Information systems in the computer industry: a customer approach

Information systems in the consumer industry: a customer approach

Franco Miotto

''''Introduction

This work is addressed to everyone who asks himself what will be, in the near future, the information needs for the consumer industry. This paper is thus addressed to people working in information technology, marketing, organization or general management. Their interest will be over the whole book and, particularly, in the chapters regarding the general objective and solutions architecture for the industry and retail environment.

This works derives from various personal experiences out of which I chose the two real cases which are presented in the initial chapters: in both cases the real problem was to shift the company information focus from the support of internal processes to the analysis and evaluation of the market scenario in which the companies were acting.

One of the problems I had to cope while doing this job is to be sure to use a methodology which would help me taking into consideration every part of the problem, not forgetting any aspect.

The method is one of the aims of the book.

From a presentation point of view, I decided to start from the real cases and then get to the abstraction, not vice versa; it seems to me easier to understand. This is the reason why the case studies are quoted initially; they should help the reader to face the more “formal” discussions with an operational attitude, not as just “principia”.

Generally I think that, after the pure automation phase (accounting, MRP etc.), information technology will need to help industries to approach the complete cycle of customer needs. This will mean taking into consideration processes with a very little syntactic content but very common: informational unstructured scenarios. I think that these processes are the one that will give us some better prediction information models and also improve our operational and control tools.

I am sure that his work has plenty of ingenuities, methodological and language mistakes but, as I found no literature on these topics, I decided to use it as a request for help so that we can make a better service to our general “customer”.

[ Information systems in the consumer industry: a customer approach 1]

[ A case study of reengineering of information systems – industry. 4]

[ A case study of reengineering of information systems – retail. 8]

[ Introduction to methodology 11]

[ General processes 16]

[ Ability to perceive and categorize customer needs 16]

[ Ability to understand, rationalize and interpreter customer needs 19]

[ Industrial processes 21]

[ Ability to satisfy the customer need. 21]

[ Ability to communicate the capacity of satisfying the need 23]

[ Industry: the architecture of the solution 24]

[ Retail Processes 27]

[ Process analysis: the retailer point of view 29]

[ Customer need – process existence relation 38]

[ Group processes 42]

[ Context processes 45]

[ Retail: the solution architecture 46]

[ Conclusion 48]

[ Appendix A 49]

[ Appendix B 50]

[ Bibliography 53]

A case study of reengineering of information systems – industry.

The company: this case history is about a middle sized industry in the market of apparel and fashion.

The total business is fairly split between production of fabric and underwear, especially beach wear.

The company was historically a weaving site and the apparel part was created to fill the period of the year when fabric production was low.

The company was created by a single person, a fairly typical situation, and grew up on such a one-person organizational schema. As time passed and markets changed, this model showed its limits and the whole company was suffering poor sales. Everybody was feeling that something new was needed but there was no clear model to follow or copy. The company was slowly losing all its assets: market as well as culture, including human expertise in management, control and operations.

The market: as you might have guessed the main part of the customers belong to two different categories:

1. Other companies buying fabric
2. Retailers buying underwear and beachwear.

We are thus talking about two different classes of customers with two different sales channels (direct sales vs. sales agents) and different habits. Geographically the company was selling mainly in Italy with little or no foreign turnaround.

From the “marketing” point of view the two parts had a completely different approach:

1. The “fabric” department had very little “brand awareness” as the product was thought for a technical market where the customers are specialists
2. The “underwear” department had a definite need for “brand recognition” as this is a large part of the final sale.

The existing information system: as it often happens the actual IT was the result of many years overlapping without the possibility of a real radical rethinking. This was due to two major reasons:

Any radical reorganization of the IT system would have meant discussing the real essence of the company both in scopes and in structure

The IT manager did not have the organizational strength and will to pursue such a task, a job which would have meant criticizing actual high class managers.

The whole situation was also worsened by the fact that the new line of business (“the underwear”) started as a result of another company acquisition.

All of these factors lead to the existence of two different systems, almost non compatible and with double costs in terms of maintenance and development; worse of all the existence of two technical worlds created the idea that two different companies were acting and that no synergies were possible.

Control system was also a problem as the two systems used different coding and taxonomy so a third system had to exist to aggregate the final data.

Economical perspectives: the international market context and production methods were driving the company to a slow decline in spite of local situation like crisis of recoveries. The whole business model had to be redesigned and the IT was a problem for this.

First of all the company needed to understand what was important and what was not; this information was not in the IT capabilities as the system was the image of the company situation and it could not merge internal information with external signals also because people working in it was too busy in getting it going on the operational side.

The turn point of the situation came when a new CEO was appointed. He decided to analyze every process to create a more elastic and homogeneous company structure. This decision put the top manager in a very delicate position: he could have been the successful innovator, the visionary leader or the excuse for a failure. Particularly in one-man company (level 2 of the Greiner model) product and direct processes are so deeply tangled that any structure variation is seen as an “offense” to the history of the enterprise and these changes are not considered as rational necessities for the company health. Service processes, and IT especially, are not felt as “communication needs” as this job was done by the founder as a physical person. Obviously we all know that is one of the deepest reasons why that communication model (the one-man company) cannot raise over a certain dimension and therefore cannot gain certain dimensional efficiencies.

With the help of an advisor the new CEO has looked into the problem of updating the IT system and his first problem was to decide which kind of approach was to use:

The content approach: this is the most common approach and it start from defining the typical parameters connected to:

• Technology situation: both technical and functional (HW, SW, user requests coverage etc.)
• Consultancy situation: both related to the existence of “best practices” in the field and to the presence of players (consultancy firms) available
• Project content: typically you tend to copy the actual requirement schema because it is what users ask for
• Timing: months to years horizons
• Objective: to a have a more flexible and usable platform; an updated environment.

The functional approach: this approach starts from a different point of view: “we want to improve customer service” where “the customer” is both the internal user but mainly the external sales customer as this last one certifies the company in the market. So, for each process, we it was necessary to define:

• The customer: who is he? (both known and potential)
• The service: what does this mean? product, attention, social needs
• The product: what the expectations of the customer (the standard we want) as a function of reliability, availability, fashion alignment.
• Esteem needs: achievement, attention, recognition
• Social needs: belonging, recognized interaction
• How do we define and how do we measure these needs?
• How do we acquire these informations?

The main purpose of this approach is to define some quantitative parameters for a business model with particular attention to the idea of “customer service”.

This second approach was really appreciated also for its “push” attitude on people who had somehow lost what the market really asked for, even though this analysis requires, as an assumption, that a customer knows what he wants, a “mature” approach, and this, by itself, is a statement to be demonstrated.

The first real step was then to figure out what the customer real needs were, differentiating them from what were historically thought them to be or from what were perceived by the various intermediate acting agents. The basic idea was to compare which information were in the IT system and which one were needed to be really customer compliant as to decide which way to invest in the general company information system.

On the external customers, the real steps which followed began with

• Identify “representative customer” by the sale force
• Check whether these customers were really representative of the whole internal market by defining the selection criteria for a sample
• Make an interview to “random customer”, “statistically sample customer” and “representative customers”
• Collect their needs and cross table the results.

The beginning was a disaster, the general attitude was:

Sales people: customers are an asset of “my” division; it is only me who should talk to them

Marketing people: the product is “right”; it is the customer who does not understand it (!).

The CEO skill was to be able to maintain the right direction and get everybody to understand that the company could only grow if it would face the real changing world, avoiding closures and blind behaviors; a formal check is something which is in the nature of improving processes.

As a result of this phase it turned out that the important parameter to be fixed was “time-to-market”: both the fabric and the underwear department could not compete with far-east productions in terms of prices so, assuming that quality was perceived as “sufficient” (therefore a correct positioning on the market) the request was for small production quantities which were to be available quickly.

From the company point of view, this meant:

1. A better information system connection
2. A better relation system between customer and vendor
3. A product industrial design which could allow a quicker response
4. A different industrial relation management for customer who need products with a long lead time
5. A better forecasting and projection system.

This whole analysis was then enlarged to non-covered channels like e-commerce and direct retail.

The solution approach: obliterate or improve. This question has been raised so many times by the times of Hammer and Davenport and we know that it has no general answer but it must be correctly posted in the real context. This pragmatic approach must also keep into consideration that the smaller the company the more important is the role of individual physical persons which are themselves “organizational customers” with their background of Maslow needs.

Inside the company the process started requesting each key employee how he felt about the idea of “customer” whether internal or external. We then reversed the question and asked everyone how he felt as being a “customer”, which kind of expectations he had, whether fulfilled or not. In this way we arrived to define a map of “needs”. We then matched these “needs” with their coverage both declared (by the function) and perceived (by the customer).

The difficulties we found, at this stage, were essentially two:

• The capacity of “customer” and “supplier” to estimate the importance and the coverage of problems; aggressive users tent to impose small problems as important mainly to show that were important people while passive persons would adapt to uneasy situations for the sake of peace
• The difficulty in accepting the idea that, being the company a whole system, the total result is the combination of all parts running well and not just a sum of parts each running at its own speed.

The fact that external consultants were involved helped people to question themselves as well as gave the company an external evaluation of specific professional capability.

In this analysis period the IT group showed its greatest limits as it was trying to support individual needs without having the chance of harmonizing the whole system. Individual requests were pushing into specific directions so the general feeling was that of a waste of time and money. From the outside we can say that it was just a representation of the company situation but to the inside this was the excuse for the falling efficiency.

The final choice: as we said the CEO found himself in the middle of

• The outside world and the its dynamics
• The needs of the internal operators and especially of the owner.

The way he chose included:

• Making the situation clear to everybody including the owner
• Understanding the stakeholder needs and make them the strategic goals
• Formally analyze the market needs
• Define the organizational model including the operational role and responsibility of the stakeholder
• Getting all the human resources through a processes of upgrading their attitude to “customer service”
• Define the instruments to control both the “service” and economic indicators of each department.

As far as the IT department the choice was:

1. Simplify the existing reporting processes as much as possible so that the actual technical infrastructure would last some time allowing the company to concentrate on other projects
2. Invest very much on instruments related to “company critical” issues like

• Style research
• Product design and management
• Technical product definition
• Market analysis
• CRM

1. Define a strategy to clear out the dependence of the company from a few IT people who actually could not be changed and get the user to accept some minor cut in service level as a function of a clearer general view on the whole system. This part was to support the company up to the change of the system in a medium time period (2–3 years), mainly through a process of data and process definition.

A case study of reengineering of information systems – retail.

The company: this case study is about a small-medium sized apparel company retail division. This company, as it often happens, started on the idea of a specific line of products and later approached the retail channel in a naive way. The retail story began with the need of liquidating the company surplus in a company outlet; this was not enough so the company approached the outlets circuit. At this point it did happen that the product offer was not balanced to make a good service to the customer so the company had the need to work with the stock channel to get rid of what was left over.

By that time the company thought it has developed a culture of “retail” so it made a decision to approach the wholesale market with mono-brand locations and/or shop-in-shop experience in the department stores.

Almost always such a change implies a large item offer so the initial “product” idea spread over a “total look” vision with its corresponding design and production problems.

The company we are talking about moved from an offer of about 150 samples to about 500 pieces thus multiplying by three the whole paperwork.

The retail division had a target of about 50 sales point, searched by a consultant and interiorly designed by a fashion architect.

The market: the company operated in the casual sportswear mainly on jackets. Geographical distribution was worldwide but mainly rich eastern countries and emerging countries, due to the average price of the product. The “ideal” customer belonged to a fairly rich class, he liked sportswear and he was fairly aggressive. The style actually intended to be aggressive enough to be chosen both by young and older people.

The existing retail IT system was originally chosen to support the initial outlet, so its main features were:

• Low cost
• Little and clear functionalities
• One level architecture (shops and main)
• single cash register in a shop
• Written and maintained by a near located, “friend” software house.

Quite a few problems had been solved on a “quick” solution attitude as volumes were small, no general approach.

The whole situation was worsened by the fact that no user came from a structured culture environment so they tent to solve their problems on an unstructured, personal way.

When the whole phenomena grew bigger two very dangerous behaviors came up:

1. The stockholder thought: “if it works for four it will work for five etc.”
2. The software house used to say: “I am willing to grow up with you: tell me what you want and I will do it.”

The company was really pushing the instrument over its project limits patching it over and over.

The economical situation: mainly due to the international crisis the company was financially overexposed and the shop system was a real weight to the balance sheet: out of a dozen shops existing only two or three were profitable, another two or three run even and the rest were both losing money and creating end-of-season unsold inventory. These numbers also did not take into account hidden costs that the company had to sustain to help the shop system; costs which are difficult to pin out but that are often consistent. I am talking about time spent by “structure” people like accounting and/or logistics to help the whole system run.

The turn point came when an outside consultancy firm had to investigate the economical situation on behalf of a new possible stakeholder. The problem was not so much the retail policy as a principle but the way it had been implemented. The company culture was industrial and everybody used to think to “customers” as being wholesaler, which means professionals, and not final customers.

Even if a retail manager and a merchandiser existed, real decisions were made by people coming from “product” oriented people so many the whole process was still very “fashion” and “industry”.

The functional approach: to evaluate correctly the job to be done we went through a dimensional analysis of the needs of the retail department customers including all the aspects of “product”; “subjective” and “social” aspects.

For every view we tried to find as many “objective” data as possible trying to avoid preconceptions. This job was guided by an external consultant, a right choice in my opinion, as we thought that no internal resource could be enough professionally detached to guarantee a correct evaluation.

First thing the company did was to separate needs: wholesale and final customers. This meant almost doubling the job but it allowed checking whether the requests of the retail channel (both wholesaler and property shop) matched with the “real” final customer wishes.

Physically the job has been done through check lists compiled by hired personnel both in the case of retailer and of final customers. Actually final customers were divided into two major categories: customers contacted in shops (already aware of the brand) and people looking at apparel shop windows (apparel keen but not especially on the brand).

Every interview was then graded according to the expectation of satisfaction both as need and as answer to it. The complete results and the exact form of the questions are not public, what we can derive are the changes the company did in its customer policies.

Question sheet results: as far as final customers are concerned we found that:

• Product - aesthetics and fashion alignment: the product was perceived as “fashion” but “middle low class” and definitely not “high class” as the company thought it was. Competitors were quite different from what the company dreamed they were. Some product categories were “identified” while other were considered “useless”
• Product - reliability: quality was recognized but the price was considered too high
• Product – availability: very low, even if much paper presentation was made on the product, the real possibility to find the item in the shops was low. Part of the problem related also to the fact that the company had decided not to offer on the web a certain number of “flagship” items
• Subjective – recognition: sales people “customer service ” attitude was judged barely sufficient
• Subjective – attention: sales people technical support counseling was perceived as not sufficient and this contributed heavily to the perception of a middle low class brand
• Subjective – empathy: obviously related to individual sales people but, on the average, not very high; the brand was definitely not felt like “friendly”
• Social – belongness: a strong feeling of group belonging was felt
• Social - distinction: fulfillment of this need is low, probably due to inadequate CRM systems.

For retailer the results were:

• Product - aesthetics and fashion alignment: the product was perceived as “average”; the rating was better than the one given by final customers
• Product - reliability: good, little commercial returns and very few items with quality problems
• Product – availability: medium/ low due to poor respect of delivery dates
• Subjective – recognition: quite good, the “retail” customer service was considered very effective
• Subjective – attention: low, customer perceived some sort of company haughtiness
• Subjective – empathy: obviously related to individual agents but, on the average, sufficient
• Social – belongness: no group feeling existed for retailers
• Social - distinction: low, probably due to inadequate CRM systems.

Company actions: based on the results we just quoted, the company decided to

• Product offering returned to about 150-200 pieces for wholesaler and a further set of about 100 pieces distributed only in company stores. These last set of garments were essentially variations on existing garments, to simplify the design phase. The whole set could then cover the “total-look” scenario for the shops and satisfy brand-keen customers.
• Advertising: this moved into two directions. The first one tried to re-position the brand in a “high class” section via the relations with testimonials and events. The second activity (fashion and newspapers) was addressed only to the countries where a distribution network existed and not everywhere; only one new foreign market was to be pursued each year.
• Company shops: only economical justified shops stayed open, with the new product offering. As far as new openings were concerned the strategy was to create mixed companies with local operators. These new middle-sized shops were addressed mainly on the sales of the well known products (jackets) and there was a one year starting period to reach balance break even, and no more.
• External wholesalers: the company recognized their importance and created a contact and support groups with the idea of improve their brand loyalty.
• Agents: the company cleared that a new attitude was needed: they were to become not only customer-order collector but also product and “prospect customers” proposers. Quite a few agents did not accept and interrupted their business relation with the company; the major criticism was that there was no longer an independent agent role but that we were talking of company show rooms and methods. This was one of the most difficult parts of the whole project.
• Company shops sale personnel: a long process of selection and education is still taking place to reach the correct standard in human relations and technical knowledge.
• Shop customer service: it became the real guideline of the retail division. Every aspect has been re-analyzed: from shop lay-out to packaging to personnel clothing and attitude. Mock customers are evaluating each site randomly and their results are discussed monthly at company level and twice-a-year with shop managers.
• Main IT system: the upgrade on this was very limited and it concerned almost only the quality of basic data regarding customer needs like delivery dates or quality indexes
• Retail IT system: this system has been changed very heavily. The operational part has been upgraded to a new instrument and also, even more important, new CRM systems have been introduced regarding both classical topics, like fidelity cards, and new topics like known and unknown person recognition. The possibility to follow the path inside the shop and on the front windows gave the opportunity to improve internal paths and increment the time passers-by would stop in front of the shop.

Generally speaking the reengineering is still going on but the results, up to now, are very encouraging in terms of customer service and of sales point balance break even where all the company shops are now correctly placed.

Introduction to methodology

Starting from the two real case studies we saw, now we want to analyze, at the highest level, the information needs for the processes of a consumer company. This will help us in defining the whole context of data and procedures to be informationally represented. Once we have done this step we can then match the existing coverage with the actual IT system.

In this work I will specifically speak about clothing industry but the method is valid also for other companies and specially for those where “customer care” is a goal and not only an instrument.

It might happen that the customer is not conscious of his needs but then, I think, we should pursue a “maieutic” process of extraction more than the induction of a new need. In this vision of business, agents and retailers are part of the “extended” enterprise as they transmit the idea of “service”.

The reason why I chose the apparel world is that, among companies which operate on physical goods, most probably is the one which best fits the “service” idea in terms of

• Volume of goods and informations
• Changing ratio for the product
• Low unitary value for the product
• Different ways of approaching the final customers
• Difference between “customer” (retailer) and “consumer” (2 decision levels).

Anyway I tried to be as general as possible and you could think of applying this method even to politics as a “service” industry to people.

Before getting into the phase of analysis, I would like to consider something we quickly quoted: apparel sales are usually made in shop with the help of an employee. From the point of view of producers the “customer” is the retailer or some people in its organization (e.g. department store) while the “real” market is the end-user.  The employee actually has a very important role in addressing the choice but he is also a fundamental vehicle for the satisfaction of the esteem needs of the “real customer”.

From an information point of view, the employee is a problem as it creates a “human” bias on the sales data (he addresses the sale) and also, sometimes, he forces his opinions into the information system. The same problem exists in the process of selling the garments to the retailers: the agent can be himself a source of information errors.

As my goal is to help defining a model for an information system, to be later translated into technical instruments, I need to define data, states and processes into detail. This is a huge work and I decided to stop at first level; this is not an ERP detail analysis which would be unrealistic. Sometime I go deeper in the analysis when I think that the actual topic has not been fully cleared.

Analysis Methodology

As analysis practice is not so clear and defined, I tried to use a methodological approach as general as possible using technique of system and process analysis.

Let us define “system” as an ordered set of organized elements all of them aimed at a certain goal. These elements can include physical objects (hardware, software), people, informations, instruments etc.

The representation of a physical system can be made via a dynamic picture (processes) or a static picture (states). A process can be defined as the passage between states (initial and final) of a system; the “state” is the photograph of a system in a steady situation.

According to the nature of the content, we can divide processes in information-bound (e.g. document handling) and physical object related (service) ones. In the first group the information and physical process coincide. As far as the second case is concerned let us make an example related to the industrial world: we can define the state (space and time location of goods: logistic view) or the changing process (goods transformation: industrial view).

The associated information system, related to the physical one, must define the context, the initial state and the transformation rules (processes).

Here we are interested in defining the abstract model (information model in our case) of the real system (natural of artificial) which we call physical system. The representation has its meaning in the context defined by variables and metrics which relate the variables to physical data. Context is defined by the choice of variables and their physical significance; state by the initial values (inventory etc.) and process by the measurement quantities (inventory movements etc.).

Informations (context meaningful data) are itself object of some form of treatment: we classify information “functions” into retrieval, storage, transmission, transformation and presentation.

Just for the sake of completeness we quote the conceptual problem of “measure” problem in its two faced aspects of the need of a measuring instrument and of the fact that the measuring action could change the measured system.

We need also to remind that we have been talking about “semantic ontologies” (which means that these rules belong to a general schema including variables and metric systems) while we know that in the global information world there are plenty of unstructured semantics with many informations inside but with a high grade of difficulty in using them.

In this work, we are interested in “business processes” which are artificial processes representing functions related to the activity of a business company. These processes, not like natural systems, do not work on deterministic laws where, once you know the initial state and the total input, the total output of the system is pre-determined. We are talking about social systems in different cultural environments and related to unpredictable events so the output, at most, can only be generally forecasted and not galileianly determined.

In this chapter more than trying to represent the processes in formally correct a usable language (a task for methodologies like UML), I would like to approach the problem of a methodology to be sure that every aspect of an information problem has been taken into consideration; I am looking how to define all the aspects of an industrial general process, a fashion one in our case.

We already saw that to define the information system we need to individuate the values of the variables related both to the state and to the process; in my experience this passes through the analysis of what I call the “information dimensions” where a dimension is an independent set of information data.

From a practical point of view we have to ask ourselves a set of questions about the initial state and about what happens in the system. The questions I asked myself are:

• What: what is the content of the process; which indicators are chosen and measured in the process
• How: how do I collect and treat informations (state), how does the process happen. This dimension includes the problem of the measuring methods, of the change of indicators (e.g. six-sigma method) and of the choice of the representation language for a coherent formalism
• Who: the definition of the actors in the process and their representation in terms of informations
• Where: which are the location of the processes; initial, actual and results places? In a global system these places can be very far away so you have to consider time-shift, different languages (presentation) and culture
• When: the time the process starts (initial state), lives and finishes so that parameters are in the final state (remember that people are components of the system)
• How much: what is the change in the variables; both internal and context variables
• Why: the reason why the process happens: internal laws (initial stability of the system) and external (context need).

Out of all these questions the most peculiar one is certainly “Why” as sometimes it is related to external laws or habits and sometimes it relates to internal reasons of order and efficiency. Again these last considerations show that we are not operating in a “classical” deterministic world.

The “how much” dimension relates the process to the physical reality (remember we are trying to write some sort of “semantics” of physical processes). We should be able to separate really meaningful variables which actually change during the process assuming that, quite often, the change is only a statistical change and the sample is in the limit of the De Moivre (see example) theorem.

It might happen that some dimension coincides: for example imagine the physical process of an apple falling form a tree. In this case the “what” and the “where” of the process are the same as the process is exactly the fall of the apple; this does not mean that we can confuse

“where” as a geographical context and

“where” as a content of the process.

From the point of view of methodology all the dimensions should be taken into consideration and, in special case, some of them coincide.

As we said, we are talking about systems which are not completely deterministic, like classical physics; space-time homogeneity is to be considered a lucky case and not a general situation. This implies that reversibility of processes is not guaranteed, sometime it is even forbidden; so certain technical instruments (compensation handlers) cannot be given for granted.

The company goal: a real problem.

We assume that a fashion company goal is to create value via improving the level of the apparel worn in the surrounding world which, by itself, is the target market for the company itself. This gets real through four fundamental processes:

• Ability to perceive and categorize customer needs
• Ability to rationalize and interpreter customer needs
• Ability to satisfy customer needs
• Ability to explain its capability in satisfying the needs.

The way to solve this major task is the full stream of the industrial project with all its aspects: marketing, sales, production, logistics, and structure.

In the marketing books we can see underlined the meaning of the 4P (product, price, place, promotion) which means getting the right product, at the right price, in the right place at the right moment and tell this opportunity to the customer.

From an information point of view, this analysis leaves us with more than one open question, the most important: what does “right” means? How can we measure such a quantity? Someone says that it will be the market response to determine whether or not the choice was “right” but this is an answer  “a posteriori”; what a company needs is a correct, or at least “best guess”, forecast “a priori”.

Customer needs: fundamentals

Before advancing further I think we should clear out what “customer needs” are.

Psychologist Abraham Maslow indicated a hierarchy of needs into 5 levels:

Physiological needs (air, water, nourishment, sleep)

Safety (medical insurance, job security, peace)

Social needs (friends, group belonging, give and receive love)

Esteem (self-respect, achievement, recognition, reputation)

Self-actualization (truth, justice, wisdom, meaning)

Once a need is mostly satisfied it no longer motivates and the next higher need takes place.

As far as clothing are concerned

• The first level is never taken into account
• The second level concerns “utilitarianism” which means the basic role of garments as defense from environment (cold etc.). In the rich society this needs is getting less and less important because of many factors (the heating systems, cars) which modify the relation between human body and environment. This need is still very important into technical clothing (work, sport) where functionality is predominant
• In the third level I would introduce personal feeling (cashmere hand feeling, valentino’s red, leather smell) and the sensation we feel when we fit well
• In the fourth level I think we can fit the social factor of recognition in the act of buying the garment (actual sale moment) or in the belonging to a “group” with its distinctive signs. Some authors tent to underline the first aspect but the actual rise in the internet sales seems to contradict them. Another argument supporting the after-sale group belonging experience is related to the expanding business of counterfeiting which could indicate how much people need to be “brand dependent”
• The fifth point, in my opinion, includes a real shopping experience in which the customer is recognized as an individual and his needs are fulfilled in a mature and respectful way.

Personally I think that the rating of the various needs depend not only on the person himself but also on the context (time, place and mood) which, by itself is not a scientific variable.

Customer needs: practice

What we really want to do is zeroing the difference between customer expectations and the perception of the product/service quality of what he has bought; in this case we have satisfied our customer who thinks he has paid the correct price for what he buys.

Referring to the quality service models via multidimensional hierarchical analysis (Dabholkar) or to gap analysis model (Parasumaran et alt.) and integrating other variables, we must satisfy quality parameters related to:

• Product: actual variables ( aesthetical/design level, fashion update)
• Product: reliability (quality of components and handwork, company reliability)
• Product: availability where and when it is requested
• Subjectivity: problem solving capability (punctuality, flexibility, quality problems solving)
• Subjectivity: reassurance capability (competence, kindness, credibility)
• Subjectivity : empathy
• Sociality: group belonging
• Sociality: individual recognition.

As we said before, customer satisfaction is a multi-faced operation and we must never forget that the “customer” is “the important person” and not only a “product” accessory, even for the best products. On the other hand, we do not want to “sell dreams” with no product around as, once the sale euphoria passed, we would have an unsatisfied customer and no customer retention in future time.

As far as the “social” part of the company-customer business relation we keep into consideration the difference between “style” and “fashion” (Espinoza - MIT Media Lab). “Style” is a principal component in group identity so, maybe in a costly way, it can be copied from someone outside the “group”. To keep it difficult for externals to keep updated with the group dynamics, the code must be continuously changed and this give rise to the “fashion” phenomena. Now we understand how “fashion” is something related to the internal of a group while “style” relates to an outside value for the group culture. When a new “style” reaches a critical mass it gets accepted into social culture and some new break point are looked for.

This topic becomes very important when we talk about information systems (in the wide sense) for the social aspect.

Data importance

From a survey we did in a group of generic customers, we found that the relative importance of the various factors in the buying action is

Product: actual variables ( aesthetical/design level, fashion update) 6,3

Product: availability where and when it is requested 9,0

Product: reliability (quality of components and handwork, company reliability) 7,0

Subjectivity: problem solving capability (punctuality, flexibility, quality problems solving) 7,3

Subjectivity: reassurance capability (competence, kindness, credibility) 7,3

Subjectivity : empathy 6,6

Sociality: group belonging 5,9

Sociality: individual recognition. 6,3

It is important to point out that these values are related to a sample of customers in the field of apparel so its value is significant only in this field.

Methodologies for a solution

Actual methods for solving the customer needs are now essentially two:

1. Industry: start from customer requirements and designing the whole industrial process (design, production, logistic) to fulfill the need
2. Trade: choosing globally and offering locally what the retailer thinks is the best solution for the customer need.

These approaches, obviously, have some common aspects but also some special features that we shall discuss later.

General processes

Let us now analyze the processes which exist in both methodologies.

Ability to perceive and categorize customer needs

In this process, the system is the environment “company – potential customer” where the customer is the owner, more or less conscious, of his needs. The goal of the process is to share this information with the company.

Why should we try to perceive the need? The answer lies in an agnostic approach on other people needs. In my opinion a company role is not to believe to be the truth depositary but to be the instrument for maybe extracting and solving customers requests.

Who acts in the process of need perception? Three kind of people act: who has the need (the customer), who collects the need, who transmits the need.

Feeling the need, the customer is the person who explicitly raises the request (demand driven) or who owns the hidden need who is to be extracted (supply driven).

We can categorize our customers into:

• Well known customers, person we know via a history of relations (fidelity cards or so); among these customers we care particularly about customers who have shown to be statistically significant in terms of representation of the whole customer set
• Unknown or random customers
• Potential customers: among these we could include people belonging to social groups which we consider target for our product, people looking at shop windows or people coming and not buying anything (prospects).

It is obvious that there are different marketing strategies on the three groups: in the first case we want to keep our customer and increase cross-selling or up-selling. In the second situation we want to make our customers loyal, in the third case we want to reduce entry barriers.

Collecting customer needs: I think we can individuate three kinds of people, the first one is someone whose job is to “feel” the market in its wider sense (society, various environments), sometime they are called “cool hunters” or scouts. The second group is formed by the agents who work together with retailers: their view is wider than the single retailer but is narrower and more precise than the one of the scout. The last group is made by sale executives who are actually in contact with specific customers so they have a clear, definite view of a limited request.

Transmitting the information: it would be easy to say that these people are the same that collects it, but it is not true in my experience. This function is often felt as a secondary job so it is delegated to another person, an assistant, done in the spare time or even worse hidden as felt part of the person assets. This attitude implies a great loss of quality in the information transmitted to the company.

What is a need, what does a customer looks for. Let us start by classifying this dimension on three values:

• Defined needs: specific requests of a definite object (raincoat, wind jacket) maybe connected in a new environment (e.g. long gloves for snowboarders)
• Semi-structured requests: more general than the former one, yet not very precise. One possible example could be “something like that jacket but the fur around the hood” or “slightly longer or shorter”. This kind of requests, mainly regarding the product, are often expressed in a sign, non-verbal language so they are very difficult to collect and transmit
• Geographical or context needs: particular colors related to a culture or a “glamour” trend better than an understatement. These are examples of customer needs difficult to receive and use but very rich in informations.

In this dimension we have actually analyzed only product needs, we can use the same detail level also for the other levels of needs (internal esteem, social and self-actualization needs). As far as I know there is no research going on this topic which seems very interesting and largely unknown.

Where: about the place the need occurs. There is definitely a relation between the “where” and the class of needs (defined, semi-structured or context); we can recognize:

• Shops: these are the places where there is an explicit interaction with the customer regarding well structured needs. This is a very important information asset
• Shop windows or shop routings: we are talking about potential customers who do not interact explicitly, this is an important patrimony of informations fairly unstructured and difficult to catch and categorize
• Competitors: we are looking at customer needs through what the competitors are offering; it is like looking at the solution and trying to guess the problem. This becomes important when competitors have access at context we cannot get into, for example far away markets
• General geographical distribution: the most general and also the most difficult situation to analyze; as an example you can think about the fact that there is no accepted taxonomy in the fashion business.

As far as the definition of the collection and storage of data, the problem is now shifting form technology problems to the definition of an accepted semantic of data.

How. To understand how we can perceive customer needs let us consider how these needs show out. We can think of three kinds of externalization:

• Conscious personal needs like an explicit request to a sale operator
• Unconscious personal needs like taking a garment in my hand, looking at it and putting it back
• Social needs like a new “fashion”.

How do we perceive these needs: for each kind we must think of a way to define the elementary information (the state) so we need

• Instruments for sales support, both real and missed
• Instruments for context analysis
• Instruments for competitors analysis
• Instrument for social trend analysis.

Specially talking about the first process, we must be very careful about the easiness of use and the precision of the instrument as the actual operator sometime works in a “normal” situation and sometime in a changed environment like “sales” or “rush times”. Another topic to be considered is related to the significance of the data we are collecting:

• Does an observed customer behave like an ignorant one?
• The data I am getting are biased by the collection process?

At the moment I think these can be considered smaller problems compared to the fact that now we have no data.

Last but not least there might be a problem on context bias: if we collect data in a luxury shop we shall have a “luxury” view of the problem, same thing for a low income customer environment. This obviously becomes a problem in inter-class analysis while it is not so bad if the company target is parallel to the sample set.

When do we collect informations and do we use them?

Using the data schema we just defined, we can say that

• Geographical or context needs have a longer time horizon than the specific product; could be one or two years
• Semi-structured requests are looking mainly a few months in advance, from one season to another; they seems a slightly shorter “time to market” of what is accepted today
• Defined needs are typically immediate in their nature; the ideal would be to answer as soon as the need arise.

Data collection time is definitely related to the nature and horizon of the need but we can post it, more or less, in the sale period and consider a large period dependence on the level of the signal.

Usage is again related to the class of need and has a strong period dependence the shorter the horizon is.

How many signals should I collect and how significant must they be?

This is a three sided problem: a problem of method, a problem of measured content and a problem of reference value.

Let us face the method problem: if a customer exclaims “beautiful” in front of a garment the statistical variance of the variable “beauty” is equal to the value of the variable itself so the information is not very reliable. De Moivre’s theorem tells us that the variance of the sample is related to the variance of the population sample as the reciprocal of the square root of the dimension of the sample. Four people saying “beautiful” are twice more reliable than one customer and begin to be statistically significant.

As far as the content of the variables we want to measure, they have to allow you to create a predictive model so they must be objective oriented. Let us make an example: sales turnaround during full price periods and during sales. If we make this analysis in mono-brand shops this becomes an indicator of price correctness between different categories as the offer stays the same and only the price changes so if the trousers percentage sales increases it means that people thought that trousers were too expensive. If the same statistics was run in a multi-brand wholesaler this could be an indicator of “among-brand” competition.

This last example introduce us to the third problem: the value of a measured variable has to be properly fit in its context. A large fur company made a large error some time ago when its sales rose quite lot in one period. This was due mainly to a large competitor’s problem but the signal was interpreted as a growing trend. The fact was that the company did not take into account the fact that the whole fur-coat market was in a steady/declining situation so the raise was to be explained as temporary phenomena.

This dimension can thus be summarized as the capacity of collecting “good” data on significant variables and fit them in the right context.

Methods and instruments: the collection of data is a very difficult process from an operational point of view.

• Defined needs, as we said these needs exist only for known customers in well defined places. Almost all sales point have instruments for operational processes (inventory movement, invoices, cash accounting), some of these products also have limited CRM functions mainly for after sale care (fidelity cards, recalls). A few of them also have options for supporting sales planning both a budget point of view and from a space/path analysis. As far as I know there is no common solution for requests and lost sales analysis.
• Semi-structured requests related to occasional or unknown customers. In my opinion this is an uncovered field as no specific instrument is available. I read about one experience of customers wearing RFID bracelets to follow their path inside the sale room but it seems to be abandoned (I would not have liked it). Video analysis for figure recognition, apart from privacy problems, is not yet fully available.
• Geographical or context needs: This is a huge and extremely interesting information problem. It relates to the capacity of analyzing socially open spaces to get signals of “trends” which might appear. As far as I know there is nothing like this existing at the moment. An interesting approach would take into consideration TV and movie pictures: they are biased by the choice of the costumes director but they can be analyzed more and more, till when the algorithm gives acceptable result.

Ability to understand, rationalize and interpreter customer needs

In this case the context system to be considered is the company and the process goal is to share the data perceived by the marketing department with the design, industrialization, production and logistic departments (industry) or purchase department (retail) which are the ones who have to propose a company realistic solution.

Why: the existence of this process is related to the need of converting general into company useful data; we need to translate context events into an internal useful language.

Who: people can be involved in this process both as process and state definition resources. As we shall discuss later (How) methods can be various and this implies that the relative importance of the various actors is quite different. Going back to the various roles, we can point:

• People supplying data are the same collecting them or market search external companies
• People rationalizing customer needs: marketing, product or market managers as this is a very delicate operation which needs high technology competence and market knowledge. Maybe a better name could be “product/service” analyst.
• People interpreting: in the fashion-product environment they are called “stylists” and they merge context, unstructured, informations with marketing data with a view for a long time horizon.

The relative role of these people is obviously related to the company market positioning: in a luxury company the stylist role is prevalent compared to the same in a large mass market enterprise.

People using these data are people in the design and supply chain of the company.

What. As we said customer need is made up of physical objects (the product),subjective aspects (personal esteem) and social requests.

As far as product requests we can divide between “upgrading”, variations on existing themes, and “innovation” which relate to requests which did not exist or did not have an answer in the former technological context. This last need is the most difficult one to satisfy as it implies the ability to interpreter social sign which could have an impact on future customer desires.

Subjective needs can be divided into “Basic” messages related to the “universal” nature of man, for example ease-of-use, comfort, functionality and “culture related” messages linked to the context the man lives in, for example color choice and matching which are very related to the society the consumer lives in.

Social messages: our aim is to be able to quantify social attention and recognition and social reputation.

At the moment these are very vague parameters.

Where. As far as the geographical location where the process exists we must keep track of two aspects:

where the process actually takes place, mainly the company main site, and where the process results are used, typically we are talking about the localization of the results. At the moment the most common ways to proceed on the topic include either local analysis and central strategic consolidation or central analysis and local adaption. Unfortunately both solutions tend to have a “time to market” too long and this reduces the competitiveness of the system, we shall get back on this.

How. As soon as we start talking about analyzing data, so that they become information, the first thought is about data-warehousing, data-mining and, eventually, knowledge management. In reality we are now trying to rationalize and interpret needs and not hidden or explicit correlations. The problem is thus quite bigger and it must include also informations different from what we have in our standard information systems. From a methodological point of view we can divide analysis into

• Rational: taxonomies and abstraction/interpretation methods and instruments. This last group include projections (defined schema and historical data) and previsions (new schemas on historical data)
• Semi-quantitative: analysis of competitors, market semantic analysis
• Irrational or context analysis.

Usually all methods are taken into consideration as we try to avoid theoretical models which could be not complete or intuition with no relation with reality.

It could be very interesting, at the moment I know of no tries, using heuristic techniques for the solution of interpretation models; I guess model are still not formal enough.

''''When. From the time point of view we must consider two different horizons: the analysis period and the time the results are meaningful.

As a rule of thumb it is correct that the analysis should be done at the same time of the data collection as it might turn out that some data are incomplete or wrong.

The validity of the result, for the physical part, is related to the total lead time of the product we are considering while it is not clear how long our analysis is valid when we talk about customer service, it could be interesting analyzing this.

How much. This dimension is always very difficult to quantify. Let us go back to the Maslow pyramid: how much do I need to satisfy level 2 (product) before moving to level 3 (personal needs) ? We assume that this percentage does not need to be 100% as once the homeostatic equilibrium of the lower level is reached, attention will move to the upper level. The point is: solving the lower at 80% and the upper at 50% (assuming that you succeed in measuring it) is better than 90%-40%?

I think it is a company choice to be made.

Altogether we must estimate the need for

• product in terms of which is our reference market, its dimension, our positioning (the quota) and how much does our product satisfy the market in terms of price/performance
• personal/social aspects: how important and how much do we satisfy them.

Instruments. Now that we went through all the dimensions of the process of “Ability to understand, rationalize and interpreter customer needs” we can have a look at the state of art as far as available instruments. We can group them into

• Analytical methods: based on known and recursive data
  • Algorithmical and or statistical: at least statistically precise
  • Heuristic: model not totally defined
• Contextual methods: using common sensations, even if not measurable and recursive
  • Brainstorming
  • Top-down or bottom-up methods.
• Individual methods: related to a particular man-environment situation, very often give non-reproducible results, e.g. Zen ispiration.

As a personal opinion, even though different methods could be seen as provocative to some people (think of a physicist who should use a zen approach), as long as this process gives usable results is should be accepted anyway. Human beings have being using gravity as a force and apples kept falling long before Newton quantified the mathematical model. Man was using heuristic models to create manufacts.  In field of social science maybe we shall never have a Galilean, recursive model  but this does not mean that we must not get better use of data to be informations.

Industrial processes

A possible way to satisfy customer needs is to use specific processes. This means designing, industrializing, planning and producing garments which satisfy the need.

The group of customer we address can be various, it might vary from a single person (make to order) to a homogeneous set of people on which we make some sort of “average” consideration; if I am talking about well-off teen-agers I need to make different evaluations and reasonings from a middle-age low income group.

Ability to satisfy the customer need.

The context is the system customer-company; the process goal is to satisfy all the requests starting from the fact that we know them. In this case the information system is a support system, not a core topic.

Why. We think that satisfying the customer will give immediate return and future perpestive to the company.

What. The expected results of the process include

• Product: an increase in physical appeal, reliability and availability of the product; a better looking, better quality and easier to find product.
• Subjectivity needs: a better customer care and satisfaction
• Social needs: a better customer group recognition and individual attention, the customer perception of the company as “trusted partner”.

Obviously these results need to be measured on customer expectation.

Who. People involved in customer satisfaction includes

• Product: design, industrialization, production, logistics
• Personal needs: sales, after sales, CRM executives, retail
• Social needs: promotion, brand management, public relations.

How. This point is about techniques to be used for customer satisfaction.

In the product area we are concerned about the processes quoted as “direct” in the Porter chain value model. This area is surely the most studied in organizational modeling, we can quote various methodologies from BPR to Kaizen. It is surely not the goal of this work to get into this problem, better authors then me have worked on this and you can refer to them.

Personel needs: the studies concerning this area, in my opinion, are not as structured as in the former area. As far as I know individual aspects of this field have been evaluated but in a stand-alone context, not in a complete customer relation view. The topics we are talking about concern

Customer centrality and adaption to the market

Product availability impact on sales

Sale channel competence and friendliness

After sales service impact

Customer relation management

Direct approach importance: the shop relation

Customer social needs are, in my knowledge, not the object of quantitative studies. This might depend on the fact that data collection is very difficult, so we are still at the level of hypothesis and specific experience collection. We are talking about:

“group” creation and belonging: brand nature and the role of promotion

brand management and group life-cycle

public relations and their results

“personal” service.

Where does the process take place: I think we can define the place where the customer is the location where the process starts. Obviously the customer can be anywhere in the world so we must take this into account. The rest of the process may then take place

Product: in the stylist studio, in the technical, industrial, loistic and retail areas depending on the specific subprocess

Subjectivity needs: sales, customer service and retail areas

Social needs: anywhere as customers can be everywhere.

All these areas must be informationally connectable.

When. As for the geographical aspects also for the time-related variables the sinchronicity is very important; if you are late in a subprocess there is little chance that you will be able to recover afterwards. This is the deep meaning when “time to market” has been chosen as the critical variable in the next future, speeding up every single phase might give you the elasticity to cope with unforecasted events which might have disastreous effects.

The real problem, in my opinion, is to balance the time associated with each subprocess.

Product: the total lead time, from the idea to the availability, in the fashion wholesale world, lasts about 8–9 months; this period is actually deeply questioned by e-commerce and its related attitude.

Subjectivity: we can think of

Pre-sales (contacts, reciprocal knowledge)

Sales

After sales (recal and custom loyalty).

These process mainly happen on a few months horizon, a slightly longer period than the product cycle.

Social needs. The process of creating a “group” is fairly quick, the real problem is keeping the “group” alive through many years. In this process the “customer attention and recognition” can only start once you have created the “group” so it takes even longer.

How Much. The metric we use is about

Product: Aestethic, quality, availability, cost and accepted price

Subjectivity needs: service, reassurance, empathy

Social needs: how much does the “group” means, how much am I recognized inside the “group”.

As far as the “product” indeces there are quantitative data available related to quality (Aql methodology, number of returns), availability (question sheets and lost sales) and price positioning (sales to full price ratio). As far as I know there are no indeces related to aestetichs, maybe only the number of collection presented items which never got produced.

Speacking about “service indeces” we have to divid “service quality” and “satisfaction index” (Oliver 1997). The first is related to external indeces and standard measuring techniques (SERVQUAL, SERVPERF) while the second is related to customer perception. The fact that customer gets in the analysis of the index, introduces two further variables related to time (quality has a fairly long horizon, perception short) and space (consumers in different countries and context have different perception of “satisfaction”).

As far as I know there are no quantitative analysis related to “group belonging” or “group recognition”.

Instruments

The most well known instruments existing today surely cover the areas of product definition (PDM) and production controlling (ERP); there are good instruments in forecasting, CRM and sales support.

Getting into details and assuming these are my personal opinions:

Product definition: there are good products helping the product definition (style, PLM, model marking, quality control) and they support time-phased geography problems via distributed workflows

• Production processes: definitely the best studied and supported area; you can find instruments (ERPs) very well done both on the theoretical foundaments and technical aspects. The only doubts are about their operational easiness and friendliness.
• Distribution instruments: not at the same level as the ERP but on the right way to be there.

Subjectivity needs support instruments:

• Customer relation: some good CRM package is available but it is still a long way to go to be really complete
• After sale support: it is considered the sales minor process so it has not been developed so much
• Retail. Very good in the operational aspects, not so much for the remaining subprocesses.

Customer social needs: available instruments are essentially question papers statistically analysed; there is no automatic data collection.

Talking about information systems I would like to return to a concept which I think very important. As customers are distributed all over the world, particular care must be taken at every level of integration, not just the technical one (Miotto etc.) if we want to avoid dangereous misunderstandings. Information integration is usually underestimated even though it is well known (Davenport) the importance that information technology had in process disintermediation.

Ability to communicate the capacity of satisfying the need

The system is the customer-company environment; the process goal is the fact that the customer ( “group of customers” to be addressed by my “solution”) is aware that a solution to his needs exists.

Why. We want the customer to be really aware of the existence of a solution of its limits because real customer service is respectful of customer identity and does not mislead facts.

What do I communicate, what is the content of the process.

• The knowledge of product content: aesthetics, reliability, availability and price/performance
• The fact that it is really that “product” that satisfies his need (whether primitive or induced)
• The context knowledge about expectation satisfaction, something like saying “come with us and you will be all right”
• The “group” belonging and brand identification
• The “group” recognition.

Regarding this last point we must be very careful about privacy issues, to know each person individually means knowing a lot of informations about him and this might not be compliant with local laws and/or create relation problems with the customer as he feels controlled and classified.

Who is involved in the process. The customer is the “receiving” (destination, output) part of the process and the company is the active (input) part. Obviously when we talk about customer we must keep in mind all the categories we have been talking about (known, unknown, potential) and calibrate methods and politics for each group.

Where does the process take place. As we noted companies and customers can be anywhere so the process must be geographically distributed. As far as places where the process takes place we can recognize:

Product: media and PR (testimonials etc.)

Subjectivity: direct sales channel (retail), indirect sales channel (wholesaler), other various channels including word of mouth

Social: media, retail and PRs.

How we communicate the information.

Product: direct advertising (I show the product and associate it at human sense), indirect advertising (for example technical people explain characteristics, I get attracted by the person and through him I get to the product); comparative advertising.

Subjectivity: service advertising ( we show our customer service level), the level of professionalism and availability of our sales executive, the product context (packaging, advertising campaign), the service context (POP material, shop furniture and look).

Social promotion: social involvement (e.g. Toscani’s photos per Benetton), fashion shows, licensing, media, internet community, sales point formats, sponsoring; everything which helps creating a “group”. For “group recognition” we must think in terms of personal service.

When. The time factor in communication is quite different for each need:

Product: the timing is related to the availability (shop, internet or other); it is useless and wrong to communicate a capacity which does exist in reality so it is very important to synchronize ability to communicate and satisfaction capacity

Subjectivity main issue is “trust” which is a long asset to create and a quick one to be destroyed; its time scale is even longer than fashion and style as it might get through different stages of the company; usually it is years long

Social issues, in my opinion, are linked to the idea of “styles”; they are linked to “cultural break” and easiness of information exchange has deeply changed the time scale which I would indicate in a two-three years period.

How much we need to communicate means defining the quantity of actions related to each former dimension. In the next chapter we shall propose a view where this dimension is actually related to the evaluation of the cost/return I have in each combination of variables. We know that evaluating the cost is feasible, not easy but usually can be done, while evaluating the return is very hard and it is usually done through side indicators like sale increase. I think there is a lot of work to be done in evaluating measurable parameters.

Instruments: we partially quoted them in the “how” paragraph, we are talking about publicity and PRs. As far as I know there are no instruments, now, able to quantify, as an example, the return of the investment of a fashion show in terms of social impact on the knowledge of a “brand”.

Industry: the architecture of the solution

To organize what we have been saying up to now, we have to create a schema including, for each process, every possible combination of the information dimensions we have been considering. Some of these combinations might be nonexistent like “sure needs of potential customers”.

As an example of the operational method we can have tables like this one:

		Need data collection	Analysis	Satisfaction	Communication
Process
	Product
	Subjectivity
	Sociality

Imagine the first process of need data collection, here we can ask ourselves which are the needs

Of a well known customer

Collected by a sale executive who transmit them

Semi-structured needs

Collected in a shop

With a very clear question

At the beginning of a sale campaign

Which means that we are considering one of all possible combinations of parameters.

Later in the book we shall get check how many are the meaningful combinations (Appendix A).

In this way we are segmenting the total information problem in “cells” each of which has its own individual analysis of states and processes parameters. 

In this method we are not really taking into consideration the “when” and “why” dimension. The “when” variable is related to the variation of the schema in time: an open issue. The “why” parameter, at the top level, is human related and, in my opinion, has the basic meaning of the actual nature of economical enterprise, but this is also an open issue.

This schema reminds us of the phase-space in statistical mechanics where the cell weight is not even but it is related to the weight the company gives to it in its strategy. As in statistical mechanics the content of the cell is a function of both the initial state and the state variation rule (the process), assuming a first order non explicit time dependence.

As far as the cost of cell fulfillment we can imagine a curve like this:

Where the cost to satisfy 100% is very high. The growth coefficient depends on the nature of the cell and it should be the result of specific analysis which locate the cell in the total analysis space.

When we talk about the value and the cost of an analysis cell we must not forget the reliability of the data we are using in terms of data collection, methods and people involved. This makes things very difficult when you think of a global solution so most companies, in my opinion have been using two side methods:

• What do other people do ( market driven policies)
• What is it going to happen if I don’t do this (scare of “not doing”).

The method I propose, not forgetting the associated difficulties, is to break down the problem into specific cells and define local strategies in a wider architecture.

I really think that a complete semantic ontology of all cells, including time and space dependence, is a non realistic result so I propose a local approach using also heuristic techniques.

The company strategic plan then becomes

• Assigning a value to each cell of the “customer needs” phase space
• Trying to associate a cost to the fulfillment of that cell
• Maximize the phase space covered with the constraint of the company total resources and define the attitude regarding the cells which are not considered for this moment.

From an information system point of view, in practice we need to quantify, for each cell,

The weight it has, related to company strategy

The value of information relative to the cell based on a definite metric system

The cost of getting that information.

The total combination gives the information scenario for the company.

The time factor shows its importance both in fact that the context keeps changing and also in the fact that no company starts from scratch; usually there is an information patrimony specially in the areas of product needs satisfaction (sales and production). The critical strategy factor now becomes the ability to choose the best solution for choosing the variation of customer phase space as to reach the best overall coverage.

From a practical point of view we start from the highest level four processes, get down to the individual cells and determine the actual company value, the cost of maintenance and the cost of upgrading.

It could be interesting to compare the structure of this analysis with the deployment of software projects. The phases of needs collection and rationalization is very well known in the enterprise software production while it is very little formalized in manufacturing. On the other end the phase of capability communication is much more developed in the industry context.

Retail Processes

We define “retail” as the set of processes which satisfy the availability need in a customer related space-time context. The difference between this set and the previous one is

1. The subject of the process, the retailer, does not satisfy the need starting from designing and projecting the answer from scratch but he tries to solve the problem choosing the solution, among those on the market, which he thinks will better fit customer requests (sales methodology)
2. The relation between retailer and final customer is much more “direct” than in the industrial case so many “non product” aspects are more important.

We can see the retail process from three different point of view:

1. Final customer: form this point of view “retail” is simply the availability in a “local” form; needs and data collection are the same as for the industrial environment
2. Retailer: problems concern both to satisfy customers (purchasing and selling) and to relate to the context
3. Context: this relates to how “retail processes” exist in the society both as time phased phenomena (geography = shops, shopping centers; communication etc.) and structure (fiscal and legal compliances)

From the customer point of view “retail” is a service process centered around the actual sale moment but we must remember that it really consists of before sale, actual sale and after sale (preparation, actuation and conclusion).

Process Analysis: the customer point of view

We know that, generally speaking, customer needs are:

Product Aesthetics, reliability, availability

Subjectivity Problem solving, reassurance, empathy

Sociality group belonging, individual recognition

And that, for each need, direct processes imply:

• Data collection for all the data levels and views
• Analysis and method rationalization to be more efficient and precise
• Satisfaction given by the fulfillment of the need of the real product or of feeling
• Communication which means the ability to communicate the possibility of satisfaction.

The actual need coverage is through the balancing of these factors.

From the market point of view, the weight of each parameters corresponds to the positioning of the company in the market share.

In the following table we can see how a group of users has quantified their expectations as a function of the sales channel

'Expected satisfaction as a function of the sales channel

		Market stall	no-brand	monobrand	multibrand	shopping center/ corner	Luxury	Internet
Product
	Aesthetics	4,9	5,8	8,0	8,2	7,2	8,3	6,3
	Reliability	3,7	5,5	8,3	7,6	7,1	8,7	4,2
	Availability	5,3	6,5	7,6	7,6	7,9	8,0	6,3
Subjectivity
	Problem solving	5,8	6,4	7,7	7,6	7,6	7,7	4,6
	Reassurance	5,0	6,4	7,9	7,6	7,2	8,3	3,4
	Empathy	5,9	5,7	7,5	7,0	6,1	7,4	4,7
Sociality
	Group belonging	4,5	4,5	7,3	6,6	6,0	7,5	4,8
	Individual recognition	4,3	4,7	6,7	6,0	5,3	8,0	4,7

Process analysis: the retailer point of view

From the point of view of a retailer, the definite question is:

“why does a customer comes to me and how can I satisfy him ‘”

Which means “which are the customer needs and why does he feel that I can satisfy them ?”.

In the world of retail the contact is not with a “customer” but with a “specific customer”, this means that subjective and social needs are very much stressed compared to anonymous relations. It happens that shops may live on “local” emotional realities (mono or multibrand wholesalers), some other times they have a more “diffuse” approach (department stores, large distribution).

The birth of a “sales project”, to satisfy a particular customer need at any level of Maslow scale, then is the result of a sales enterprise which evaluates the market opportunities in terms of the lack of a product in a certain area/time, the availability of structures (shops), a new sales method or the existence of an unexploited sociality.

We start from our daily experience to group elementary processes into categories; this will help us in the functional analysis of the retail system. Processes are sets of actions which satisfy needs whether these needs concern customers, retailers or the context. We assume that, if a process exists, it must have some meaning otherwise it would not exist any longer. Not every possible process exists or, sometime, we are not aware that it exists.

Our methodology starts from listing the processes and then looking for their value on customer needs; we must be very careful to distinguish between “real” value and “customer perceived” value; customer are only interested, and ready to pay for, in the second ones while there could be processes (e.g. finance control) which have no value for the final customer but are very important for the retailer. We shall be using the “perceived value” parameter.

To be completely correct from a methodological point of view we should define each process to the very detail, in fact we adapt to evaluate the cost/effectiveness of a process, this means that the value of a process is a function of

• The relative importance of the customer need (what I satisfy)
• The perceived value of the solution: the expectation (how much I satisfy it).

In the following tables:

Processes are grouped by areas

Coding is such that

Effect on the process: H = high, M = medium, L = low, blank = not applicable

Grouping level: C = customer, G = group, T = context

Area: P = product, S = subjectivity, C = sociality, O = organization, F = fiscal

Process group	Process	Product			Subjectivity			Sociality
		Aesthetics	Reliability	Availability	Problem solving	Reassurance	Empathy	Group belonging	Distinction	Group level	Macro area
Group: preliminary analysis	Analysis of product market request (sales)	H	L	H				M		G	P
	Analysis of product knowledge by the operator				H	H				G	S
	Analysis of product availability on the market (purchasing)	H	M	H	H			M		G	P
	Analysis on customer classification				H		H	H	H	G	C
	Analysis on service level to be offered		H	H		M	H			G	C
	Analysis on location availability		H	H			H	H		G	C
	Organization definition			H			H	H		G	C

Process group

Process

S

Product

Subjectivity

Sociality

Aesthetics

Reliability

Availability

Problem solving

Reassurance

Empathy

Group belonging

Distinction

Group level

Macro area

Group: starting process

Financial means research

M

T

O

Fiscal and legal obbligations

M

T

F

Shop works and upgrading

T

Exhibition spaces

M

M

T

Sociality spaces

M

M

M

T

O

Suppliers choice and relation

M

H

H

T

O

Signs and banners

M

L

L

G

C

Opening communication

L

L

M

M

G

C

Advertising

M

M

G

C

Community (mail list)

M

M

M

G

C

Process group	Process	Product			Subjectivity			Sociality
		Aesthetics	Reliability	Availability	Problem solving	Reassurance	Empathy	Group belonging	Distinction	Group level	Macro area
Group: purchasing order	Budget per supplier/per category (category definition)		M	M						G	P
	Comparison supplier offer vs expectation and product choice	H	M	H						G	P
	Analysis of purchasing order vs spece and finance			L						T	F
	Vendor analysis on punctuality and terms of delivery	M		M						G	P
	Sale context support (POP material)		L	M			M	H	L	T	O
	Reorders										G

Process group	Process	Product			Subjectivity			Sociality
		Aesthetics	Reliability	Availability	Problem solving	Reassurance	Empathy	Group belonging	Distinction	Group level	Macro area
Group: goods receiving	Advance shipping notice			L						T	O
	Receiving authorization			M						T	O
	Receinving operational: physical			L						T	O
	Content control (per box or per delivery)			L						T	O
	Delivery acceptance or refusal			L						T	O
	Garments quality control, relabeling and shop floor ready			L						T	O
	POP material receiving						L	M		T	O
	Supplier invoice control			L						T	F

Process group

Process

S

Product

Subjectivity

Sociality

Aesthetics

Reliability

Availability

Problem solving

Reassurance

Empathy

Group belonging

Distinction

Group level

Macro area

Group: goods arragement

Arragement logic decision

Quantity per garment on show

M

M

M

G

S

Grouping per theme, supplier, price

M

M

G

S

Path definition

M

M

M

G

S

Emotional spaces/product combination definition

M

H

M

M

G

S

Emotional customer/product comb definition

M

H

H

G

C

Shop windows

M

M

H

G

S

Prices and rebates

M

M

M

M

G

S

Process group	Process	Product			Subjectivity			Sociality
		Aesthetics	Reliability	Availability	Problem solving	Reassurance	Empathy	Group belonging	Distinction	Group level	Macro area
Group: customer relation	Customer welcome					M	H	H	H	C	C
	Customer-garment relation: trial on	H		H	H					C	P
	Customer care: number and quality of sales executive				H	H	H	H		C	S
	Customer brand identification						H	H	H	G	C
	Customer recognition						H	H	H	C	C
	Sales: operational (fiscal, finance)			L	M		L			T	O
	Sales: operational (transports)			L	M					T	O
	Social: brand image					M	M	H	H	G	C
	Social: packaging						M	H	H	G	C

Process group

Process

S

Product

Subjectivity

Sociality

Aesthetic

Reliability

Availability

Problem solving

Reassurance

Empathy

Group belonging

Distinction

Group level

Macro area

Group: customer relation, after sale

Quality

Product quality

H

M

M

M

G

P

Follow up: customer care

Company to customer: campaign and group

M

H

H

M

G

S

Customer to company: returns

H

M

H

H

H

G

C

Unfair returns

Process group	Process	Product			Subjectivity			Sociality
		Aesthetics	Reliability	Availability	Problem solving	Reassurance	Empathy	Group belonging	Distinction	Group level	Macro area
Group: general adverstising	General adverstising					M	H	H	L	G	S
	Testimonials					M	H	H	L	G	C
	Shows					L	M	H	L	G	C
	Papers					H	M	M	L	G	C
General purpose
	Stock keeping			L						T	O
	HR				M					T	O
	Real estates			L						T	F
	Patrimony									T	F
	Fiscal regulations									T	F

Customer need – process existence relation

Let us look at the processes we just quoted (remind that needs belong only to the final customer); to fulfill them we need to operate on three different levels (not to be confused with operating entities):

• Single customer
• Customer group : customers of one specific sale point which means how the local retailer organizes the service
• Context: general aspects of service which means how is the general service defined, how to handle general topics ranging from product presentation to fiscal procedures.

The “retail” system does not consists only of processes related to customer relation but it has to cope with many levels of activities; this is the meaning of the “group” attribute in the former table.

Retail support systems: the information processes.

We speak explicitly of “support” and not of software because, as you can saw from the process listed, the content is not a pure “data” parameters but if often connects to physical or psychological aspects.

We also saw that final customer and retailer needs somehow differ both in content and in relative weight.

From an industry point of view the retailer is “the customer” and this is why we need to understand which are the needs he needs to satisfy and he is willing to pay if satisfied.

We can think of retailer needs general schema as:

		Data collection	Analysis	Sotisfaction	Communication
Customer processes
	Product	To be anlyzed	To be anlyzed	To be anlyzed	To be anlyzed
	Subjectivity	To be anlyzed	To be anlyzed	To be anlyzed	To be anlyzed
	Sociality	To be anlyzed	To be anlyzed	To be anlyzed	To be anlyzed
Group processes
	Product			To be anlyzed	To be anlyzed
	Subjectivity			To be anlyzed	To be anlyzed
	Sociality			To be anlyzed	To be anlyzed
Context processes
	Organizzation	To be anlyzed	To be anlyzed	To be anlyzed	To be anlyzed
	Fiscal	To be anlyzed	To be anlyzed	To be anlyzed	To be anlyzed

What we derive from this table is that “single”, “final” customer needs have been largely disappointed in the industrial attitude; companies tend to focalize on “customer groups” as their ability to solve needs is essentially related to product/social and not to subjectivity capabilities.

This aspect of the end customer need is mainly covered by the “retail” structure.

To be methodologically correct we should now take into consideration all the 32 cells; out of these only 6 (“customer group”, data collection and analysis) have already been taken into consideration in the industrial analysis. In the following pages we shall group some cells to avoid being too long even though we realize that we make a methodological approximation.

''''Customer processes

Personal needs are, by definition, very “personal” so they need a very “local” application of general principles stated by the company. The information content is actually very little formalized: we are moving in a very unexplored field.

Product: data collection, analysis and satisfaction

We are talking about the behavior of a specific customer in a specific sale situation: a very elementary context.

• What: we are looking at the relation between the customer and the garment he is evaluating;
• How: which are the parameters to decide “will the garment fit the customer expectations ?” or even better: “will the garments satisfy the customer need?”
• Who: the actors involved in the process = the customer and the retailer
• Where does the process take place? typically a real shop but it could be a virtual one
• When does the concurrence of product/customer occurs ? presence of both customer and product
• How much is the customer need satisfied: this is perhaps the most difficult parameters to measure directly
• Why: this the company strategy.

Assuming that we want to satisfy customer need, I think that the only information instrument which can be used is the sales executive capacity to support requests on product (fashion, quality) and customer (decision process). Time length and variability of relation, in my opinion, make impossible for a formal information system to be really useful.

Measuring system can only be indirect through a total evaluation of the sale executive.

Product: communication

The aim of this process is to make the specific customer understand that it is possible to help him in choosing the right product. Assuming that we think that the correct local instruments are sales executive, we want the customer to trust sales executive in their knowledge of product and can help him in determining the product coverage of his needs.

• What: sale executive product competence
• How: must be explicit and customer must recognize it
• Who: the information instrument is the sale executive or, at most, the store manager
• Where: in the sale area, this means physical availability of the vendor
• When: during real and prospect sales
• How much: as far as I know there is actually no formal system of measuring this process, maybe through customer interview
• Why: because it satisfies the customer.

As far as information supports, we must give the actual instrument (the sale executive) the knowledge he needs both on the product he is selling and on competitors so that he can help the customer to judge correctly the answer to his needs.

Subjectivity: data collection, analysis and satisfaction

We are talking about elementary processes which concern ability to answer, personal assurance and empathy to a particular customer.

• What: as we are discussing of very individual, peculiar data. I think that the signals and the collection method are very difficult to categorize, we could try to classify the results. From a practical point of view we should define the results we want and leave to the sale executive the method to collect the data regarding customer individual feeling etc.
• How: we could start from classifying (based on our experience) customer approach and check the results of possible general support standards we offer
• Who: people involved are sales executive and store managers (control level)
• Where: every possible customer relation, mainly in sales area
• When: before, during and after the sale
• How much: a possible measure of unit could be store manager evaluation
• Why: because customer must be at ease from a human relation point of view.

Information support: The sale executive must be empathetic with the specific customer so he must fit his way of acting to the actual situation. Information content must then relate to the sociological world of sales and, eventually, to the social and fashion trends.

Subjectivity: communication

• What: we want to communicate that a customer feels at ease in a particular context. It is a very personal phenomena and it is related mainly to the sale executive empathy, to the sale place format and to the brand image.
• How: the most important means I know of are word-of-mouth messaging and architecture design
• Who: mainly the sale executive, also every other company employee
• Where: mainly the shop but also the general social context
• When: it is important to note that both actual sales but also prospect and possible sales are extremely important for this topic
• How much: I think that only customer interviews can be a measuring instrument
• Why: to get returning customers.

This topic is fairly delicate because customer expectations can be very different from company policy and very often we saw a large gap between the two approaches.

Sociality: data collection, analysis and satisfaction

• What: the content of this point is about the customer feeling himself recognized and accepted
• How: the whole process starts from customer receiving and recognition which must be precise. In the case of recognition this can be done through formal instruments (fidelity cards) or informal ones (the sales executive memory). In any case there must be standard procedures for each case.
• Who: this is mainly a sales executive job
• Where: Typically the sales area; it is an interesting topic to understand what this means in a distributed location (internet)
• When: always, during real or prospect sales
• How much: a possible way of measuring this data could be the number of visit a customer does whether they became a real sale or not
• Why: to create a nicer environment for our customers.

From an information system point of view the first problem is related to customer recognition. Sometimes we can find some sort of “fake” personal recognition (e.g. intimate friendship) which annoys the customer, the real cases I can think of are either related to the high luxury environment, where quite a few customers are well known from social news, or small local retail with a consolidated personal knowledge of the customers. In other contexts we must rely on some personal interactions supported by CRM systems not to loose company knowledge.

Sociality: communication

• What: we are talking about the fact that a customer knows he will be recognized and helped
• How: on this topic we can think of formal communication systems like advertising but my opinion is that the best way is word-of-mouth and group diffusion
• Who: people involved are mainly sales executives and store managers
• Where: the sales place and the logical surroundings
• When: during the whole relation with the customer (pre, actual and after sale)
• How much: a possible indicator could be the number of contacts; both ways and any possible content
• Why: because it helps satisfying the customer.

The information object includes the content (“welcome”), the form (direct or indirect message) and the destination (actual or prospect customers).

Group processes

Customer group needs are those industry relates to. As far as data collection and analysis processes, we can refer to the first part of the book as we are talking about collecting and categorize common customer needs; retail is a different way of solving them.

Product – satisfaction.

• What: the topic is about product availability in the whole time cycle including after sales. We should divide the process in purchasing, stocking, shelf availability and after sales. Problems concern offer analysis, purchasing operational, sales space limitation as we assume that bulk storage is not a retail problem; the whole system is the retail industrial chain.
• How: operations through subprocesses of purchasing, exhibition, sales and after sales service.
• Who: people involved includes merchandiser, buyers, sales executive and customer service.
• Where: any site of the company
• When: we can estimate a few months period
• How much: the whole process is so large that I think the only summary indicators we can use is the economical turnaround of the enterprise unit (shop etc.); subprocesses can be individually measured.
• Why: this is seen as the real nature of the retail structure, could not be the only one.

Customer satisfaction is “the process” of a retail system as it has to conjugate market availability and specific customer request. From an information point of view it asks for a huge amount of informations (see appendix B).

Product – communication

What: we are talking about the process which makes the customer understand that, in that place and at the right moment, he will find the answer to his product needs (group level). We thus deal with an information content.

How: we can use formal systems (commercials, press, window presentation) or informal (word-of-mouth) in large social contexts and personal systems (human relations) in limited environments.

Who: usually we cope with professionals in large scales and sales executive in small environment.

Where: Social contexts mean the whole society, up to world scale, and especially in aggregation area while small environment means essentially shops.

When: product satisfaction is not a one shot process, it needs to be created before and fed also after sale, this means that communication has to be time calibrated.

How much: without any communication product access is essentially stochastic so we can have a first guess relating amount of communication to sales increase.

Why: because it might be that the customer doesn’t know that we can solve his need.

This whole topic should be analyzed by itself.

Subjectivity - satisfaction

• What: in this group we can identify a few topics. We can identify the role of the sales executive (technical expertise, personal attitude, follow up), customer-context relations (shop image, goods location and availability), customer-company relation (commercial, shop windows). They are all the result of how the company has imagined its relation with the customer.
• How: customer satisfaction can thus be a result of how we support
  • Sale executive competence both on product and relation
  • Context design and product merchandising
  • Space positioning, visual merchandising and commercial.
• Who: persons involved include sales executive and sales structure managers to project the sale process
• Where: both in the shop and in the company studios
• When: a real sale experience does not last a moment, we must create a long lasting customer relation
• How much: I think one of the parameters we should consider is customer retention and find a way to measure it (e.g. fidelity cards)
• Why: we want to satisfy every aspect of our customers.

Informations related to this process are various and need a separate study.

Subjectivity – communication

What: this topic is about how we can communicate our ability in satisfying customer subjectivity

• How:
  • sales executive: after the specific training, we must communicate our employees ability in a formal way to the market (group of customers)
  • customer – context: after the design of a comfortable shop environment we must be very strict in assuring that the standard is kept
  • customer-company: like before we must underline our ability in individual attention.
• Who: people involved include sales executive and communicators.
• Where: we must act any place a prospect can be but especially near shops, as to use take advantage of existing structures.
• When: we are not talking of a specific product so there is no definite time zone, it is a continuous job with peaks when no specific product is to be advertised
• How much: I think we could use the number of visiting people in our shops as an indicator
• Why: to cover any aspect of subjectivity need.

The information request set is too large to be analyzed here, further studies are needed.

Sociality – satisfaction

This process is concerned with smaller groups of customers than those addressed by industry, retail is more “locally” concerned either from a geographical (customer in a certain area) or from a social (customer of a certain type) point of view.

• What: the aim is to create a sense of belonging so that the customer refers to the shop, also maybe not for purchasing
• How: the attachment may be induced either directly (direct marketing) or indirectly (social signs)
• Who: it is usually a PR person working on these topics
• Where: the place is related to the sale method (place or market type)
• When: the time base is fairly long as it implies personal involvement
• How much: a possible parameter to measure such a process could be the number of visit, whether for purchase or not, to the company locations
• Why: it is not so easy to create the “social” concept of the retailer, especially for multi-brand retailers who do not share a company support.

Let get into more details for this area. Our analysis could take into consideration:

Customer reasoning:

What qualifies myself from the context?

How much does belonging to that group cost ?

Which are the group identities and testimonials?

How can I avoid being considered “standard” and yet belong to the group?

Retailer reasoning

How much does it cost to create the “group”?

How much does it cost to maintain the “group identity”?

How much do I get in terms of new customers or upsales form the “group”?

Generally which is the “group” trade off?

I think we can look at two possible ways of approaching the problem:

Internal: a “group” needs to have times and places it can exists (like happy hours in bars etc.) and archetypes it can recognize, testimonials defining the “group characters”

External: a “group” needs symbols like shopping bags or reserved events.

From an information point of view we can measure

Customer retention both in number and quantity

New customers entries

PR costs.

These data are very difficult to obtain as they are much perturbed by product data, at the moment I do not know of reliable analysis on this topic.

Sociality – communication

While industry communication is essentially based on product, retail communication underline the idea of service, of problem solving. This idea implies that it is more of an institutional then technical communication.

• What: I want to tell people that my “group” is a “happy community” and you can join it.
• How: the mean is related to the market I am heading, no general rule.
• Who: the person who acts is mainly a PR, the customer receives.
• Where: the main targets are customers and prospects so it has to be evaluated where to spend the money; internet is a world situation
• When: if you act just once it is dangerous: the customer asks himself why of these expenses; the “group” communication has be lasting in time as it connect people and it has to create trustworthiness
• How much: let us divide customers and prospects. Customer are to be steadily reminded, the parameter we could measure is customer retention. Prospects are to be invited, we could measure new entries as a function of expenses.

The information we need to control are various and often not explicit : imagine we talk of teenagers buying clothes. Clothes are not just a way of dressing, it is also a request for meeting similar. This means that a shop is a meeting point and it has to fulfill this need so that the teenager likes to stay in the shopping area. Places where you can only buy, in my opinion, have little chance against the web-offer, on the other hand satisfaction places are more expensive than normal shops.

From an information point of view the problem is thus to quantify the ratio between the capacity of satisfying customer social need and economical balance.

Context processes

Context processes group all those operations which have no direct relation with the customer so these processes create no customer perceived value but are necessary for enterprise functioning.

A rough classification could divide them into “fiscal” processes (related to external existing rules and laws) and “organizational” (related to process “best practices” in the business area).

Context process are the one which are best known from an informational point of view as they derive either from formal rules (fiscal) or from repetitive experience (organizational); they are also the best information system supported processes. It is not the aim of this paper to describe more deeply this set of processes; I only would like to point out that, as they create no customer value, they must be considered a pure cost driver and the information system goal should be to satisfy the enterprise need reducing these costs. Typically this goal is achieved using methodologies as standard as possible introduced in the company via education and/or consultancy.

Retail: the solution architecture

As we discussed in the industry part of this paper, in retail also we can create a schema for the set of processes related to the company information strategy. The matrix needs-functions is the retail phase space where each cell has its own cost and value; the complete figure is the company positioning strategy.

		Data collection	Analysis	Satisfaction	Communication
Customer needs
	Product
	Subjectivity
	Sociality
Group needs
	Product
	Subjectivity
	Sociality
Context needs
	Organizzation
	Fiscal

Some of these cells need to analyzed at a more specific level (e.g. group-product satisfaction) ì; we should then sum the subprocesses cost to derive the total cell cost while the value is available only at an upper level.

We can think at the “true value” of the need as the product of the need importance multiplied by the channel expectation for the market we are operating, we find a result like the following table:

Valore di canale

Weighted expectations
		Market stall	no-brand	monobrand	Multi-brand	shopping center/ corner	Luxury	Internet
Product
	Aesthetics	31,2	37,0	51,0	52,3	45,9	52,9	40,1
	Reliability	33,3	49,5	74,7	68,4	63,9	78,3	37,8
	Availability	37,1	45,5	53,2	53,2	55,3	56,0	44,3
Subjectivity
	Problem solving	42,4	46,7	56,2	55,5	55,2	56,2	33,6
	Reassurance	36,9	47,2	58,3	55,7	53,3	61,5	24,9
	Empathy	39,4	38,1	50,1	46,8	40,8	49,5	31,4
Sociality
	Group belonging	26,7	26,7	43,0	39,3	35,6	44,5	28,2
	Individual recognition	27,0	29,7	42,3	37,8	33,3	50,4	29,7
Total		274,2	320,6	429,1	409,2	383,4	449,	270,2

Based on this schema, a retailer, as long has he decided which one is his operating channel, can find the relative value of customer need, his problem is now to decide “how much do I want to invest in satisfying this request”.

As we saw, each of these cell is made of many elementary processes with its own contribution to the final cost; this allows us to derive total cost as the sum of the whole solution.

The information technology goal is both to detail the information content and the analysis of a single subprocesses and to reduce the cost of each of the processes itself using technology in the right way (where possible).

It is obvious that we start from processes which have the highest customer value so that they have a quicker return.

Conclusion

The aim of this work is look for a schema in the structure of information processing in a consumer industry. Personally I think we can recognize four types of consumer industry:

Physical goods with industrial origin (apparel, shoes, cars)

Physical goods for personal satisfaction (perfumes)

Services (non material goods) with industrial origin (security)

Services for personal satisfaction (films, bodycare).

Foe each type of industry organizational best practices, KPIs and data collection instruments have been defined but I believe that, up to now, information systems have developed only a local coverage related to immediate needs or to the existence of a single cell information model.

Looking at the whole information context it turns out that quite a few cell have information characteristics (timing, number of data, algorithms) that make a complete formal model unfeasible to exist. It turns out more useful to adopt a simplifying approach and reengineer the process.

Sometimes the general approach is not possible also because it might happen that you are still defining the elementary process. In particular there are many cells not covered by information models and instruments; most of these situation occurs from historical priorities or from lack of technical instruments.

In my opinion we could derive that

		Data collection	Analysis	Satisfaction	Communication
Customer processes
	Product	To be analyzed	To be analyzed	To be analyzed	To be analyzed
	Subjectivity	To be analyzed	To be analyzed	To be analyzed	To be analyzed
	Sociality	To be analyzed	To be analyzed	To be analyzed	To be analyzed
Group processes
	Product	To be analyzed	To be analyzed		To be analyzed
	Subjectivity	To be analyzed	To be analyzed
	Sociality	To be analyzed	To be analyzed
Context processes
	Organizzation
	Fiscal

I think that, actually, the whole part related to customer subjectivity and sociality is left to the retailer experience and intuition. This attitude implies that satisfaction indexes are bound to be very inaccurate and inefficient.

Obviously the relative weight of the various cells is related to the context we are working and, up to now, the “product” cells have been the most important.

In a globalized world were access to product will be eased by technical instruments, other factors will become more and more important so we shall get to analyze them.

We also need to stress that subjectivity and sociality assume a fairly different meaning in the internet world and this aspect is completely unknown at the moment.

Appendix A

Phase space for processes

As an example let us try to define the phase space cell for some general and industrial processes, not considering meaningless cell and taking into consideration the initial state of the processes.

Process: Ability to perceive and categorie customer needs

	what	Who	Where	How	How much
Product	Defined Semidefined Context	Known customers Unknown Potential	Shops Shop window Competitors Society	Rational Irrational Social	Short Medium Long
Subjectivity	To be analyzed	To be analyzed	To be analyzed	To be analyzed	To be analyzed
Sociality	To be analyzed	To be analyzed	To be analyzed	To be analyzed	To be analyzed

Ability to understand, rationalize and interpreter customer need

	What	Who	Where	How	How much
Product	Better product New products	Analyst Stylist	Company site	Rational analysis Semiquantitative Intuition	Months
Subjectivity	Interior messages Thought Personal messages	Behaviour analyst	Limited spaces	Company	Months/years
Sociality	To be analyzed	Marketing	Company	Company	Months/years

Ability to satisfy customer need

	What	Who	Where	How	How much
Product	Nicer product Better product	Product dept Industrialization Production Logistics	Technical area industrial logistics	PLM SCM Logistics	Months
Subjectivity	Operational behaviour	Sales After sales Customer service Retail	sales Logistics Customer service Retail	Sales CRM Retail	Months/years
Sociality	Customer Recognition Company recognition	Promoter Brand manager PR	Company Prospects Special groups Individuals	Brand management PR	Months/years

Ability to communicate the capability of satisfying customer need

	What	Who	Where	How	How much
Product	Product technical char. Emotional product char.	User Company	Advertising communication	Dierct advertising Indirect adv. Competitor comparison	Week/months
Subjectivity	Context knowledge	User Company	Retail Word-of-mouth	Service advertising Direct interaction Product/service relation	Years
Sociality	Group belonging Group recognition	User Company	Media Retail Pr	Social advertising Fashion shows Etc.	Months/years

Appendix B

Processes – customer group level: here we can have more “general” (e.g. sale market analysis, purchasing) and more “specific” topics (e.g. shop emotional paths definition); this might change the level of standardization we can find. Let us consider a fundamental retail need:

Customer group level: product-satisfaction.

In this part we consider the processes regarding availability of the product for the whole time period, including after sale. We can spot the following subprocesses:

• Market offer analysis
• Purchasing
• Stock management
• Sales area availability
• After sale behavior.

Assuming that request analysis (what does the customer group wants) has already been done, we want to use those informations.

Market offer analysis

In this process we match what the market offers with what our customers want. This process mainly takes place in two different ways:

Catalogue analysis

Physical analysis

Catalogue analysis

• What: we want to find, in the market we have access (first constraint), the product which best gets near to our objective in terms of
  • Nature (clothing type and category)
  • Technological properties (composition etc.)
  • Aesthetical and fashion parameters
  • Price range
  • Supplier characteristics (reliability etc.)
• How: this process used to be, and partially still is, fulfilled via information channels like technical papers or physical agents
• When: the search is made essentially when a new collection is introduced so there is little time for changing and this creates markets rigidities
• Where: a multibrand retailer has limited possibilities to make real geographical analysis, we are talking of a fairly strict constraint on this point
• Who: the real actor is the buyer, in small entities this corresponds very often to the seller
• How much: with the actual information systems this process is fairly slow, we might think of using, as a measuring parameters, the number of suppliers taken into consideration
• Why: we want to increase the knowledge of the market offer

This is a process in which there are very large possibilities of increasing the information quality, maybe standardizing the offer methodology; the problem seems to be related to multibrand confusion.

Physical analysis

• What: in this process the retailer checks the correspondence of initial informations and controls certain unavailable data (garment fit, fabric real color)
• How: the process takes place where the physical garment is available (fairs, show rooms)
• When: the time must be compatible with market requests
• Where: as said, in fairs, show rooms or agents information points
• Who: people involved includes buyers and offering companies
• How much: it could be interesting measuring the distance between the catalogue offering and the real offer; we should interview the customers
• Why: to reduce wasted times

The information system support for this process is, in my knowledge, near to zero. The goal could be a historical feedback system for operators.

Purchasing

This process begins after product choice and includes operations related to purchase order creation and control. It is a standard industrial process which we only quote quickly without even getting into details like quotation, offer and order confirmation.

• What: it is the process of defining the characteristics of the supply in terms
  • Physical: goods to be delivered, place and date of delivery, delivery context (packing, labeling etc.)
  • Non physical: terms of payment, quality standard, information data.
• How: operational aspect of the purchase order (paper, electronic data interchange)
• When: purchase order can be made in various moments: fairs, later back home
• Where: as before it depends on customer/supplier organization
• Who: entities involved include customer, supplier and, sometimes, third parties like agents or credit companies
• How much: process dimension could not be related to the economical amount (think of small boutiques buying many codes and little quantities) but we could think in terms of SKUs
• Why: it is a steady state both from the physical and the information point of view.

From the information systems point of view, this is one of the best known process and there is plenty of knowledge on it.

Stock management

In this process, after we have chosen and ordered the garments, we are to keep track of the physical location.

• What: the process is about knowing where the goods are; they could be at the supplier, in transit, in the warehouse or in the sale area
• How: our system must help us in giving the situation both at the moment and in the next future (e.g. passage from transit to warehouse)
• When: the system must be available always and must give response on inventories at any time
• Where: the process must support people anywhere it is needed, both locally (shops, warehouses) and remote (company headquarter)
• Who: there are operational actors (shop executives, warehouse employee) and control people
• How much: it is obvious that precision is a must; sometime fiscal limits are law defined
• Why: sales points are part of a larger system designed for customer satisfaction.

We need an information system which gives you the situation in any part of the customer dedicated world (supplier, logistics, shops); at the moment we are not yet in this situation.

Sales area availability

This point is about the way goods are to be shown so that customer probabilities, to find what he is looking for, get higher.

• What: as we know what the inventory is, we need to balance space vs. goods and to define exposition priorities (paths and areas)
• How: the choices we make must match customer needs and quantities taking into consideration that we might have to cope with missing quantities to be filled in the future
• When: the matching process between goods and space is obviously related to goods availability (spaces are generally fixed on the short term) and to customer visit frequency. It is usually considered a two-three weeks period.
• Where: where the sale takes place
• Who: usually it a is a visual merchandiser job, in smaller sales entities it is a senior sale executive job
• How much: department stores have long studied this problem, it is not in the aim of this paper to get into it
• Why: no doubt a good explosion helps the customer in finding what he is looking for.

From an information point of view, data concern customer and product presence (actual and future), customer revisit attitude and product appeal on the local market.

After sale behavior.

To satisfy the customer we must also project to implement after sale behaviors. After sale has two main components: returns and follow-up.

Returns

• What: we are essentially dealing with garments with quality standards not as expected
• How: returns are mainly processed via a shop physical hand back and the substitution with another garment or a refund
• How much: timing is mainly law defined and it might last from a few days (unsatisfaction) to months (quality problems)
• Where: the return process usually happens where the sale process took place
• Who: acting people include the customer, the retailer and the garment company
• How much: it is easy to be measured and, obviously, should be as little as possible
• Why: because this process is somehow part of the sale process, it is a side effect

Follow up

• What: this process help us in defining our new sales standards, it should measure the difference between the relation perception at the sale moment and later in time
• How: we must identify customer correspondence between customer expectation and real result
• Where: we have to be able to re-reach our customers where they stay
• Who: this process is available only for trackable customers so we much try to increase this number
• How much: to be statistically significant
• Why: to drive future sales processes

As far as information system is concerned, returns is a typical summary process so it needs operational and control systems while follow-up is also an analytical process.

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