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Wednesday, June 25, 2014

PGPM Marketing Batch 2014

SBDKAM Course
(Sales, Business Development, Key Account Management)
Outline By Prof S K Palekar :  PGEMP 2014 Batch

Design Considerations
  1. A feed-forward survey was carried out which has been used in designing this outline. The findings are given later in this coutline.
  2. The course has 16 sessions and is created for full time students of the PGPM program.
  3. These students have more than 5 years experience – mainly in non-marketing functions. Going forward, these students aspire to get into  business development, key account management, selling as well marketing. Their interest is mainly in B2B businesses; but  B2C has not been ignored.   
  4. Since the students are intelligent, observant and have 5+ years of experience, the pedagogy will be based on class discussions anchored into the type of reality which they are (and will be) exposed to in the Indian industry.
  5. The course is planned in terms of a series of ”modules” and each module has its own learning objective and associated materials. Each module typically consists of  2 consecutive sessions.
  6. The plan for each module is (A) case presentations by the selected groups at the beginning of the class (B) followed by discussions rooted into the reality portrayed in the case (C) towards the end of the module will a sizeable customized  Q/A session .
  7. The aim will be not to teach too many concepts and tools with narrow and special applications but to focus on the “vital few” concepts and tools and spend time on how these concepts can be applied to multiple situations.
  8. Almost all the cases used in the course are based on the Indian reality. All cases used are short cases having less than 4 pages so that they can be quickly grasped and absorbed.
  9. The discussions will be focused on the type of practice needed in the industry. In fact that is why the feed-forward survey was conducted. For the same purpose the class method will be highly interactive and learner centric so that the students can get their own mind cleared from the perspective of industry and applications of interest to them.

Class Communications
  • All submissions to be sent to me through COCO only and on e mail only.
  • My method of informing the class as a whole will be either through COCO or through my blog (URL: http://tchingu-marketing.blogspot.in/2014/06/pgpm-marketing-batch-2014.html). I shall assume that the students are browsing my blog every day and shall expect that the notifications are followed.
  • For any academic queries the students are expected to leave their queries as comments on this blog. I shall reply within 48 hours.
  • The course outline, course policies, evaluation methods and even reading materials are posted on this blog in real time. The blog will be closed within 1 month of the closure of the course. The students are advised to download what they want from the blog.
 Module Wise Academic Plans
  1. Module 1 : How marketing and selling function contributes to the company objectives
    Case : Analysis of HUL, ICICI Bank or Cummins annual reports
    Concepts : General process of marketing, metrics of marketing performance, how and why the marketing organization differs depending on the context
  2. Module 2 : Understand the basic unit of planning sales architecture
    Role Play : ACE Institute’s Executive MBA course
    Concepts : Buying Journey, Buying Personas, Different selling situations
  3. Module 3 :  How to connect with the customers – when you look for the customers
    Case : Elegant Furniture case
    Concepts : How a “direct sales” operations is set up the first time
  4. Module 4 :  How to connect with the customers – when the customers look for you
    Case : Adani Televisions case
    Concepts : How a “channel sales” operation is set up the first time
  5. Module 5 : Key Account Management
    Case : Ecolab case
    Concepts : When KAM works and how it works
  6. Module 6 : What do the field sales managers contribute
    Case : Eddington sales and service
    Concepts : How sales funnel is used in practice to make and achieve forecasts
  7. Module 7 : How branding works in B2B situations
    Case : Tan Dan Steel
    Concepts : Why brand, how to build a brand
  8. Module 8 : Selling to influencers and course summary
    Demo of Eureka Forbes and course summary
Evaluation Plan and Process
The evaluation will add up to 100 as follows
  1. Class presentations :  20 ( group submission and equal marks will be given to all members who are present in the class ) : These are to be prepared in advance by the groups designated by the COCO and are to be presented in PPT format in 10 minutes in the class. A maximum of 6 slides are needed. The first slide must consist only of group number, names and roll numbers and the topic and day. Any one student selected by me on the spot will be required to make the whole presentation. The presentation must be sent to me by the COCO in e mail form anytime before the class begins. Any presentation coming later than that will not be used for evaluation. Since the class is small, cases are short,  and the presentation time is limited; I suggest you spend a maximum of 2 slides (ideally 1) in explaining what is already in the case and spend more time on your analysis and recommendations. More marks will be given for your insights and for bringing inputs which are not in the case ( example : research on the industry, your observations, and your common sense) and for the quality of the recommendations.    
  2. Class notes :  30 (group submission and equal marks will be given to all members who are present in the class To be performed as a Group ) These are to be prepared within 48 hours of the end of the class and sent to me through the COCO. It should record what was covered in the class during the module and also prepare a summary which can be edited by me if needed and then circulated to all to act as refreshers. Marks will be given for your insights and for bringing perspectives and inputs which were not covered in the class ( example : research on the industry, your observations, and your experience) to make the material rich. 
  3. Final Examination : 30 ( Individual scoring ) : Mostly this may be an open book case based examination.
  4. Class Participation : 10 ( Individual scoring ) : Marks will be given for being attentive and for intelligent and useful participation based on one’s own experience and observation. I discourage frivolous participation but encourage intelligent comments and questions and even disagreements. Marks will be deducted for those engaged in e mails, text messages and social media. Since the class is small it is not difficult to figure this out.  
  5. Class attendance : 10 ( Individual scoring ) : Anybody coming late is likely to be marked absent. 
 Results of the Survey done among the students ahead of the course
  1. FOCUS OF TEACHING : Looking at B2B marketing primarily from the  CEO and  CMO perspective but Regional and Field Manager perspectives should also be added. The primary focus should be on B2B but B2C should not be completely excluded. Within the B2B there was specific interest in marketing of professional services, projects, FMCG and capital goods in that order.
  2. MARKETING ORGANIZATION IN THE B2B INDUSTRY Job  content of various designations in the industry “business analyst”, “consultant”, “business development”, “sales”, “service”, “Key Account Manager”. Is there a lot of overlap? What skills are required for business development and account management? Do they  vary with businesses ( Does B2B skills differ from B2C ?). How do the actual roles of these designations vary from industry to industry and situation to situation? Say from IT industry and FMCG industry? Is profit making and market share the only responsibility of a marketer? Role of business development in VUCA environment How does a role of BD change where there is a need of a new market to be created? Integration of various accounts within a brand or business." What does Key Account Management mean in the context of B2C businesses, say Nestle? Does it mean managing and getting more business from institutional buyers? How do Marketing and Business Development relate with each other? Is one a subset of the other? What are the skill sets required for BD and KAM?" How is B2C different from B2B?
  3. MARKETING AND SELLING OF PRODUCTS AND SERVICES IN B2B INDUSTRY : How to differentiate in a multi vendor environment when almost similar services are being offered  by everyone? How to sell high priced and differentiated products when customer makes the decision based on prices. In product sales, how much is technical knowledge important for sales personnel? How to make different marketing plans when doing B2B sales and when doing B2C sales? Sometimes while working for a key account, we understand the challenges faced during execution, which other competitors may not understand so how to resolve such situation specially when bidding for new orders where pricing becomes the main focus?
  4. MANAGING CUSTOMERS IN B2B INDUSTRY : To grow existing accounts or acquire newer ones? How to identify accounts that we need to focus on and grow and the accounts we need to scale down In Key Account Management, where big accounts are involved, there can be conflict in managing customer profitability and resources deployed on the account. How to create win win situation. Which criteria is more important for identifying loyal clients for KAM- the amount of business they give or the level of management interaction involved between the client & supplier? Challenges faced in KAM for public -private partnership (PPP). How and where to draw a line with respect to key account management? How to balance out the organization's as well as the Key Account requirements?" Is Diversification the last step towards business development? How do i know whether i have run out of business development opportunities in existing business or not? Which is the most critical aspects of KAM, getting new orders or providing services for existing orders?
List of Cases to be used in the class and source
  1. HUL annual report URL : http://www.hul.co.in/images/ HULAnnualReport201314tcm114391926.pdf
  2. ICICI annual report URL : http://www.icicibank.com/managed-assets/docs/investor/
    annual-reports/2014/ICICI-Bank-Annual-report-FY2014.pdf
  3. Cummins annual report URL : http://www.cumminsindia.com/documents/ annual_reports/Cummins%20Full%20AR%2011-12.pdf
  4. ACE Institute’s Executive MBA course ( to be given to the students )
  5. Elegant Furniture case ( to be given to the students )
  6. Adani Televisions case ( to be given to the students )
  7. Ecolab case ( to be given to the students )
  8. Eddington sales and service ( to be given to the students )
  9. Tan Dan Steel ( to be given to the students )

COURSE SUMMARY / MODULE WISE 
  1. Module 1 : How marketing and selling function contributes to the company objectives (Case : Analysis of HUL, ICICI Bank or Cummins annual reports). 

    Peter Drucker said; "the main purpose of a business is to create customers and keep them" . Viewed this way, almost all costs are the marketing costs. The way for a CMO to earn a position at the CEO's table is to advise him on which costs will need to be incurred more because they create a significant value (meaning willingness to pay) and which costs need to be cut because they do not create value for the customer. See     Kano's Model. Marketers need to be aware of the complete cost structure of the company but the unfortunate part of the life of a marketer is that he is not responsible for all costs; the CEO is. But, being aware of all costs, the marketers get a better hang of the CEO level issues.

    How marketing process is a method of converting knowledge of the market into simultaneous outputs of customer satisfaction and profits. CVP analysis. Different sources of values (Product, Facility, People, Image and Platform) and types of costs ( scarce resources are not only money but time and risk too).

    Marketing as a function and marketing as a department are different. It depends on how it is sliced for implementation. Do not go by designations : go by the content of the job. Depending on the number of customers, the order size per customer and the view (telescopic, close up or endoscopic); the marketing department looks different. P&G, ICICI and Cummins all look different but the marketing throught process is the same. Same goes for 3 generic strategies : the role of marketing is different in each.
      
  2. Module 2 : Understand the basic unit of planning sales architecture .Role Play : ACE Institute’s Executive MBA course. 
    We learnt the concept of buying journey through the role play : the stages of readiness a buyer goes through before the purchase takes place.

    There is a difference between traditional selling (where the value of the product can be understood simply and evidently) and concept selling (where the customer is not aware even of the problem which the product is supposed to solve). Using the buying journey we understood the difference between concept selling, consultative selling, comparative selling and facilitative selling. The concept selling is aimed at "C" suite customers who create budgets and the facilitation selling is aimed at "A" suite customers who merely operate within the budgets. You need different types of persons and skills sets for each type of selling.

    We learnt there is a need to "qualify" (understand who is the buyer and at what stage of buying readiness is he) the buyer before you begin telling him about your product. For a customer who does not feel the pain of the problem, there is no point in offering a solution.

    Important is to know how customers are distributed on the buying journey because at each stage they need to be tackled differently.

    We learnt the two basic paradigms of selling : hunting and gathering. It is a question of who searches for whom. Hunters need to invest everything on their own and their search costs and risks are high. Gatherers need to appoint the right partners who are already invested in space, people and inventory. When do we use hunting and when gathering.
  3. Module 3 :  How to connect with the customers – when you look for the customers. Case : Elegant Furniture case 

    Here we saw an end-to-end demonstration of how marketing and sales strategies are planned and executed.

    In marketing we saw how market sensing (market research by Aditya) results into marketing strategy formulation (MVC) in order to create internal alignment and external focus.

    In sales we saw how an examination of the eco system and the formulation of MVC strategy results into formulation of sales strategy (how the touch point mechanisms are tailored to the buying journey) and sales organization (how the planned touch points are converted into sales roles)

    We spent some time in understanding the hunting paradigm, the sales funnel, the sales cycle, the pipeline and how to make sales forecast for hunting products.
  4. Module 4 :  How to connect with the customers – when the customers look for you. Case : Adani Televisions case 
    The class saw how a problem is solved in practice. It is not necessary to bring in all the tools in each and every case. In this case, the main business was CTV and the case said this problem could be solved by "more walk-in customers, better display,  better salesmanship at the shop counter  or less working capital".  None of the groups took the cue from the case but applied their own logic! Similarly, for the BWTV business the main issue was that the outlets were not covered.

    Once this was realized it was not too difficult to work out the solution of appointing distributors for BWTV business who would pay cash upfront which was then pumped into the CTV business to make it grow. The BWTV business grew by sales coverage of the potential outlets. The class realized that, of course, the company had to pay the price by way of sales commissions to the distributors but then the sales increased of both CTV and BWTV and it all worked out.

    The new arrangement of selling BWTV through distributors is an example of segmenting the trade according to what they keep and then giving a different "treatment" to  each segment. This illustrates how the concept of segmentation can be used in sales.

    There was a lively discussion on who would be willing to become a distributor for a dying product category? The class saw that from the point of view of a category "below" BWTV (fans) it was not a dying category. We studied how the outlets evolve in consumer durable business in tandem with the evolution of the customers and the locality.

    We discussed why we need a middleman at all. We saw that all the needs of a given customer cannot be possibly met by the company sitting in a different town and therefore business partners may be needed to satisfy the customer.  The main advantages of having a local business partners are (1) costs are shared among different principals (2) they can respond to, and service, a local customer faster (3) they can break the bulk and also serve an assortment to customers (4) they know customers locally and hence their payment recovery is fuller and faster (5) they have their ear to the ground.

    Even large companies with big volumes find it cheaper to buy services from local traders than arrange them themselves.

    What we did not cover (and I expect the students to know this by reading) is (A) which channel strategy to use (wide, selective, exclusive) (B) How to decide the  number of tiers to be used (C) How to decide the Job Description of each tier depending on what you want them to do (D) How to work out ROI and compensation plan of each tier of the channel member (E) Deep relationship between the type of channel strategy and the products to be put through the channel (F) How to create and administer price lists in a channel. For example, simple and standard products can be mass marketed through wide networks but high priced ones needing customization and conversation cannot be.

    Finally we     discussed if the trade is a middleman or a customer.
     
  5. Module 5 : Key Account Management . Case : Ecolab case. Concepts : When KAM works and how it works 
    In the class we realized that for the Ecolab business (A) The task is of concept selling because the cstomers are at left end of buyer's journey (B) the customers are "C" suite customers (C) is not product selling but service selling. It is for this reason that the product, in spite of being good, could not be sold because the connection chosen (of using the existing industrial products sales force) was incorrect. 

    We also discussed other points in the class   

  1.       Wrong choice of the product for entry in India?
  2.       Should  the new product have been given to a separate sales force ?  
  3.       Was the sales force trained well in knowledge and skills?
  4.       Was the sales process defined for the new product ?
  5.       What selling model was used : hunting or gathering ?
  6.       Should they have used KAM system ? 

    The customer’s buying journey is different (VFM Curve) but Peter using the same sales process ( a sales process is a response and plan of how to weave our touch points with the customer’s journey), the same paradigm (coverage and not hunting) and the same skills, systems and structure. No clear cut definitions of funnel stages.

    Probably it was wrong of Peter to use the same sales force (and hence the same sales funnel and the same sales process and the same customers) for Ecolab product.
  7. Module 6 : What do the field sales managers contribute. Case : Eddington sales and service
    Many companies measure and review only the sales outcome but not the selling effort. This is a big mistake because the main task of any sales force is to plan adn achieve the sales revenue and it depends on being able to set targets consultatively and to be able to review and take corrective action when the targets are not being achieved. Without these basic processes, the task of selling is well neigh impossible in practice. Measurable targets should be set for both the outcomes and the efforts.

    We saw a demonstration in this case. It was indeed possible to substantially increase the first level field supervisor looked at what are the improvements that were possible to be done at various stages in the sales funnel metrics at the level of micro-segments (territories). 

    We also saw that the overall marketing view (all competitors put together) (looking at only at the category) is good mainly for taking an overall company level actions like new products and pricing and positioning communications but the view taken by the field sales manager (of micro segments) (of individual's strengths and weaknesses in carrying out the assigned tasks ) is important in bringing about changes in (A) number of territories (B) re-mapping customers to territories and salespersons (C) redefining sales and service job descriptions (D) working out individual development and coaching plans (E) seeking tools from the marketing support ... are all important in making the sales grow at the territory level. 





  8. Concepts : How sales funnel is used in practice to make and achieve forecasts
  9. Module 7 : How branding works in B2B situations
    Case : Tan Dan Steel
    Concepts : Why brand, how to build a brand
  10. Module 8 : Selling to influencers and course summary
    Demo of Eureka Forbes and course summary

 Course Summary 

  1. HUL annual report URL : http://www.hul.co.in/images/ HULAnnualReport201314tcm114391926.pdf
  2. ICICI annual report URL : http://www.icicibank.com/managed-assets/docs/investor/
What new learnt in Elegant Furnitures

  • Customer centricity in practice
  • Choosing competitors
  • Buying journey
  • Application of marketing principles end to end
  • Different modes of selling
  • Target audience : C (create budget), B (shape the budget), A (Operate budget)
  • Each sales architecture is a solution to a unique situation
  • Using MR for practical actions
  • MVC model of strategy formulation
  • DDDD loop
  • How to increase the value practically
  • Positioning (The 4 questions )
  • How to handle a new venture 

ULE 1 
INTRODUCTION TO MARKETING AND SALES

LEARNING OBJECTIVES  
  1. How marketing and sales is linked to the financial outcomes
  2. How marketing helps improve profits
  3. How marketing and sales is organized as a company wide process
  4. How a company organizes various roles in marketing and sales tasks
  5. How employees & external partners collaborate in marketing
  6. How marketing organization is context dependent  
CLASS PLAN AND PEDAGOGY

WORK FOR GROUPS 1 AND 2 : will work separately on the following exercise. These presentations should be loaded on class computer before the class begins. The COCO will send me these 2 presentations by e mail before the class begins..

EXERCISE :  Refer to the latest annual reports of Hindustan Unilever (Click) and ICICI Bank (Click) and make a PPT of 11 slides. each group will get 20 minutes to present. Read critically and intelligently : there is no need to read everything. Even an hour of such scrutiny is sufficient.  The URLs are

FOR EACH OF COMPANY (HUL, ICICI)
PRESENT 5 SLIDES AS FOLLOWS
  1. The amount they spent on "marketing" during the year? What did you include in these expenses and what did you not? Why ?
  2. Which of these are selling expenses and which are marketing expenses?
  3. Which of these marketing expenses are discretionary over a period of one year and which are of long term nature?
  4. How can the company reduce its marketing expenses in order to make more profit without losing out on the output expectations from these expenses
  5. What are the major marketing initiatives the company took during the year.
IN THE 11TH SLIDE
Give the conclusions of the group on how the marketing of products and services is different.

​WORK FOR GROUPS 3 AND 4 
COCO will take separately from each of these two groups - class summaries in WORD format - within 48 hours of the end of module - and send to me


THE MAIN TAKE-OUTS OF MODULE 1 : 

  • LISTENING TO THE MARKET AND BEING INFLUENCED BY THE MARKET IS AS IMPORTANT AS INFLUENCING THE CUSTOMERS THROUGH YOUR MESSAGE AND SELLING : Many people believe that marketing is about communicating with the customers and influencing it to buy - but they are mistaken because it is a sales oriented approach. Customer-centric marketing begins when you allow the customers to communicate with you (through your market sensing mechanisms) and thus influence you to create value for the customers. The activities that go into listening to the market and formulating the strategy based on such insights may account only for 2% of the total costs but unless you have a good mechanism for listening to the market, the remaining 98% costs may be incurred wrongly. From the marketing perspective, "wrong costs" means costs which do not create value (willingness to pay) in the minds of their customers.
  • http://catalog.flatworldknowledge.com/bookhub/reader/5581?e=urbany_1.0-ch05_s02
  •   

http://www.slideshare.net/skpalekar/which-generic-selling-model-to-use
http://www.slideshare.net/skpalekar/7-steps-b2-b-business-development-complex-and-high-value-offerings


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What seems to be the problem and how it needs to be corrected ?
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Class Discussion Management
Adany Televisions

1)      BRING THE CLASS BACK TO “WHAT IS AT ISSUE?” : After the class goes in all sorts of directions - like product positioning, market forces, schemes, the sales manager being bad etc - bring the class back to the main problem : the sales manager saying that the main problem for growing CTV business we need credit and for growing BWTV we need coverage. 
2)      WHAT ARE THE CONSTRAINTS : How can these be solved because the company will not give additional credit facility. Therefore a new distribution strategy emerges as follows

1.      For BWTV, expand the network
2.      For CTV, give more credit and increase share

3)      SOLUTION : This can be done by appointing distributors for BWTV who will give cash on delivery. This money will be utilized in giving credit to CTV network.
4)      WILL THIS INCREASE THE COST ? Yes but there is plenty of scope for BWTV expansion (we can sell to 11000 outlets instead of 3000 ) and the volume will compensate for reduced margin. 
5)      IMPLEMENTATION : Would you get distributors easily for BWTV - a dying market? Yes because we will select only those distributors who are currently selling fans - for them it is a sunrise market and probably his fan customers will soon upgrade to BWTV. And he has hopes that , when he starts handling BWTV, someone will soon ask him to handle CTV also.
6)      IMPLEMENTATION : Could the company itself not to what the distributors enabled it to do - give more credit to CTV, start selling on cash to BWTV ? No , because what the retailers can accept from an independent businessman like a BWTV distributor, they will not accept from the company. The same company cannot sell its CTV and BWTV on different terms and conditions. If you need to create a separate marketing mix for a trade segment, it is better done under the banner of a distributor rather the company banner.

Note : From here onwards I use the opportunity to teach sales and distribution





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Questions to discuss in the class


1.       Can you do without the trade / channel members for your Go-To-Market?  Only if the customers are few and want highly customized products. ONLY mapping of how people come-to-market will tell you if channel is important. For everything you do not need a channel. For everything you cannot deal direct with customers.
2.      Is the trade a middleman or a customer ? This is a question of who is the “Channel Captain” and “Who owns the customers” because it is him to wields the power to get things done in forward and in backward mode. If there is a strong demand pull, you are the channel captain and you can treat the rest of the value chain as middlemen. But if it happens to be “Big Bazar” and has his own loyal customers, irrespective of the answer to the dilemma above, it is better to err on a safer side and treat channel as a customer because you never know when you will need them on your side.
3.      What is the JD of a channel member ? Make a list on board and then say there is no standard definition ! You and your channel needs to form a partnership to do to the customer what you want done. In case of a strong FMCG brand it is the least you want from the mom and pop stores but the answers may change depending on the market and your competitive situation. You need channel members because they can reach your market more / efficiently / completely than you can. They can (1) give small deliveries (2) service in a short time (3)  give door delivery (4) influence clientele due to his existing relationships (5) to deliver an assortment (6) to give credit (7) to be in the vicinity of the customer (8) to work on a lower cost due to low overheads (spread over different lines).Your Job Description depends on the activities you want them to do and hence many different types of channel members exist : high end retailers, mass retailers, discount retailers, cash and carry retailers, wholesalers, distributors, exclusive stores, service centers, brokers, complaint logging centers, carrying and forwarding agents, installers, solution providers, promoters, upgrade and exchange centers etc Their Job description also depends on the type of customers they cater to : some only cater to hotels, some cater only to dentists, some supply to poultry farms, some supply only stationery. A general system of classification is
         Who are his customers ( example : meeting the needs of the poultry industry)
         Who are his principals ( example : Sony authorized dealer )
         Who are his competitors ( example : malls competing with mom and pop stores)
         What is his price strategy ( low price, premium price, cash and carry, credit )
4.      These positions are "executed" in practice by the type of assets a “trader” brings to the table while doing business
         Space : for storing, operating, demonstrating, displaying
         Location : passer by, walk in, visibility, marquee value
         Working capital invested in the inventory and in market credit
         Manpower and Mechanism and vehicles to invoice, deliver and collect
         Management 
         Customer Relationships.



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TRADE MARKETING
TAUGHT ALONG WITH ADANY TELEVISIONS

The B2B marketing that is the back-end of B2C marketing :  “trade marketing”. The Trade is the “1st customer” because if the trade does not buy you cannot sell even if there is consumer demand (Examples : Optonica Sharp, HLL boycott). 


Why do you need B2B at all – why not deal directly with the customer ? The answer has to do with the customer’s buying journey. Millions of customers spread all over want the product demand to be fulfilled conveniently. It is cheaper to use a channel : independents or franchisees. Why do companies appoint traders as Business Partners ? Because the local traders can provide valuable services to the customers of the companies which the companies themselves cannot 
1)      to give small deliveries
2)      service in a short time
3)      give door delivery
4)      influence clientele due to his existing relationships
5)      to deliver an assortment
6)      to give credit
7)      to be in the vicinity of the customer
8)      to work on a lower cost due to low overheads (spread over different lines).

The "trade" is a generic name of various entities with various "positions". These entities are "positioned" by 
9)      the activities they are designed to do (high end retailers, mass retailers, discount retailers, cash and carry retailers, wholesalers, distributors, exclusive stores, service centers, brokers, complaint logging centers, carrying and forwarding agents, installers, solution providers, promoters, upgrade and exchange centers etc)
10)  Value Chain : Availability, Delivery, Financing, Awareness generation, Education  and  Updation, Consulting /  Diagnostic, Customization, Commissioning, Training,  handholding,  coaching, Up gradation, Replacement ,  Disposal, Repair,   maintenance, Enquiry  Response,  Order  taking, Status /  alert  information, Convenience.
11)  or by the type of customers they cater to : some only cater to hotels, some cater only to dentists, some supply to poultry farms, some supply only stationery.
12)  Who are his principals ( example : Sony authorized dealer )
13)  Who are his competitors ( example : malls competing with mom and pop stores)
14)  Pricing position ( low price, premium price, cash and carry, credit )
These positions are "executed" in practice by the type of assets a “trader” brings to the table while doing business and while competing 
1)      Space : for storing, operating, demonstrating, displaying
2)      Location : passer by traffic , walk in traffic, display visibility, marquee value
3)      Working capital invested in the inventory and in market credit
4)      Manpower and Mechanism and vehicles to invoice, deliver and collect
5)      Management 
6)      Customer Relationships.


15)  How India's population pyramid is served ?
a)      Up to 10 Mn households you can go direct and can service 100 outlets
b)      up to 25 Mn you need to have 1 tier system and can service up to 10000 outlets
c)      up to 60 Mn you need 2 tier system and can serve 100000 outlets
d)     beyond that you need 3 tier system which can serve up to 1000,000 outlets.
16)  ROI calculations : ROI = Profit / Investment

-  Profit  (Trading Profit per unit - All Costs) + schemes and incentives
    - All costs = costs imposed by the mfg requirement 
      + costs imposed by the market conditions
      + costs chosen by the trader (how he manages)      
-  Investment ( Inventory + Credit Given - Credit taken )
17)  Discuss stories

- Constructing the Price List 
- Comparison with  bank rates : why ROI should be 40%
- why interest should not be taken into account ?
- Kerala dealer wanted margin but I spoke about ROI
- Mangalore dealer wanted flood damage - I did not give
- Agra dealer had included the cost of his lavish house as cost (chosen cost)
- Ashwin bhai earning only 0.25% on Odopic - he had infinite ROI

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Description : Set in the context of a standard B2C product but with a strong sub-text of B2B retail servicing issues, Ashok Khosla, Head- Marketing & Sales of Adany – which sells both color and black-and-white televisions - is torn between his marketing and sales departments. The marketing head is confident that the market demand will be sufficient to fulfill the growth aspirations of the CEO but his sales head is unsure of getting support for stocking and timely payments from his existing retail network. The CFO of the company expresses his inability to raise funds to finance additional working capital. Ashok therefore does not know how to set his annual target. The class discusses and understands various dimensions of this common occurrence. .

Learning Objectives : How markets evolve. Where and how channels are used. How channels finance.


Question

What seems to be the problem and how it needs to be corrected ?

LEARNING OBJECTIVES

1.      Introduced the concept of “trade marketing”. In fact the trade is the “1st customer”. If the trade does not co-operate, you cannot sell even if there is consumer demand.
2.      The "trade" is a generic name of various entities with various "positions". These entities are "positioned" by 
  • the activities they are designed to do (high end retailers, mass retailers, discount retailers, cash and carry retailers, wholesalers, distributors, exclusive stores, service centers, brokers, complaint logging centers, carrying and forwarding agents, installers, solution providers, promoters, upgrade and exchange centers etc)
  • or by the type of customers they cater to : some only cater to hotels, some cater only to dentists, some      supply to poultry farms, some supply only stationery.
3.     A trading entity's position is defined by 
  • Who are his customers ( example : meeting the needs of the poultry industry)
  • Who are his principals ( example : Sony authorized dealer )
  • Who are his competitors ( example : malls competing with mom and pop stores)
  • Pricing position ( low price, premium price, cash and carry, credit )
4.      These positions are "executed" in practice by the type of assets a “trader” brings to the table while doing business and while competing 
  • Space : for storing, operating, demonstrating, displaying
  • Location : passer by traffic , walk in traffic, display visibility, marquee value
  • Working capital invested in the inventory and in market credit
  • Manpower and Mechanism and vehicles to invoice, deliver and collect
  • Management 
  • Customer Relationships.
5.      Why do companies appoint traders as Business Partners ? Because the local traders can provide valuable services to the customers of the companies which the companies themselves cannot 
  • to give small deliveries
  • service in a short time
  • give door delivery
  • influence clientele due to his existing relationships
  • to deliver an assortment
  • to give credit
  • to be in the vicinity of the customer
  • to work on a lower cost due to low overheads (spread over different lines).
6.      In the overall marketing mix, most students (wrongly) believe the “place” element among the 4Ps is the "passive element" and the product, price and promotion are the “active elements”. Coming from such belief, the answers to most marketing problems automatically become Product improvement / modification and Promotional Prices, incentives or communications. This is simply not true. The case shows the power of trade marketing (as against end user marketing) - how restructuring of the channel strategy – in this case – creating a distributor strategy in a directly-served market -  enables the company to  withdraw marketing resources (in this case the working capital and the time of the sales force) from a dying segment of the market (in this case the retailers who dealt in BWTV) and redeploy the resources in the sunrise segment of the market (in this case CTV retailers segment). Giving different trading terms to different trade segments would have been impossible for the company but appointing a distributor solves the problem – its almost like creating a different trading brand in the market which has its own target market.
7.       The case also demonstrated how a marketer can work within the financial norms of the company and still achieve the company objectives. In this case, the demand could have gone up by more than 25% - probably even 50% - but the company was in a bind because the retail trade was unable to make necessary investments to cope up with this demand and the company itself could not have given so much credit – no funds, much risk etc.  The students learned that not only do the distributors do the classical textbook job of undertaking sales transactions on behalf of the company but actually do much more in the market



  1. How India's population pyramid is served ? Up to 10 Mn households you can go direct, up to 25 Mn you need to have 1 tier system and can service up to 10000 outlets, up to 60 Mn you need 2 tier system and can serve 100000 outlets and beyond that you need 3 tier system which can serve up to 1000,000 outlets.
  2. ROI calculations : ROI = Profit / Investment
    -  Profit  (Trading Profit per unit - All Costs) + schemes and incentives
        - All costs = costs imposed by the mfg requirement
          + costs imposed by the market conditions
          + costs chosen by the trader (how he manages) 
    -  Investment ( Inventory + Credit Given - Credit taken )
  3. Discuss stories
    - Constructing the Price List
    - Comparison with  bank rates : why ROI should be 40%
    - why interest should not be taken into account ?
    - Kerala dealer wanted margin but I spoke about ROI
    - Mangalore dealer wanted flood damage - I did not give
    - Agra dealer had included the cost of his lavish house as cost (chosen cost)
    - Ashwin bhai earning only 0.25% on Odopic - he had infinite ROI
Questions to discuss in the class
1.       Can you do without the trade / channel members for your Go-To-Market?  Only if the customers are few and want highly customized products. ONLY mapping of how people come-to-market will tell you if channel is important. For everything you do not need a channel. For everything you cannot deal direct with customers.
2.  Is the trade a middleman or a customer ? This is a question of who is the “Channel Captain” and “Who owns the customers” because it is him to wields the power to get things done in forward and in backward mode. If there is a strong demand pull, you are the channel captain and you can treat the rest of the value chain as middlemen. But if it happens to be “Big Bazar” and has his own loyal customers, irrespective of the answer to the dilemma above, it is better to err on a safer side and treat channel as a customer because you never know when you will need them on your side.
3.        Make a list on board and then say there is no standard definition ! You and your channel needs to form a partnership to do to the customer what you want done. In case of a strong FMCG brand it is the least you want from the mom and pop stores but the answers may change depending on the market and your competitive situation. You need channel members because they can reach your market more / efficiently / completely than you can. They can (1) give small deliveries (2) service in a short time (3)  give door delivery (4) influence clientele due to his existing relationships (5) to deliver an assortment (6) to give credit (7) to be in the vicinity of the customer (8) to work on a lower cost due to low overheads (spread over different lines).Your Job Description depends on the activities you want them to do and hence many different types of channel members exist : high end retailers, mass retailers, discount retailers, cash and carry retailers, wholesalers, distributors, exclusive stores, service centers, brokers, complaint logging centers, carrying and forwarding agents, installers, solution providers, promoters, upgrade and exchange centers etc Their Job description also depends on the type of customers they cater to : some only cater to hotels, some cater only to dentists, some supply to poultry farms, some supply only stationery. A general system of classification is
         Who are his customers ( example : meeting the needs of the poultry industry)
         Who are his principals ( example : Sony authorized dealer )
         Who are his competitors ( example : malls competing with mom and pop stores)
         What is his price strategy ( low price, premium price, cash and carry, credit )
4.      These positions are "executed" in practice by the type of assets a “trader” brings to the table while doing business
         Space : for storing, operating, demonstrating, displaying
         Location : passer by, walk in, visibility, marquee value
         Working capital invested in the inventory and in market credit
         Manpower and Mechanism and vehicles to invoice, deliver and collect
         Management 
         Customer Relationships.


Adany Televisions case taken on August 17, 2011 for PGPM (M)
LEARNING OBJECTIVES AND SUMMARY

1.      In the overall marketing mix, most students (wrongly) believe the “place” element among the 4Ps is the passive element and the product, price and promotion are the “active elements”. To such students, the answers to most marketing problems automatically become
a.       Product improvement / modification
b.      Price reduction
c.       Promotions – aimed mostly at the end users and sometimes at the trade
2.      The case attempts to break the student from the mind set and shows how restructuring of the channel strategy – in this case – creating a distributor strategy in a directly-served market -  enables the company to  withdraw marketing resources (in this case the working capital and the time of the sales force) from a dying segment of the market (in this case the retailers who dealt in BWTV) and redeploy the resources in the sunrise segment of the market (in this case CTV retailers segment).
3.      Giving different trading terms to different trade segments would have been very difficult to impossible for the company to do without a seveThis would have been impossible for the company to do with
4.      The case also demonstrated how a marketer can work within the financial norms of the company and still achieve the company objectives. In this case, the demand could have gone up by more than 25% - probably even 50% - but the company was in a bind
a.       The Retail trade unable to make necessary investments to cope up with this demand
b.      The company itself could not have given so much credit – no funds, much risk
5.      The students learned that not only do the distributors do the classical textbook job of undertaking sales transactions on behalf of the company – invoicing, delivery and collection - 
a.       Capacity of the compan h can be redeployed for segments most obvious answer to whereas the last element (selling and distribution) is a passive element. Even the suggestion of most students were in the nature of “promotion campaigns” through the channel - more schemes, display bonuses etc. No one really thought that the “channel trade   

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Adany Televisions case taken on August 17, 2011 for PGPM (M)
LEARNING OBJECTIVES AND SUMMARY
1.      Introduced the concept of “trade marketing”. In fact the trade is the “1st customer”. If the trade does not co-operate, you cannot sell even if there is consumer demand.
2.      There are various “positions” in the space of  members of the trading community. Some are retailers, some are wholesalers whose strong point is door delivery, some are wholesalers whose strong point is price, some are carrying and forwarding agents, some are service centers, some are complaint logging centers, some are consignment agents, some are representatives, some are installers, some are solution providers, some only cater to hotels, some cater only to dentists, some supply to poultry farms, some supply only stationery.
3.      How do we describe these “positions” and how does a trader “execute” his position? A trader’s position is characterized by
a.        Who are his customers ( example : meeting the needs of the poulty industry)
b.      Who are his vendors ( example : Sony authorized dealer )
c.       Who are his competitors ( example : malls competing with mom and pop stores)
d.      Pricing position ( low price, premium price, cash and carry, credit )
e.       Value chain tasks ( what activities he is designed to undertake ) : Availability, Delivery, Financing, Awareness generation, Education  and  Updation, Consulting /  Diagnostic, Customization, Commissioning, Training,  handholding,  coaching, Up gradation, Replacement ,  Disposal, Repair,   maintenance, Enquiry  Response,  Order  taking, Status /  alert  information, Convenience.
f.       Why do companies appoint traders as Business Partners ? The answer is in the ability the trader provides to a manufacturer - to give small deliveries, to service in a short time, to give door delivery, to influence clientele due to his existing relationships, to deliver an assortment, to give credit, to be in the vicinity of the customer, to work on a lower cost due to low overheads and due to overhead spread over different lines.
4.      What assets does a “trader” typically bring to the table while doing business and while competing : Space : for storing, operating, demonstrating, displaying.  Location : passer by traffic , walk in traffic, display visibility, marquee value.  Working capital invested in the inventory and in market credit.  Manpower and Mechanism and vehicles to invoice, deliver and collect.  Management.  Relationship Making.  Customer Base
5.      Depending on the specific customers he wants to deal with, with specific competitors he wants to fight with and with specific vendors he wants to cultivate; he organizes his assets and costs . The value chain is different.
6.      In the overall marketing mix, most students (wrongly) believe the “place” element among the 4Ps is the passive element and the product, price and promotion are the “active elements”. To such students, the answers to most marketing problems automatically become
a.       Product improvement / modification
b.      Price reduction
c.       Promotions – aimed mostly at the end users and sometimes at the trade
7.      The case attempts to break the student from the mind set and shows how restructuring of the channel strategy – in this case – creating a distributor strategy in a directly-served market -  enables the company to  withdraw marketing resources (in this case the working capital and the time of the sales force) from a dying segment of the market (in this case the retailers who dealt in BWTV) and redeploy the resources in the sunrise segment of the market (in this case CTV retailers segment).
8.      Giving different trading terms to different trade segments would have been vey difficult to impossible for the company to do without creating a severe problem but appointing a distributor solves the problem – its almost like creating a different brand.
9.      The case also demonstrated how a marketer can work within the financial norms of the company and still achieve the company objectives. In this case, the demand could have gone up by more than 25% - probably even 50% - but the company was in a bind
a.       The Retail trade unable to make necessary investments to cope up with this demand
b.      The company itself could not have given so much credit – no funds, much risk
10.  The students learned that not only do the distributors do the classical textbook job of undertaking sales transactions on behalf of the company and sometimes more …
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MY SESSION PLAN
PGDM STRATEGIC MARKETING CLASS
May 14, 2012

L5.      In the overall marketing mix, most students (wrongly) believe the “place” element among the 4Ps is the "passive element" and the product, price and promotion are the “ac
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