Bundle offers: New Mantra of success

Just visit any retail shop and try to observe a change in the offerings of the FMCG players. I am talking about bundle offers. Invariably every FMCG company is giving these kinds of offers. Let’s look at some of the bundle offers.

· Emami’s schemes include Emami Pure Skin worth Rs 22 free with Boroplus

Advanced Moisturizing Lotion worth Rs 98

· Five pieces of Sardija Cough drops worth Rs 5 free with 100 ml of

Sardija Cough Syrup worth Rs 50

· ITC is offering Vivel Di Wills shampoo (200 ml) free with its 75 gm

bathing soap for Rs 89

· Fiama Di Wills and Lux are offering free lufa with their body washes

· Sunfeast is giving 4 packs of variety of its biscuits for Rs 25

· Kurkure (Frito-Lay) is offering 3 different flavors for reduced price

· Meswak is giving toothpaste and tooth brushes together

in a nice cylindrical box

· Dettol has a bundle offer of its soap and liquid

These offers operate on logic of “Buy more to save more”. In these hard times this tactical measure can provide companies with more revenues (though profit may decrease), better cash flows. At the same time these offers help the companies to increase the trial of the new and upcoming variants/flavors which are often bundled with their best sellers. These offers also give them more shelf space and eyeballs in the retail chain. Consumers may not buy them immediately but atleast will pick up the bundle, look at the price point (I also did the same) and may decide to buy one in future.

Let’s look at how these offers work from the company’s perspective.

Because of the lower price point the total value perceived by the customer goes up and customer is tempted to buy the bundle product. He would not have bought the unbundled standalone product. Also these bundle offers create one more price point for the customer. Some customers buy the product at the new price point.

This strategy sometimes proves perilous for the company In the long run as the customer may get used to lower price point and may not be willing to shell extra money once the offer is withdrawn. This sometimes happens with Soaps which can often bundled in a pack of three and are price substantially lower.

From the customer’s perspective these offers are often tempting. Great packaging adds fuel to this temptation. In case new flavors/variants are bundled with existing flavors/variants bundling provides him the incentive to try. It also provides him with the incentive to buy more and pay less which he always strives for.

I am sure that someone amongst us will surely be tempted by one such offer…Soon…

Vikas

Next Post --> “Positioning of great Indians companies”

Two Great Marketing Propositions

In marketing every day one comes across new fundas and jargon. I believe that some of this gyaan is able to strike a chord with your heart. Today I will be talking of two such things which struck a chord with my marketing perspectives. One of the revered marketing gurus delivered a lecture on these on Ted.com, which is a legendary platform where masters of different genres share their own perspectives.
We also know about product diffusion curve. We have innovators, early adopters, early majority, late majority, laggards. As a marketer one tries to get the attention of all these categories. It was argued that we infact don’t need to spend our money and time to attract members of every category. We can achieve our purpose if we are able to target innovators, early adopters. Now this may sound trivial, in the sense that everyone knows about it. But have you ever wondered how many marketing managers actually implement this? My hypothesis is, “very few”. There are difficulties involved in identifying true adopters and innovators but as they say nothing comes for free. One has to spend time and money to find these people and market your product to them. There are few things like innovative product high on differentiation which is taken for granted here. If we can identify these people and market our product only to them, they will make sure that the product is propagated to other categories because of their innate characteristics which compel them to preach about the stuff they own and like.
Now imagine a situation where laggards adopt the product before early adopters and innovators. This is invariably lead early adopters and innovators to shun the products as they are the leaders when it comes to embracing new products and ideas. They can’t see others taking their coveted position.
These two propositions were somehow able to convince me to the core. Your thoughts are invited.

Why MBA

In my previous posts I have always criticized Masters of Business Administration course and its usefulness. This post will be a welcome break.

During any MBA interview "Why MBA" is always asked. Lesser mortals like us have limited foresight of the future and we end my giving cliché answers. Few top answers are

1. I want to be an entrepreneur

2. I am a Manager in the Making

3. I want to expertise in Finance, so on and so forth.

I will present my perspective on this Legendary Question. I would like to start by squashing myths about Entrepreneurship and MBA. MBA can never inculcate entrepreneurial traits in anybody. Though, it can easily take them away. It is because of the inherit structure of the whole MBA course. You will learn Marketing, Finance, HR, Ops, Systems but not entrepreneurship. Best route to be an entrepreneurship is to become one. Nothing else matters.

MBA for me is about following things.

1. Change of Perspectives: As an undergraduate or working in the technical arena the way we look at things is different. For example 3 years back when I used to see an aircraft I used to think about the great engineering effort that must have gone into building it. Formula 1 was the mother of my imagination. But now Formula 1 is more of a brand to me rather than anything else. WWF now is a legendary because of the way they market themselves rather than anything else. You are able to appreciate a TVC commercial, in a new manner.

2. Environment: I have always believed that the culture and environment around you changes you as much as you change it. When you are among bunch of smart people, who talk about MBA fundas all day night, they way you perceive things also change. The Environment helps in transition of Technology oriented mind to business oriented mind, which is an important goal of MBA. One is better able to appreciate important terms like Positioning, Market risk, Prime lending rate…

3. Meeting Business leaders: Meeting and listening to top business leaders can influence your thought process more than anything else. As a part of MBA program one gets ample opportunities to meet these great thinkers. It is also about the self realization that happens after meeting these people. You tend to get overwhelmed by the vision they have. In the process seeds of great traits of these leaders are also sown in your heart, ready to bear fruits in the coming years.

4. Professors: These angels can change the course of your life, literally. They don't influence your thought process but in fact make it. Everyone must have had overwhelming moments listening to these great academicians. They introduce you to the world of Business. They hold your hand and walk you through complex jargons of MBA.

Ideas/criticisms are welcome, as always.

Experience Management and Leadership @ “The Apprentice”

I would like to start with a brief introduction to “The apprentice” for all of you who do not know about it. It is reality based TV show in which 15 candidates compete for one job for 15 weeks. All the candidates have impressive credentials, with some leading their companies and some with best education in the world from the likes of Harvard, Boston, and Cambridge et al. Some are street smart high school dropouts as well. The Job is to run one of the companies of Mr. Donald Trump who is a biggest real estate developer of New York City and owns more than 100 companies. Mr. Donald trump is a great leader and is highly respected for everyone in USA. He enjoys a true celebrity status.
All of what has been said by me would not be making any sense if I miss this word, which is the spirit of the whole show, Leadership. There is a great emphasis of leadership qualities and the respect a leader should command from the team.
As management students we have read a lot about Leadership. We have tried our best to define it, understand the spirit of it and lots more. But personally I was not able to appreciate it, until now. I had a vague idea of what leadership is. Also we read about “Type A” personalities, different types of leaders which some with dictator like qualities and some who believe in engaging their team and lot more terms which have started to sound more like a cliché by now.
Now here is one TV show which has got everything into it, which can enable anybody to understand and experience all the jargon they come across or have read text books of management. Prima facie it may look like any other TV show where people come together, compete and somebody wins. Its Business orientation differentiates it from all other shows. The tasks of the teams are complete related to business and nothing else. For all of the tasks along with business sense one should have knowledge of demand supply principle, pricing, consumer behavior, marketing, advertisement, sales, value proposition to the customer and lot more. The judges for all these tasks are top executives from HUL, Pepsi, P&G, Levis jeans, depending on the nature of the task.
I will give you the glimpse of few tasks that teams undertook:
Design and new bottle of new flavor of Pepsi, Design a new advertisement campaign for Levis, Market and sell new burger from burger king, Develop a piece of real estate, Set up a restaurant and get the best user review
All these tasks need great leadership skills from the team leader, which is chosen for every task by the team. Now lots of time leader has to operate in the background and sometimes he/she has come in the front. Sometimes if someone is not doing a good job you have to decide whether to go for a change as time is crucial in every task. There is lots of back stabbing, maligning, strategy, creativity involved in every task. One should know how to manage “Type A” personalities, which perhaps is as tough as anything could be.
I have had many overwhelming moments while watching this reality show. I am sure that what I have learnt from this show is much more than what I learnt from the management text books for the last one year. Watching this TV show has again made me wonder, if we really need a management degree to be successful in business of it’s the practical experience which matters more.

Business @ “Smoking points”, “Drinking places” & “Golf courses”

One day one of our distinguished Professors said that Business (B2B) is all about managing authenticity and building trust. I liked that statement but was never able to appreciate it. I used to think that business is about making great presentations, excellent communication skills, strategies, jargons, business suits et al. It’s about big conclaves, meets where people meet, know each other and do business with each other.

The moment of truth came few backs weeks when even after working (internship) for a big MNC I realized that ground realities are totally different. Real business is about everything but whatever I have mentioned earlier. It’s all about building trust and managing authenticity.

Now the logic is very simple and goes like this. If I have to buy something from you, which can be anything product or a service, I will have to put my money on you. I will have to rely on you to deliver. In short I will have a strong dependency on you. I you fail I am also bound to fail. So you have to win my trust and confidence in order to convince me to put on money on you.

One thing is for sure that one can’t win the trust only by making great presentations and speaking flawlessly in a posh boardroom. You have make connection with that person. You will have to come across as someone who is real and serious about the whole affair. You have to tell him that even your stakes are quite high in this whole affair.

At middle management level I have observed few platforms where people really connect like anything, though I don’t endorse any of these platforms. First one is “smoking points” outside the offices. This is a place where a sales person and his prospective client will fag together and discuss the things openly in non threating environment. If sales person is able to make connection he will win the deal and probability of making connection increases many folds at places like this. Until few weeks back I never believed in this but now I am convinced about it.

Second is “Drinking places”. These are the places where real business happens. Under a bit of influence of alcohol one is able to trust each other better. Also the mask people wear becomes somewhat transparent which facilitates making connection with the other person. This place is a real ice breaker.

I think these are the two places outside board room where people test each other and decide if they want to do business with each other. Now these are the points where business involving small to medium amount of money happens. There is one more place where big deals happen, the “Golf course”. According to one survey 20% business happens on golf courses. I have no personal experience in this as yet but I will share my perspective. On a golf course big industry honchos come together and discuss things in a relaxing environment. They try to understand each other. They test each other’s game and see the kind of energy and passion other person has. Then they decide if they befit for each other or not.

I would like to conclude by saying that few other things like your culture; integrity; values etc do help in managing authenticity and building trust but they rather are the things which one ought to have if he/she wants to be a successful businessman.

Where is the Disconnect between Sales and Marketing in B2B Business?

Marketing and sales look like siblings working in tandem. Marketing creates opportunities and Sales in enchases those opportunities. Together they make a rosy picture.

Having worked for few weeks in a B2B sales profile I can say that when it comes to B2B business, Sales and Marketing behaves like distant cousins. They no longer work in tandem and there is a huge disconnect between them.

I will try to explore where and why this disconnect? Why it should not be there?

B2B business is driven by motivated sales team rather than Marketing evangelists. Marketing people do play a role but it is at the very high level. They have very less clue of what is exactly happening on the ground level. On the other hand sales people think that they are the ones who are putting up all the hard work on the ground. They are the ones who are actually connecting with channel partners, promoting the brand and bringing in the numbers. They pay special focus on developing a channel through channel partners as most of the business is done through them only in most of the cases. Mostly sales force relies on their contacts to build and expand this channel. They will use pricing, products differentiation and every trick in the book to build channel. But they forget one important aspect in this whole picture, “Branding”. But this is not their prerogative; marketing people should be doing it!!!

In B2B scenario one can say that Marketing team has fewer stakes as they don’t have to reach to individual customers. Their target audience is greatly reduced. Marketing people think that it’s responsibility of Sales team to develop the channel and they spend virtually no effort in marketing the company to the channel partners. The whole focus is on customers who do not interact with the company directly, but through the channel partners. What an irony!!!
Hence the disconnect lies in sales and marketing teams approach towards channel partners. Both of these teams have individual plan in isolation and seldom seem to work in tandem to tap these channel partners.

One solution to this issue is to have a marketing team dedicated to market the company to the channel partners. Their effort should be in sync with the effort of marketing team focusing on brand building and marketing to customers. This marketing team should work on branding collaterals, special programs, promotional schemes focused on channel partners. At the same time Sales people should work closely with this team to make them aware about their requirements.

Common sense should prevail…Soon…

Give up the control and flourish

Visiting big retail chain and watching thousands of products displayed elegantly has always been an exhilarating experience for me. One hundred types of Soups, great variety of organic food, stimulating collection of sausages has always given the kick to gourmet like me. But never in my life had I tried to explore the reason, why retail chains emphasize so much on display of products. Marketing aficionados told me that the reason is obvious, not even worth discussing. More product display means better exposure, which further coerce customers to buy, which otherwise they would not have bought. For the good marketing student which I am, I took the logic and convinced myself that the use of million square feet of floor space to display products is to stimulate latent customer needs and in process fuel sale.

But one day something happened which impelled me to question this fundamental, which for me was nothing less than a gospel. I was buying toffee from small mom and pop store. The shopkeeper took the money, signaled me to take anything I want for the sum I paid and turned his face away. Now I had the choice to pick any thing I want to. I don’t have to wait for shopkeeper to handover the things to me. I felt liberated, literally. I felt like a free bird. Like a true iconoclast I wasted no time to frame perspective of my own about the whole situation.

Displaying items alone can’t make customer buy anything. But the display of products in retails is meant to give control in the hands of customers. It makes them feel liberated. He thinks that he has been emancipated. This emancipation is manifested in his purchase behavior. He ends up buying bizarre products, which otherwise he would not have bought.

Given an option to choose between two restaurants, one would tend to choose the restaurant with more choices, even though he may always order the same things. This happens because more options mean more control. More control aggravates his latent needs.

This perspective can be extended to plenty of other areas also.

Business model of Dell for mass customization, millions of tariff plans by telecom service providers, elaborated menu all put the control in the hand of customer and lets him decide his fate.

So if you want to boost those falling sales curve go ahead and give the control in the hands of the customer. He will for sure pay you back, generously.