Introduction

Basically, a market is an interaction between buyers and sellers. A generic market however, can be described as an interface between sellers and a broad group of customers with approximately the same universal needs.
For instance, consumers of analgesic drugs want their pains relieved fast; buyers of photographic lenses need quality images for their money.
How can a firm position itself in a homogeneous market so as to have discretion in setting its prices and gain competitive advantage above its peers?


Generic Markets

In generic markets, consumers hardly care about the manufacturers of the product they purchase; they simply ask for a generic and any product offered by the seller is acceptable to them since all products in the industry furnish them with the same basic satisfaction at the same price. A generic market to this extent can be described as a perfectly competitive market. Basic examples are the salt, sugar, chalk and pure water markets.
Firms in a generic market are price-takers but they can have their profits increased or become price-makers only if they possess competitive advantages over their peers.


Competitive advantage

A firm is said to possess a competitive advantage over its rivals if it sustains profits that exceed the industry average. Essentially, competitive advantage may be in the form of cost advantage or differentiation advantage. Cost advantage emphasises a firm’s ability to deliver the same benefits as its competitors but at a lower cost whereas, a firm possesses differentiation advantage if its product delivers benefits that exceed those of its competition.
A firm can achieve cost advantage over its competition through better buying conditions, greater labour productivity and several cost reduction strategies. Differentiation advantage on the other hand is subject to several complex factors.


Product Differentiation

“Differentiated products refer to a group of products that are similar enough to be considered variations of one generic product but dissimilar enough that they can be sold at different prices” (Lipsey)
In product differentiation, the firm has a limited discretion in the setting of its prices. Product differentiation is intended to distinguish the product of one producer from that of the other producers in the industry. It can be real, when the inherent characteristics are different; or fancied, when the products are basically the same. Differentiation should be real to a reasonable extent because customers must be able to see the product as unrivalled and unequalled, therefore, the price elasticity of demand for the product tends to be reduced and customers tend to be more brand-loyal. This can provide considerable insulation from close competition.

Real product differentiation in some industries (e.g. pharmaceuticals) could be difficult so the consumer has to be persuaded, via advertising, packaging or design, so as to make the product unique in the mind of the consumer. This is because alterations to a drug compound gives another drug entirely which must be approved by NAFDAC.
According to an estimate presented by Bleidt (1992), most pharmaceutical companies spend slightly more on marketing and promotions than on research and development. This can be linked to the product differentiation strategy applied by these firms in their bids to soften price competition.
For example, PANADOL and EMZOR paracetamol differentiate their products by packaging them in sachets. Another is CAPQUINE, which is an encapsulated (aimed to prevent the bitter taste of the drug) brand of chloroquine.
Psychologically, a drug consumer feels more secured buying a packaged drug compared to unpackaged generics. Moreover, since the brand name is trusted the consumer feels a psychological healing; this, generics hardly offer.

To buttress this view, Fridman et al (1987) reported that only half of 245 surveyed physicians believed generic drugs to be as reliable as branded drugs. Physicians and patients alike believe more in branded drugs than generic ones because definitely, the branded or owner drug actually pioneered the production of the drug and the drug company would have operated in a monopoly thereby creating a trusted name in the minds of the consumers. The brand creates anticipation in the consumer’s mind; a unique and defined experience, obtainable through consuming the product offered by the brand. Another case is the branding of salt by UNILEVER under the brand name: ANNAPURNA. Annapurna, a brand of salt contains the normal iodine quotient required for the human body compared to the generic, which is highly deficient in iodine.


Patents

For a firm to sustain its competitive advantage, it must have resources and capabilities that are superior to those of its competitors; without this superiority, competitors could simply replicate what the firm was doing and its advantage disappears. Examples of such resources are: patents and trademarks, proprietary know-how, installed customer base, reputation of the firm, brand equity etc
Of utmost importance to us at this juncture are patents.

Firms invest in research and development in order to find better ways of doing things and to gather relevant information for effective decision-making. A research exercise may be directed towards the development of a new product or a new way of doing something; when this becomes a success, the firm may be granted patent right, which gives it the sole right to manufacture the product. Patents last for specific numbers of years after which other manufacturers in the industry may follow suit. Brands manufactured under patent protections enjoy a sort of monopoly throughout their patent life; the abnormal profits earned diminish after the expiration of the patent thereby placing the brand in a monopolistic competition.


Genericised Trade names

Some brand names weld enormous influence or have their usages abused that their trade names become genericised over time. Genericised trade names are former brand names, once legally protected as trade names, which have since come to signify a generic product regardless of its manufacturer.

The genericisation of a trade name sometimes results because the trade name is the name of a product protected by intellectual property rights, especially patents. Since the patent gives an inventor the exclusive right to manufacture a product for a period of time, consumers will only know that product by the inventor's trademark and name for the period of the patent. When the patent expires, the inventor's competitors begin producing their own adaptations, but using the inventor's trade name to christen their products because this is the name by which the general public identifies such items. In some instances, when the new entrant gives his product a very unique name, consumers tend to call the new product the same name as the older product.

Some patents that lost their trademarks these ways are:
‘Cola’ - soft drink; genericised part of Coca-Cola;
‘Aspirin’ – acetylsalicylic acid; still trademarked in many places around the world by BAYER and
‘Heroin’ - narcotic drug; also originally registered by BAYER as a pain reliever.

Also, the following current trademarks are often used generically:
DHL - to courier something, e.g. I need to DHL this parcel
Omo – detergent registered by UNILEVER
Pampers - disposable nappies for babies
Sellotape - transparent adhesive tape
Vaseline - petroleum jelly
Xerox - photocopy machine. Sometimes used as a verb, e.g. "Xerox two copies for me"

Rank Xerox at a time advised its customers to ‘photocopy’ their documents and not ‘xerox’ it. The effect of genericisation of trademarks on a brand is that customers may purchase other adaptations of the brand thinking they are one and the same.


Transition from Generic to Brand

Note however that a firm in a perfectly competitive market can move into a monopolistic competition by product differentiation. And when it differentiates its products, the demand for its product becomes less price elastic. A manufacturer of generics can create an entirely new brand from that generic product, so that the brand becomes a differentiated product in the industry. EVA and RAGOLIS table water differentiated themselves from the generic pure water; PANADOL and EMZOR paracetamol differentiated themselves from the generic paracetamol; ST. LOUIS sugar also differentiated itself from the generic granulated sugar by presenting its refined sugar in cubes thereby allowing consumers ease of measurement.
Successful differentiated products are innumerable and their secrets are simply the sustainable competitive advantages they possess over their competition.


Summary

Before branding a homogeneous product, cost-benefit analysis of the strategy must be carried out and a positive contribution should be feasibly earned so as to increase the revenue base of the firm.
However, a firm can decide to stay in the generic market while creating another product through differentiation with the intention of having another product line on which it has reasonable price discretion. A simple application of marginal costing techniques should guide the firm in this decision-making process. Furthermore, the firm must be careful in its pricing policies because its product now faces a price elastic demand whereby increase in prices reduces the units purchased.

References

Aronson, Thomas et al, The impact of generic competition on brand name market shares (1997)
Cannon, Tom, Basic Marketing: Principles and Practice (London: Cassell Publishers Ltd, 1992)
Koutsoyiannis, A., Modern Microeconomics (London: Macmillan Press LTD, 1979)
Lipsey, R.G, Principles of Economics (Oxford: Oxford University Press, 1999)
Porter, M., Strategic Competition (1980)

Crisis leadership came the hard way for U.S. Army Colonel Thomas Matthews, who led the Task Force Ranger mission in Mogadishu, Somalia in 1993. Matthews shared his hard lessons at the Leadership, Values, and Spirituality Forum at Harvard Business School.

by Martha Lagace, Senior Editor, HBS Working Knowledge



In business, a wrong decision can cost you money. In war, it can cost you your life.

Thomas Matthews, now a retired U.S. Army Colonel, had to make life-or-death decisions in full-out crisis mode, once with very tragic and very public results. His leadership experience included the Task Force Ranger mission in Mogadishu, Somalia on October 3, 1993. On that day, five of his aircraft were shot down. Two of them crashed in the city of Mogadishu. More than 500 Somalis and eighteen American soldiers were killed. Trapped overnight in the hostile city, his unit was rescued the next day.

The grisly scene was broadcast around the world.

Matthews talked about how and why he made the decisions he did that day at the Leadership, Values, and Spirituality Forum held at Harvard Business School on April 4, 2003. HBS professor Henry Reiling was panel moderator.

The failed mission, which had been launched at the direction of the United Nations to grab two lieutenants of a warlord, was later recounted in the book, Black Hawk Down: A Story of Modern War by Mark Bowden, and reenacted in a 2001 feature film of the same name directed by Ridley Scott.

"That was my crisis, that point in time as a commander of that aviation force, the leader in charge. And what are you going to do?" asked Matthews, a sober man with ramrod-straight posture and an unwavering voice.

He said he is not sure how exactly he made decisions that day. "You're out of time," he told the group. "You have a situation in your face ... I don't know [how I knew]; but I'll just tell you that in my mind's eye every decision I made I felt was crystal clear," he said.

"I don't know the metrics or the reasons for all that. I'll just tell you it was clear in my mind's eye what should be done at that moment. Here's why I think some of that's true. It is a function of experience. It is a function of time on the rock: I've been in the Army for twenty-eight years.

"I will say it is also a function of where you came from, what your family was, what your religion was, what's your base, your foundation, your cornerstones that you grew up with. And they vary [for leaders], but there are some common things there. And it's off of those base things ... because in crisis what you try to do is make your life as simple, and as black and white as fast as you can—because it is serious. And because of that you power down and revert to basics."

The Army's leadership doctrine is used for soldiers aged eighteen through generals. They embed it, practice it, and preach it, Matthews said. The word crisis in the abstract means urgency, danger, a problem. In the military, the consequences are often life-threatening, he added.

"And of course you have to live with the effects in the future of the consequences of your action. That's not always the case" in other professions, he said.

What All Leaders Should Be, Know, and Do
Matthews offered the audience and other panelists a brief primer on the Army's leadership framework. Though leaders in civilian life are fortunate to be spared from making decisions with such dire consequences, they may benefit from the basic foundation.

The essential framework is known as "Be, Know, Do." Leading hinges on the DO part, Matthews said. "In order to be a leader, you've got to do; you must act." Words such as "loyalty" do matter. "We have a motto: NSDQ. It means, Night Stalkers Don't Quit. That matters in time of crisis and [when] you're under a lot of stress: Don't quit. Persevere. Have the will to push through the problem."

In times of crisis, he said, do the right thing. "What is that exactly? You know. Do the right thing. You know what's not right, and oftentimes you can define this in the negative sense. You can define what to do, what the correct leadership decision is, by knowing what you shouldn't do, what you wouldn't like to see be done," he said.

"Leaders have self-confidence. They get it by being comfortable in their own skin. They get comfortable in their own skin by being grounded emotionally, being supportive of others, and having had the freedom to fail."

"It's easy to say," he admitted, but leaders need to remain calm during conditions of stress, chaos, and rapid change. Anyone can prepare in advance for the possibility of crisis leadership, he said. "If you work on it now when you have time prior to the crisis, then that's the way you'll behave at the time of the crisis, because you know no other way to behave."

Maintain a positive attitude, he said. The thinking should be: The glass is half full; we'll figure it out; we'll handle it; we'll survive the situation.

The BE piece of the Army framework means character. Character can be strengthened through repetition, practice, and daily behavior. In a crisis a leader will "power down" to the basics of character. The pressure of subordinates looking to the leader for guidance is also a very powerful stimulus for decision-makers.

The KNOW piece of the Army framework means competence. It means technical and tactical competence, said Matthews. "That means work, study, put in the time. Do it now while you have the time. You won't have time to open a book in time of crisis," he said.

Other Experiences with Crisis
Joining Matthews on the conference's Leadership During Crisis Situations panel was Donald Hastings (HBS MBA '53), chairman emeritus of Lincoln Electric Company. He said that as a leader he found meditation to be very helpful.

For Dr. Gary Klein, head of his own research organization, Klein Associates, it has come from examining decision-making through the lens of science, and more recently through observing leadership in action.

For Ford Rowan, it has come from practical experience accrued as a lawyer, journalist, and university professor.





This article is Copyright © 2001 President and Fellows of Harvard College

…”if all the hands that reach could touch”….

We all cannot become anything we want to be if we just work hard. If we can become whatever we want to be, then we all have the same potential. And if we all have the same potential, then we lose our individuality; we are not uniquely talented, expressing ourselves through unique goals, unique capabilities, and unique accomplishments. We are all blank sheets of canvas, ready, waiting, but featureless.

However, we should not be troubled by the fact that there is a limit to how much we can rewire our brains. Instead, we should view it as a happy confirmation that people are different. There is no point wishing away this individuality. It is better to nurture it. It is better for us to understand our filter and then channel it towards productive behaviour. So if you can’t carve out new talents for yourself, what, if anything, can you change about yourself?

First, you can discover your hidden talents. The greatest people are adept at spotting a glimpse of a talent in themselves and then repositioning so that they can play to that talent more effectively.
Second, you can teach yourself or get taught new skills and new knowledge.

This is the most profound insight shared by most great men that ever lived; skills, knowledge and talents are distinct elements of a person’s performance. The distinction is that skills and knowledge can be taught while talent can’t be taught. Combined in the same person, they create an enormously potent compound. Trying to learn a talent may result to a waste of time and money trying to teach what is fundamentally unteachable.

Skills are how-to’s of a role. They are capabilities that can be transferred from one person to another. For accountants, arithmetic is a skill. If for some reasons, the neophyte accountant does not know how to do arithmetic, he can still be taught. The best way to teach a skill is to break down the total performance into steps, which the student then reassembles. And naturally, the best way to learn is to practice.

Knowledge is simply “what you are aware of”. There are two kinds of knowledge: factual knowledge - things you know; and experiential knowledge - understandings you have picked up along the way. Factual knowledge for an accountant would be knowing the rules of double entry, and for sales people, it would be their products’ features and benefits. Experiential knowledge is a little quiet different. It is less tangible and therefore much harder to teach. Acquiring it is your responsibility. You must discipline yourself to stop and look back on your past experiences. And try to make sense out of them. Through this kind of musing or reflection, you can start to see connections and patterns. You can start to understand.

Some of these understandings are practical. For example, over a number of years, an accountant comes to know a number of ways to shield a client’s asset from excessive taxation. Some understandings are more conceptual. Your awareness of who you are and how you come across to others is experiential knowledge. It comes with time, if you’re listening. In the same way, your values, -- those aspects you hold dear-are experiential knowledge. As you make your choices, sometimes compromising, sometimes holding firm, you come to realize that certain aspects of your life are more important than others. These critical aspects become your values, guiding the choices you make in the future. Some of these values will remain constant throughout your life. Others will change with time and reflection.

Talents are different phenomena altogether.
A talent is a recurring pattern of thought, feeling, or behaviour that can be productively applied. It is what keeps us going when skills and knowledge fail us. In some instances, our relevant and intelligently acquired knowledge and skills require something grander for a qualitative decision to be made; talent makes the difference.
In accountancy, the talent required is an innate love for precision. For example, ask a great accountant - not any accountant, but a great accountant --- when he smiles and he will tell you, “when the books balance”. When the books balance, his world his perfect. He may not show it but inside, he is aglow. All he can think about is, oh, when can I do that again! This might seem rather too odd for you. But if you think about it, for the person blessed with the innate love of precision, accountancy must be a wonderful job. Every time his books balance, he experiences absolute perfection in his work. How many of us can claim that?

A love for precision is not a skill nor is it knowledge; it is a talent. If you don’t possess it, you will never progress as an accountant. If someone does not have this talent as part of his filter, there is very little a manager can do to inject it.

Talents are very important to success. However, they may be grouped into three classes: Striving talents, Thinking talents and Relating talents.

Striving talents explain the why of a person. Why he is motivated to push and push just that little bit harder. Is he driven by his desire to stand out or is good enough good enough for him?

Thinking talents explain the how of a person. They explain how he thinks, how he weighs up alternatives, and how he comes to his decisions.

Relating talents explain the whom of a person. They explain whom he trusts, whom he builds relationships with, whom he confronts and whom he ignores. Does he think that trust must be earned or does he extend trust to every one in the belief that most will prove worthy of it? Is he drawn to win over strangers or he is at ease only with close friends.

However, there is a myth that talents are rare and special but as a matter of fact, there is nothing special about talent. If talents are simply recurring patterns of thought, feeling, or behaviour, then talents are somewhat commonplace. Everyone has certain recurring patterns of behaviour; no one can take credit for these talents. They are an accident of birth, “a clash of chromosomes”. However, each person can and should take credit for cultivating his unique set of talents.

If you are a dark-sider, find a role in life where skepticism is the key to success. Regardless, it won’t be that bad.

....at last, I found myself....

..don't just do your best, do your impossibles!