Posts Tagged ‘Marketing’
In marketing, there are different types of promotions that are provided to consumers and trade partners. Broadly, they are divided into two categories: front-loaded promotions and rear-loaded promotions.For example, when using price packs, direct mail coupons, FSI coupons or peel-off coupons, consumers obtain an immediate benefit upon purchase or a front-loaded incentive. However, when buying products with in-pack coupons or products affiliated with loyalty programs, promotion incentives are obtained on the next purchase occasion or later, i.e., a rear-loaded incentive.
The decision of whether to go for a front-loaded incentive or a rear-loaded incentive is dependent on the innate choice process of consumers in a market (variety-seeking or inertia). While in both variety-seeking and inertial markets, the sales impact and the sales on discount are higher for front-loaded promotions than for rear-loaded promotions, from a profitability perspective, rear-loaded promotions may be better than front-loaded promotions. Research has shown that in markets with high variety-seeking it is more profitable for a firm to rear-load, and in markets with high inertia it is more profitable to front-load.
- In: Business | Strategy
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Consumers come from different cultures, demographics, psychographics, and are at different evolutionary stages. Different markets have different advantages and disadvantages. The majority of the largest companies in the world produce and distribute products across national borders. Most companies have different products in different continents at an instant of time. Also, based on the different consumer markets and the consumer evolutionary stage the product offerings change.
Companies have directional global, continental, national, and regional strategies. So, every global strategy should have the flexibility to be interpreted at a regional level and the regional strategy should align with the global strategy. Sometimes a regional strategy may evolve slowly into a global strategy. For example, the Shakti Amma programme for HUL is now taken globally to other markets such as Africa and China. Integrating the global, national, and regional strategies across different verticals to deliver the business value and international competitiveness is one of the most challenging aspects for any organization today.
A to B and B to A marketing
Posted on: July 31, 2011
In marketing, there are two fundamental principles called Attitude to Behaviour (A to B) and Behaviour to Attitude (B to A) marketing.
In A to B marketing, you target and change the attitude of the consumer first, so that the change in the attitude may result in a desired change in the behaviour. For example, you tell the consumer the toothpaste whitens your teeth, so that this attitude may result in the change in behaviour of buying the product. This is what most ATL activities do.
In B to A marketing, you target and change the behaviour of the consumer first, so that the change in the behaviour may result in a desired change in the attitude. For example, the whitening toothpaste gives a promotion of 1+1 free that makes you buy the product. After using the product (behavioural change), you liked it (favourable attitude) and you changed your earlier inimical attitude towards the product. This is what most BTL activities do.
A visit to any mall and you see it is filled with the in-mall activations and the in-store activations. Brand Activations are catching up fast and becoming a serious BTL activity for the marketers and it is no more only for the awareness, PR and couponing. It is fast becoming an important weapon in marketing and brand management.
Brand Activation takes a holistic approach of linking social media, WOM, mobile and creating a unique brand experience to the user. The user will remember the experience as he experiences the brand in a unique way. It also provides more scope for creativity to the advertising and the brand activation agencies to create clutter-breaking interaction with the brand. Ad Agencies like StreetBlimps, Jagran Solutions, Connect Advertising which specialize in developing brand activation concepts, BTL advertising work closely with the event management partners in the delivery.
Big Mac Index
Posted on: June 15, 2011
The Big Mac Index is published by The Economist as an informal way of measuring the purchasing power parity (PPP) between two currencies and provides a test of the extent to which market exchange rates result in goods costing the same in different countries. It “seeks to make exchange-rate theory a bit more digestible”. The index takes its name from the Big Mac, a hamburger sold at McDonald’s restaurants.
The Big Mac PPP exchange rate between two countries is obtained by dividing the price of a Big Mac in one country (in its currency) by the price of a Big Mac in another country (in its currency). This value is then compared with the actual exchange rate; if it is lower, then the first currency is under-valued (according to PPP theory) compared with the second, and conversely, if it is higher, then the first currency is over-valued.
For example, using figures in July 2008:
1.the price of a Big Mac was $3.57 in the United States (Varies by store)
2.the price of a Big Mac was £2.29 in the United Kingdom (Britain) (Varies by region)
3.the implied purchasing power parity was $1.56 to £1, that is $3.57/£2.29 = 1.56
4.this compares with an actual exchange rate of $2.00 to £1 at the time
5.[(2.00-1.56)/1.56]*100= +28%
6.the pound was thus overvalued against the dollar by 28%
Limitations:
The burger methodology has limitations in its estimates of the PPP. In many countries, eating at international fast-food chain restaurants such as McDonald’s is relatively expensive in comparison to eating at a local restaurant, and the demand for Big Macs is not as large in countries like India as in the United States. Social status of eating at fast food restaurants like McDonald’s in a local market, what proportion of sales might be to expatriates, local taxes, levels of competition, and import duties on selected items may not be representative of the country’s economy as a whole.
In addition, there is no theoretical reason why non-tradable goods and services such as property costs should be equal in different countries: this is the theoretical reason for PPPs being different from market exchange rates over time. The relative cost of high-margin products, such as essential pharmaceutical products, or cellular telephony might compare local capacity and willingness to pay, as much as relative currency values.
Nevertheless, economists widely cite the Big Mac index as a reasonable real-world measurement of purchasing power parity
Why the clock says 10:10?
Posted on: April 22, 2011
This is a question that all of us ponder on at some point of time. There is one famous answer, which is that the watch-makers want you to smile. They want people to remember that they should smile and look at their watch. I was also quite satisfied with this answer before.
But, the actual answer comes from marketing and branding.
The moment you see a watch, you always see the time and get distracted by the time. So the watch-makers had difficulty to make consumers see the brand, the watch, and appreciate the watch without getting distracted by the time. The watch-makers decided on a time 10:10 which pretty much focuses on the maker’s name. If everybody uses the same time, then the consumer will see the brand, the watch, instead of the time on the watch. It is just to avoid consumers getting distracted by the time. This is the rationale behing 10:10.
This is one of the lessons of how intensely one has to observe consumers. Thank you.
- In: Business | Education
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Marketers revolve around customers, insights, plans, and strategies. No matter who you are in business, you always attend or deliver presentations. With some experience of delivering and attending presentations, I thought of sharing some of my learnings here for the benefit of others and myself.
I happen to attend and deliver some marketing presentations and some of the common responses at the end of the presentations are: I lost my way in the middle of the presentation, I couldn’t understand what he meant, I didn’t understand what point he wants to make, what a boring presentation, I felt like – so what?, etc…
My experience says that in most presentations fifty percent of the audience don’t understand your presentation, and fifty percent of those who understand don’t find it relevant to them, and of those who find it relevant don’t know what to do with the information.
Let your audience understand your presentation
The last thing that you want from your audience is them not understanding your presentation. The best way to make them understand is SAY IT, SAY IT and again SAY IT.
Understand the Objective(s):
- What is the objective of your audience to attend this presentation?
- What is your objective to deliver this presentation? (If you’re not addressing the question 1 here, you are wasting the audience time.)
- Does your presentation help the client in achieving his objective?
- Always ask for expectations from the presentation. Inform them which expectations can be met from this presentation, and which cannot be met and how to deal with them. Tell them upfront the expectations that you would meet in the ppt, discussions, Q&A. Provide them with your mail address in the presentation.
Most presentations fail because they aren’t clear about the objective, and they aren’t clear about what the audience or the client company wants.
RULE 1: State the objective of the Client or the audience of your presentation.
This makes the Client and the audience feel happy that you understand them and they will be assured that atleast you know their problem.
RULE 2: State the objective of this presentation
This will set the context and will help the Client understand what is to come.
RULE 3: State how this presentation helps the Client achieve his objective or solve his problem.
The Client will be very happy that you know the problem and you have a solution to it.
Believe me, if you get these three rules right, you’ve solved half the problem for your audience. The Client is happy that atleast you know what you’re going to do. Because most of the time during the presentation, the Client will be wondering “so what?”.
Provide them a summary of what is to come
Once you made your objective(s) clear to the audience, provide them with an executive summary of the presentation. Why?
Imagine a typical presentation where the audience are wondering what will the presenter say, and there he goes with his slides full of information. The audience see the slide visuals, the amount of information, they listen to you, you blabber something, they forget your earlier point, and in the meanwhile you turn to the next slide. You’ve lost the audience.
Believe me, this happens in most presentations. It’s not easy to be as audience. With so much of information flow – the presenter seeks attention, the slides seek attention, the visuals seek attention, in the meanwhile the visual reminds you of something. As audience, it is very easy to be lost during a presentation. This is the most important thing a presenter should take care of.
So, for the benefit of the presenter, to make it easy for the audience to understand the context and make their understanding easy – to connect the dots, it is best to provide an executive summary.
Advantages:
- This helps if a senior person has no time for your full presentation, and is interested to know a snapshot of your work.
- This gives the audience the context and they can connect the dots easily in the presentation. This reduces your burden to make them understand.
- If it is good news, they will be excited and will make them active in your presentation and they will secretly like you for the good news.
Disadvantages:
- If it is a bad news, may be your audience will be critical of your work and conclusions.
I say that, even this will be for your advantage as if you can convince a critical audience that your bad news is the reality in the market, you’ve done it. So, if you want to tell your Client this product will not work in the market, tell him in the summary. This will make him be critical of your work, but that is the challenge to persuade him that it is the reality in the market.
Build the story
Once you’re done with the objective(s) and the executive summary, start the movie. Every presentation should tell a story.
Facts: McDonald’s reduced its prices. McDonald’s sales have tripled.
Story: McDonald’s sales have tripled because of its reduced prices.
People want stories, not facts. It is when you give them facts, people feel – so what?
The body of your presentation should have Story Save Points (SSPs). It is the completion of a line of thought or idea and each of these Story Save Points should be re-emphasized until they are understood by the audience. These are stages where you want to save the understanding of the presentation in the mind of your audience. This should be the stage where you can have a summary slide of what happened until now, and re-emphasize the understanding before going forward.
Each of these Save Points should be connected to each other and are the anchor points to build the story. It may be of your choice to actually draw these Story Save Points from the conclusions and recommendations you want to make. This forms the skeleton of your presentation.
Skeleton of a Presentation:
- 1. OBJECTIVE(S)
- a. State the objective of the Client or the audience to attend the presentation.
- b. State the objective of this presentation
- c. State how this presentation solves the problem of the Client or helps the Client achieve his objective.
- d. What action(s) the Client will take based on this presentation?
Understand the audience expectations and possible questions. Often it will be a great start to clearly mention what questions you will answer and how will you solve their problem(s).
2. EXECUTIVE SUMMARY
3. INTRODUCTION
4. STORY SAVE POINT 1 <PAUSE and give them time to digest>
5. STORY SAVE POINT 2 and its linkage to SSP 1 <PAUSE and give them time to digest>
6. STORY SAVE POINT 3 and its linkage to SSP 1 and 2 … <PAUSE and give them time to digest>
7. CONCLUSIONS and RECOMMENDATION
8. ACTION POINTS
Rules for making the presentation:
- Always ask for expectations from the presentation. Inform them which expectations can be met from this presentation, and which cannot be met and how to deal with them. Tell them upfront the expectations that you would meet in the ppt, discussions, Q&A. Provide them with your mail address in the presentation.
- Give them the reasons why they should sit in this presentation, and the benefits of this presentation. This alerts the audience, because audience feel alert when you talk about them. When you talk about yourself, most of the times they switch-off.
- People remember best in 3s, so don’t give your audience more than 3 things to remember in a slide. Having said that, I know it is difficult for most people to prepare a slide with only three points. So, try not having more than six points in a slide if there are no sub points. If you have sub points, don’t have more than four points.
- For every slide, write a small note on why this slide is required and how it meets the objective or the story save point.
- Don’t give two stories in one slide. This will confuse your audience, and it becomes more difficult for you to let them understand.
- Use the relevant pictures, videos, and quotes wherever possible. People remember visuals a lot. The presentations I remember the most are those with great visuals.
- Ask them some question, and whatever the answer (unless it is completely orthogonal) tell that it is a correct answer and add your answer to it. This is a good strategy to make them listen to you.
- Make it large and legible. Try to tell a story with pictures and videos.
- Don’t read off the slide. It easily puts-off the audience. The only solution to this is preparation, there is no alternative.
10. Maintain eye contact with one person at a time. As you talk to the person, finish a thought and then move onto a next person. Start with the easiest person or your friend in the audience. Make the eye-contact with the other end and move in a semi-circular motion shifting the eye-contact to the other end.
11. Provide your contact information in the presentation.
12. Maintain a good intentional pause between ideas and re-emphasize the idea before transitioning the audience into the next idea. This helps them better understand where you’re coming from and where you’re going.
All the ideas in this blog are my original thoughts and come from my personal experience. Any feedback to improve them is most welcome. Finally signing off, I would say – help your audience understand your presentation.
Thank you.
HBS Case Studies to read
Posted on: October 3, 2010
- In: Books | Case Study | Education | Marketing
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Some of the case studies which are a must-read for every marketer:
1. Marketing Myopia
There is a reason for this being the first in this list. This is a revolutionary
article on Marketing written by Theodore Levitt. This article made him world-famous and the father of modern marketing. This is one of my favourite articles and is easily one of the greatest contributions to Marketing.
2. Marketing Simulation: Managing segments and customers
This is a simulation program from Harvard Business School, where the student assumes the positions of CEO and CMO of a medical motor manufacturer and are tasked with executing successful B2B marketing strategies from period to period. This is one program that teaches you the whole framework of Marketing Strategy.
3. Marketing Analysis Toolkit: Market Size and Market Share Analysis
Market shares, market sizes, growth rates are the breath of every marketer. Every marketer should understand the basics of market and how these are calculated. Marketers frequently need to estimate the projected sizes of the markets and market shares. This case covers all you need to know about the market analysis and projections for both existing products and new products.
4. Giant Consumer Products: The Sales Promotion Resource Allocation Decision
This case provides students with an opportunity to become familiar with some major strategic issues that firms face when formulating and implementing a sales promotion, including: cannibalization, branding, pricing strategies.
5. Cunard Line Ltd.: Managing Integrated Marketing Communications
Cunard, the world’s oldest luxury line company, is confronted with several key issues involving its marketing and marketing communications strategy. One concerns the balance between image/positioning, and the competition planning. This case explains all the problems related to positioning, and how to solve the communications problems with an integrated communications strategy. This is a very important case for every marketer.
6. Creating a Marketing Plan: An Overview
This is well explained in the book Marketer’s Essentials, a book by HBS. But it is a delight to go through this book and the way all the concepts of marketing are integrated to develop marketing strategies. Also definite templates for Marketing Plan, and Customer Value are provided.
Also, one can refer to http://www.elearning.hbsp.org/businesstools.
Also, refer to the references of papers in Marketing Management text book given for each chapter. This is a very comprehensive collection of all papers in Marketing.
The last few years were a golden period for the FMCG industry. The economy was growing at a faster rate, imput prices were low, and inflation was low. This year the food inflation is very high around 12%, and the raw material cost has increased upto 15 to 20 percent compared to last year. The operating margins which are typically about 20 percent in the last few years have seen a drop to almost 16 percent.
High food inflation has an adverse affect on the FMCG industry. People will spend less money on discretionary items which will hit he FMCG industry. They say the fate of HUL is dependent on the monsoons. A good monsoon will not give any inflation worries and also increases the consumption power creating demand for hair oil, biscuits, soaps, shampoos, laundry, and toilet soaps.
High input costs
High input costs are another worry for existing woes. The cost of milk powder and sugar has gone up by 35 percent and 19 percent YOY and Nestle India is really struggling on its margins. The wheat used in ITC’s biscuits is up 10-15 percent thi year, the Copra used by Marico cost 10 percent more, the coconut and palm kernel oil used by Godrej Consumer has risen by 15-20 percent, and the menthol used by Emami has gone up by 20 percent. The heavy rains in Kerala might have caused the cost of Copra to increase and it doesn’t seem to be temporal. So, maintaining the margins this year is a tough task. Some of the FMCG players say that they will not increase the price of Low Unit Packs (LUPs) but may increase the prices of higher priced stock-keeping units (SKUs). The packaging cost which is very important in the FMCG sector has shot up by around 10 percent this year. They are expected to stay that way caused by the strong crude prices at $80 per barrel.
Rural Market is the way
Urban Markets are showing lower growth as compared to the rural hinterland. It is estimated that the big daddy Hindustan Unilever (HUL) gets almost 50 percent of their revenue from rural India , and Dabur gets almost 55 percent, and Marico gets 25 percent of their revenue from rural India. The Urban Markets are saturated with more and more competitors and less margins for the companies. For example, Toothpaste has a rural penetration of 40 percent as against 72 percent in the Urban areas. The underpenetrated categories such as toothpaste can be taken advantage of by companies like Colgate and HUL. Colgate started an initiative to educate people about the advantages of toothpaste and influence conversions from toothpowder and others. The volume growth in such categories will be fast.Shampoos showed a growth of 8.9 percent (Jan to May’10) compared with an urban volume growth of 2.5 percent.
The government schemes which have been launched over the past few years had helped in increasing the disposable income, in turn the purchasing power of rural India. Schemes such as Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) which aim to put around Rs. 40,000 crores in the hands of the rural poor, leaves a large population with higher disposable incomes. This leads to some basic changes in the consumption patterns of greater consumption of personal care and above basic food requirements.
India is one of the most challenging markets in the world which fooled big marketers and companies across the world. We have over 1500 Gods segmented into 350 broad categories, and we have a God for every single day of the week. There are 9.5 lakh pan shops, 638,667 number of villages, 612 districts, and 28 states in India. This is the country where you see a pan shop and Haagen Daz together, and a bullock cart and a Mercedes in the traffic jams. Indian market is very challenging and it really fascinates me as a marketer.A very large part of Indian population still lives in villages defining the Rural India.
Rural India is very important for many companies and there is tremendous increase in investments and strategies surrounding the rural markets. Rural India Market buys:
- 45% of all soft drinks
- 50% of motorcycles, TVs, cigarettes, washing soap, fans, blades, and a lot others.
Rural Market Opportunities
Few of the companies that are going bullish in the rural markets:
- HUL with its Project Shakti has already has a reach of 1.7 lakh villages, and aspires to reach 5 lakh villages by 2020.
- Indian Tobacco Company (ITC) has a lot of penetration in the rural markets and the eChoupals are a big hit in the rural market.
- Airtel is planning to reach around 2 lakh villages.
- Marico with its most famous brand Parachute has a reach of 1 lakh villages.
- Pepsi and Coke, the Cola giants, have a reach of 70,000 villages.
- Dabur, known for its Lal Dant Manjan and Hajmola, has a reach of 60,000 villages.
- Colgate with its Operation Jagruthi has a reach of over 60,000 villages.
- Mahindra & Mahindra sells most of its SUVs in the rural market.
Mahindra Shubhlabh is India’s largest exporter of fresh produce. Mahindra Shubhlabh engages with farmers in the production of export quality grapes, pomegranates, and apples aimed at delivering to domestic and international markets. It has a huge R&D facility in Pune to research on various modern seeds and saplings.
- Nokia 1100 with its torch is a very big hit in the rural market. It is a perfect example of understanding the needs of the consumer. Nokia realized the need for a torch in the mobile for the rural people as they walk in the dark streets and fields of the village. Nokia is set to release some low cost phones to tap more from the tier-3 and tier-4 markets.
There are other companies like Godrej, ParleG, Asian Paints, Yes Bank, Royal Enfield, ITC and Revlon.
Marketing Challenge
Delivering to the rural markets is a real challenge to many companies. In fact, the whole dynamics of these markets are so different that you need to look at a different product mix containing the 4A’s instead of the traditional 4P’s of marketing:
Acceptability – Build what the consumer wants
Affordability - Make an affordable product
Availability - Distribution plays a key role in the rural markets
Awareness - Don’t promote the brand, demonstrate the product.
Top Media in Rural Markets
Dainik group is the leading newspaper in the rural markets. In the realm of television, we have the following in the descending order of penetration in the rural markets.
- Doordarshan has a reach of 97% of the rural markets in India.
- Zee Cinema which carries with the image of movies being the favourites of rural people.
- B4u movies
- MTV
- Discovery Hindi
One of the key trends in the rural markets is people changing very quickly from cable to satellite TV. This is because of the hassle-free dish connection of the satellite TV. Most of the dish TV companies like Tata Sky, BIG TV, and Airtel are selling good in the rural markets too. Similarly, Revlon has come up with a lipstick for the rural markets and it is doing very good as against Lakme. This shows that there is huge potential in these markets and it is interesting to see how these trends will transform the lives of the rural people and in turn impact the Indian markets.
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