7 Ways to sell more even if your product is the same as that of your competitor

You don't always need to have a better product to compete; and sell more.... 

1. Even if your product is the same as your competitor, you can still sell more by making your  product available to the customers where your competitors’ product is not available. Identify where your competitor’s product is not available – but where the customer would appreciate it – and you score over your competition. This is true particularly of convenience products like toothpastes and soaps because people must find them without walking too much. The same applies to impulse products like soft drinks, confectionery, eatables, affordable fashion. How would customers buy unless they see it prominently. My friend Jagdeep Kapoor says; “jo dikhta hai woh bikta hai”  
2. Even if your product is the same as your competitor, you can still sell more by delivering it to customers where, when and in quantities they require. For products which are heavy, cumbersome or risky to carry, this works. These days, where walking or traveling is becoming increasingly difficult, would offering to deliver helps? My friend Jayesh Ravindranath says; “we recommended to Dubai based retailer Choithram that a kiosk be put after the checkout counter so that anyone who does not want to lug the goods along with her can have them delivered later when she wants it by paying a small fee and leaving them at the kiosk”. Even in B2B selling, customers who are space constrained will appreciate more frequent deliveries in smaller lots. The customer will save a lot of space and will pay you for it by giving you a better price.
3. Even if your product is the same as your competitor, you can still sell more by providing financing to your customer through a various schemes like loans, hire purchase, EMI etc. This is true for big ticket items like cars and expensive consumer durables. My friend Sundar says, “An LCD TV at a price of Rs 60000 is a very different “product” than the same TV at a down payment of Rs 5000 per month and an EMI of Rs 3000 every month.” The market expands dramatically many fold when you provide finance - many more customers can now afford to purchase it.  
4. Even if your product is the same as your competitor, you can still sell more by if people are more aware of your product. This is particularly true of fancy, novel products and un-needed products like fashion, novelties, curios, small and big luxuries, insurance policies etc. Your customers tend to buy them when they become aware of them though ads, showrooms, window displays or sales pitches. My friend Vikesh Wallia once said; “a large display window of a department store on the high street of Pedder Road went for a song whereas an outdoor sign board of the same size near the store went at several times the price”. The difference was that the signboard went from the advertising budget of the Product Manager through an ad agency whereas the compensation for the window display went from the display budget of the area manager through the distributor.  In the insurance business I know many customers who rue buying a particular policy because they were not aware of what was the appropriate policy for them. There are literally millions of products out there on the shelves but the customers can keep hardly 3-4 alternatives in their mind for every product category they are likely to buy. This is called as "consideration set" of each customer. If you are not in the consideration set of a person, it is highly unlikely that she will buy your product. She does not know it exists!
5. Even if your product is the same as your competitor, you can still sell more by educating and  updatingThis is true for situations where the customer does not know that she has a problem, or that there is a solution or how to access and use the solution. Suresh Goklaney of Eureka Forbes says; the customers. “when we launched vacuum cleaners, people were not aware that the millions of dust mites hidden in carpets, upholstery and curtains lead to respiratory irritation of house members. Or, when launched AquaGuard water purifier, people were not aware that 80% of the diseases in a tropical country like ours were due to water borne disease-carrying bacteria. The biggest task was to make the customer aware that she had a problem using educational approach and demonstration. After that, the product sold itself in most cases.” I know of a printing press owner who was eternally grateful to a sales executive who educated him that,  instead of buying a new offset-printing machine costing several crores, he could purchase some balancing equipment and change his layout to increase his plant capacity at only 20% of the cost of a new machine. The printer never ever questioned the quotations or prices of that sales executive after the episode.     
6. Even if your product is the same as your competitor, you can still sell more by providing expertise to the customer and help him diagnose the problem and suggest a solution. This is true of situations where the customer does not really know how to define the problem and evaluate a solution. My friend Satish Menon builds houses and says, “a customer was so fed up of water leakage during monsoon in his flat that he was seriously thinking of selling it off. I spent half a day investigating it and found that the holes drilled to drive nails in the neighbor’s external wall were  responsible for the leakage. He was happy to pay me 3 times the price I was really expecting.” 
7. Even if your product is the same as your competitor, you can still sell more by helping the customer to install, fit and commission it. This is true of products which need to be connected, installed, fitted and commissioned at site. This is normally true in B2B businesses where plant and machinery is bought by the customer in bits and pieces from different vendors but needs someone to put it all together and make it work. Even in B2C situations, architects, interior decorators, engineers etc work in this fashion. Customer always pay good price to people with good reputations and good work to show off.

Why should you care for services if you make only products?

If you sell products, you may be looking at your Profit & Loss statement - and seeing a lot of manufacturing costs sitting on it - and may be coming to the conclusion that you are in "Product Business". 

But there is a different perspective. The fact is that your customers use your products along with a lot of services and it is quite possible that they may be buying these services from elsewhere. Your sales and profits can actually improve if you recognize that your customers' satisfaction comes out of a combination of your products and someone else's services. 

Let us say  you  are  making  and selling diesel  engines. Does that mean to you that you are in a "Product  Business"?   Banish the notion and see what  your customer  is buying and you  will realize  that  he  is  almost always buying  your  product  along with some services . For example, your  diesel engine will not get sold to a fisherman for his boat unless there is someone to explain to him what type of engines are available, which of these are suitable for his needs, why a specific model is better, answer his queries, to take down his order, to deliver  the engine, to help him install it,  to be there to take his call in case repairs are needed, to go and repair it…etc . All of these are services ! Without these services your engine will not sell.
 
It is possible you do not see the service delivery activity on your P&L account because you have chosen not to undertake the service directly - instead you may be paying the trade (or someone else)  to conduct the pre-sales, sales and after-sales service activities for you.  It may not be on your P&L account but it does not mean you are not responsible for the service delivery.  As far as your customers are concerned, you are responsible for the service because you are selling to them under your name and hence must be responsible for all the services they need to purchase, install and use your product. Many companies see the service as a hassle, an activity that generates nothing but complaints. They prefer to operate manufacturing in one central location where everything can be planned and controlled nicely. Service is not so nice. It is  spread-out, demand for it is unpredictable and it is very difficult to please the customers and also to retain and motivate trained employees. But, when it is becoming increasingly difficult for marketers to differentiate their physical product, service is emerging as the next frontier.
     

A LOOK AT HUL THROUGH ITS P&L LENS

But let us go back to our original thread : why do companies remain under the notion that they are in "Product Business" ? Let us take the example of Hindustan Unilever Limited. Most people, including probably the company executives themselves, may be under the impression that HUL is in “product business”.

Their  P&L shows that ,for the 12 month period ending December 31, 2007,  its  Income   was Rs 14106 Crores and its  Operating  expenses were  Rs 11797 Crores . The accounting policy of HUL shows that sales are net of taxes and also net of the trade commission paid - generally 8% to the distributors and 12%  to the retailers. Let us  recast the P&L account of HUL from the customer perspective and it will be seen that the turnover of HUL is, at consumer prices, actually Rs 18760 Crores and this pie splits as follows.

Trade Commissions :  Rs   3250  Crores ( Service * ) : 17% of consumer spending ( Rs 18760 Crores )

Taxes :  Rs    1400 Crores ( Government )  :  7% of consumer spending

Materials  :  Rs    7414 Crores ( Bought out ) :  40% of consumer spending

Machine  Depreciation : Rs  138 Crores ( Book Charge ) :  1% of consumer spending  

Services ** :   Rs    4409 Crores ( Service ) :  24% of  consumer spending

* service to the consumer and trade is compensated by way of commissions

** employees, ad & promotion, freight

In other words, when consumers spend on HUL products, 80% of it  gets  almost equally split  between  buying of services and buying of  materials : HUL is as much a service organization as a product organization.

The misconception that HUL is in “Product Business” comes from the narrow interpretation of what costs are seen on the books of HUL. What is missed is the fact that HUL’s products will not sell unless they are widely available, widely seen  and widely known. HUL has to do all this - it has no option! But HUL does not do this under its own banner - but gets it done through their sales force (which is on their P&L ), their distributors, their retailers and their ad agency. During the year under discussion as above, they incurred Rs 3250 Crores of trade commissions and Rs 1400 Crores of advertising – a whopping Rs 4650 Crores worth of services - and they do not include other services like travel, sales force salaries, sales offices, godown rents etc. If they too are taken into account, the figure will come close to what they are spending on manufacturing activities.

Ultimately it is HUL which is the wellspring of the service activity : the sales force which contacts its distributors which appoints and services them, the salesmen and delivery boys of the distributors who contact the retailers and sell to them, the merchandisers who put up the shop displays, the billboard contractors who put up HUL ads on their sites, the ad agency which creates ads and releases them in media. They are all  services.

Whys is this important? Because many companies are acting under the wrong notion that they are in the "Product Business" whereas, in reality, they are - and should be acting as if they are - in "Service Business".  Is there a difference in these two in terms of action ? Yes - and huge !

"Product Business" people tend to get occupied with materials and machines and related stuff like sourcing, purchasing, plant layout, supply chain, cycle time, down time, preventive maintenance etc. "Service Business" people tend to get occupied with things like organization, competencies, motivation, performance tracking, training, culture etc. 

Those who think who are in product business must learn to go through the following SARP sequence to understand what business you really are in

• what are you selling ( vacuum cleaner )
• what application your product enables (cleaning )
• what result comes form the application ( good impression )
• what payoff is acheived in the end ( favorable customer perception )  

You understand what business you are in only when you can answer all the 4 SARP questions.  

 

None Returns to tell us of the Road ...

There is no shortage of theories. But what an executive needs is to be able to apply the theory to his specific context. For example, in sales management, the royal road is to be able to sniff out people with good selling ability and then hire them. Many travel on this road but not many have left behind a road map. This is what happened to me when I followed this road... 

Is it not strange of the many who,
Traveled before us, the door of darkness through
None returns to tell us of the road
Which, to discover, we must travel too.
( Omar Khayyam)


I had just joined Eureka Forbes as the Head of Marketing in 1998. Our large sales force of over 4000 people - operating out of over 150 offices in 90 cities of the country - was considered to be a great tool of our marketing. And I was keen to learn how to improve it  further. The annual “Silver Circle Club” for the elite 20% salesmen at Goa in 1999 was my first opportunity to observe them. I learnt an important lesson there about selling qualities among people.

In Eureka Forbes we always assigned a very high importance to our front line sellers. We never called them  as salesmen and instead fondly called them as “EuroChamps”. In the annual “Silver Circle Club”  the  top  EuroChamps were taken every year to an exotic tourist place in India and given a time of their life for 4 days. They were put up in five star hotels, had a  non-stop party during this entire time,  were treated like royalty in great style and all their bosses would be in attendance at that time to serve them and help them enjoy - including the CEO of the company. No expense or effort was spared.  The entry to the club was by qualification only. The EuroChamps had to achieve special sales targets for 7 continuous months to qualify to come to the club.

The managers too loved the club.  The club was a tool to get them to achieve a large part of their sales target. All they had to do was to drum up sufficient number of EuroChamps under them to enter the club. After that the aura of the club - built up over the years - worked its magic into the sales force. Being present in the club had assumed legendary proportions in the sales force because it was a sure way to hobnob with the managers and get known to them. Most promotions took place from among those who were regularly seen at the club. Not being in the club was a big let-down. 

It was my first Silver Circle Club at Cidade de Goa in 1999. I  had an idea of conducting a survey to capture the profile of these highly successful EuroChamps to see what drives them. I designed a simple questionnaire, put a serial number on each, distributed these  among all the rooms  and announced that a raffle will be held the next day based on the serial number. Most submitted their filled forms the next day. When we analyzed the data after coming back from Goa, there was a shock waiting for us. The elite of our sales force was less educated than the rest of them who were not so successful. Some of the best EuroChamps were not even graduates!  Did it mean that less educated the person, the better he will be in selling? That is what the  textbooks would have use believe.

I remember discussing this with Adil Bhesania - my colleague from HR who had just joined us from Coke – to make sense out of this seeming anti-correlation between education and selling ability. After many discussions we formed a working hypothesis – which I still believe is true – that our education system is largely based on mathematical, logical and linguistic ability, and does not impart, nor evaluate, the selling ability of a person. We both were excited because till that time we were short listing candidates for front line selling positions based on their educational qualifications. The simple survey showed that educational qualifications were not really the qualifications to look at for a front  line selling job!

We were convinced by now that we were on to something big because we had a big problem of having widely varying recruitment standards because our 175 offices in 90 cities interviewed virtually every day. Very few of these offices could afford  its own HR officer who could assist in interviewing process. In 90% of the offices the recruitment was done essentially by the executives from the sales operations function.  Both Adil and I  began looking for a “test” or a “scale” that could be administered to all aspirants uniformly in all locations. Our aim was to take more people into the sales force based on their selling ability and not based on their educational qualifications!

We searched high and low. Many consultants were will gave us "gyan" about motivation and organizational behavior. But no one really came forward to give us what we wanted which will enable us to administer a test uniformly at all locations to sniff out people with selling ability. We had given up the hope of finding a simple solution when we happened to meet one consultant. He not only offered to suggest a test but also explained very simply and convincingly what does a selling  ability consists of. His name was Harish Shivdasani and he was a psychiatrist by training!

We did not believe him at first. Then Adil came out with a brilliant idea and - to our surprise  Harish agreed to be subjected to our acid test. We told him we will buy the scale from him provided his test could sniff out best salesmen from a random group. We hired a hall and gave him and gave him a mixed group of 40 persons - 20 of them were Silver Circle Club members and 20 were not. And nobody knew who was who except us. Both of us were really amazed to discover that more than 80% of his choice - based on the test scores - was correct. His test could indeed distinguish top salespersons from those who were not. 

It is another story of how we bought the scale from him and wanted to deploy it across the country. It was an interesting experience for us to practice our version of "scientific sales management". And it furthered my belief that a simple glimpse of insight, validated in your own context, is better than being lost in the temple of a comprehensive theoretical model. 

This I know of the one true light
Kindle me to love, or wrath consume me quite;
One glimpse of it within the tavern caught,
is better than in the temple lost outright
( Omar Khayyam )

What is more important - Strategy or Implementation ?

Thousands of young MBAs enter the industry every year - only to find they have been taught the strategic part of marketing which they will not have a chance to practice at least for the first five years of their professional life. 

The bigger and more reputed the company, the longer it will take them to come to a point in their career where they can practice what they learnt in the B school.

Virtually all marketing activity is unique (not repetitive) and can be carried out in 4 steps (1) Discover the situation through data collection (2) Diagnose the problem that needs to be solved through analysis (3) Design the solution through application of strategy (4) Deliver the solution through implementation. The paradox is that in the B Schools we teach them the first 3 parts but not the last part - and that precisely is the part the industry wants young MBAs to do at the beginning of their careers! 

New MBAs are first placed in "operations" before they get to work on strategy because it is the primary activity of the business and anyone who wants to ultimately lead the business at the highest level must know "operations" well. What is "operations" - the definition varies from business to business but generally the following are considered as "operations"

• Sales : customer contact or supervision of customer contact
• Support : helping customers, sales force, distributors, dealers
• Operations : produce and reach materials to those who need it
• Assistance : to their bosses in managing their jobs. 

If this is what the industry wants; why don't we teach these subjects in our Business Schools? There are two main reasons.

1. Operations are not in media limelight - the Brand Equities and Business Lines do not consider leaders in customer service, training, administration etc as protagonists of the industry. They hero-worship strategists, visionaries, missionaries and thought leaders. Ram Kumar of ICICI once said that many professors would be proud to say that they teach strategy but not many would like to identify themselves as teaching implementation? Implementation is just not fashionable! 
   
2. The second reason is more interesting. Our current education depends almost entirely on the written word in the text book and the texts can carry only explicit knowledge - the one that can be captured on paper, transmitted through writing and reading and evaluated through an examination. That is why we do not pay much attention to the subjects with a high amount of tacit knowledge because it cannot be easily captured into a  textbook. 

This has bothered me for the last several years when I taught at some of the B Schools around Mumbai like SPJIMR, NMIMS, JBIMS and MICA. I was fortunate in finding many professors who resonated with my plans of teaching "practice of marketing" and I began developing a systematic approach of teaching practice of marketing at S P Jain Institute,  NMIMS and at MICA. Prof M S Rao invited me to teach at his "Start Your Business" program at SPJIMR.  Prof Mala Shrivastava at NMIMS encouraged me to design and deliver a course on "Marketing Implementation". Prof Atul Tandon at MICA invited me to teach a thoroughly practical course on "Sales and Distribution".  The results in all cases were beyond my expectations. Many students said "now we will know what to do when we enter the industry". 

What is the main difference between strategy and implementation? From my perspective it is simply this : a strategy is about cerebral concepts, an implementation is about influencing the behaviour of people. The strategist thinks there is an absolute & correct answer and once it is found, the job is done - the implementation can be delegated down the line! The strategist spends 90% of his time in situation analysis and strategy formulation. The implementer is very different : he believes a startegy merely makes the outcome possible but it is the people who make the strategy happen. He believes that a strategy that does not excite and motivate people is a non-starter; even if perfect from a textbook viewpoint. A pragmatic strategist begins his search for "what to do" not only through data analysis but also through peeking into the hearts and aspirations and inclinations of the people who will carry it forward. Your reputation as an executive is built up not only by knowing the theory that goes into making the plan but equally importantly in knowing the people who will deliver the plan. As the book "Good to Great" says, the people come first and the strategy comes later in great companies.

The main issue in any implementation is whether you know who are the key people in your organization whose behavior you need to influence in order to get your plan implemented?  The key question he asks himself from the implementation perspective is whether he has created communications, mechanisms and organizational support  for these implementers to

1. ACCOUNTABILITY : (1) Make them feel they "own" the plan (2) Let it be clear who is responsible for implementing the strategy in a given region, account, location etc. Deciding a strategy and then not knowing who will action it is a non-starter!
2. STANDARDS : It should be clear what observable / behavioral outcomes need to be produced. Many times people understand the goal (example : to become customer centric company) but don't know what they need to do about it.
   
3. CONFIDENCE CREATION : People's confidence is high if they have done it before. If not, it can be built up by training. Ideally the people who will supervise them should take part in this training.  
4. CONSISTENT SUPPORT : (1) CULTURE : It helps if it becomes a part of "how we do things around here" - meaning there is plenty of informal chat and folklore around the required behaviors (example : how the boss caught him for not doing this) (2) CONNECTIONS : Other things in the company are connected with this .  
5. MOTIVATION : Personal consequences (reward or otherwise) are created and communicated.
6. COMMUNICATION AND FEEDBACK : goal setting and periodic previews and reviews happen based on this.
   

None of these 6 points are what glamorous theory and concepts are made of. Yet, these simple points make up for great execution.  

WHOSE BEHAVIOR  NEEDS TO BE INFLUENCED : First you need to be clear who are the key people in your company whose behavior you need to influence to get your plan implemented. Just because you have written a plan and sent to everyone does not mean it will get implemented. Just because someone's job description involves implementing your plan does not mean it will get implemented.

DO THEY FEEL A PART OF THE TEAM MAKING THE PLAN : If people feel that the plan was thrust on them, there is very little chance that people will behave in the way you planned. This does not mean everything should be the way every implementer wants it but you must ideally consult them before finalizing the plan. Many times most people not only feel good when they are consulted but also make valuable suggestions to improve your plan. If there are many people then you should consult their bosses and not they themselves. If they are good bosses, they will consult their people anyway. 

Generally the implementers themselves should be asked to make a plan because then this question becomes redundant. But occasionally situations may arise, particularly in the areas of strategic planning etc, that the management may think that only specialists can plan. In reality, the specialists should be put into a consulting roles and the implementers should be made to consult them so that the ownership rests with them only. Where this is not possible, the planners should definitely consult the implementers in any of the two ways : either the planners make the plan first and then run it past the implementers or it can be the other way too.

DO THEY KNOW WHAT OBSERVABLE OUTCOMES THEY NEED TO PRODUCE ? Many times your plans are wrapped in a strategic and theoretical language and the people at the operating level do not know what is actually expected out of them. If you are running a retail promotion, your own statement in the plan regarding customer behavior - "the availability is very important for customers during festive buying because they need to take home the product by evening that day" - is correct but I am sure the salesperson on the beat will not know what is he expected to do about it. You must clearly state that the "opening stock on the first day of the festival in every A class store should be at least equal to 10% of your monthly sales target or 50% more than the mast month's sale from that store - whichever is higher. Please compile this for each store and give it to the local godown by September 30th." Of course every small thing need not be specified but major operating actions of major implementers must be planned and communicated effectively.

HAVE THEY DONE THIS BEFORE? HOW CONFIDENT ARE THEY OF DOING WHAT YOU ARE ASKING? What is obvious and easy for you may not be so obvious and easy for all those involved in the implementation of your plan. Many plans fail because the standard actions, systems, materials, formats were not shown to the people who had to use them.


DO THEY KNOW WHAT SUPPORT WILL THEY GET? FROM WHERE? HOW? Do they know what resources they will get ? To continue the example of the retail promotion, do they know where they will get the tags and display materials, when will special products come and in what quantities, whether the store will remain open throughout the night to enable them to put up the display overnight? Most planners are happy to see the materials in their offices but it is a mistake. The plan will get executed only when all these materials come together in the field for every implementer and they know how to use them and are given an opportunity to do so.

DO THEY KNOW WHAT ARE THE PERSONAL CONSEQUENCES AWAITING THEM ?  Just because there is a circular or an e mail from you does not mean it will happen. Almost the whole organization is competing for implementation as far as the front line employee is concerned. His boss , his boss's boss, his HR Head, his Admn Head, his Regional Head, his Product Managers and his customers .... are all in line for his attention. He does those things where he clearly sees a positive payoff (benefit) or a negative payoff (scolding). You need to make sure that the implementer knows what these are - ideally this should be done through his boss. The payoff to the employees need not always be money; it can be recognition also.

WILL THE IMMEDIATE BOSS LEAD, GUIDE OR HELP? OR AT LEAST WILL NOT HARM ? The support from the immediate boss is very important. Ideally he should go all out and support. At the very least, he should not distract the employee from the behavior demanded by your plan.

Advertising a product or service for the first time ? Beware !!

Many who advertise to push their products hard into the market for the first time get hurt so badly that they do not return to market again. Some even close their business! Many people think that once they begin advertising ...

customers will become aware and begin buying and the sales level will increase. Well, that is how it is supposed to happen. It is literally worth millions to you to learn why it does not happen this way many times - and what you should do to avoid losing money due to advertising.

A strong burst of advertising is like an air force attack. The planes are visible, fast and power-packed. But it all gets over fast and before you know the planes have unloaded their bombs and headed home. In the same way, a strong advertising blitz through mainline media can guzzle millions of rupees a week and, before you know, you will have finished your budget!

If you are the first timer in the world of advertising, chances are that you may not have got your act together - because you have not advertised before! Even if the campaign works out without a hitch, you will face problems you had not anticipated. For instance, chances are that you will discover that your supply chain is not adequately tuned to cater to your needs.

In 1992, I was Vice President of Marketing and Sales at Balsara, we watched the entry of IPCL into mosquito repellent mats market with a brand called "6-to-6". We were selling similar mats under the brand name "Odomos Mats" and our Chairman Aspi Balsara was rather concerned what would happen to our brands because they had a good story (a mat that lasts 12 hours from 6pm evening to 6am in the morning) and were highly visible on the TV with a good looking ad. I told him I was not concerned and it will be only a few months before the brand got wounded. Sure enough, what happened was worse than I had predicted - they closed down the whole consumer division . This resulted in their having to sell off their brand Teepol too!

How did I know ? Because their supply chain and distribution network was so weak that it could not have kept pace with the kind of national TV advertising they were doing. They had a distribution system that was created and sustained by their dish-wash liquid brand Teepol. It was a niche brand, used only by a few top households in the country - and its distribution footprint was woefully inadequate for the mass media campaign they had unleashed. By 1992 calculations, for a mass advertised brand to sustain itself and make it financially worthwhile, it should have to be  in at least 4 Lakh outlets. Teepol was available not even in 40000 outlets! It was to clear to me that the new brand "6 to 6", which was riding on the distribution network of Teepol, could reach only about 40000-50000 outlets. The sale, even if brisk, from so few outlets, could never have sustained the expense involved in national TV campaign. It is easy to spend millions in media but it takes years to increase distribution from 40000 to 4 Lakhs on a sustainable basis. That was the rub. Before they could even begin expending the network and supply chain, the campaign was over! A huge amount of cash was spent - without a commensurate sales in return. The consumer division never recovered from the red ink created by the success of advertising!

These kind of supply chain wrinkles cannot be ironed out in a hurry. A furniture retailer from Mumbai advertised 3 furniture items together. For one of the items, the response was so overwhelming that he ran out of stock and incurred an opportunity loss. Since the item was imported, it would take weeks before he could get the next order in. On the other hand, one of the other two items he advertised had no takers.

No air force can win a war by itself. Its action needs to be co-ordinated with action of troops on the ground and directed by generals who have an understanding of what is happening in the entire theatre of the war. Similarly, advertising by itself cannot generate business and profits. It has to be in tandem with action in the factory and through the sales force and a good distribution system.

Many first time advertisers are in a hurry to launch publicity campaigns because they want to be quick in establishing themselves in a market. What they do not see is that the advertising works for their big competitors because they have got their act together before they started advertising. Their distribution is in place. They know exactly what kind of an impact advertising has had on their business. They have marketing personnel who tap the right target audience, with the right message, through the right medium. These are all pre-conditions for advertising to produce results.

Since “Drinking Chocolate” is a beverage that is drunk hot abroad, Cadbury’s started off by promoting it as a hot drink in India. Later they realized the housewives here were using it more as a recipe ingredient and less as a beverage. The company had to go in for a refocus. Cadbury survived to see another day because it was a going company - but had it been a small company with limited resources, it could easily have gone under for sending out a wrong message.

Good generals use the air force only after their on-ground troops are in the right place and formation, with a good map of the territory and when they know exactly where the enemy needs to be attacked. Similarly, good businessmen should use advertising only after you are sure that the groundwork has been taken care of. You should know who your audience is, what you should tell them, in what tone and through which medium. You should also have a reasonable estimate of what type of products will get sold and in what quantities. But how will you know all this unless you advertise in the first place? This is a very real dilemma for first time advertisers.

Once, working for a comapny called Corn Products ( Now Best Foods) I had to choose a promotional gift for the customers. I sent my product manager to go to Apna Bazaar opposite Regal Cinema and actually offer a choice to housewives who came to buy our products. Within a day we had the answer. 80% of the housewives ignored the fancy stuff we had procured and preferred a plain stainless steel spoon! In our case we had done our homework and knew exactly what to play up.

Market researchers can probably tell you how customers may respond to your ad but you will never know how the industry will react or how the supply system will cope up till you actually release the ad. The wise thing to do is learn by trial and error : test market in one small market then move up the scale. And by all means resist the pressure or temptation to undertake a big national campaign : you may end up losing millions.

Clarity, Courage and Strategy

In that moment of realization I saw that all great leaders – whether Gandhi, Jesus or Krishna or anyone else – had this quality in abundance. They had their own inner light which burned bright and showed them the way in their moments of darkness, fear, confusion and dilemma.

Last Sunday I was invited to speak on “strategy” to an unlikely audience at an unusual venue on a beautiful morning.

The audience consisted of about 30 Christian adults who seemed eager to learn to become leaders in their own spheres. They had assembled under a banner called “Power to lead” started by my friends Dr Raja Smarta and Ruth DeSouza. The venue was the green and sprawling campus of St Pius seminary at Goregaon.

Everything conspired that morning to enable me to make connections of strategy to things that I had heard and read several years ago in the 80s and 90s. My mind recollected Carlos Casteneda’s book “Tales of Power” from the 90s where he describes the qualities of a “warrior”. Further back I went back to Werner Erhard’s “est” course I had once attended and its description of being either “at effect” or “at source”. And then I went back to my childhood when my grandmother told me the story of Mahabharata where Arjuna was faced with the dilemma of warring against his own relatives when Arjuna was reminded of his duty (”Dharma”) in his principle role in life as the warrior king. In that beautiful morning I made the connection and learnt that the words like “strategy”, “warrior king”, “at-effect”, “character” all mean the same thing.

In that moment of realization I saw that all great leaders – whether Gandhi, Jesus or Krishna or anyone else – had this quality in abundance. They had their own inner light which burned bright and showed them the way in their moments of darkness, fear, confusion and dilemma. Most of us mortals are stressed out due to the dilemmas we face and the compromises we make in our daily lives. Hence we admire those who have sorted themselves out what they are here for - and unhesitatingly know what purposes they will pursue - and also know what they will not. This is the stuff which leaders are made of. The connection between leadership and strategy is so strong that people will many times follow a leader even if his strategy is wrong - Hitler is an example – as long as they see clarity and courage in the leader.

If I look back, the my main message that morning was the same for individuals, groups and companies. Do not waste time in solving the dilemmas every day between so many activities making demands on your scarce resources. Instead of focusing on the lower orbit of deciding “which activities”, go to the higher orbit of deciding “which purposes”. You will save a lot of time and feel more at ease when, instead of considering the “trivial many” decisions regarding activities, you will focus and decide on what are those “vital few” purposes. Once sorted out, these vital few decisions will guide you into objectives, sub-objectives and activities that come out from the strategy. After all, what is a strategy? It is the choice of purposes (not activities) you have made to guide your activities.

3 things are really needed for you as a leader to travel on the right path. First, you need a calm mind to clearly see what purposes (strategic objectives) are important to you and your group. Second, you need to have a strong intent to act on your decisions : to have the conviction, commitment and courage. Thirdly, you need to operationalize and implement the strategy through (a) Planning : what will be done, towards what targets and outcomes, who will do it, by when, how and within what time and money constraints (b) Implementation : to contact the stakeholders and understand their expectations before finalizing the strategy, to communicate the plan and targets and milestones, to monitor the progress and take corrective action (c) to create structure for implementation regarding who will do what : secretary, treasurer, storekeeper, accountant etc.

There are many examples – small and big – to illustrate the benefit of thinking in terms of purpose rather than activities. Let me give only one. In the American space program, they realized that a ball pen cannot be used in the space because of the absence of gravity which pressures ink forward and went in search of "a ball pen that can write under no gravity situation” and it took them millions to develop a pen. The Russians used a pencil because they defined their purpose as writing on paper.

When you choose to undertake an activity – for the sake of the activity without knowing the purpose behind it – you are at best wasting your time and at worst harming yourself. Do you feel compelled to answer someone just because something has put something in your inbox even when it is not your priority? Do you eat just because it happens to be a lunch time even when you are not hungry? Do you feel compelled to react back when someone has hurt you even when doing so is against your long term interest? In each of these cases you are acting as if you are not a leader and as if you have no strategy.

Tough Luck For Your New Products

Marketing People invest too much energy into working with their technical, financial &  advertising colleagues on New Products - but not enough with their distribution and sales colleagues. If they do, several crores spent on promotions can bear better fruit; not to speak of not having to miss promotions, slowed careers and lost accounts

New products was, and is, always a serious business - and it is getting more so. Mostly, the cards are stacked against your new products. The statistics shows that 90% of all new products fail during their launch phase.  Failed new launches is much more than a loss of your future income opportunity - it is a loss for your vendors and distributors of their future income - and it is also a waste of your current cash and time. For the concerned marketing person and the ad agency it is at the least a black mark on their CV - and in severe cases a loss of job!


The increasing speed of obsolescence requires new products to be developed at a faster clip than ever before to replace the ones in the marketplace. In the early 1980s, a consumer durable dealer never complained about selling the same model for years - but today the same dealer expects you to change the model every year. Because everyone else is doing so! Even the consumers have come to expect this; although they dont need it!

A quick back-of-the-envelope calculation tells me that the Indian consumer product industry may be losing around Rs 1000 Crores annually - in promotion money alone - on failed new product launches. If all costs are counted, the losses will be of several thousand Crores.

What I want to say today is that you yourself - may be unwittingly - hurting your new products by falling prey to some common pitfalls; which can be easily avoided. If you are not careful, even potentially successful products may look like failures to you because there are two in-built disadvantages a new products start out with.


TRADE DISADVANTAGE

The first is a trade disadvantage. An external disadvantage. Under this, you may feel that the new product is not generating enough incremental volume. I quote from an issue of a leading Indian publication wherein the vice president of a well known international market research firm says “Unfortunately this is what the vast majority of new products do. On an average, 95% of a new product’s sales volume comes from stealing share from the existing brands.” The extent to which your new product is not encroaching on your existing products is indeed a measure of the success of your new product. After all you are spending on new products to increase your overall volume.

This is true, but with a catch : you must measure the encroachment over an appropriate time frame; otherwise you may reach wrong conclusions. You apply the criterion too soon and even a successful product can come out looking like a failure because, given the peculiarities of the Indian trade, it is very difficult for a new product to show you an adequate incremental volume in a short time.

The Indian trade allocates its key resources - buying budget and shelf space - to your business in its own unique way. Unlike foreign retailers who allocate their budgets and space based on floor space indices and slotting fees; the Indian trader allocates them based on an intuitive concept of "salesman-wise budget". Our Indian baniya has developed an experiential formula for the “size of the order” he would give to your salesman during his regular visit. To start with, he will allocate the same amount of resources to the entire basket of goods sold by your salesman; even if the salesman happens to carry a new product in his basket that day. Your marketing and advertising strategists may have targeted your new product at a different end-customer - but - while travelling through the common distribution channel – the new product lands up fighting for the same resources given to your other products. As a result, your new product faces  sibling rivalry for the first few months; whether you like or not. Only when it has been demonstrated to the baniya that your new product does indeed generate a steady sale at his outlet will he increase his allocation to your salesman. Thus, your new product will have no option but to encroach on the resources of your other products in the interim period.

That is why, in India, it takes time for a new product to carve out its own niche.  Unfortunately, many Marketing Managers and their bosses lose patience quickly and conclude prematurely that the new product is cannibalising too much into existing products and not generating sufficient incremental sale of its own. Before the new product is given time to earn its rightful space in the channel, the managers withdraw its support system and leave the new born to fend for itself in this cold and lonely world.

Which is why, in spite of all the advertising you do, your new product will take longer to take roots - unless you have plans to overcome this trade constraint. I am amazed that the ad agencies, who have high stakes in the new product game, and who “leave no stone unturned” from the customer marketing aspect, are frequently clueless about arrangements made by the client to overcome these trade problems associated with new products. Many agencies plan a diagnostic research as part of new product activity. But how many ask for trade diagnostics? The offtake data of Nielsen / ORG is good enough to see "what is" - but it is not good enough to tell you “what it could have been”.


SALES FORCE DISADVANTAGE
This is an internal disadvantage. I have seen many sales forces acting against the interests of their own new products because the new products make disproportionate demand on their time and attention compared to their contribution to sale. Instead of nurturing the new products they may unknowingly work against it. 

What happens is this. Due to the first month of new product hoopla and conferences, the sale of existing products suffers because the sales force spends a lot of time behind the new products and even the top management goes to the market to supervise new product launches. By the end of the month the figures start looking bad for the existing products and the HO comes down heavily on the branches to “catch up” on the deficit of existing products. The sales force is only too glad to oblige.

For most sales forces the incentives are strongly linked to the overall sales value. The  sales force, naturally, hates anything that comes in the way of their earning the incentives. Unfortunately, new products do. By their very nature of being new, they generate much lower volumes compared to the time and salesmanship that the sales force has to spend. Due to this in-built disincentive to sell the new product, when Head Office asks the sales force to “catch up” on the sales of the existing products, the sales forces happily falls back into their “default mode” of focusing on “tried and tested” high volume products. Result : new product suffers.

If you insist on selling both the new products as well as the old; sometimes you get the worst. As Vice President of Balsara, when I told our General Manager Vikesh Wallia to sell both the existing products - Promise and Babool toothpastes - as well the new Promise range of toothbrushes - he found that the sales force began selling the new range of brushes as if it was an established product : the new product was dumped in the trade with such high volumes that we were left licking our wounds for nearly an year after that. The range died a natural death just by lying for several months in the warehouses and shelves for months - waiting to be sold.

Because of these two practical disadvantages, you must make special arrangements of selling in advance to give your new products a chance to bloom. Unfortunately most marketing departments spend inordinately high amount of money and time discussing new products with their technical, financial and advertising people but not enough on how it will get distributed and sold. I have always felt that if an equal amount of planning is done in the area of sales and distribution, several Crores can be saved - not to mention of missed promotions, aborted careers and lost accounts!

Negotiable Price or Fixed Price ?

Price is real but its perception is subjective. If marketers understand how customers interpret the price; they will keep their prices more firm and less negotiable.

In no other city in India can you rely on public taxi service as you can in Mumbai. You get a taxi within minutes; on most streets. You dont ask the cabbie how much he will charge before getting into it. You do not need to haggle when you get down - you only need see the meter. You don’t feel ripped off. May be that is why the market for cab-travel is more developed in Mumbai. 

When the customers feel that the pricing in a market is fair and well-managed, customers tend to come oftener to such markets. When you want to develop a product category, it helps if the price is standardised.

Many markets remain undeveloped precisely due to this reason. Take the example of toy market. I was the CEO of a toy company called Funskool once; and I remember discussing pricing practices with my Marketing Head Raghavan Shrinivasan and my Sales Head Ashok Samant. The prices fluctuate so much between different stores for the same toy that this uncertainty drives the customers away from the market and they land up buying some other gift! The funny thing is that a toy customer generally feels she is charged unreasonably even if a dealer has given her a genuinely low price. No wonder the Indian toy market has remained underdeveloped.

Is a fixed price better than a price open for negotiation? I say, yes. In the TV market, a few years ago, almost no one quoted the best price upfront. They got “quotations” from different dealers and played one dealer against another. In those days, the dealers did not display their real rates, but only official ones, on the models. When the customer came in, they “sized up” the customer and accordingly played the game. Soon, the dealers realised that when the customer walked out to get another quote, she may never came back. So, many dealers have now changed their tactics and are giving their “best quote” upfront. Slowly, these new pricing tactics are sinking into the collective psyche of the customers and they are responding positively. The Francis Kanoi research showed that people are visiting less number of shops now compared to before - confidence in the product category is increasing.

In fact, laments from the sales people notwithstanding, I firmly believe that when the category is growing, one should generally not play the price card. When the category is growing, the product, it’s utility, and benefit to the customer must become the Centre of marketing attention. That is why in Eureka Forbes, where I headed marketing, we never ever gave any price discount. Any negotiability in price at the selling point distracts from the value of the product - and the sales conversation centres around the price - instead of the value.

For Direct marketing firms it is important to keep the prices steady because many of them sell "concept products" which have not been accepted by the masses yet. Such products can be sold only if the sales dialogue focuses on the product and its value and not on price. 

Even if you are selling through a channel / network price clarity is equally important. There are dozens of examples among the FMCG crowd where giving more discounts to the trade only increases the price undercutting. This reduces the confidence of the dealers who start wondering whether the company or the wholesaler is the right source to buy from because the wholesaler’s price is better than the company’s prices. This reduces the hold of the sales force over the market. The sale of slow moving products suffers. The display and merchandising suffers. The relationship suffers.

I have noticed that firms which are trying to become more brand-oriented (as distinct from sales-oriented), find it difficult to tell their sales departments that they should reduce the schemes and discounts. It is not only a question of money but also of customer confidence. The more the price fluctuation, less the brand confidence.

What do you think? Comments, agreements, brickbats, views are welcome.

Excuse me, your brief is showing !

What can the clients do to get the advertising that works? They must understand their own customers well & share this knowledge with their agency. They also must resist the temptation to try to do the agency's job.  

What can clients do to get better and more effective advertising from their ad agency? They must give their ad agency an advantage of their own area of expertise by giving a proper brief in the first place. Then they must insist that the agency builds on this brief by using its own area of expertise. Simple and obvious.

• Clients should be experts in the area of knowing the market and their business. They should know and share with their agency - who their customers are, what these customers desire, and what needs to be done - and said - to attract the customers.
• Clients should then leave the agency to use its own areas of expertise - knowing how to communicate to various types of customers and through what media.

In reality this simple and obvious thing is not practiced because each party loves to get into the other’s turf. The clients tell the agency how to advertise and the agency loves to tell the client how they should conduct their business. Today I want to talk mainly about the client briefing.

I remember Glaxo releasing an ad, several years ago, in the Sunday supplement of The Times Of India Mumbai. The headline was “Too tired to lift even lift a finger? It could be diabetes.” I dare say this ad did not take into account two imporant factors. First, the people who are potentially interested in diabetes, like me, are likely to be above 40 and the copy of the ad was set in such a small typeface that they would surely lose interest before reaching the final “action line” inviting people to ask for a free booklet on diabetes. Secondly, it overlooked that on a Sunday morning, a typical target customer may prefer to talk to someone on the phone than reaching for a pen to ask for a booklet. Are these minor aspects you say ? I do not think so. These two insights about the customers, if shared and applied, would have resulted in more impact and more demand for the booklet. All that was needed was an increase in the font size, and putting in a phone number. And, of course, someone to be there to take down the names and addresses of the callers on a Sunday morning.

It is a myth that only the ad agency is responsible for good advertising. The client also makes a major contribution through his own area of expertise - his superior knowledge about his own customers and how his business revolves around these customers. A client’s deep knowledge about his customers’ frame of mind, lifestyle, behavior etc enables him to get better advertising. Although many clients say they advertise to increase sales, very few can actually brief their agencies about their model of how their advertising is supposed to work on the mind of the customer and how it is likely to lead to more sales.

For example, for an FMCG product like a Cadbury’s chocolate, which I handled once upon a time as Product Manager, it is possible for a sale to be “completed” through an ad - the customer can choose the product he wants to buy based on an advertising exposure. For such a low-ticket product, the customer behavior is impulsive and all that remains to convert the awareness into sale is visiting a retailer. On the other hand, for a high-ticket durable like an Onida TV, where I was heading marketing, sales and service functions, the product sale could not be “completed” in a similar fashion. Francis Kanoi Research showed that a person visits retailers at least 3.2 times before final purchase happens. In such a case the role of advertising is not to sell the product itself but to sell the idea of visiting the showroom and it is the dealer who would consummate the sale after demonstration and question answer session.

It is due to these fundamentally different behaviors of the customers in different markets that the role of advertising is different for different companies and industries. Ever wondered why FMCG firms are into product branding whereas durable firms are into corporate branding? The answer is that FMCG firms aim to sell the product whereas the durable firms aim to pull the customer to their showroom. The showrooms are always under corporate name.

The root of successful advertising is really into the customer psychology in each market. A long time ago I remember going through the market survey findings of Anacin; to discover a remarkable feature. For such products where people seek “relief” from an unpleasant situation , the customers’ expectations are expressed in very brief and simplistic language. The customers cannot generally talk more than 2-3 sentences about “what they expect from an ideal product”; and that too grudgingly. On the other hand, for “shopping” products - say Alan Solly shirt - they would happily and spontaneously talk for several minutes.

Such observations from the client give a sound navigation for the agency to follow. The advertising for Anacin has to be quick, should have less copy, but will need more frequency to reach such a “reluctant” audience. On the other hand, the shirt advertising needs to be an indulgent showcase. People need to savor the good looks, interesting texture; at a leisurely pace. This insight automatically suggests that shirt advertising should have press ads, color, good pictures and interesting copy. Instead of incorporating such fundamental insights in their briefs, the clients’ normally second-guess the agency and tell them how to do their job : creation of advertising.

In my 34 years of industry life, I have seen many briefing situations where the client assembles product samples, a list created by R&D of various product features, articles that appeared in new papers and industry magazines to support his point of view, a tome about the magic ingredient XYZ. And, without fail, loads of ideas on the which model, storyboard plots, clever lines etc that the client has conjured himself and would love to see in his advertising.

A long time ago I was a witness to a two hour briefing session in Delhi for a company making a milk additive powder for children's nutrition. Except for the first few minutes spent in looking at the products and related facts; the entire time was spent by the client animatedly briefing about various headlines, shots, angles, models etc. Finally, the agency asked " who the advertising was aimed at" and the client was shocked. His product manager had clearly included one line: “Target audience : all women having school going children”. Wasn’t that sufficient?

The agency persisted that such boiler-plate description was insufficient and they wanted in-depth appreciation of what kind of a frame of mind the customer was in. Finally, the client seemed to understand and said "we will send it later". Next day an office peon came to the agency carrying a large suitcase of startegy files, tour reports, market research reports, ORG reports, guard-books, clippings, annual target sheet and also a file on consumer complaints. The covering note said “Kindly do the needful". This happened twenty years ago and over the years I have noticed that the brand kept declining and is not even seen these days. However, during this slow death, three agencies were judged by the client as incapable and terminated.

When the chief strategist himself does not know who his customer is, I wonder how he can ever recognize a good ad from a bad one? In spite of the 1001 rules about what makes good advertising, there is only one that has withstood the test of time. Just as beauty is in the eyes of the beholder, the power of the ad is in the eyes of its target customer!

So, what do you think? Comments, applause, brickbats, viewpoints are welcome.

Strategy makes it possible. People Make it work.

The strategists set the direction using logical and cerebral methods but  what makes it work is the energy, hearts and aspirations of the people in the organization. A mere textbook strategy does not work well. 

It is so easy to forget that a strategy works not only because it is logical but also because it captures the hearts of the people who make it work. The wellspring of our actions is frequently in our hearts and not in our heads. You may have experienced - sometime in your life - the feelings felt by those 17 athletes who broke the record of running four minutes a mile in 1954. Roger Bannister was the first in the world to break the four minute barrier (for a mile) - a feat that was claimed to be "impossible" by experts. And then, within a few days, 17 people all over the world broke the same record! Yes !! What prevented those 17 people to do the same just two weeks earlier? It was the mindset!

All of us act based on our mindsets. There are some plans which "leap out" at us as being possible. There are some others which we think are not possible. Then it becomes a self fulfilling prophesy. Somebody rightly said that “if you can see it, you can believe it. If you can believe it, you can become it”. For a strategy to become successful, it should be backed not only by a sound marketing head but an energetic and committed heart as well.

In 1991 the mosquito repellent mat market was an annual 150,000 cases. At Balsara, where I headed marketing and sales then, we had just introduced Odomos mats and had kept a very safe and conservative target of 4000 cases for the whole nation for the whole year and it worked out to be only 1000 cases every quarter. I remember finding myself in the first quarter review meeting and wondering, along with our Sales Head Daulat and Product Manager Geeta Sethi, why we could not achieve even such a paltry target in spite of our national distribution and Odomos being an establsihed brand.

As usual, the culprit appeared to be the strategy. It is a time honored tradition in the industry to blame the strategy when the targets are not met. I heard the usual ones - the product is not up-to the mark, sales returns, poor word of mouth, price too high, less advertising, aggressive competition etc. But such logical discussions frequently go nowhere. We were stuck in the meeting.

That is when I tried a different approach. I said to the group that - if any of the four regional managers came forward and voluntarily took an “astronomical” target of 10000 cases for just one region - I would go all out and "do anything" to support him. The least expected regional manager - Manian from south - came forward hesitatingly and said he would try and do 8000 cases in his region in the remaining three quarters. All that he asked was 2% scheme for a few months as an "extra". It turned out to be far less than I had feared he would ask for. I sanctioned it on the spot.

Believe it or not, by year end he had done 6000 cases - when all other three regions - togther - struggled to do 2000 cases. The effect of this unusual and unexpected achievement was electric in the annual conference. Manian became our Roger Bannister and lit the way for the rest to follow. Within an year we had crossed 25000 cases in 1992. There was a new optimism about this product in the sales force. Geeta Sethi was ecstatic and wrote in her annual plan how the "test market” in South India was successful and provided us with a "new successful strategy" for growth.

But, from my perspective, facts were different. 2% scheme was not a strategy at all because we could have done it at any time for any region. Did 2% produce the results? No. It was Manian's devotion and commitment to the strategy!! I am clear we could not have produced results and discovered how good our strategy really was - had it not been for him! We created the torch but he lit it and went around showing the light to all of us.

All that I can say is that, for any given strategy, if I had the option of fielding my strategy in Market 1 where the analysis suggests there is maximum potential - and in Market 2 where the team is very keen on implementing the strategy - I would not let the analysis eclipse the heart and I will choose Market 2 first. Because then the team in Market 2 would “Bannister” my strategy and hopefully other teams would take their cue from this winning team and make us succeed nationally.