Tuesday, 22 June, 2010

It's not Advertising ... It's the Boring Distribution..

Why is it that all Marketing Strategy articles in business papers or by self proclaimed analysts talk about only how advertising has helped the blue-chip companies..the advise they give, the examples they cite do not have much relevance to actual sales..Why do we tend to forget that marketing is not a synonym for advertising rather advertising is a part of marketing as a whole..

So few other important aspects , include Packaging, Distribution etc.

Advertising is a tool to create brand awareness in 99% cases it does just that(we have zillion reports stating this obvious fact) whereas a Purchase decision by an individual is a result of a good dose of other factors.

Distribution is one such factor which is mostly overlooked( not given its due importance) and if done smartly can really work out for your Brand's success..

Let's talk practically..

ITC came out with Bingo an new brand of chips in this over crowded/competitive market..and evidently they rolled out a massive Ad- Campaign ,With some really down right stupid ads,their Ads solved only for one purpose, that of buliding Brand awareness and and they did manage to achive that.The ads were so abstract and bland that they could hardly entice the consumer to buy.

Then what did the trick for Bingo?? well the answer lies in the massive Distribution which is infact ITC's shining armour .

You had Bingo everywhere.. n infinite varities..at places and shops which may have never even kept any chips brand...n this Distribution forte which Is ITC's strong point helped them in the end..

We can take a number of examples where the success or faliure of the brand has been due to the Distribution, Irrespective of the Ads or lack of them.

For e.g. Chevrolet - It has slowly build for itself a vast distribution network and its sales can be directly related to This very fact, not that they give 3 years of free servicing n etc..

Let me point another unique example, Have you heard of a beer called Kalyani Black Label, Those who have would agree that it is one of the finest beers ever, It has won various awards in which it had some serious local as well as global brands as competitors.

But sadly,Particularly in North India this brand now owned by UB group is hardly avaiable.. it does a brisk business in North-East ..Calcutta n Guwhati etc.

The reasons is simple UB wants to promote it's Kingfisher Brand more..

Others also do it, very famously Coca Cola did it with Thumps up, It purposely censored the distribution for Thums-up , but after years of cowardness .. Thumps-up was made available again.. and now it out sells both Coke n Pepsi in the Indian market, but even now its hard to find a Thumps-Up Can in Tier-2 cities (don't know why..or maybe the answer is below)

Another example is how these days you hardly find retailers keeping the Glass bottles of Coke ,Pepsi, Thumps- Up etc (specially in Tier 1 cities) wha you get is the Pet Bottle, this is wonderful strategy which helps them sell the larger size of their product and increase their Top-Line,just another way of what you distribute..

Ok so now from above examples you may see some merit in the notion that Distibution plays an important part in the eventual sales..

Now what I really wish to understand and learn is,

How do those companies which can't advertise ensure that they have a good distribution network?

Well there are host of companies who can't advertise, the whole unorganized sector, which is 95% of the retail sector consist of such companies and brands.

Example-- have you ever seen an Ad or even heard of the following :

JK files

Pye Tools

Jhalani Tools

Ramchandra Sahai

SS Fitting

Unique Fittings

All of the above are the market leaders in the various industries which they are in.. they are not white goods(consumer durables) It is these brands I'm more keen to learn about.

How does SKF bearings manage to Distribute it's product so well ?

How does a Pye Tools whose screwdriver is in every hardware shop?

Today its easier to sell an Audi to a customer than selling a new Biscuit Brand to the retailer.

This is precisely what is not taught at B-Schools and what is never mentioned in a Bussinesworld or an ET.

My Point is that the well known Brands can easily expand their sales with an efficient distribution network, which they really don't make the most of.

But how does a small unknown or New Brand embark on this journey to have a presence everywhere?

So what are the options:

a.Start and concentrate one place at a time

b.Expand at the expense of squeezing margin

c.Exploit existing market dynamics

Well combination of a. and c. is what we see when we go outside any city where you find these Local Brands of mineral water. They are priced the same and sell because their is no alternative.

b. Is done by a Halidram which launches it's brand of Chips, or a Tropicana to compete with Real Juice, or any non FMCG or Non- consumer durable brand like a Supreme Tools which come out with their set of screwdrivers.

I'm again back to these Co's who live in shadow markets which we don't know about.

They are more for specialists like an engineer, a mechanic, a plumber, Or a computer technician n etc.

But why I'm after these boring products well:

Min 400 shops in chawri bazaar..

Min turnover 1 Cr each

Total- 400cr..

The above is a hypothetical case, The Real turnover is in Thousands cr's a year.

Now you know why i wanna know about them...

Monday, 14 June, 2010

Advantages of Social Media To Small Business

We all are aware of the impact of social media websites. A huge amount of people have been participating in social media websites and this has resulted in increased investment in the growing field of social media marketing. A large number of small businesses today have started using social media ideas and strategies in their goals. This is because of a number of reasons.

Social media websites include Facebook, Twitter, YouTube, Linkedin etc. Many small businesses have become a part of these sites and have created their profile pages intending to get more traffic and new customers. It is important to remember that you cannot attract traffic just by creating a profile page; you have to actually be involved and participate in a community.

Social Media Marketing is the marketing strategy used to create content for your website and displaying it on Social News and Bookmark sites. The techniques of social media marketing can benefit websites and help them to grow very quickly. To mention, some of the advantages of social media marketing for small businesses are:

1. More awareness about your brand: If you are able to create a successful social media marketing campaign, there will be a lot more talk about your brand online. When users are appealed by your message, they will spread it across which will be more effective than traditional methods.

2. Quick results: If your message is on the front page of a major news, social video and bookmark site, you will be able to drive large amounts of traffic instantly. It is not necessary that the traffic will result in conversations but momentum will be created in the right direction.

3. Cheap prices: Social media marketing can be used as a replacement for conventional advertising and this is possible at a pretty lower price. With social media marketing, you do not need to spend huge amounts of money like you would have had to with the traditional mediums like newspapers, magazines, television, radio and many more.

4. Improves ranking on search engines: Social media marketing campaigns have an effect on search engine rankings. A huge amount of back links can be attained which improve your ranking on search engines.

5. Compatible with other mediums of advertising: If you start a social media marketing campaign, it does not mean that you need to stop you traditional methods of marketing. Social media marketing can be used along with traditional advertising and marketing.

6. Role of influencers: Through social media marketing, initiators and influencers reach audiences and encourage them to choose your brand. A person will always prefer to buy something that people recommend rather than just blindly make purchase from a faceless company.

7. Sidestepping and blindness: The age old methods of advertising online such as banner ads have almost lost their significance. Social media marketing has the capability to attract large amounts of traffic to your website without the help of traditional methods of advertising because of the increase in ad blindness.

[ Some Personal Rants:

To your surprise , the Best part about a Small Business Owner is that i really don't have to Sell the idea of Social Media to them. SMB's have the advantage of quick decision making and an appetite of taking risks thus one doesn't really have to push Social Media. So after knowing the Why? they simply ask How and When to do it? whereas corporate co.'s still loose the plot by being stuck on WHY?

In-fact some SMBs in the engineering space are pushing me to start their twitter a/c's when an eCommerce sites are better bet or at-least the first step towards their Online presence.]

Well Social Media provides you a simple platform to be out there for your customer and better still with your customers. So as they say .. your next customer is just 140 characters away...

Friday, 4 June, 2010

Technology -- What , When and How??

Any SMB (small and medium-size business) works and proceeds towards growth path, obviously by reducing cost and increasing Sales (and hence profitability) . But the question remains: How to reach there? It was mentioned by Jeff Stiles, the senior VP of Small-Medium Enterprise Marketing at SAP, that the only solution for a constant growth of SMB’s is to "embrace new technologies". With the advent of technology, not only the working methodologies become trouble-free but the pace at which things can be done increases manifolds.

One of the major challenge faced while decision making by an organization is about,'what, when, and how much' to invest on a technological solution. It is very crucial for any SMB to comprehend the various facets where technology plays a vital role in their business growth. To begin with, it is essential to focus on 'increasing productivity' which is clearly determined as 'how to do more with less'. One easy way to attain ‘efficiency’ is to invest in products designed especially for SMB's, are scalable and affordable, proposing a 'plug and play' solution. Software like Dropbox, an online virtual storage utility that allows synchronization of files across various systems wherever the client is installed, is a perfect paradigm of saving time at a negligible cost. This revolutionized way to store and share files leads to a non-stop communication process as opposed to tedious methods of e-mailing and flash drives.

The launching of new technologies constantly alleviates some fundamentally essential tasks to be performed smoothly and without a hitch. Today, personal computers with a fixed work station are turning history and slowly but surely are taken over by the 'mobile revolution'. This new generation of smart phone is supported by ubiquitous high-speed web connectivity. A lot of work turns handy with such software like QuickOffice and ScannerPro, which smoothens tasks like transferring PDF, Microsoft Office and iWork files to other devices like printers, mailers, networks etc. without further ado. For SMB's, getting accustomed to these applications would not only emerge to be cost effective but also profitable by saving time on these petty tasks.

Being the biggest category of planned investment expense, technology can lead to a dramatic increase in productivity, resulting in more output, without necessarily adding to the 'staffing expense'. The emergence of online communications, with launching a great website, an awesome navigation and content, an email newsletter to reach people right in their email inboxes, blogs to foster more conversation and boost the web sites rankings in search engines is a mark of "Web 2.0" technology. Through this the organization can ensure that the website enables visitors to communicate & connect with the company as well as each other. This unified communication network is integrating the operations of ticketing portal 'kyazoonga.com', who have hired, trained and developed only two technicians for this 'Search Engine Optimization'.

The 'augmented reality' of trends in applications also implies in depth awareness about ‘outgrowing’ of current tech solution for a SMB. Consequently, while investing in a technology it is more important to implement it in an efficient manner. The investment in right kind of technology can help the business reach the next higher level and retain more customers. Along with a right choice, it is also essential to integrate it with various aspects like CRM, supply chain management, billing/payment, innovation tools and R&D processes. It is equally important to train and develop the workforce to make sure an optimum use of technology and an overall advantage for the company’s expansion. The amalgamation of cheap and abundant knowledge available to the customer along with skilled personnel is another key to a successful technological investment.

During recession a lot of businesses were forced to 'retrench'. Most of the "growth companies" claimed the usage of online payment methods like 'PayPal', during the economic downturn, as compared to the "staying afloat" or the "sinking ship" companies. This method ensured an immediate payment, while keeping the cash afloat in the market. The simple adaptation of online invoicing and payment method helped these businesses to use customer generated funds to fuel their overall growth. The credit card companies are also introducing ‘payment via swipe on mobile phone’, which could mean a big changes for small businesses, part-time vendors, boutique owners and even small individuals like a florist.

I have seen people handling Multi-crore Business without a single computer installed (yes this is India, everything is possible) and witnessed a vegetable vendor sending e-cards on Diwali. Both knew Technology is important the latter was using it without any precedence whereas the former didn't in-spite of a imminent need.

The simple fact is people still don't know how and whom to approach to fully benefit form technology. This gives a huge opportunity to IT Co.'s ( i hope they are listening) to tap the SMB sector which account for 40 % of all exports. The winner amongst the IT co.'s would be the one who reaches out to SMB's , as there are lot of services available but people just do not know about them.

A computer peripherals co.'s CEO used to courier CD's of Posters and Catalogs to its Branches office till recently , before they knew about a yousendit.com . Well i personally feel that, this is one service which has lot of scope for a software co.'s to look into and most of them are going into the "Cloud"

The mantra, in that way, is to learn the basic principles of leveraging technology to make the business stay: prolonged, flourishing and on the rise. Only adequate and appropriate investments can help in reaping big rewards, now and in future. Updating technology, thus, helps in collaborate the our efforts to meet customer needs by 'serving' them better and as for the IT co's they just need to stamp their products straight on to our face for us to notice them.