Flurys menu had neverchanged. Its most popular items included cakes, pastries, and puddings. Flurys inspired strong emotionsacross generations, and its loyal customers enjoyed the nostalgia of the company, which marked a part of

The Sugarr & Spice, a Kolkata bakery brand and competitor of Mio Amore, was an ISO 90001-2008-certified bakery chain founded by Supriya Roy, who had been running the chain for 29 years. The Sugarr& Spice had a wide array of offerings in the packaged and ready-to-eat categories, including cakes, pastries,savouries, cookies, and daily breads. The Sugarr & Spice had 125 outlets (i.e., company-owned andfranchises combined) in West Bengal; the majority were Kolkata. The Sugarr & Spice was slowlyexpanding beyond West Bengal through a network of dealers and distributors into the Indian states ofJharkhand and Odisha, and into the countries of Bhutan and Bangladesh.

It had subsequently expanded its business through franchiseeagreements across the country with a turnover of ₹7 billion and more than 20 factories, largely in westernand northern India, but also in eastern India. Monginis also provided accessorized carry-out catering, withtelephone and Internet ordering options

The brand was positioned as a “food boutique”focusing on quality, presentation, and service.

Eastern India was a good market for bakery products and was home to many local players, such as The Sugarr& Spice, Just Baked, and Cakes; together, these offered stiff competition for SFPL. SFPL remained a notchabove the competitors, offering 168 stock-keeping units in 11 categories7 (see Exhibit 2). New additions to abaked-product line required modifications both in the ingredients and the equipment and processes used,which could become a challenge for the bakers.

India had more than 2,000 organized or semi-organized bakeries and 1 million unorganized bakeries. Interms of volume, half of the market was served by organized producers, and the other half by unorganizedbakeries. Indians consumed non-homemade bakery products, including traditional wheat-based productslike biscuits, cookies, croissants, buns, breads, cakes, and muffins. Breads and biscuits were the mostpopular bakery items, representing 80 per cent of the total market in India.

The growing affluence of India’s middle class, including higher disposable income for lifestyleproducts, also led to the expansion of modern-format supermarkets, such as Big Bazaar, Spencer’s Retail,and Lulu Hypermarket; these stores often included in-house bakeries or premium bakery brand outlets.Each week Indian consumers patronized their neighbourhood store five to six times more, on average, thanorganized retail outlets and modern-format stores

e murmured, “Monginis still has a very high recall despite not having been present foryears. Our creation, ‘MonerGinis’ never let Bengalis forget Monginis. And it’s now staring at me in theeye. How was the Mio Amore brand going to compete with Monginis?”

On April 15, 2015 (the Bengali New Year), the Monginis brand namewas removed from all SFPL outlets and Mio Amore was launched with a tagline: “Monerginis notunkore/pran bhore niyo morey” (Desire of your heart has come in a new form/Accept me wholeheartedly)The Mio Amore brand took off in late 2016 (see Exhibit 1)

In mid-2014, MFPL wrote to SFPL, asking it to stop using the Monginis brand going forward, claimingthat, in the recent past, SFPL had diluted the Monginis brand and had concentrated on SFPL’s own brands.The dispute was settled on the condition that SFPL would discontinue using the Monginis brand name fromMay 1, 2015, and, for a three-year lock-in period ending in May 2018, MFPL would not enter the territorieswhere SFPL had held the Monginis franchise (except for Odisha).

SFPL was a ₹5 billion,2 West Bengal-based food products company manufacturing and selling gateaux,cakes, pastries, muffins, other bakery items, savouries, and packaged snacks. In 1989, Basu had taken onthe franchise of the Monginis brand from MFPL to manufacture and sell similar food products in easternIndia, in the states of West Bengal, Bihar, and Odisha,3 and in the northeast. Since approximately 2001,SFPL had invested heavily in advertising Monginis products and repositioning the brand.

These facts show, I think, that (i) individual independenceis the first need of the moderns; therefore (ii) they shouldnever be asked to make sacrifices in order to establishpolitical liberty. It follows (iii) that none of the numerous andover-praised institutions which hindered individual libertyin the ancient republics is admissible in modern times. Ihope I have brought you to the point of agreeing with meabout those three principles

he people that cared most about liberty in moderntimes—before France was liberated—was also the people thatcared most about all the benefits of life; and it valued itsliberty mainly because it saw in this the guarantee of thebenefits that it cherished.

Montesquieu, whose mind was more observant becausehe wasn’t such a hot-head, didn’t fall right into the sameerrors. He was struck by the differences I have described,but he didn’t discover their true cause. According to him,the Greek politicians who lived under the popular govern-ment didn’t recognize any power but the power of (1) virtue.Politicians today tell us only about (2) manufactures, com-merce, finances, wealth and even luxury. He attributes thisdifference to ·the difference between· (1) the republic and(2) the monarchy. It ought instead to be attributed to thedifference, indeed the oppositeness, between (1) the spirit o

It follows that we must be far more attached than the an-cients to our individual independence. When they sacrificedthat independence in order to keep their political rights, theywere sacrificing less to obtain more; whereas for us it wouldbe giving more to obtain less. The aim of the ancients wasto share social power among the citizens of a single country;that’s what they called ‘liberty’. The aim of the moderns is tobe secure in their private benefits; and ‘liberty’ is their namefor the guarantees accorded by institutions to these benefits

So you can see that we can’t any longer enjoy the libertythat the ancients had, consisting in constant active partici-pation in collective power. Our liberty has to consist of thepeaceful enjoyment of private independence. Each person’sshare in the sovereignty of his country wasn’t an abstract bitof theory, as it is ·for us· today.

Amongthe moderns, on the other hand, even in the freest statesthe individual is sovereign only in appearance, though he isindependent in his private life. His sovereignty is restrictedand nearly always suspended; and if at fixed and rareintervals—surrounded by precautions and obstacles—heexercises this sovereignty, all he ever does with it is torenounce it

Among the ancients, therefore, the individual is nearlyalways sovereign in public affairs but a slave in all his privaterelations.

The laws regulatemœurs, and as mœurs touch on everything, there’s nothingthat the laws don’t regulate

But while the ancients called this liberty, they saw no incon-sistency between this •collective freedom and the completesubjection of the •individual to the authority of the group

The liberty of the ancients consisted in carrying outcollectively but directly many parts of the over-all functionsof government, coming together in the public square to•discuss and make decisions about war and peace;•form alliances with foreign governments;•vote on new laws;•pronounce judgments;•examine the accounts, acts, and stewardship of themagistrates;•call the magistrates to appear in front of the assem-bled people;•accuse the magistrates and then condemn or acquitthem.

Representative government is a modern discovery, andyou will see that the condition of the human race in an-tiquity made it impossible then for such an institution tobe introduced or established. The ancient peoples couldn’tfeel the need for it, or appreciate its advantages. Theirsocial organization led them to want a kind of freedom totallydifferent from what representative government grants to us

The mission of the tribunes in Rome was a representativeone, up to a point. They acted on behalf of the plebeianswho had been reduced to a harsh slavery by the oligarchywhen it overthrew the kings. (Oligarchies are the same in allages!) But the people exercised considerable political rightsdirectly. They met to vote on the laws and to judge nobleswho had been accused of wrong-doing. So Rome had onlyfeeble traces of the representative system

nce to enjoy the benefits thatit didn’t want, and denied it the ones it did want.

Using another time series analysis, the consultants determined sales of the DX1 line in the Springof 2004 should have been 134,180 units (actual sales were 129,386). As a result, the consultants feltcannibalization of the DX1 line should be included in the profitability analysis. They estimated$99,332 in contribution was lost due to this cannibalization.

mental contribution impact, theconsultants concluded that the promotion lost $469,489 in contribution.

To further increase penetration of consumers in the premium segment, another 20% Culinarianprice promotion ran in May 2005 on its popular 10-inch fry pans, 2-quart sauce pans, and 6-quartstock pots in the CX1 and DX1 and SX1 line. Trade partners were again expected to adopt the 48%margin for the promotion. Culinarian featured this promotion in advertisements in four nationalmagazines. Participation for this promotion caused a surge in orders that Culinarian’smanufacturing plant could not handle—several backorders had still not been filled by June 2005.

From customerresponses to questions on these cards, Culinarian was able to determine that 80% were fromhouseholds who already owned one or more Culinarian product, 70% felt the price discount was

For consumers to receive their full 20% discount, Culinarianrequested each participating retailer to accept a 48% margin instead of their usual 52%. AlthoughCulinarian did not feature the price promotions in any of its national advertising, several retailers ranlocal advertisements featuring the discount.

After the sales force reported that all three of the kitchen specialty chain accounts and the majorityof their independent stores were demanding price reduction events, Culinarian offered its first pricepromotion in 2004. The objective of this promotion was not only to appease the trade, but to broadenits customer base and stimulate excitement for the brand at consumer level. A 20% consumerdiscount was available to participating retailers on all pieces in the CX1 Tyro Collection line fromApril 1 to May 31.

The company had very strong relationships with retailers, and therefore each retailer carried allfour product lines. Retailers were enthusiastic because they could capture a higher level ofprofitability with Culinarian products versus competing products. Gross margins for retailersaveraged 52% for Culinarian products (Le Gourmand and Robusto merchandise averaged 48%).Culinarian was highly selective in choosing retail outlets as partners.

Culinarian product features focused on advanced performance technology for serious cooks.Culinarian was the leader in metallurgy technology and was the first manufacturer to provide thebenefits of copper cookware with effortless cleaning and maintenance.

Culinarian ranged from 15% for respondents with household incomes under $75,000 (17% forLe Gourmand, 14% for Robusto) and 25% for those with household incomes over $75,000 (30% forLe Gourmand, 28% for Robusto). Star Chef and Kitchen Select both commanded unaided brandawareness levels of 35% for respondents with household incomes under $75,000 and 45% for thosewith household incomes over $75,000. When asked if they recalled having seen Culinarianadvertisements, 4% of survey participants answered “yes.”

he results of the study revealed that 75% of its customerswere 30 to 55 years of age; 82% were women; 70% had household incomes over $75,000 and 60%considered cooking to be their number one hobby.

Manufacturers of cookwarehad to balance the need for performance, time-saving features, and aesthetics, with price

In 2006, Culinarian’s CEO, Audrey Roux, established four strategic priorities for the company:(1) widen its distribution network, (2) increase its market share of the premium cookware segment,(3) preserve its prestigious image, and (4) continue to capture revenue growth of at least 15%, whilemaintaining pretax earnings margins of 12%.

Thecompany selectively distributed merchandise through a limited number of kitchen specialty retailoutlets and high-end department stores.

Culinarian designed, manufactured, distributed, and marketed premium performance cookware,generally defined as pots, pans, and similar non-electric tools used in food preparation.

Retail distribution outlets for cookware included kitchen specialty chains (e.g.Williams Sonoma), local specialty stores, department stores (e.g., Macy’s), mass merchandisers (e.g.,Wal-mart), grocery stores (e.g., Kroger), direct TV sales (e.g., Home Shopping Network), onlineretailers (e.g., Amazon), and catalogs (e.g., manufacturers’ direct mailings). Sales of cookware weresomewhat seasonal due to the purchase of cookware for weddings and Christmas gifts (see Exhibit 2for a breakout of consumer sales by month).

Cookware was purchased either by the piece (open stock) or in a boxed set (ranging from 5 to 14pieces). A typical 5-piece set included a 10-inch fry pan, a 2-quart sauce pan with lid, and a 4-quartstockpot with lid

A growingtrend in premium cookware was the offering of colored designer cookware that matched kitchendécor and product lines endorsed by and branded with the name of a widely recognized televisioncelebrity chef (e.g., Emeril Legasse)

Cookware was available in aluminum, stainlesssteel, porcelain-on-iron (POI), cast-iron and copper. Copper was the most expensive category and thefirst choice of most professional chefs due to superior heat conductivity.

I believe we need to be bolder with our price promotions. The number one complaint thatmy sale force hears from the trade accounts is the lack of consistent and meaningful pricediscount events. Providing a 30% discount promotion will increase commitment and supportfrom the trade and will boost our overall brand awareness. It’ll also provide us with newcustomers who would otherwise not purchase because they feel the suggested retail is too highand encourage current customers to immediately purchase additional pieces. And yes, I thinkif the data in the consulting study is re-examined, you’ll see the 2004 price promotion wasactually very profitable

“Telematics” or “connected vehicle systems” referred to the increasingly sophisticated automobiletechnology that drivers interacted with via flat-screen digital dashboards (including GPS, hands-freephone calling, and emergency alert systems such as OnStar). New vehicle models had steadilyexpanded the capabilities of these systems to deliver entertainment, limited internet access, weather,and other information. Drivers received these services free for a limited time in new vehicles and thenby subscription thereafter

enhancements to the service provider network,rebranding as Agero

. Other technologies such as advanced satellite-based mapping tools were usedto fine-tune the data, allowing representatives to “surgically select” service providers who werecloser to the incident, saving more than $1 million annually.

Part of the money was invested in technologies to collect new data from call centers, motorists,and service providers and in the creation of a customer satisfaction department. “We try to surveyeach of the seven million roadside events we service each year,” explained Customer ExperienceDirector Chris Small. “This gives us more than 750,000 data points to analyze.” The data revealed asurprising result: while call center performance was important, motorists’ interactions with serviceproviders determined as much as 85% of the CSI (customer satisfaction index) score. Especiallyimportant were the service provider’s arrival within the promised ETA and professionalism,particularly appearance. Motorists strongly preferred clean, logoed service vehicles, and uniformedmechanics

Saxton introduced a rigorous organization development process aimed at formalizingperformance management systems and building management capabilities. He implemented newmetrics, created performance scorecards, and introduced a forced ranking system that compelledmanagers to identify high and low performers

As the roadside assistance business matured and competition intensified, Howard and Jeffreyurged their father to adopt a more professional and decentralized business model: to bring inprofessional managers, bolster governance systems, and improve data and reporting practices. By1998, Wolk, then in his 60s, recognized the need for reforms. “We were a solid company with greatrelationships and strong integrity, but a little old fashioned. I knew that to stay differentiated fromthe competition, we had to reinvest, come up with new ideas, and hire the brightest people we couldfind,” he said. “Until then I had been a benevolent dictator, but a dictator nonetheless.

or example, to locate service providers to assista stranded motorist, call center representatives referred to computerized lists of providers sorted byzip code (and sometimes the Yellow Pages as backup). Nonetheless, the call centers performed wellrelative to competitors, earning industry awards for service excellence.

Besides location and basic equipment profile, Cross Country collected little data on serviceproviders. As a result, the company lacked a systematic way to measure the performance of itsservice provider network, identify top performers, or cultivate their loyalty

As a result, Cross Country’s call centerrepresentatives often had to call several service providers before finding one who was available.

Because motorists calling for roadside assistance believed they were contacting the OEM directly,Wolk understood that Cross Country’s service capabilities affected the OEM’s brand reputation. Ashe explained, “Carmakers recognize that you have to have a quality relationship with yourcustomers. We help them turn a negative driving experience—a breakdown—into a positiveexperience . . . .”1 Yet, OEMs were often unwilling to pay a significant premium for higher servicelevels. When Cross Country and its competitors (GE, United States Auto Club, Road America, andAAA) bid for OEM business every three years or so, the OEMs frequently gravitated towards thelowest bid, as long as the provider met a minimum threshold of service quality

Cross Country received a flat fee(in advance) per vehicle, policy, or member and assumed the risk for both the frequency and severityof claims. This contract model was commonly used for roadside assistance plans purchased bymotorists after their initial warranty expiration

“claims pass-through” model, in which Cross Country billed the actual cost of theclaim plus an administrative fee to the OEM client.

Cross Country’s contracts with OEMs, which included roadside assistance under the OEMwarranty in the U.S. and Canada, were generally for three- to five-year terms. Cross Country offeredits clients several contract revenue models. Most popular were “flat-fee-per-dispatch” contractswhere Cross Country assumed the severity risk (amount of cost incurred responding to a roadsideevent). This type of contract appealed to many clients because it provided a guaranteed fee for theirexpense budgeting and avoided the risks of rising labor and fuel costs. For Cross Country, thisrevenue model created the opportunity to earn additional profit if it could control costs efficiently

Cross Country’s business model was built on personal and contractual relationships with OEMsand roadside service providers. But the bulk of interactions were with stranded motorists through itscontact centers. As Wolk stated, “We are a B-to-B-to-C company. We often talk more to car ownersthan the OEMs themselves do.”

During this period, when a motorist needed roadside assistance, he or she dialed the phonenumber shown in the vehicle’s warranty documents. The unique phone number provided by eachOEM routed the call to a Cross Country call center (also known as a contact center), where a customerservice representative answered using a specific script (“Thank you for calling Toyota roadsideassistance. My name is _____. How may I help you?”). The representative asked the motorist for keyinformation, including the vehicle’s location, make, and model, and then contacted local tow-truckoperators to arrange for a service provider to be dispatched. After confirming the dispatch (seeprevious page), the representative informed the motorist of the service provider’s name, phonenumber, and ETA (estimated time of arrival). (

Cross Country’s primary business was arranging roadside assistance for drivers covered by OEMwarranties. (New car sales typically included three- to five-year warranties covering towing andrepairs for vehicles disabled by mechanical problems, dead batteries, lockouts, etc.) Cross Countrycoordinated roadside assistance services for Chrysler drivers on behalf of Chrysler, for example, orfor Hyundai drivers on behalf of Hyundai

Big Skinny established sales presences on three online retail portals which offered a potentialsource of easy distribution of its products: Amazon, Buy.com, and eBay.

Looking ahead, Kiril pondered his priorities. He wanted to expand Big Skinny’s online marketingpresence but needed to decide where to focus: Should Big Skinny concentrate on drawing newconsumers to its website through search engines, or should it focus on engaging existing customersthrough social and interactive media? Alternatively, should Big Skinny hand off more of its webmarketing to retail portals like Amazon and Buy.com?

It seemed that the complexity of full-scale A/B testingwould require hiring a software engineering consultant, if not an additional full-time employee. Evenan online A/B testing system—which could be obtained cheaply or even free of charge—wouldrequire complex integration with all aspects of the Big Skinny website.

A/B testing, a marketing technique thatshowed different advertisements to different users in order to compare response rates. Big Skinnyused automated A/B testing to evaluate alternative sponsored-search campaigns by submitting avariety of ads to a search engine to see which performed best.

To engage consumers, Kiril aspired to include several interactive components within the BigSkinny site. His top priority was an interactive wallet selection guide. This tool would ask a series oflifestyle and aesthetic questions to help users select wallets for themselves or friends.

Big Skinny enjoyed a special kind of brand fandom: previous customers would often drop by BigSkinny’s booths at street fairs to tell distributors—and any fairgoers who happened to be withinearshot—how much they liked their Big Skinny wallets

Big Skinny submitted high bids for keywords such as “thin wallet,” which Kiril deemed especiallylikely to lead to sales. Big Skinny bid somewhat less for exploratory keywords like “nylon wallet.”(Exhibit 4 details Big Skinny’s keyword bidding strategy, and the rates of conversion of keywordclicks into wallet sales.)

Most sponsored search ads were sold on a “per-click” basis: advertisers paid search engines onlywhen their ads were clicked.

Search engines offered vague guides on their quality-ranking systems; for example, Googleinstructed retailers to “[k]eep the links on a given page to a reasonable number.”4 In addition,industry consultants offered suggestions for “search engine optimization” (SEO) to improve a site’sprominence

Combining low click-through rates with pay-per-impression pricing, display advertising could be a risky choice.

Yet display ads were typically sold on a per-impressionbasis, requiring advertisers to pay whether or not a user was interested in an ad, and whether or not

Big Skinny’s favored in-person sales technique, comparing its product’s thinness to standardwallets, carried over to the world of display advertising.

display advertising

Because potential customers could easily see the difference in thickness, Big Skinny found in-person sales straightforward. Kiril’s standard approach was to encourage customers to move theirwallets’ contents into a Big Skinny. “For $20, your wallet will be that thin forever,” Kiril would thenexplain.

Wallets are small, lightweight, and often in need of replacement; hence, wallets are naturalimpulse purchases, often bought as gifts.

Street fair sales pitches had launched Big Skinny, and retail distribution and print advertising hadfueled further expansion. But Kiril had bigger aspirations, and online marketing seemed the key toachieving maximal growth. The overwhelming response to Big Skinny’s promotion glitch confirmedthat consumers were ready to buy wallets online

“Here’s a regular wallet, just out of the box,” he would say, “and here’s a BigSkinny. It’s the same thickness, but it’s already stuffed with 16 pieces of hard plastic—the nationalaverage.” Kiril had mastered this pitch, and he could easily sell over 100 wallets in a full-day fair

As more and more Chinese brands are relying oncelebrities (actresses/actors, singers, athletes), should Yue Sai replace Du Juan with acelebrity or should they stay with a model? At the moment, 80% of Yue Sai’s communicationbudget is focused on skincare and 20% on makeup. Should this be changed? Further, shouldthey change the current media plan or focus more on new media platforms like Weibo?

Given the situation facing Yue Sai and the current portfolio of brands of L’Oréal China, thecritical issue is whether the brand should: 1) keep its new lifestyle positioning as the brand of“confident, modern Chinese women”, 2) be positioned as a Chinese luxury icon symbolizingthe nation’s long history and rich heritage, 3) adopt a more affordable value proposition, or 4)try something totally different

LPD tried to compensate for the volume decline brought by higher prices (see Exhibit 14) byentering new distribution channels such as Sephora (see Exhibit 16), while pushing for betterdeals with distributors in order to enter more cosmetic stores. Meanwhile, the increasingnumber of foreign premium brands entering the Chinese market led department stores to pushYue Sai’s counters further back in the stores, reducing their visibility and exposure to traffic.Some department stores even delisted the brand

To deliver Yue Sai’s longstanding brand promise that “Nobody knows Chinese skin betterthan Yue Sai,” L’Oréal’s Shanghai Research and Innovation Centre focused on creatingproducts specifically designed for Chinese skin. For example, the Vital Essential line (⭏ᵪѻ≤) launched in 2007 incorporated extract of ganoderma mushroom (⚥㣍), a traditionalChinese medicine ingredient believed to foster internal balance and boost internal energy,with a fragrance evocative of the distinctive smell of traditional pharmacies. This product wasthe most-liked of the Yue Sai line-up, with above-average repeat purchase scores.

The post-acquisition years were less smooth than anticipated. On the positive side, L’Oréalhad acquired a brand with a wide distribution (more than 1,000 stores across differentchannels), strong sales (€39 million in 2006), historical strength in makeup, a few goodskincare products and packaging, and a factory and R&D facility.

To promote the brand, Madam Yue-Sai Kan wrote the first book about makeup ever publishedin modern China, which became a huge best-seller. Battling myriad obstacles and localregulations, she secured distribution in department stores nationwide, personally trainedChina’s first beauty advisors, and developed a range of red lipstick and basic skincareproducts designed for Asian skin.

The first modern cosmetics brand of China, Yue Sai, was founded in 1992 by Madam Yue-SaiKan, 4 an Emmy-winning TV host, socialite and entrepreneur (see Exhibit 8), with the aim “tocreate, produce and sell the very best beauty and skincare products that we can offer to Asianwomen and to the world, and become the first global cosmetics brand from China.”

L’Oréal is the world’s largest cosmetics company, with worldwide sales of €19.5 billion in2010. In that year, its sales in China exceeded €1 billion for the first time, an 11.1% increaseover the previous year and a double-digit gain for the 10th consecutive year, making Chinathe third-largest market for L’Oréal after the United States and France (vs. its seventh-largestin 2008). L’Oréal had vowed to acquire one billion new customers globally in the nextdecade, a significant portion of which will come from China.

Common ingredients such as glycyrrhiza uralensis (⭈㥹),lonicera japonica (䠁䬦㣡), “silver ear” mushrooms (䬦㙣) and wolfberry (ᷨ ᶎ ) can bepurchased in most grocery stores and are cooked with food or made into tea. Other morespecific and expensive ingredients (TCM has over 1,800 ingredients) like angelica (ᖃᖂ),cordyceps (㲛༿㥹ߜ), ginseng (Ӫ৲), and notoginseng (йг) are typically bought in specialTCM pharmacies (see Exhibit 6).

In China, the younger generation was significantly more receptive to cosmetics products thanolder consumers. The average cosmetics consumer was in her mid-20s (vs. early-50s inEurope). Most were raised as an only child (or “little emperor”), had significant disposableincome, and liked novelty. For them, another “generation” meant people who did not overlapat university or were separated by a decade at most (not parents and children).

New channels of distribution, such as TV-based direct selling and ecommerce portals wererapidly emerging. Over half a billion Chinese consumers had access to the internet.Traditional media (e.g., TV, newspapers) were losing their appeal as the younger generationspent a significant portion of time texting, surfing the web, and using social media such asWeibo (a Chinese fusion of Twitter and Facebook).

The second distribution channel consisted of beauty store chains like Watsons and Manning(see Exhibit 4).

When multinationals first entered China, premium cosmetics were almost exclusivelydistributed via department stores (see Exhibit 2). As in department stores worldwide, brandsrent floor space and sometimes pay a sales-based commission to the department store

As of 2010, the top five companies in the beauty and skincare market (including personalcare) were all multinationals: P&G, L’Oréal, Shiseido, Unilever and Amway. Yet they stillonly accounted for 40% of the €18 billion market, and now had strong local competition.Firms such as Shanghai Jahwa and Jala had experienced extremely strong growth and theirbrands were available everywhere, from high-end department stores to local cosmetic stores,presenting a formidable challenge.

Given an enormousincrease in disposable income, Chinese consumers increasingly desired more sophisticated,premium products in many categories, including beauty and skincare

HomeChef would win our “all-around” award. We reallyliked it. The meals were simple but flavorful. Ilearned a few new techniques preparing them, butdidn’t roll my eyes at extraneous steps like I oftendid with Blue Apron.

Plated and Blue Apron will appeal to youif you want to try exotic flavors and unusualcombinations. These meals include ingredients youwon’t find at your local supermarket.

You’ll paya hefty premium over doing your own shopping,but these services will likely save you money (andbe better for you) than getting lots of take-out

They found that customers who producedthe same dinners in the exact same portions—whiledoing their own shopping—spent 60 percent morethan they would have if they’d just orderedthrough Blue Apron

How much does Blue Apron cost? For two people,meals are $9.99 per meal per person. For four,meals are $8.74 per meal per person. In otherwords, three meals for two people per week (sixmeals total) would run you $59.94, which includesshipping.

After weeks of Blue Apron meals, however, wefound some to take longer than indicated—up to anhour and a half. While many meals can be preparedin under an hour, we wouldn’t recommend BlueApron to anyone looking for fast weeknight meals.

You canselect your dietary preferences to ensure that youdon’t receive anything you don’t eat, like red meat,fish, or shellfish, but you’ll have less control over

Blue Apron According to their PR rep, Blue Apronis the largest fresh ingredient and recipe deliveryservice in the US, delivering over 800,000 meals permonth to 85 percent of the country.

Ultimately, Freshly meals are theultimate convenience.

By contrast, we’re alwayslaughing at how involved Blue Apron’s recipes are.If a recipe calls for pickles, you’ll be slicingcucumbers and marinating them in vinegar. Not sowith Hello Fresh, they take a few steps out

he only thing we didn’t love about HomeChef is that it seemed like they used even morepackaging than some competitors.

Home Chef is attractive because they offer 10 ormore meal choices each week, with a good varietyto meet dietary needs. There are vegetarianoptions, as well as soy-free, gluten-free and low-calorie meals.Home Chef also thinks beyond dinners withbreakfast offerings (like the frittata we ordered,though it was just as tasty for dinner) and otheroptional “sides” like a margarita smoothie the weekof Cinco de Mayo or a spring fruit basket. Thequality of most of our Home Chef Ingredi

Home Chef

One downside to consider, however, is theenvironmental impact of packaging. Meals shipwith ice packs and some with foam liners

And while theseservices are not inexpensive, they may not be asexpensive as you think.

Blue Apron and Hello Fresh

But eating out allthe time isn’t good—for your health or your wallet

Are they worththe money? And which service comes out on top?I’ve always loved to cook. But then life happened.

During this period,elite landholdings consolidated while rural Indian populations weredisplaced and regrouped, and Spanish ideas and values spread formallyand informally. Legal institutions matured as caste rights and obliga-tions were written (though not systematically) into laws that main-tained distinctions between Spaniards and non-Spaniards, and amongnon-Spaniards themselves

She’s also thinking about activities outside of fitness.Already the company has experimented withoffering massage, Daybreaker parties (booze-freeearly morning raves), movies, and dance shows onits app, says Kadakia

lassPass has had to build technology to help manyof these fitness studios track class inventory,explains Kadakia, and the company is open tocreating more products for fitness studios. It’srecently launched a product called “smart spot,”which is an algorithm studios can turn on toautomatically release class spots to ClassPass basedon historical data.

That’s why ClassPass may be phasing out unlimitedaltogether. If you try to sign up for ClassPass inmajor metropolitan areas like New York or Chicago,you won’t see the unlimited subscription plans, onlythe 5- and 10-pass options

There’s a big difference in marginsbetween a frequent user and an occasional one.While they know that every month class-goers willmiss classes and have to pay a fee, they can’t reallyknow in advance how many people will do that. Thetiered pricing is meant to introduce more certaintyto the company’s finances, by limiting a customer’sability to drive down their own class cost

ays Lanman. But since the $99 rate alsoattracted exercise fanatics (those who were takingso many classes it was reducing their individual costsper class to less than $10), the price change mayhave been aimed at churning some of these powerusers ou

This managed to accrue a subscriber base, but thesubscription was not supposed to be the mainsource of revenue. It was primarily a way to getcustomers hooked on a product and eager to buy itregularly at full size on Birchbox’s website, ratherthan a mechanism for triggering a steady supply ofrevenue.

To get this middleman role right is an arduous task.It depends on selling consumers a product they mustvalue enough to sign up for, but won’t fully use.

Over the course of 2015, ClassPass stoked monthlyrevenues from $3.4 million to $9.1 million, taking inroughly $86 million in revenue for the year total,according to the internal document reviewed by FastCompany. But operating costs stood in the way ofconsistent profitability. ClassPass started 2015 offwith a monthly net loss of $2.8 million. At the end ofMay, those losses had mounted to $7.2 million permonth. The company was turning over between $8.5and $9.5 million every month to its partner venuesfor the majority of the year. Plus, it had mountingsoftware costs, which Kadakia says were attributedto an increased investment in its engineeringdepartment and its new products, though shedeclined to go into detail on exactly what thoseencompassed

Frequent class-goers could significantly drivedown their cost per class on otherwise expensiveboutique classes by going to lots of classes.Spreading $99 across an entire month of dailyclasses equates to paying $3.30 for each individualclass, if a power user takes a class every day.

At the start, ClassPass’sNew York City users paid $99 a month for unlimitedfitness classes. Then, in 2015, it raised its price to$125 a month. This past summer, that numberjumped to $190 a month for unlimited classes. Thesurge, designed to fatten margins, cost ClassPass10% of its users, according to TechCrunch.

Thesubscription model has also become a tool fororganizing monthly activities like getting your hairstyled or going to the gym, and has created a marketaround quickly scheduling the hours of your day.

there’s ClassPass—a three-year-oldservice that, for a monthly fee, connects fitnessnovices and workout junkies with a wide range ofboutique exercise classes at a discounted rate

Nature gives the firSt of these, viz. Paternal Power to Parentsfor the Benefit of their Children during their Minority, to supplytheir want of Ability, and underStanding how to manage theirProperty.

And therefore he, that will look into the Hiflory of England,will find, that Prerogative was always largeff in the hands of ourwiseSt and beSt Princes: because the People observing the wholetendency of their Actions to be the publick good, conteSted notwhat was done without Law to that end; or if any humane frailryor miStake (for Princes are but Men, made as others) appear'din some small declinations from that end; yet 'twas visible, themain of their Conduct tended to nothing but the care of thepublick. The People therefore finding reason to be satisfied withthese Princes, whenever they acted without or contrary to the I oLetter of the Law, 11cquiesced in what they did, and, without theleaSt complaint, let them inlarge their Prerogative as they pleased,judging rightly, that they did nothing herein to the prejudice of

For as a good Prince, who ismindful of the truSt put into his hands, and careful of the good of Iohis People, cannot have too much Prerogative, that is, Power todo good: So a weak and ill Prince, who would claim that Power;which his Predecessors exercised without the direCtion of theLaw, as a Prerogative belonging to him by Right of his Office,which he may exercise at his pleasure, to make or promote an IlIntereSt diStinct from that of the publick, gives the People anoccasion, to claim their Right, and limit that Power, whiclr, whilStit was exercised for their good, they were content should betacitly allowed

For the end of Government being thepreservation of all, as much as may be, even the guilty are to bespared, where it can prove no prejudice to the innocent

Tis not a change from thepresent State, which perhaps Corruption, or decay has introduced,30 that makes an Inroad upon the Government, but the tendency ofit to injure or oppress the People, and to set up one part, or Party,with a diStinction from, and an unequal subjection of the reft

the best remedy could be tofound for this defect, was to trust this to the prudence of one,who was always to be present, and whose business it was to watchover the publick good. Constant frequent meetings of the Legi<lative,and long Continuations of their Assemblies, without necessaryoccasion, could not but be burthensome to the People, and must ''necessarily in time produce more dangerous inconveniences, anayet the quick turn of affairs might be sometimes such as to needtheir present help:

It is not necessary, no nor so much as convenient, thatthe LegiJlative should be alwqy; in being. But absolutely necessarythat the Executive Power should, because there is not always need'of new Laws to be made, but always need of Execution of theLaws that are made.

Therefore 'tis necessarythere should be a Power a/wqys in being, which should see to theExecution of the Laws that are made, and remain in force.

Therefore in well order'd Commonwealths, where the goodof the whole is so considered, as it ought, the Legu/ative Poweris put into the hands of divers Persons who duly Assembled, haveby themselves, or jointly with others, a Power to make Laws, which2o when they have done, being separated again, they are themselvessubjeB: to the Laws, they have made; which is a new and neartie upon them, to take care, that they make them for the publickgood.

But Still it muSt be with his own Consent,i.e. the Consent of the Majority, giving it either by themselves;or their Representatives chosen by them.

But in Governments, wherethe Legi&lative is in one laSting Assembly always in being, or inone Man, as in Absolute Monarchies, there is danger Still, thatthey will think themselves to have a diStinct intereSt, from thereSt of the Community; and so will be apt to increase their own 2sRiches and Power, by taking, what they think fit, from thePeople. For a Man's Property is not at all secure, though there begood and equitable Laws to set the bounds of it, between him andhis Fellow Subjects

ef/abluhed and promulgated Laws: that both the People'may know their Duty, and be safe and secure within the limits ofthe Law, and the Rulers too kept within their due bounds, andnot to be tempted, by the Power they have in their hands, toimploy it to such purposes, and by such measures, as they wouldnot have known, and own not willingly

Secondly, The Legislative, .or Supream Authority, cannotassume to its self a power to Rule by extemporary ArbitraryDecrees, t but is bound to dispense juflice, and decide the Rights ofthe Subject 1qy promulgated !landing Laws, and known Authoru'd Judges.

Law of Nature '30 i.e. to the Will of God, of which that is a Declaration,

Thus the Law of Nature stands as anEternal Rule to all Men, Legislators as well as others

Firfl, It is not, nor can possibly be absolutely Arbitrary over theLives and Furtunes of the People. For it being but the joyntpower of every Member of the Society given up to that Person,or Assembly, which is Legislator, it can be no more than thosepersons had in a State of Nature before they enter'd into Society,and gave up to the Community. For no Body can transfer toanother more power than he has in himself; and no Body has an •oabsolute Arbitrary Power over himself, or over any other, todestroy his own Life, or take away the Life or Property of another

This LegiJlatiVII isnot only the supream power of the Common-we•lth, but sacred and1o unalterable in the hands where the Community have once placedit; nor can any Edict of any Body else, in what Form soever con-ceived, or by what Power soever backed, have the force andobligation of a Law, which has not its Sanflionfrom that LegiJlative,which the publick has chosen and appointed

or Legi<lative con-ftituted by them, can never be suppos'd to extend farther than thecommon good; but is obliged to secure every ones Property by pro- 10viding again~ those three defects above-mentioned, that madethe State of Nature so unsafe and uneasie. And so whoever hasthe Legislative or Supream Power of any Common-wealth, isbound to govern by e~ablish'd flanding Law.i, promulgated andknown to the People, and not by Extemporary Decrees; by 1Jindifferent and upright Judges, who are to decide Controversies bythose Laws; And to imploy the force of the Community at home,on!J in the Execution of such Laws, or abroad to prevent or redressForeign Injuries, and secure the Community from Inroads andInvasion.

The inconveniencies, that they are therein exposed to, bythe irregular and uncertain exercise of the Power every Man hasof punishing the transgressions of others, make them takeSanctuary under the e~ablish'd Laws of,Gover':'ment, and theremseek the preservation of their Property. T1s this ma~es. them so10 willingly give up every one his single ~ower of purushing to beexercised by such alone as shall be appomted to It among~ them;and by such Rules as the Community, or those authonsed bythem to that purpose, shall agree on.

the Preservation of their Property. To which in the State of Naturethere are many things wanting

To which 'tis obvious to Answer, that though in the State ofNature he hath such a right, yet the Enjoyment of it is veryuncertain, and conStantly exposed to the Invasion of others.

And to this I say, that everyMan, that hath any Possession, or Enjoyment, of any part of the'' Dominions of any Government, doth thereby give his tacit Con-sent, and is as far forth obliged to Obedience to the Laws of thatGovernment, during such Enjoyment, as any one under it;whether this his Possession be of Land, to him and his Heirs forever, or a Lodging only for a Week; or whether it be barely20 travelling freely on the Highway; and in Effect, it reaches as faras the very being of any one within the Territories of thatGovernment

very Man being, as has been shewed, naturally free, andnothing being able to put him into subjection to any EarthlyPower, but only his own Consent; it is to be considered, whatshall be underStood to be a su.flicient Declaration of a Mans Consent,•lto make him suijef! to the Laws of any Government. There is la common diStinction of an express and a tacit consent, whichwill concern our present Case. No body doubts but an expressConsent, of any Man, entring into any Society, makes him a perfectMember of that Society, a Subjet1: of that Government.

Every one ;. born a Su/Jjet! tohu Father, or hi& Prince,, and iJ therefore under the perpetual tye ofSub;etlzon and A!!egzance.

puts himself under anObligation to every one of that Society, to submit to the deter-mination of the mqjority,

And thereforewe see that in Assemblies impowered to atl: by positive Lawswhere no number is set by that positive Law which impowers1l them, the ail of the Majority passes for the atl: of the whole, andof course determines, as having by the Law of Nature and Reason,the power of the whole.

for theircomfortable, safe, and peaceable living one amongSt another, ina secure Enjoyment of their Properties, and a greater SecurityagainSt any that are not of it

EN being, as has been said,. by Nature, all fr~e, equaland independent, no one can be put out of this EState,and subjeB:ed to the Political Power of another, without his ownConsent.

Nondisposable Razor Media Advertising Expenditures,a 2009–2010E

linical trials indicated Clean Edge achieved a 25% increase in hair removal versus otherleading nondisposable razor brands (e.g., Cogent and Vitric). Trials also proved benefits to overallskin condition with more even skin tone and improved skin texture.

As a result of new-product introductions and in order to stimulate demand, total mediaadvertising expenditures in this category had been rising faster than retail market sales, and thistrend was expected to continue

umerous productinnovations in the super-premium segment (e.g., 5-blade technology, glide strips, lather bar, lowresistance blade coating, etc.) fueled the growth

Nondisposable Razors $ 178 $ 212 $ 188 $ 198 $ 208 $ 218Refill Cartridges $ 763 $ 801 $ 802 $ 815 $ 832 $ 853

Financial Forecasts: Alternative Positioning Scenarios for Clean Edge

% of Nondisposable Razor Sales by Retail Channel: 2007–2010E

Behavior Segmentation of Nondisposable Razor Consumers

To capture the volume estimates laid out in Exhibit 7, Randall determined a niche positioningstrategy would require $15 million in total marketing expenditures for Clean Edge’s first year. Inorder to reach full sales potential with the mainstream position, a $42 million marketing budgetwould be needed for year one. It was clear to Randall that launching Clean Edge as a mainstreamproduct would require significantly more marketing support.

Those executives who felt the design was a major breakthrough in grooming believed theproduct should stand apart from the current lines with an emphasis on the “Clean Edge” name (e.g.,“Clean Edge by Paramount”). In opposition to this were a handful of executives who thoughtParamount’s name should receive top billing as this was consistent with the overall corporatestrategy of building the Paramount brand name equity. The name this group preferred was“Paramount Clean Edge.”

When the question of Clean Edge’s product positioning was broached, Rosenberg said, “I can’tbelieve we are even considering a mainstream positioning strategy. You will just siphon offconsumers from Pro. A mainstream strategy will dilute the brand power for our bread-and-butterproduct, Pro. We will just be cannibalizing ourselves.

Within the super-premium segment, Randall had the option of recommending Clean Edge for aniche product position focusing on highly involved, fastidious groomers looking for a superiorshaving experience, or a mainstream position focusing on the broad advantage of offering the closestpossible shave.

rince had been a market leader in nondisposable razors since the 1950sand held the number one position in terms of retail dollar sales in 2009. Prince sold nondisposablerazors and refill cartridges under the brand names Cogent and Cogent Plus. Both were consideredsuper-premium products. Revenues for Prince’s nondisposable razors and refill cartridges in 2009were approximately $224 million with $45 million in operating profit

B&Kunveiled a new product line of nondisposable razors and refill cartridges (Vitric Master) in 2009 thatprovided an advanced lubrication strip, non-slip handle, and superior anti-corrosive technologyblades.

New products such asmen’s body spray, fragranced shower gel, and skincare lines proliferated in the last several years.Male-specific personal care products outpaced the growth in the women’s beauty market as theseproducts became more mainstream

There wasa group of consumers that Paramount labeled as “Maintenance Shavers” who were almostcompletely disinterested in the product category. Involved users could be broken up into“Social/Emotional” and “Aesthetic” shavers.

Currently, industry experts divided the nondisposable razor and refill cartridge market into threesegments based on price and quality: value, moderate, and super-premium.

executives atParamount agreed Clean Edge should be priced in the super-premium segment of the market.However, some executives believed Clean Edge should be launched as a mainstream entry withinthat segment, with the broad appeal of being the most effective razor available on the market. Othersfelt a more differentiated niche strategy, targeting the most intensely involved super-premiumconsumers, would be optimal. Paramount had decided to launch this technologically advancedproduct into the men’s market first where the company had the strongest presence, with anintroduction into the women’s market following soon after.

Company Name/Product:

WHAT DO CUSTOMERS WANT?

A process called a Kano Analysis is used to helpdetermine the value of product features.

Opportunities for Primary Demand Creation

Main benefit: is the primary benefit provided by the product category thatdifferentiates the category leader – the leading productDynamic benefit: is the benefit used by a competitor to take share from thecategory leader.

Slide 13BUYING PROCESS

What “job” is the customer hiring the product to perform? “Job” definedsegments tend to be much larger than product defined segments since theretends to be more substitutes.

Behavioral Segmentation

Create vertical segments Easy to identify, reliable andstable – but easy for competitorsto duplicate Critical for determiningplacement (channel) issues –how you access the customer –how they purchase Watch for stereotyping

Who are current customers, repeat customers vs. potential customers? How doyou prioritize them?

The Positioning Statement:

Segmentatio

ehaviors

Identify who has the greatestproblem.

Value creation isdriven by context. Understanding thiscontext can be critical to a firm’s abilityto capture value. What is the real causeof the problem?

Sometimescustomers are so accustomed to their current situation that it is hard forthem to envision or comprehend a better way of doing something.

o introduce, moreover, an emulation amongst men, they divided thewhole species into two classes, vastly differing from one another. The oneconsisted of abject, low-minded people, that always hunting after imme-diate enjoyment, were wholly incapable of self-denial, and without regardto the good of others, had no higher aim than their private advantage

The chief thing, therefore, which lawgivers and other wise men thathave labored for the establishment of society have endeavored, has been tomake the people they were to govern believe that it was more beneficial foreverybody to conquer than indulge his appetites, and much better tomind the public than what seemed his private interest.

The power-andsagacity. as well as.labor and care of the politician in civilizing the societyhas been nowhere more conspicuous.than in the happy contrivance ofplaying our passions against one another. By flattering our pride and stillincreasing the good opinion we have of ourselves on the one hand, andinspiring us on the other. with a superlative dread and mortal aversionagainst shame, the-artful moralists have taught-us cheerfully to encounterourselves, and.if not subdue, at least so to conceal and disguise our dar-ling passion, lust, that we scarce know it when we méet with it in our ownbreasts. Oh! the mighty prize we have in view for all our self-denial!

But nobody isso savage that no compassion can touch him, nor any man so good=natured as never to be affected with any malicious pleasure. Howstrangely our passions.govern us!

I have seen a lap-dog that would chokehimself with victuals rather than leave anything fora competitor of hisown kind; a

hat weare 80 generally ashamed of this vice is owing to that strong habit ofhypocrisy, by the help of which we have learned from our cradle to hideeven from ourselves the vast extent of self-love, and all its differentbranches: It is impossible man should wish better for another than hedoes for himself, unless where he supposes an impossibility that himselfshould attain to those wishes. And from hence we may easily learn afterwhat manner this passion is raised in u

Envy.is that baseness in our nature which makes us grieve and piné atwhat we. conceive to be a-happiness in others. I don’t believe there is ahuman creature in his senses.arrived to maturity that at one time or otherhas not been carried away by this passion in good earnest. And yet I nevermet with anyone that dared own he was-guilty of it, but in jest.

When we perceive an air of humanity, and men seem not to beemployed in admiring themselves, nor altogether unmindful of others, weare apt to:pronounce them void.of pride, when perhaps they are onlyfatigued with gratifying their vanity, and become languid froma satiety ofenjoyments. That outward show of peace within, and drowsy composureof careless negligence, with which a great man is often seen in his plainchariot:to loll at-ease, are not always so free from art, as they may seem tobe. Nothing is more ravishing to the proud than to be thought happy.

nd considering food and raiment tu be necessi-ties, and the two chief articles to which all our worldly cares are extended,why may not all mankind set aside a considerable part of their income forthe one as well as the other, without the least tincture of pride? Nay, is notevery member of the society in a manner obliged, according to his ability,to contribute toward the maintenance of that branch of trade on which thewhole has so great a dependence? Besides that, to appear decently is acivility, and often a duty, which, without anv regard to ourselves, we oweto those we converse with.

We are possessed of no other quality so beneficial to saci-ety, and so necessary to render it wealthy and flourishing as this, yet it isthat which is most generally detested.

The bond of societyexacts from every member a certain regard for others, which the highest isnot exempt from in the presence of thc meanest, even in an empire.

Becauseimpudenceisavice,itdoesnotfollowthatmodestyisavirtue.Itisbuiltuponshame,apassioninour nature, andmaybeeithergoodorbadaccordingtotheactionsperformedfromthatmotive.

It is shame and education thatcontains the seeds of all politeness, and he that has neither, and offers tospeak the truth of his heart, and what he feels within, is the most con-temptible creature upon earth, though he committed no other fault.

Those who are not instructed in these rules long beforethey come to years of maturity scldom make any progress in them after-wards. To acquire and bring to perfection the accomplishment I hint at,nothing is more assisting than pride and good sense. The greediness wehave after the esteem of others, and the raptures we enjoy in the thoughtsof being liked, and perhaps admired, are equivalents that overpay the con-quest of the strongest passions, and consequently keep us at a great dis-tance from all such words or actions that can bring shame upon us. Thepassions we chiefly ought to hide for the happiness and embellishment ofthe society are lust, pride, and selfishness. Therefore, the word modestyhas three different acceptations that vary with the passions it conceals.

What strange contradictions man is madeof!

his ignominy is likewise called shame, from the effect it produces. Forthough the good and evil of honor and dishonor are imaginary, yet there isa reality in shame, as it signifies a passion that has its proper symptoms,overrules our reason, and requires as much labor and self-denial to besubdued, as any of the rest.