Inbound Marketing vs Outbound Marketing

Inbound (Yellow pages) – Customers come in search of the product. Pull strategy. Social Media,
Search Engines are facilitating this.

Outbound – TV, Radio, Newspaper – Paid advertising. Push strategy.

Why Sales & Marketing

Value addition customers – Infosys

Teaching

Sales stint after school

Marketers are

 Curious (Questioning and knowing more about customer’s needs)

 Good observer (Djokovic, trends, New store addition in GMR clue), people’s behaviour

 not afraid to try something new

Sales people are goal oriented, empathize, ease of interaction, listening skills, accountability,
optimistic, persistent

 Driven: Has a sense of urgency and a need to accomplish the task at hand

 Confident: Believes in own abilities and can handle rejection

 Outgoing: Projects a great first impression and is energized by social interactions

 Assertive: Effectively controls interactions and doesn’t cave in easily

 Funny: Engages customer emotions, is likeable and memorable

 Structured: Leads the customer through the process, is organized and follows through

 Relational: Cares about the person, not just the sale; effectively identifies customer
needs

 Focused: Doesn’t get side-tracked; knows the final destination

What is your strength that fits into sales and marketing?

 Adding value, Motivating, adapt, not afraid to try something new, Good observer

How to motivate salespeople?

 Understand needs of salespeople. Invest money in their development.

 Develop a good environment for them.

 Classify – Best, Core, Laggards – Even with groups there is heterogeneity

 Identify where the performance curve is. How much percentage of star performers.
 Have a bench system which motivates laggards to work.

 Involve families. Fun events.

 Rewards should be having unique offerings. It should be not be lower grade for lower
categories. Reward rejections also. People who have made the effort but not achieved
result.

 Don’t put a cap on max rewards. Don’t look at it as a cost centre.

 High sales period. Low sales period.

 Cash. Support. Recognition.

 Multi-tier approach. Quarterly, Monthly bonuses as compared to early.

 Don’t stretch. Set mutually agreed targets.

 Complaints – High targets, less commission, territory sub-par, be fair,

 Reward/ punish a person for only the things he can control. Customer satisfaction
surveys, the number of prospective accounts visited (even if they didn’t buy), and the
retention of existing accounts.

 Sales frequency differs for different industries. More time spent with a single client in IT
or Boeing. Firm’s sales cycle is important

 Salesmen can push December targets to January to manipulate sales data.

 Individualized plans leads to an unfair system as employees share information.


How would you make a loyal customer change? With an example

 Understand drivers of purchase

 Differentiation on changing consumer preferences

 Understand what my customers like about me. What makes them loyal to me?

 Product Innovation

 Habit change (Snapchat vs Facebook)

 Loyal customers evangelize. Follow them on social media or wherever they go. Engage the target
through social media

 You are one in a million to them. But you are unique to us. Give special treatment.

 Research. Engage. Woo. Capture. Retain.

 Consumption is a social phenomena

Competition

Anything which can be substituted with my product/service.

Competition for Facebook – anything where people spend time on. If user opens a snapchat
message before a Facebook message, then it means snapchat is winning.

Forecasting
Why forecast? What information does it give?
How will you use it?
How accurate does it need to be?
What is the cost of forecast technique vs error accommodated?
Time period of the forecast?
How many variables are controllable/uncontrollable?
Tracking system for forecast. MAPE. Metrics.
Lifecycle of the product?
Types – Qualitative (Delphi, Market research) , Time series (Moving average), Causal (Regression)

Steps Involved in forecasting demand

Defining a Market
Take into account all potential end users. Be inclusive.
Take Tea market – Include coffee users, pepsi, water etc.

Divide demand into component parts

Small Homogeneous groups

Forecast drivers
Which particular segment and its share

Sensitivity analysis
 What could make the analysis go wrong?

Market Demand vs Market potential

Demand - Total volume that would be bought given a customer group, geography, time period,
environment, marketing efforts.
Potential – The maximum demand that could be achieved through marketing efforts.

Promotions
Give promotions to the fellow who has limited stocking ability. Consumer’s warehouse is the fridge.
Distributor is in the business of stocking. So avoid promotions for distributor.

Politics in supply chain

Chance of suppliers arm twisting. Develop a sourcing arm if the value added by the supplier is not
high. Marico copra case.

Apple Innovation
Modular vs System Innovation
Design Thinking

Segmentation
Classifying customers; heterogeneous markets; life stage on industry; cultural trends. Separation of
markets into smaller portions applicable when customers’ needs are heterogeneous, with the aim of
serving each segment more effectively.

Interesting Segmentation variables ?

Competition
Any product which can be a substitute to you

Positioning
Classifying industries; distinct value in customer’s mind.

Online advantages
Almost spontaneous in Digital. Because behavioural information is captured then and there.
First Degree Price discrimination is possible.

MARKET ENTRY
Costs & Disadvantages of entering the market first
Educating the customer about the product.
Competitors can flood in and increase the supply thereby bringing the prices down.
Competitors can charge a lesser price to eat your market share.

First Mover Advantage

Create the rules. Flexibility.
Convince the customer regarding price as they are not aware.
Being the first allows a company to acquire superior brand recognition and customer loyalty
If first mover understands the customer preferences and positions it as a superior brand, then the
second mover has to go with inferior positioning.

Bertrand- Price of competitor fixed. First mover disadvantage

Cournot – Given Competitor produces fixed output, how much will I produce- Homogenous good
Stackelberg – One firm sets output before other firms, First mover

VALUE CHAIN VS SUPPLY CHAIN

Value chain – R&D -> Design > Production> Marketing>Distribution> Service
Supply Chain –Earth >Supplier > Manufacturer> Packaging>Distribution>Retail>Consumer>Earth

POWER OF FIXED COSTS

B.E = FC/ (Sales price per unit- VC per unit)

If fixed cost is not reduced, then there is problem. If new players enter market, then they might eat
market share and reduce our revenues. GM failed to decrease fixed costs as Toyota entered US due
to high FC.

FC cannot be brought down if there is barrier to shut down factories or lay off workers due to strong
union.
FC can be reduced by outsourcing which converts FC into VC

Backward & Forward Integration

An example of backward integration would be if a bakery business bought a wheat processor and a
wheat farm. For example, backward integration would be undesirable if a supplier could achieve
greater economies of scale and provide inputs at a lower cost as an independent business, than if
the manufacturer were also the supplier.
An example of forward integration would be if the bakery sold its goods itself at local farmers
markets or owned a chain of retail stores, through which it could sell its goods.

Economies of scope

For example, McDonalds can produce both hamburgers and French fries at a lower average cost
than what it would cost two separate firms to produce the same goods. This is because McDonald’s
hamburgers and French fries share the use of food storage, preparation facilities, and so forth during
production.

Another example is a company such as Proctor & Gamble, which produces hundreds of products
from razors to toothpaste. They can afford to hire expensive graphic designers and marketing
experts who will use their skills across the product lines. Because the costs are spread out, this
lowers the average total cost of production for each product.

Economies of scale actually takes a U turn after a certain quantity as operational inefficiencies creep
in. For eg; Inventory costs or shipping costs may go up.

Consumption
It is a social Phenomenon.
Beyond a tipping point, it becomes an epidemic. Look for revelatory incidents.
Prosumption as a post-modern marketing concept.
Bring about a change in the way products are used or consumed.

Diversification vs Innovation

Diversification is entering into an existing saturated market

Innovation is creating a new market/business
Investors worry about diversification. Managers should look for innovation and create value.

Most of the current research methods focus on consumer behaviour in the past.

Aim of Marketing
The ultimate aim of marketing is to create a monopoly and ensure the product sells by itself in the
market

When you are not paying for the product, you are the product. Why? Prediction of what customers
will do next is where the money lies

Outliers give more insights than the average

A brand is the set of expectations, memories, stories and relationships that, taken together,
account for a consumer’s decision to choose one product or service over another. If the consumer
(whether it’s a business, a buyer, a voter or a donor) doesn’t pay a premium, make a selection or
spread the word, then no brand value exists for that consumer.

Patient wait for the doctor in a clinic. But doctors wait for a patient in an emergency ward. Same
hospital. Different models.

On Innovation

It should add value to the consumer. That is the only way of comparing innovations.
When you release a product in a market, you have to ensure that you are the first one to make it
obsolete. That should be the speed of innovation. Innovations are modular and systemic. Apple is
example of System innovation.

The negation
Cost of not doing is important too. God doesn’t exist. Strategy is closing doors.