Excellence

(Speech delivered as Chief Guest of the Sri Lanka Marketing Institute during the 2010 Effie Awards held in Colombo, Sri Lanka)

I bring you greetings from the Philippines and from my association the Philippine Marketing Association (PMA).

When I read the invitation of SLIM President Rohan Somawansa, I did not hesitate to accept. I cleared up my schedule and went on to book the flight. Earlier this year, I invited all national marketing association members of the Asia Marketing Federation to attend the PMA National Marketing Conference (NMC). Sri Lanka Institute of Marketing (SLIM), through Rohan, was the first to accept. Rohan even volunteered to bring along a super speaker from Sri Lanka. And he did.

SLIM has always responded to our invitation to attend our national and world conferences. I would like to think that the PMA should do no less and respond to SLIM’s invitation. SLIM and the PMA have developed this unwritten partnership based on mutual interests and objective. SLIM and PMA members have also developed close ties and friendship. You can consider SLIM and PMA as one tiny block in the Asian Marketing Federation. I believe that our countries share similar problems and circumstances.

Moreover, SLIM and the PMA have similar mission and vision. Founded in 1970 and subsequently incorporated by an Act of Parliament in 1980, SLIM has been promoting marketing and elevating the status of marketing in Sri Lanka. The PMA’s mission is to develop and promote Marketing as a science and profession guided by the universal principles of ethics, corporate citizenship and social responsibility and to serve as a policy making and recommendatory arm of the government on Marketing related issues

SLIM’s vision is to establish marketing as the driving force, which enhances business and national value. PMA’s vision is to create awareness on the power of marketing in business, industry and the academe, both here and abroad. The PMA's theme this year is “Marketing as Growth Accelerator.” Marketing as a growth accelerator advances the idea that the discipline of marketing is a superior approach towards sustainable corporate growth and profitability. The frameworks that are found in marketing are essentially the prescription for sustainable growth and profitability.

SLIM and the PMA are active members of the Asia Marketing Federation, and, by virtue of the affiliation, are both associated with the World Marketing Association, and UN Global Compact.

As active promoters of the art and science of marketing and as practitioners, SLIM and the PMA subscribe to the basic tenets of best practices in marketing and change management through customer and market understanding.

We just attended the Board of Management meeting of the AMF on November 4 and 5 in Tokyo. In that meeting, we reaffirmed the growing importance of the Asian region in the global economy. Two of the top three global economies come from our region. It is also expected that very soon, China will become the global leader and the biggest economy in the world. It will be this region and many countries in this region where economic growth will be sustained.

In Tokyo, SLIM and PMA attended a global conference organized by the AMF and Japan Marketing Association. Two distinguished scholars and writers presented their thesis about the role of marketing in development and the future of marketing as a driver for growth. Professor Hyun-Chul Kim of Seoul University outlined the accomplishments of Korea and what it did to rise above the difficulties brought about by the global crisis and become a world competitor. Hermawan Kartajaya, considered as one of the top 50 marketing gurus in the world, presented what marketing should and will be in the future and the importance of change in driving economic growth.

From these discussions, I realized that the changes driving economic growth in Asia are essentially market-driven and rooted on the successful applications of the latest principles of marketing. On the other hand, the principles that are dictating the type of marketing strategies are evolving. I consider Marketing's dynamism and its propensity to change and evolve as the elements that make marketing an important driver of corporate growth and profitability.

Such significance can only surface by recognizing the role of marketing in driving institutional growth and success. The Effie Awards, a global awards scheme which selects the most effective advertising campaigns that have excelled at the national and international levels, provide such recognition. Through these Awards, SLIM promotes best practices in the advertising industry. It is also through these awards that SLIM is able to provide industry and government with guidelines for driving growth. This is consistent with SLIM’s mission of being an active leader in the nation’s efforts towards economic prosperity and SLIM’s vision of establishing marketing as the driving force to create business and national value.

In that session, I also realized that the world does not stand still. In the 1960s and 1970s, South Korea was at the lower end of the list of countries in terms of economic development. Indonesia was very parochial and had very few executives that could be considered as global thought leaders. But lo and behold, Japanese top executives attended the session and listened to a Korean professor and an Indonesian marketing consultant.

I congratulate Sri Lanka Institute of Marketing (SLIM) for carrying the torch of excellence in marketing through the Effie Awards. These awards are very significant not only to the marketing profession in Sri Lanka but also to the members of the Asian Marketing Federation (AMF) of which SLIM and PMA are members.

Let me also congratulate the awardees, the epitome of excellence and considered the best of the best and the most effective MARCOM Campaigns in 2010.

disaggregated pricing (part 2)

When my kumpadre Ed Tiambeng, a seasoned traveler, was penalized for re-booking his flight to Tacloban even if it was one week ahead of the original schedule, he got smoldering mad. From the smoke of madness, he came up with a not-so-bright idea of calling his congressman to propose a bill that will ban penalties for rebooking if the ticket was rebooked at least two days before the flight.

It is a not-so-bright idea because the same rule will apply to all airlines. The airline with the advantage will still keep that advantage no matter how small that is. It is also not certain if government will have the facilities and ability to regulate this option.

Michel Roberts, my favorite strategist, argues that a market leader would always have the advantage if what the competitors did was merely to try to out-compete the market leader. If they exploit the weakness, if there is any, the market leader would have the size and muscle to adjust and overcome the weakness. If they compete head-on focusing on the strength, there is just no way that the market leader would lose. Roberts consider the SWOT approach as irrelevant for this reason.

Herbert Hoover, the 31^st president of the United States servicing from 1929 to 1932, advocated and pushed for efficiency management. That framework suggests that government is inefficient and should be less visible in sectors where the private sector is capable of producing the desired capacity. He favored a strong government and private partnership. For all his failures at the onset of the great depression, Hoover presented a solid governance principle. We should not allow government to spread its tentacles.

Instead of seeking for a legislative initiative, competitors should consider this failing as an opportunity to create its own arena of competition. It is possible that Cebu Pacific’s system was designed to support the disaggregated pricing. No Board would ever support the mothballing of a huge investment based on a speculative notion. My best guess is that the Board will vote to sustain that strategy if it comes to that. On the other hand, other airlines can easily sway to a new system with less complication and with nothing to lose. If they do, they have my attention and my money.

One possibility is for other airlines to create a system that will credit delays in flights to penalties for rebooking. This approach has two benefits. First, it would endear the airline to passengers who have suffered so much from the disaggregated pricing scheme. Second, it puts some credibility in the airline’s mouthful of promises.

A more radical approach is the pizza approach. Pizza not delivered on time becomes free. Passengers pay only if the flight leaves and arrives on time. Passengers pay 50% once the plane departs on time. The balance is payable on arrival according to on-time performance. Hah, that would be one super strategy. Of course, the only way this may be implemented is if the system supports it. If an airline has a working system in place that supports a different approach, like Cebu Pacific, it would take more than a normal effort to calibrate if at all that is possible. If none or a different one exists, that airline is more flexible.

If you have other ideas, email to abfontanilla@yahoo.com.

disaggregated pricing

Not too long ago, air travel, both domestic and overseas, was associated with excellent in flight service. Airlines then served good food, provided newspapers, had user-friendly booking and re-booking services, and maintained a ticketing system that was quite elaborate and service oriented. I recall that in that setup, all costs were paid up front. It was designed to cater to the business travelers who were considered more discriminating and demanding. Calibrating the services to what business travelers expected set the standards for air travel. And that was one super standard.

To keep operations viable, airlines front loaded the airfare to include all these amenities and expected services even if on some occasions these services were actually not utilized. Front loading the airfare, or what I call aggregated pricing, is based on the assumption that air travel needed to be comfortable and compensate for the stress related to air travel. It was also based on the assumption that air travelers were faced with imperfect conditions such as scheduling and carry-on baggage. Because of the front loaded airfare, the cost of air travel appeared somewhat prohibitive to many travelers. Many took to other travel modes such as land and sea travel. Back then, air travel, sea travel and land travel co-existed and were not threats to each other.

Cebu Pacific reinvented air travel in the Philippines. It disaggregated airline services and prices by cutting the air fare to its basic minimum. Cebu Pacific even ventured to sell seats at very attractive promo rates to fill up the capacity during months when travel was expected to be at its lowest. Components of the air fare such as food, newspaper, re-booking, check-in baggage, insurance and other items were disaggregated and charged only on demand of the specific service. I call this disaggregated pricing, the opposite of aggregated pricing. Cebu Pacific compensated for the scaled down services with in flight entertainment courtesy of the flight crew at no additional cost to the airline.

Disaggregated pricing is a form of radical pricing but quite different from the radicalized pricing strategies adopted by successful ventures such as Google, Yahoo and Wikipedia which provide the basic service and earn revenues from volunteered payments and democratized options. The strategy must have been successful for Cebu Pacific. It now claims to be the number one airline in terms of passengers flown and has aggressively added capacity through the years.

The strategy employed by Cebu Pacific also restructured the travel industry. Sea and land travelers saw the economics of disaggregated pricing and started traveling by air. Employees and students who in the past could not afford to travel domestically and overseas found the upfront and downloaded cost low enough to travel. My employees have pre-booked their flights way ahead and have been traveling at least twice a year to local and overseas destinations. Domestic tourism improved. Even travel to overseas destinations covered by the pricing strategy increased.

Disaggregated pricing had many social and market benefits. It was a good strategy. I thought so too until the realities of imperfect information started setting in.

My meetings in Cebu and Catbalogan on October 21 and 22 were cancelled right after I booked my flights online. It was too late to cancel or re-book the flights so I decided to go ahead with the trip by setting other appointments. Since the original flight back to Manila was two days later, I was able rebook that flight from October 23 to October 29. Well, for that rebooking, I paid a penalty of P934. On the way to Tacloban airport on October 23, I realized that I rebooked the flight to October 29 and did not change the flight back to Manila to October 23. Good thing, seats were available. I had to pay an additional P1,500.

For that multiple destination from Manila to Cebu to Tacloban to Manila, I had to pay a total of P9,606.56 or around US$223.41. While the basic fare was only P5,494, I had to pay taxes and fees of P696.76, web administration fee of P106, travel insurance of P720, seat reservation of P224, SMS reminder of P5, security aviation fee of P15, and total penalty of P2,440.80. That was a lot of money for a local trip with only three stops. No newspaper. No food. Only cheap live entertainment from the flight crew.

So, is the disaggregated costing less costly? Not quite. Next time you book, check all the details.

The Pinoy Dream

(Delivered during the Philippine Junior Marketing Association's 2010 Governor’s Pulong on 19 June 2010 at the Southville Foreign University Auditorium)

Let me echo the proposition of Dr. Paul Dumol -- that common dream is for the Philippines to become truly a nation. A nation, according to Dumol, is a community of responsible citizens who deeply love their country. Following this definition, he says that the Philippines is not yet a nation.

It is a nation in progress. This argument, which I consider a breakthrough in development administration, successfully paraphrases the struggles and pitfalls of Philippine development or underdevelopment. As a nation in progress, the Filipinos are in various stages of developmental maturity. Some have embraced the concept of nationhood. They manifest a commitment to the common good.

Gawad Kalinga founder and Ramon Magsaysay awardee Tony Meloto is an example of a Filipino committed to the common good. His dream is to build homes for the homeless and to provide a community for those seeking to find one. Efren Penaflorida, a hero in my book, is another Filipino committed to the common good. He took the responsibility of educating street children through his mobile classroom. He knew that education will liberate these children from the bondage of poverty.

However, there are many more amongst us who stay at the level of regions. They are committed to the goals of their respective regions. That attachment is so strong that it is often mistaken as a sentiment for the common good. In countries where there are many overseas Filipinos, we see multiple regional blocks.

In Chicago where my brother lives, he is a member the Quezonians. He is also a member of a group of Filipinos born and raised in Lucena which is a part of Quezon. There are associations of Kapampangans, Ilokanos, and many more ethnic groups. In the last election, among the party list winners are ethnic groups – Ako ay Boholano, Ako ay Ilokano – overshadowing marginalized groups. When the President of the country comes from one particular region, many of the political appointees will almost certainly come from the same region regardless of qualification.

Still many others are at the level of towns, cities or provinces. Their loyalty, behavior and engagements focus on hometown traditions and aspirations. Everything else remains abstract or insignificant. Thus, we find many overseas workers expediently associating with town mates but with little interest in networking with other Filipinos.

I often hear about this story that when Boholanos apply for a visa, chances are that they would get one. Because it is well known that Boholanos would always go back home to attend their town fiesta. I have not heard of that same passion and commitment to visit the Philippines on Freedom Day or on important national events. There are still those who are at the level of communities or barangays. They are very clannish. Very supportive of the family and the community where they live. Outside of this enclave, they break the rules. Family and business interests define social and political standards. Anything outside these interests is inconsequential.

When the common good is at stake, citizens tend to behave according to the patterns symmetrical to their level of developmental maturity. Dumol says that there is nothing wrong with this natural progression. From family, to a community, to a town, to a province, to a region and then to a nation. After all, one cannot love a country if he or she does not love the region. One cannot love a region if he or she does not love the province.

This natural progression is, in its rawness, time dependent. Like wine, it has to age according to a time-related pattern. We are A NATION YET IN PROGRESS. Not there yet. But on our way there. The questions that beg to be answered are: Where are we on the road to nationhood? How long will it take for us to become a nation? Dumol’s best estimate, if we don’t do anything, is that it will take at least four more generations for the Philippines to become truly a nation.

It does not mean, however, that the velocity of developmental maturity remains a function of fate. It is possible to intervene and hasten the process of maturity. This is what happened in Singapore, Malaysia and other relatively young countries that are now more developed.

Ordinarily, we see these expressions of developmental maturity when there is a crisis or call for action that demands concern for the common good. At the onset of the 1997 crisis, Koreans lined up to donate their jewelries to forestall a national crisis. Even if it was only a masterful attempt to camouflage mistakes of the past, it demonstrated concern for the common good.

I met an Indonesian, considered the second most powerful person in Indonesia, who left his high-paying job in a big corporation to spearhead the rebuilding of Aceh after it was devastated by a natural disaster. He considered it as a responsibility and a calling. Today, he heads the performance governance team that orchestrates the performance of the bureaucracy.

Sometimes, we also see these expressions in the form of a natural outburst of love for country. Artists Edd Aragon, who is based in Australia, directed me to PinoyCentric, a web site styled precisely to express that pinoyness – respect and love for whatever is Filipino. PinoyCentric is “a Chicago-based but Pinas-grounded arts, culture and appropriate sciences web publication providing features and information about Filipinos worldwide.

The staff of contributors is made up of Filipinos and friends with diverse backgrounds brought together by our roots in the old country, a spirit of creativity, adventure and a desire to share our stories.” It invites readers to look at this creative intersection as a celebration of the resiliency and success of Filipinos wherever destiny brings them to shake off the fault of our political system. PinoyCentric demonstrates that feeling which is distinctly native, naturally pinoy – an outburst of love for country. The tagline “Pinoy Centric: All things brown” says it all.

Perhaps, we can learn from Pinoy artists who have a way of digging deep into their ethnic roots to create new patterns, new ideas. If we can find enough of these expressions, we may discover that nationhood is probably just around the bend, not three or four generations away as suggested by Dumol. I see that same expression in your theme “A Filipino Legacy” and in the way that you creatively articulated your theme. For this, I congratulate you. But it must not end with a theme and a poster. That expression must be translated into action.

This is the challenge that I would like to present to this forum – to find an expression or expressions that will help in our journey towards nationhood. Every bit of expression helps. We are at the edge of the current generation of baby boomers. This is a generation that had been at the forefront of a tremendous economic growth and technological changes.

About to replace that generation is the generation Y or Z – that is you. Bruce Tulgan (2009) describes the GenY as being “more difficult to recruit, retain, motivate and manage than any other generation to enter the workforce.”

But this will also be the most high-performing workforce in history for those who know how to manage them. I cannot tell you why. You have to tell me why. I think you know. Being at the edge of a major shift in generational leadership, you inherited the responsibility of transforming this nation from a tailender in growth and social development to a leader.

You have the confidence. Connectedness. The advantage of technology. Global awareness and exposure. And the tools for creating an impact. I challenge this forum to find an expression that will fuel the Filipinos’ love for their country. What would such an expression be, you may ask? May I propose some possible avenues for such an expression.

First, Promote the Rule of Law Be involved in promoting values that emphasize the importance of the rule of law. About a year ago, I was part of a group that went to participate in a session that defined the vision of a Southern City. One of the participants was the author of a book “12 Little Things Every Filipino Can Do To Help Our Country.”

After hearing him speak and elaborate on what he wrote in the book, I was just so amazed to realize that, indeed, little things mean a lot. To those who grew up in this environment, you will find some of these little things quite amusing or even comical. For example, his first recommendation is for us to follow traffic rules. One of the required readings in Apologetics in the Seminary is the book “To Each His Own.” That is precisely what traffic is like in the Philippines.

Yesterday afternoon, I was driving along Quirino Avenue coming from Philippine Christian University on my way to the office in Makati. All of a sudden, a young boy, probably in first grade, zoomed to the front of the car barely missing the bumper of my car. I cannot blame this little boy. This is what sees every day.

Now that school days are back, so is double or triple parking and needless violation of traffic rules. These things happen, and I am sorry to say, in schools. Drivers double park on the street waiting for the senoritos to step out of the gate and straight to the car. No waiting time. It takes commitment, dedication, a deep sense of patriotism and a life of Christian values to be able to follow traffic laws.

Benjamin Franklin said that “the best way to build a dream is by attending to the little things that comprise it. Its foundation is in the little details; its beauty in the fine points.”

Second, help build a better image for the Filipinos: I have always wondered how the Filipino is looked upon in the global world. I have heard of many stories. But it takes one’s own experience to formulate a picture of the Filipino in this globalized world. Let me mention five based on my own personal experiences.

First, the Filipino as a traveler and security risk. You find a Filipino wherever you go. This is a 20^th century spectacle. Travel trends indicate that this will continue to be so in the 21^st century. Filipino travelers are generally labeled as a security risk. There are many anecdotes on this tag. I have personally experienced this special treatment everywhere: in America, in Asia and in Australia. Unfortunately, that tag seems to be at work in the Philippines as well. Putting on a blazer and a fancy hat does not change this tagging a bit.

Second, the Filipino as a good singer and nothing else. I am proud of one part of this label. It is distinctive. We share this distinction with very few ethnics in the world. Sadly, it is the only thing that stands out in the minds of business colleagues and friends from other countries. After business meetings, when we break for dinner or cocktails, the microphone is passed on to me, with everybody, from the Koreans to the Europeans, expecting me to deliver a grand performance.

Third, the Filipino as a good worker but low-wage earner. This is puzzling to me. The world demand for talent exists. There are few ethnics that can match the resiliency and patience of the Filipino worker. I could never imagine a two- or three-job rotation. But many Filipinos, in countries where the demand for workers is high, willingly take two to three jobs a day. They work hard throughout that rotation every day and every hour of the day. Despite all that, the Filipino is, generally and arguably, known to receive lower wages. While the average family income of Filipinos in the U.S. is above average, a job-for-job comparison suggests that the salary can improve.

Fourth, the Filipino as an entrepreneur but low-tech. I am sure this is image-driven. But image has a reality of its own. This is how we are normally positioned in the minds of business people from other countries. We populate the web with business inquiries. We compete with many countries in clogging the web space. In my industry, we are ahead of most countries in requests for evaluation copies and samples. But we stand dead last in implementation.

Fifth, the Filipinos as hospitable people but undeserving of a visit. I have represented an American company in the Philippines for the last 15 years. Each year, we have Asian and World meetings. Each year, a poll is conducted to determine site preferences. The Philippines is never ever mentioned. The Filipino as an international host no longer exists in the minds of business people: An airport that needs improvement. Convention centers that do not meet world standards. Traffic and pollution. Poor time management. These are some top-of-mind remarks.

The Filipino, in a global economy, has to be purposely repackaged. There must be a conscious effort to determine how we are viewed by stakeholders around the world and to re-engineer the Filipino image. The first step is to validate what it is that sticks in the mind of people around the world and put these into some kind of an actionable framework. Image is a powerful differentiator. The second step is for all of us to rise above these limitations and create a new Filipino image.

Third, participate in socially responsible enterprise development

According to Paul Zane Pilzer, a noted writer and economists, individuals will take the responsibility and receive the rewards for their own continuing professional education. There will be a return to the entrepreneurial spirit of the craft unions; individuals will once again be compensated for their performance and innovation, rather than for their duration. And there will be the emergence of a new benefit structure; individuals, not organizations or governments, will begin to take responsibility for their own retirement, health care, and the security of their families.

I can break up this message from Paul Pilzner in two parts.

First, be an entrepreneur.

Second, be a responsible entrepreneur.

Enterprise development is so close to the discipline of marketing. In marketing, we learn to create new ideas, new products that will satisfy specific needs of customers. As marketing students and future practitioners, you will be most prepared in tackling the challenges of enterprise development. Keep that kind of a mindset. Train yourselves to be employers, not just as employees.

This must be done with a social purpose. The Philippine Marketing Association’s theme for 2010 “Marketing as a Growth Accelerator” promotes marketing with a social purpose. Marketing with Meaning. “When your marketing is meaningful, the marketing itself adds value to people’s lives, whether or not they immediately buy what you’re selling.(Bob Gilbreath, 2010). Marketing as a growth accelerator can only have substance if it yields something that is meaningful – to people, to a community, to a country or to the world.

I congratulate the governors and officers of the Philippine Junior Marketing Association for organizing this event. You have been chosen to lead. You have opted to take that responsibility to lead.