It’s a “New Brand World”: “14 Things You Need to Know” About “Marketing-Communications Today”| by: Linda Kearns | MarketingProfs

I worked in marketing for 20+ years for a Fortune 100 company—in various roles, including #BrandManagement, Global-Communications, #MarketingResearch, and #Communications—for some of the best-known brands…!!

In a word, I’ve had lots of experience with some of the Best #CreativeMinds and Agencies in the world while working at a large corporation…Yet, in the past three years, as a Marketing Consultant for a very small boutique agency in New York, I have learned more about what it takes to operate successfully and create value in today’s “new brand world”..

1. Marketing Materials don’t have to Cost a Lot :

Yes, you can create a TV/video commercial, and a pretty damn good one, for under $50,000. Basically that leaves $300,000-$400,000 or more to get exposure for your message..

With New Technology, Hungry Talent, and people looking to “make their mark” in the Entertainment Business, the Execution of a spot can be done very- affordably…If you know your Brand and it is being Managed with the Right-Message to the Right People, putting it on video does not have to be expensive; and it can still be fun, fresh, educational—and get noticed…You can get Logos and Graphics designed by Talented up-and-comers ; you can get Celebrity Endorsements for little OR no dollars…!!

If the #BrandFit, is Authentic, the message is on target, and the ultimate program is win-win for those involved, you can often do a lot with little up-front investment…

2. Pay what something is Worth, not what it Costs :

Prices are always negotiable. In general, you can get the product done or the media needed for a price that is in line with the value it creates. Recently, we negotiated 40% off the original quote for the media costs of a print ad in a major consumer publication with no sacrifice in placement. If you don’t ask, you won’t get…

3. Work with People who offer “Value” :

The work day is long. With Internet, email, and mobile devices, ideas come at all times of the day and night. There is little divide between work life and home life. Work is life and life is work, and it all fits together. Just make sure your intrusions are giving you value, interesting insights, and offering return on your time..

4. Work for People you Trust & Respect—and Who Trust & Respect You: 

That is the most important thing—and, together, your positive energy will help make things happen..

5. PR has always been Easy to Get…as long as you have News, but Today it is even Easier, Quicker & Less-Expensive:

With one click, the world can learn about your message, as long as it is newsworthy and creates interest. Social networking, blogging, and viral pick-up can work magic. There is often no need to send a formal release. But just remember: one click and the world will know your message..

6. If your “Product / Service has Style”, the Stylish will “Rave & Share” :

I know many people who can spot something that has the “it” factor: They think it’s cool, great, stylish… and that it will be a must-have. If it has style, Fashionista, Refinery29, People StyleWatch, Glamour.com, Elle.com, the Cut, and many, many bloggers and fashion influencers will write about it, covet it, pin it… because they know it “has it” and they love it. The Cambridge Satchel in its hey-day was a great example..

7. Do something you are “Passionate About” :

If you’re doing something you love, you will be more likely to have the energy to make something happen. Energy and enthusiasm in communications are contagious. If you are passionate about your brand, others will want to be, too..

8. Work with a Team that has Diverse Skills, various Points of View, and Different Backgrounds :

Together, they can form a holistic perspective and bring new and exciting ideas to the table. Again, nothing new… but I have learned just how well and successfully a small team can operate. Our agency’s strength is built on the strength of individuals, but it succeeds only because of the strength created as a result of how we work together as a team. Winning teams collaborate, build, and support one another. Doing so seems easier in smaller agencies because of less politics, similar goals, and faster response time…

9. It’s not what you know, “it’s who you know” :

That has always been the case. But this is even truer in our new world of communications. The difference today is that it is relatively easy to get to know new people. You can find someone’s contact details online or by phone. Getting a celebrity to cast… you can probably get his or her cell phone number. Finding a CMO’s email… a breeze. Lists of bloggers, websites, etc. are there for the picking. No need to buy lists; go online and search…Then tell them what you know…

10. Marketing Research is No Longer a Formal Science—”It’s a Way of Life” :

There is research at your fingertips. Use it. Consumers want to be engaged. In fact, they are probably already talking about your product and your competition. Just take a look. Get alerts. Do searches. Check Twitter streams. Ask questions. Start a dialogue. Engage consumers on a fan page. A blog. Tumblr. Pinterest. Instagram. Facebook.

Don’t pay for research until you have done your research on information that’s already available, for free. Then pay for new research smartly to find out the why, to get into the back-story, and to do further analysis..

11. Global Marketing is relatively Easy Today : What used to take years now takes Days or Months or Less :

You can take a product from the UK or Brazil, and get PR for it in the US, and get retail placement for the product fairly quickly. All with the Internet… sharing pictures, prices, endorsements, and press pick up. The world is much smaller. Great products in one country are usually great, and accessible, in another. Increasingly, consumer needs and desires are similar globally. And top celebrities and editors have worldwide influence.

12. Keep your Brand Relevant :

It is one thing to create buzz, awareness, and news for your brand. But if you want to keep it vital, it has to remain exciting, newsworthy, and interesting to your audience. For Cambridge Satchel, this was done with new styles, celebrity usage, designer collaborations, and product placement. But you need to keep such activities up to maintain brand relevance.

13. Continuously Audit and Protect your Brand :

To the best extent you can. Your brand lives in a viral marketplace now. So much is out of the control of the brand managers and the communications managers. If you aren’t continuously on the lookout and don’t manage and monitor your brand… it will still be out there, living without your input and protection.

14. Success breeds Counterfeits, so Beware of cyber-fraud:

Social Media is an amazing tool that can shortcut the success of a brand by creating awareness and interest that can spread exponentially. The flip side is that social media has created a viral “Canal Street” that ignores copyright and trademark, and sets up fraudulent websites, Facebook accounts, and Twitter profiles using your brand and photos. Others will trade off your success. Buyer beware, and #Brand be aware…!!

SEBI fine-tunes “Draft-Regulations” for “Infrastructure Investment Trusts” in India | VCCircle

Leasing of land on which a Hospital or Hotel is located shall not be considered as an “ Infrastructure Project for the purposes of #InvITs”…!!

Securities market regulator #SEBI ( Securities and Exchange Board of India), has come out with more elaborate Draft Regulations for setting up “Infrastructure Investment Trusts (InvITs), which prescribe at least 80 per cent of the corpus to be invested in completed or income generating assets for InvITs issuing public units, strategic investors to bring at least 5 per cent of the amount, InvITs offer size to be at least Rs 250 crore (around $42 million) and that the proposed holding of an InvIT in the underlying assets shall be not less than Rs 500 crore ($83 million)..

This follows a previous consultation note circulated late last year and incorporates the provisions delineated in the Union Budget which provided tax pass-through status to such investment vehicles..SEBI has called for comments on its draft proposals by July 24…

Here are some key points:

InvITs are proposed to provide a suitable structure for financing/refinancing of infrastructure projects in the country..It shall invest in infrastructure projects, either directly or through SPV. In case of PPP projects, such investments shall only be through SPV…

InvITs which propose to invest at least 80 per cent of the value of the assets in the completed and revenue generating infrastructure assets, shall raise funds only through public issue of units and minimum subscription size and trading lot for such InvIT shall be Rs 5 lakh. Rest 20 per cent may be invested in under construction infrastructure projects (subject to maximum of 10 per cent) and other permissible investments. The minimum public float in such issues would be 25 per cent, which is at par with equity issues on the bourses.

These other permissible investments include listed or unlisted debt of companies or body corporate in infrastructure sector (provided that this shall not include any investment made in debt of the SPV); shares of companies listed on a recognised stock exchange in India which derives over 80 per cent of operating income from infrastructure sector; government securities besides money market instruments, liquid mutual funds or cash equivalents..

An InvIT which proposes to invest more than 10 per cent of the value of its assets in under construction infrastructure projects shall necessarily raise funds through private placement from Qualified Institutional Buyers and body corporate and the minimum investment and trading lot for such InvITs shall be of Rs 1 crore. Such InvITs shall mandatorily invest in at least one completed and revenue generating project and not less than one pre- commercial operation date (COD) project. In such InvITs there should be at least five QIBs and a maximum of 1,000 institutional investors holding units.

Listing shall be mandatory for both publicly offered and privately placed InvITs…!!

The InvIT shall refund money to the applicants if it collects subscription of amount less than 75 per cent of the issue size as specified in the final offer document or in the case of public issues less than 20 subscribers buy the units of the InvIT. SEBI has also said the maximum oversubscription amount which can be retained by the InvIT would be capped at 25 per cent over and above the target.,

An InvIT prior to making an offer of units, either through public issue or private placement, may have strategic investors such as banks, international multilateral financial institutions, foreign portfolio investors including sovereign wealth funds, etc., which together invest at least 5 per cent of the size of the InvIT or such amount  as may be specified by SEBI.

An InvIT shall be a trust with parties such as sponsor(s), investment manager, trustee and project manager(s). A trustee can either be a debenture trustee registered with SEBI and not an associate of the sponsor(s)/investment manager; or an associate of the sponsor/investment manager having not less than 50 per cent of its directors as independent and not related parties to the InvIT. However, a trustee of InvIT cannot be trustee to another InvIT or an Alternative Investment Fund engaged in infrastructure sector.

The proposed holding of an InvIT in the underlying assets shall be not less than Rs 500 crore and the offer size of the InvIT shall not be less then Rs 250 crore at the time of initial offer of units.

The aggregate consolidated borrowing of the InvIT and the underlying SPVs shall be capped at 49 per cent of the value of InvIT assets. However, this may exclude any debt infused by the InvIT in the underlying SPV. Further, for any borrowing exceeding 25 per cent of the value of InvIT assets, requirement of credit rating and unit holders approval has been made mandatory.

SEBI has said leasing of land or building on which a hospital or hotel is located shall not be considered as an infrastructure project for the purposes of InvITs but if revenues are generated from operation and management of a hospital or hotel, then the same shall be considered as infrastructure project under these regulations.

If the sponsor of the InvIT is a developer it needs to have at least two projects which have achieved financial closure…

It calls for the investment manager to have net worth of at least Rs 5 crore if it is a body corporate or a company or net tangible assets of value not less than Rs 5 crore in case the it is a Limited Liability Partnership..

It should have at least five years experience in #FundManagement/#AdvisoryServices/development in the #InfrastructureSector and have at least two employees with five years or more experience each, in fund management/advisory services/development in the infrastructure sector; at least one employee who has five years of experience in the relevant sub-sector(s) in which the InvIT has invested or proposes to invest; an office in India from where the operations pertaining to the InvIT is proposed to be conducted…!!

From “Demand-Generation” to “Revenue-Generation”: How to “Become a Revenue-Driven” Marketer |by: Glenn Gow |Marketing Profs

In this article, you’ll learn…

  • How leading marketers are turning their organizations into revenue engines
  • Best-practices for transitioning Marketing into a revenue-focused organization

The days of being grudgingly accepted as a necessary #CostCenter, are numbered for #Marketing…Today, the writing is on the wall: Either demonstrate how Marketing will contribute to the company’s top-line revenue growth… or be prepared to change careers…!!

#CMOs and VPs of Marketing need to step up and take responsibility for #RevenueProduction…That means coming to the table with a #RevenueMarketing Forecast and aligning tightly with #Sales, to ensure the revenue goal is met…

Some companies are even assigning Revenue Quotas to Marketing and compensating marketing executives on meeting those quotas…Your company might be next…!!

As a #Marketer, you can view this trend as a negative, or you can approach it as an opportunity to finally achieve credibility within your company, especially with the #ExecutiveSuite…Showing a return on investment is the entrée to a strategic place at the executive table…

The big question is How to make the transition from being a Demand Generation-focused Organization to becoming a Revenue-Generating Organization…??

There is no cookie-cutter solution, but there are proven best-practices being used by savvy marketers to successfully drive revenue-focused marketing (also see the infographic at the end of this article)…

FIVE Best-Practices for Becoming a Revenue Marketer :

1. Start at the Top to create a Revenue-generation #MarketingPlan - The first step in the revenue marketing process is to look at your company’s overall business plan, including the revenue goal. Your marketing plan should align with the business priorities and goals for your company as set out in the company plan.

You then determine the percentage of the overall revenue goal that marketing should contribute. Though the percentage will vary by industry, in our experience it’s not uncommon to see targets starting at 30% or even higher. Based on that target, you can set performance goals for the demand waterfall, including the number of visitors, leads, opportunities, and closed deals you need to make your revenue quota..

2. Get your measurements in place - Many marketing departments don’t know how to focus on revenue as a goal because they don’t understand how they can measure it. You must have the proper systems in place so that you’re able to track a lead from the moment it comes in all the way through the buying cycle, when that buyer purchases, renews, or cancels.

A connected view of the buyer lifecycle allows you to demonstrate marketing’s contribution to revenue..

The problem is that many marketers have disjointed systems or they lack the right marketing solutions altogether, which limits their ability to track performance across the buying cycle…A VentureBeat study found that only 20% of large companies use marketing automation today..#MarketingTechnology, will be imperative to connect the dots across the buyer’s journey and Measure Key-performance-indicators, that support Revenue Generation…!!

3. Speak the same language as Sales - Becoming a revenue-generating marketing organization means working much more closely with Sales than in the past. And to get their attention, you need to speak their language. When you talk about open rates, lead generation, and automated nurture campaigns, Sales hears “marketing-speak.” Don’t talk about leads. Talk about qualified opportunities and closed business..

As marketing organizations make the transition into revenue generation, the shift to speaking the same language will start happening organically. Planning, forecasting, pipeline, bookings, and revenue become the common ground for the two organizations to work together..

4. Maintain the Relationship with Prospects and Buyers - It’s no longer acceptable to hand off the lead or opportunity and walk way. Marketing has to take responsibility for working with Sales to find ways to help move the buying process along. When Marketing hands off the opportunity, it shouldn’t lose the relationship. It needs to maintain the connection throughout the buyer’s journey.

Once a lead is qualified and converted into an opportunity, Marketing should create pipeline acceleration programs to help Sales close deals…For instance, marketing could create an individualized program for opportunities that have been stuck for 30 days or more, to help move them forward..

5. Define Service-Level Agreements - Part of committing to a partnership is agreeing on how you’ll work together…#SLA (Service-level agreements), can help you better define your working relationship with Sales. For example, you might decide that Marketing will provide only leads that meet certain criteria as an opportunity, then once that opportunity is handed to sales, Sales must make contact within 48 hours, else the opportunity reverts to Inside Sales..

The point is to agree on when an opportunity will be handed off, how long Sales will hold it, and what happens when the required action does not occur. The agreement needs to be ratified at the most senior levels within Sales and Marketing to ensure buy-in and commitment from the top down…

It’s All About Revenue Now :

Nearly every marketing executive is feeling the pressure to show a financial return. But signing up for a revenue number should be viewed as a positive: It’s an opportunity to expand Marketing’s influence and justify a larger budget..

As you build your Revenue-Engine, you can scale your Success, Grow Marketing’s contribution to the #BottomLine, and make that Seat at the Executive-Table permanent…!!

 

“Indian Consumption Pie”: “Food to stay No.1″ item on Family-shopping List | by: Abheek Singhi | Livemint

“Food will remain the Largest Spend Category” even in 2020 with spending of Rs.40 trillion, followed very closely by “Housing & Consumer Durable” with spending of Rs.35 trillion..!!

Most Indians, even those with incomes of $3,000 (around Rs.1.8 lakh) per-annum OR Lower, consume basic products such as cooking oil, bathing soap, washing powder, and tea. But, as they get richer, they start to purchase durable goods, with the typical hierarchy being TV and cooking gas as the top focus..

Ten years ago, Rakesh Sahu, who runs a small restaurant on the outskirts of Lucknow, ate cheap rice, avoiding fruits because of the cost involved. Now, he buys branded refined oil, basmati rice, and eats all the fruits and vegetables he wants because he can afford the extra spending…

photo

“I don’t think twice before buying good food for my family today”, says Sahu, whose income has increased more than five times in the past 10 years from Rs.90,000 per year to Rs.5 lakh now…!!

He used to get clothes stitched for the family for special occasions earlier. These days, he buys ready-made garments —though he does not spend extra for brand names..

The amount Sahu spends on consumer goods and what he chooses to spend his money on fit into a pattern that has accompanied rising incomes in India. The aggregate consumer expenditure is likely to increase from Rs.45 trillion in 2010 to nearly Rs.150 trillion by 2020—an over-threefold jump in a decade..

Sahu, for instance, does care about brands in the durables space. His television set is an LG, which he bought after watching a programme on a neighbour’s LG. He has moved his son from a government school to the City Montessori School—an English-medium private school. “I want my son to have the best education possible”.

Where once he had no money for “Leisure or Entertainment” (discretionary spending), Sahu now takes his wife out for an occasional movie and even the spot of jewellery shopping…

We analysed consumer spending across different categories and how it is expected to change with rises in income levels and over time. Today, the No.1 item on the family shopping list is food, accounting for nearly one-third of the total consumer spending. Second on consumers’ spending list is housing and household appliances, closely followed by transport and communication..

Interestingly, the spending across different income segments is quite different and has changed with time…!!

To monitor this transition, we use a tool we call consumption curves. This helps us establish how consumers change their spending habits as they earn more. Different types of products have differently shaped curves—and this demonstrates that consumer demand for different products and categories changes at varying rates..

For items such as #Household goods, the consumption curve is an upward line, indicating a steady rise in spending as incomes rise. Other #ConsumerCategories, that rise steadily, if less steeply than Household Goods, are Transport and Communication, as well as #Education..

Expenditure on “Health”, another Major Category, only really starts to rise as people enter the upper-middle OR affluent classes, with only the tail-end of the Consumption curve bending upwards. By contrast, the #ConsumptionCurve, for Food..follows a gentler trajectory, and “actually flattens out as people get richer”… You can only spend so much and consume only so many calories…!!

Exhibit 1: shows the consumption curves for broad categories across different countries for the three different types of curves for Household-goods, #Health-care and Food. We find that the consumer off-take pattern changes with increase in income—even within the same broad category.

Exhibit 2: show the three patterns observed in India. The first type of increase is “inflection point”—observed in the mass #FMCG (fast moving consumer goods),categories such as Tooth-paste—which also have low-cost substitutes such as Tooth-powder..

In this situation, category consumption changes dramatically as the consumer enters the middle class and then remains largely flat…!!

The second pattern is “continuous growth”, which holds true for most durable goods and more premium FMCGs. Here, the consumption increases steadily with increases in income. The third pattern is “stable with income”, observed in highly penetrated FMCG categories such as biscuits and vanaspati..

In this case, the level of penetration is not significantly different across income segments…

Our research indicates that as people enter the #Middle-class, they switch their focus to Consumer-goods that enhance their quality of life Far-beyond subsistence..

Most Indians, even those with incomes of $3,000 (around Rs.1.8 lakh) per annum OR lower, consume basic products such as cooking oil, bathing soap, washing powder, and tea. But, as they get richer, they start to purchase durable goods, with the typical hierarchy being TV and cooking gas as the top focus..

Beyond this, they prioritize goods and services relating to the family, especially children…

We have calculated that 37% of the middle class household’s expenditure is devoted to children, mainly their food and education…One young couple we met in Mumbai, earning about Rs.15,000 per month and living in a one-room chawl, spends nearly Rs.1,000 per month on the school fees for their only daughter. “We want the very best we can afford for her,” they explained…!!

We have estimated how the shape of consumption is likely to change for India in the future, based on the consumption curves from 2010 to 2020…Food will remain the largest spend category even in 2020 with spending of Rs.40 trillion, followed very closely by housing and consumer durable with spending of Rs.35 trillion.

The fastest growing categories are related to “Education, Entertainment & Leisure”, increasing more than FOUR Times in the 10-year period…!!

It seems clear that Both the Size & Shape of Consumption is going to undergo dramatic changes going forward…!!

Time to “Recognise Private-Universities’ Role” in putting “India on the Global Education Map” | by: Ashish Dhawan | The Economic Times

Private universities in India are often treated with suspicion for providing poor quality education and being most focused on making money. While this may be true in some cases, they are playing a significant role in fulfilling our country’s growing demand for quality higher education. 60 % of college-going students in the country today are enrolled in private institutions…

Rapidly increasing demand for higher education in India is part of a global trend with worldwide enrolment expected to rise from 100 million in 2000 to 260 million in 2025. Many countries are encouraging private institutions as a viable way to ensure that students are offered this opportunity. For example, Brazil recognized that the public sector cannot meet its youth’s demand and therefore encouraged and supported private education..

Currently, over 75% of Brazilian students go to private institutions and the largest higher education firm, Kroton, has over a million students…

Similarly, developed countries such as Japan and Korea have over 70% students enrolled in private universities, while developing countries such as Malaysia have over 50%. China invested in top private universities through Project 985 to build a few world-class universities, but is struggling to provide education for students at the base of the pyramid. Recognizing this gap, China has also enacted a Law for Facilitation of Private Education in 2002.

This led to the number of higher education institutions doubling and enrollment increasing five-fold over the past decade…

New Chapter:

The Indian higher education system consists of three tiers: elite public institutions, second-tier public and private institutions, and finally private institutions providing mass education. In most developing countries, elite institutions are publicly owned and heavily subsidized..

In India too, the government spends a significant amount per student for IITs and IIMs. Commercial private players often do not have the same motivation to incentivize education, and have therefore not pursued quality higher education actively.

However, with rapid economic growth, the private sector has reacted to the needs of our workforce and set up a large number of professional colleges, especially in engineering and management. The Indian School of Business, for example, created an innovative one-year MBA programme for students with work experience, relative to the traditional model at the IIMs. Recently, we have seen an emergence of philanthropic universities such as Azim Premji University and Shiv Nadar University that are offering quality education.

Private universities in higher education are also breaking conventional paradigms in education. Ashoka University offers a liberal education to students, allowing them to break down borders of arts and sciences, theory and practice, and take courses across to craft their own interdisciplinary major. Such institutions can serve as models for other institutions that focus on developing 21st century skills, critical thinking, communication and leadership.

These initiatives point to the emergence of a new breed of private institutions in India that can complement elite public institutions and establish international standards of excellence in Indian higher education.

While it is encouraging that the Union Budget 2014 committed resources to replicating apex institutions such as IITs, IIMs and AIIMS across the country, our government should look at the higher education system more holistically to increase the gross enrolment ratio (GER) and uplift quality..

Hard Taskmaster:

The government should move beyond being the primary service provider in education and play a catalyzing role in improving quality of higher education in India. It can do so by tightening licensing standards and improving quality assurance, without impinging on the autonomy of private institutes..

The government must invest in a regulatory architecture that can improve the standards of all institutions, public and private, dramatically. The National Assessment and Accreditation Council should be strengthened and the rating framework of institutes should shift focus from infrastructure and inputs to student learning outcomes..

Given the fiscal deficit our country faces and the need to rapidly increase higher education institutions to meet demand, our government should recognize that private institutions are a large part of the ecosystem and play a significant role in achieving a high GER…

We need the best of public and private efforts to make Indian higher education globally competitive..!!

What You “Need to Know About Segmentation” | by: Gretchen Gavett | HBR

The marketers of Clearblue Advanced Pregnancy Test, a product that can tell you if you’re one-week, two-weeks, or three-plus weeks pregnant, asked a couple of D-list celebrities to tweet out their positive tests back in 2013… IbisWorld researcher Jocelyn Phillips as pointing to the high-tech aspects of Clearblue’s test, also noting that young women might be more willing to shell out more money for such technology — the digital version costs about $5 more than the boring old blue and pink line version…

There is nothing new about this kind of segmenting in the pregnancy test market, however. And it’s actually a really useful (if not slightly unsettling) example of how you might segment potential-customers with very different needs and behaviors..

For example, you could segment the market for early pregnancy tests based on demographics such as age and income, or you could segment the market based on consumers’ price sensitivity…

But in this situation, it is useful to ask why : Why would a woman want to take a pregnancy test ? And are these reasons the same for everyone? A little bit of thought would suggest that there are two groups of women: hopefuls, those who want to be pregnant, and fearfuls, those who are afraid that they might be pregnant.

How would you identify these two segments and market to them differently? Often companies offer multiple products that appeal to different market segments and let customers self-select. That is, the firm does not identify customers in various market segments; instead, the customers reveal their market segment identity by choosing different products. Quidol, a company based in San Diego, California, created two different products to appeal to two segments in the market for early pregnancy tests: the hopefuls and the fearfuls. The actual test products were almost identical, but the two products were given different names and package designs, were placed in different aisles of a drugstore, and were priced differently.

Segmenting, at its most basic, is the separation of a group of customers with different needs into subgroups of customers with similar needs and preferences. By doing this, a company can better tailor and target its products and services to meet each segment’s needs. This isn’t, as McKinsey’sJohn Forsyth says, simply for marketing or retail firms.

“We see many, many companies saying, ” I want to get more consumer-driven and customer-facing…But sometimes the organizations don’t know how to start….I’d say you really start with a basic understanding of your consumers or customers, right ? And that’s segmentation…”

It sounds straightforward but often it isn’t. Here are a few pitfalls that many companies fall into when they start thinking about segmentation…

  • One, companies rarely create a segment  — more often they uncover one.
  • Two, segmentation and demographics are very different things. “You have two people, we know they’re the same age, we know they’re British citizens, and we know they’re of royal blood,” explains Forsyth. “One of them is Prince Charles. The other is Ozzy Osbourne, the Prince of Darkness. They’re in the same demographic segment, but I can’t imagine marketing to them the same way.”
  • And three: you have to ask yourself why you want to segment and what decisions you’ll make based on the information. “Many companies say, well, I think I just need a segmentation,” says Forsyth. “But before you even start the segmentation, you need to really understand why you’re doing it and what some of the actions are that you’re planning to take, based on what you think you might see. It helps you understand what’s actionable in terms of driving a company’s business.”

Once you’ve answered these questions, you have to decide whether you want to start segmenting by needs or behaviors. “If you’re doing something strategic and you’re trying to figure out if you have the right brands, the right value proposition, the right product line, then I would say you should start with needs or attitude segmentation,” explains Forsyth. This is basically trying to identify what needs your product or service is or could meet.

“But if you think you’ve got that pretty much under control,” he continues, “and you need to understand how to go to market or target your digital and TV spending, then I would start with behavior.” This involves trying to identify differences in customer groups based on their buying and lifestyle patterns, for example -

Regardless of your approach, a useful “Segmentation” should include these SIX Characteristics :

1) Identifiable. You should be able to identify customers in each segment and measure their characteristics, like demographics or usage behavior.

2) Substantial. It’s usually not cost-effective to target small segments — a segment, therefore, must be large enough to be potentially profitable.

3) Accessible. It sounds obvious, but your company should be able to reach its segments via communication and distribution channels. When it comes to young people, for example, your company should have access to Twitter and Tumblr and know how to use them authentically — or, as Clearblue smartly did, reach out to celebrities with active Twitter presences to do some of your marketing for you.

4) Stable. In order for a marketing effort to be successful, a segment should be stable enough for a long enough period of time to be marketed to strategically. For example, lifestyle is often used as a way to segment. But research has found that, internationally, lifestyle is dynamic and constantly evolving. Thus, segmenting based on that variable globally might not be wise.

5) Differentiable. The people (or organizations, in B2B marketing) in a segment should have similar needs that are clearly different from the needs of other people in other segments.

6) Actionable. You have to be able to provide products or services to your segments. One U.S. insurance company, for example, spent a lot of time and money identifying a segment, only to discover that it couldn’t find any customers for its insurance product in that segment, nor was the organization able to design any actions to target them.

Now you can start breaking down segments by who buys, what they buy, and why they buy (or use or view, etc.) it. The pregnancy test interactive above is a great example of how this works…

There are also prominent failures that companies should heed. One of the most infamous is when Bic decided to segment its young female consumers. The “Bic Cristal for Her” writing utensils were thinner, designed with more pastel colors, and priced higher than other pens. Women, in general, were offended, taking to Amazon to write some very creative reviews. The pen market, in other words, was not as heterogeneous along gender lines as Bic had thought.

When thinking about how you segment, John Forsyth has several suggestions. For one, he notes, “focus groups are dead. If you’re still using focus groups, you’re using 30-year-old technology.” A much better way to understand customer needs and behaviors is to spend time with people in their homes, stores, or health clubs. “You watch them, you talk to them while they’re doing the kinds of things we want to be observing.”

This type of qualitative research is all the more important because it showcases real stories that are key to convincing stakeholders. “When we illustrate things with qualitative research, we get CEOs going, ‘Wow, you’re really telling me my marketing strategy is all wrong and I need to change it,’” says Forsyth. “It’s very powerful, and it’s really exploded in the last 10 years.”

Big Data and technology have changed how companies approach segmenting. “The old model, particularly in the market research world was, ‘I understand people’s needs and attitudes, and behaviors will come from that,’” Forsyth explains. “Today, in many situations, [marketers] have flipped it to say, ‘I’m going to do segmentation based on their behaviors, and then I’m going to try to understand the needs that drive behavioral differences.”

He warns, however, that this type of segmentation is “a lot harder to do than people think, and I don’t think we’re anywhere near being good at it yet.”

Forsyth’s also seeing a lot of movement in the area of segmenting emerging markets worldwide, which poses a number of challenges. For one, scales marketers use to measure needs or behaviors in one country may be way off in another due to different cultural norms.

He also notes that “Affordability” is still a Huge-factor in “#DevelopingCountries,” too..whereas it may not be elsewhere — as the $20 pack of digital pregnancy tests demonstrates nicely…!!

“Local Dynamo’s” : How Local Companies in “Emerging-Markets are Winning” at Home | BCG

Emerging markets remain Global Growth-Engines…Although some of these markets are doing better than others, they collectively offer the most promising opportunities for expansion. Yet global companies often struggle to create Successful #BusinessModels in #EmergingMarkets…At the same time, many local companies are thriving—building businesses that attract local customers and defeat both other homegrown companies and multinationals. Understanding the successful practices of these companies can help you win in these markets, too…!!

Several banks, for example, have grown quickly and profitably in emerging markets, even though most consumers frequently have unstable incomes and don’t have even a checking account. In Mexico, Banco Mercantil del Norte, or Banorte, wanted to reach potential customers without constructing expensive bank branches, so it decided to rely on other companies’ bricks and mortar. The bank partnered with Telecomm-Telegrafos, a rural telecom operator with 1,621 retail locations; 7-Eleven, one of the fastest-growing convenience chains in Mexico, with 1,720 contact points; Tiendas Extra, a convenience store with 883 locations; Soriana, a supermarket chain offering 633 points of sale; and Grupo Control, with 75 points of contact as of March 2014. These partnerships aim to offer basic financial products such as deposits, credit cards, remittances, and withdrawals..

exhibit

Across the Pacific Ocean, Bank Rakyat Indonesia (BRI), the nation’s oldest and most profitable bank, serves the street vendors and merchants that power the nation’s local economy. BRI sends employees equipped with handheld devices into 2,300 busy markets and bazaars, which cater to nearly 6 million customers. The bank is experimenting with floating branches to reach remote customers on Indonesia’s more than 900 inhabited islands..

In all industries, Local companies are transforming the constraints of emerging economies into profitable opportunities and becoming thriving commercial enterprises. We have compiled a list of such energetic private-sector companies—or local dynamos—to highlight their accomplishments. Though there are hundreds of dynamos, we focused on just 50 to better see how their practices may be applied more broadly to all companies that want to succeed in these markets. (See Exhibit 1)..

Meet the Local Dynamos : 

The 2014 list reflects the consumer-driven focus of emerging markets as they increasingly start to resemble mature-market economies and move beyond low costs, cheap labor, and other traditional sources of advantage. Many of the local dynamos are competing on innovation rather than cost, for instance: South Africa’s Discovery Health, an insurance administrator, rewards its customers for modifying their lifestyles and habits..

Local dynamos have been growing faster than comparable companies in both emerging and mature economies…From 2009 to 2013, their revenues grew by 28 percent annually…This growth has generated even greater returns for shareholders. During the same period, total shareholder return rose 26 percent annually for the local dynamos, a much steeper rate than those for indices composed of similar companies..

The Secrets of Their Success : 

Each #LocalDynamo, has its own story about how it has won in its home market…At the same time, the 50 companies share six traits that give them an edge. Four of these traits are specific to the business models that they deploy to thrive in emerging markets: catering to customers and local conditions, leveraging digital technologies, operating at warp speed, and adapting to uncertainty and circumstance..

The other TWO Traits—Building Talent Engines and Establishing Functional Excellence—demonstrate the rapid development of these companies as they create world-class strengths and gain skills commonly found in multinational companies. (See Exhibit 2)…

exhibit

Let’s see how they do it….!!

Catering to Customers and Local Conditions - The local dynamos understand their customers intimately and know how to appeal to them. They identify new customer segments, unmet needs, and local habits that other companies do not recognize. Perhaps foremost, they understand the cost-and-quality calculus that will appeal to the growing middle and affluent class in these markets..

Shriram Transport Finance, for example, was founded in India in 1979 to provide financing to owners of small trucks, a segment that financial institutions were largely ignoring. Shriram now boasts more than 600 branches and about a 25 percent share of the pre-owned commercial-vehicle financing market in India. Field officers make monthly visits to borrowers, during which they often collect cash payments..

Leveraging Digital Technologies - By 2018, there will be an additional 1 billion Internet users and more than 5 billion post-PC products—tablets and smartphones—in circulation than there are today. Most will be located in emerging markets..

Although Internet and mobile coverage remains spotty in these markets, innovation is sky high. Without investments in hard infrastructure (such as stores and branches) to protect, many companies are focusing their resources on online and mobile channels..

Xiaomi, for example, forgoes expensive retail outlets and sells mobile phones directly to consumers in China..In 2013, the company sold about 18.7 million smartphones at about half the price of comparable Samsung and Apple phones; Xiaomi already outsells Apple in China. CEO and founder Lei Jun has ambitions to sell 60 million smartphones in 2014. Xiaomi offers batches of 200,000 to 300,000 phones at a time, and they sometimes sell out in minutes..

Xiaomi is also mastering online marketing platforms. Its social-media team is active on WeChat, Baidu, QQ, and other online forums. Lei Jun has 8 million followers on Sina Weibo, currently the most popular social-media platform in China..

Operating at Warp Speed - Local dynamos have built their businesses swiftly and successfully. They add people in large numbers without faltering. They move into new segments and rapidly become market leaders. In markets comprising multiple regions and customer segments, many of the dynamos have created national brands and established a national sales and retail presence…

Brazil’s Magazine Luiza, a retailer with $4.1 billion in sales in 2013, has grown more than 26 percent annually since 2009 by catering to Brazil’s swelling middle class. As a result of several acquisitions, Magazine Luiza has more than tripled the number of its stores over the past ten years. But the company has also grown organically, expanding in important cities such as São Paulo, where it opened 44 stores in a single day in 2008…

Online sales have been growing faster than conventional sales, thanks to innovations such as social-shopping services and strong fulfillment. The company has, for example, created online stores on Facebook and elsewhere that allow consumers to sell goods on commission to friends and family…

Adapting to Uncertainty and Circumstance - Still, the emerging-market environment remains challenging. The supply of electrical service is sometimes uneven. Roads and rail networks, high-speed wireless networks, and ports are works in progress in many locations. Market intelligence is occasionally spotty. But local dynamos have creatively worked through these limitations to meet the needs of their customers…

Equity Bank, one of the largest banks in Kenya, has expanded by providing services to customers previously viewed as “unbankable…” Rather than build local branches for people who live in remote areas, Equity Bank relies on agents to deliver financial services. The agents use their smartphones to accept an application for a new account. The application is then processed centrally, and the applicant receives notification of the status of the application via text messages..

Building Talent Engines - Talent shortages may be acute everywhere, but they are especially severe in emerging markets. Historically, companies have not offered the same level of training and development that schools provide, and schools just can’t keep up with the demand for qualified candidates. Job-hopping is often viewed as the fastest way to advance rapidly in these markets..

Local dynamos successfully overcome these constraints. They hire top local talent and build an engaging and rewarding environment. They also put in place strong people practices so they can identify, train, and promote their best employees and help those who need stronger skills.

HaiDiLao Hotpot, a thriving hot-pot restaurant chain in China, provides a captivating customer experience that would be impossible to pull off without engaged employees. “On special holidays, magicians in colorful, traditional masks perform tricks. Patrons order using iPads. Periodically, a server breaks into the restaurant’s signature Olympic-style ‘noodle dance,’” a Wall Street Journal article observed in 2013.

The company has promoted this environment through careful development and training of its employees. Performance evaluations, for example, are based on customer satisfaction and an employee’s passion for work. And HaiDiLao’s benefits are unmatched in the restaurant industry: the company offers free apartments, with air conditioning and Internet, to employees and helps them solve any difficulties with enrolling their children in school.

Establishing Functional Excellence - One of the ways that many local dynamos distinguish themselves from the rest of the pack is by developing functional capabilities that rival—or even exceed—those of multinational companies. These capabilities include business model innovation, technological innovation, operational excellence, branding and marketing, product offering, and customer service.

Cinépolis excels in many of these areas…The company has grown to become the largest movie operator in Mexico, with 295 cinemas and 136.7 million annual visitors, by offering an unparalleled and innovative theatrical experience. Its theaters have comfortable stadium seating and modern digital technologies.

Heeding the results of market research, Cinépolis developed movie snacks with Mexican flavors, such as popcorn with lemon juice and chili sauce. Customers can enjoy a meal while watching a movie in the VIP room. Some of the theaters are equipped with “4DX” technology, which produces movement, smells, mist, and wind in addition to sound and video. Cinépolis has also developed facilities where children can watch movies while playing in a ball pit…

Shaping Your Response to the Local Dynamos :

How can you compete against these homegrown companies? You need both to emulate them and emphasize your own strengths…Emulating the dynamos will require you to operate with their energy, ambition, and entrepreneurial zeal and to adopt the characteristics that we identified earlier as keys to their success in their home markets..

Ask yourself the following questions -

  • Are your best and brightest employees deployed in emerging markets? If not, you will lose.
  • Are your aspirations bold enough? Unless your aim is to grow twice as fast as the market, your aspirations are too low.
  • Have you created a profitable business model that delivers growth now? You need to deliver something special and specific to each market at an affordable, yet profitable, price.
  • Do you and your senior team spend enough time on the ground? You need to be more than a tourist to succeed against these home-grown companies. You and your team should walk the streets, take public transportation, and visit stores, homes, hospitals, and government offices.
  • Are your initial investments big enough? Money does not buy success in these markets, but it can help to overcome the running start that local dynamos have. You simply cannot make up the lost ground with incremental investments.

Emphasizing your own strengths should be an easier task…You do not have to abandon what worked at home or in other overseas markets. But you do have to figure out how to apply your scale, expertise, brand, R&D capabilities, access to capital—and whatever other strengths you possess—in a different and potentially rewarding setting….!!