Habits – Path Dependence – 2

competition, differentiation, differentiation, ideal customer, Marketing, segmentation, single target market

In my earlier post I wrote about why Path Dependence can be a big barrier to success. The reason this is important when we look at Marketing and Product Marketing is that the market and the competitors are always changing. The customers change, the way they like to interact with suppliers changes, their priorities change. The way your competition reacts to these changes with their offerings and how you react all need to keep up with these changes

So the solutions which helped you become successful previously may not make you successful now. It happens to me all the time. Whenever I keep trying to use the same old data points, the same old methods and things don’t work I have to start going down to basics.

Habits are good , as I have said multiple times before, because they help cut out the energy requirements from our life , but the same habits become a baggage when you have to change to meet new scenarios. Habits work on path dependence.

While the basics of targeting a single target market, differentiation , segmentation, all remain as is, what changes is the way you address a customer. There was a time when you reached out on the phone to people. Then people. got Caller id phones and if they didn’t recognise your number you got diverted to voice mail. Then came email. But if you were still stuck on phone as primary method of prospecting and didn’t adapt to email prospecting you would be long gone.

So while habits are good, energy & time efficient, sometimes when things are not working out you need to look at another path to see if it can take you to your destination.

If you look at India’s history as an analogy, one of the reasons that they were able to conquer our country and rule it for almost 150 years was because they came with guns, while the Indian kings at that time, still had their armies using swords and spears.

In marketing if you don’t carry the ability to go back to basics to figure out what is causing your team to fail, then you won’t last long. Sometimes you have to change the teams just for this reason, because if they are not willing to change, you have just two options – either die a slow death or change the team and live to fight another day.

Till next time then, don’t let path dependence stop. you from exploring new solutions.

Carpe Diem!!!

Product management concepts for a consumer company -2

B2B, differentiation, differentiation, ideal customer, Marketing, Positioning, route to market, segmentation, single target market

Product management is actually a much stronger discipline with consumer companies – both in the FMCG and White Goods space. What has happened with the e-commerce companies is that they have actually taken the whole consumer marketing concept to a different scale. Having said that, all the companies which are successful even in the e-commerce space, have followed the basics of marketing / product management to the core.

What started this series of posts was the fact that while these companies were burning massive cash, they were still enjoying heavy premiums when they get listed in the stock market. So is it that they are blindly burning cash or is there a method to the madness.

I highlighted some of the concepts in yesterday’s post. Today let’s look at other things like Single Target Market. Amazon today is a very big market place where they sell their own products as well as provide a platform for others to sell and take a commission on items sold. But Amazon only started by selling books initially. They did not try to get into selling everything at once. And they just sold books first in the Americas before expanding.

Look at another company Uber – they were only the ride hailing App. They did not get into the Uber Eats or the Uber Connect till they had taken a dominant position in that market. Similarly Zappos – which is now part of Amazon – was only into selling shoes.

Generally when I talk of concepts and give ideas for targeting the customers, building partnerships, I speak from the perspective of a small or mid-sized company which is wanting to get into the market. So some of the ideas are very specific.

However the same concepts at a different level are also applicable over the e-commerce space. So while Amazon is a big daddy in the retail products space, a small start-up in India “Nykaa” started with just selling cosmetics and related products to ladies. Today if you want even a French perfume in India, your first port (in this case App) of choice would be Nykaa. Its become such a big brand for the cosmetics and related categories. Similarly in the fashion space its “Myntra”. These companies segmented the market even within e-commerce and specialised in certain areas and have made a success out of it.

So principles of marketing and product management won’t change, what could change is the scale, the risk and the delivery mechanisms.

Till next time then.

Carpe Diem!!!

Product Management concepts for a consumer company

B2B, differentiation, ideal customer, Marketing, Product Management, Profitability, Risks, single target market

When you see the large venture capital backed companies burning cash month on month you wonder if the general concepts of Product Management / Marketing are valid, these days, for a consumer facing company.

There is one dynamic to keep in mind – the principles of Product Management / Marketing have not changed, what’s changed is the availability of money at extremely low rates – in most developed countries the interest rates are hovering at or less than 1% on bank deposit . In Japan just a few months back interest rates had actually gone negative.

If you keep this in mind where cost of money is so low, people are looking for ways to get a higher return on their investment so the propensity to take risk is higher. If the cost of money would be say at about 5% on bank deposits, then the propensity to put in risk capital would be different. That’s also one of the key reasons that the stock markets are at a record high even though countries have been facing lockdowns.

Now inspite of this these VC based companies are generally not stupid. The VCs do put in checks and balances to ensure their money does not sink.

So the burning of cash is part of a strategy to acquire customers. This would only succeed if the life time value of a customer is known. This principle is true for any kind of product or service you get into. If you know the life time value of a customer then you can actually buy customers because you know that if they are happy they will buy more often from you and also refer others to you.

The second is the convenience factor / inertia factor. Once you have given some customer a good service and they get used to the convenience of working with you, they will generally end up buying from you because the cost of getting another vendor is quite high. In case of B2B customers the number of processes to complete to get a new vendor empanelled are so large that procurement teams want to limit their vendors. In case of consumer products, its so difficult to understand another new “app” to order items. So you go ahead and order again on an “amazon” just because your card is already loaded and you can buy without hassle.

The other factor is critical volume . In the “app” based consumer companies the network effect plays a big role. So the larger the customers and vendors on a platform they feed into each other to create a positive snowball effect. Due to this in any market you cannot have more than two “amazon” or more than two “uber” kind of companies.

In B2B business also something similar happens with critical volume. If you look at it about 25-30 years back there were at least 5-6 prominent ERP vendors including SAP, Oracle Financials, MFG Pro etc. today there are only 2 primary companies in this arena. This is because based on the number of installations, the number of technical people needed goes up, so do salaries so more people train themselves to avail this opportunity. Slowly the availability of trained manpower becomes one of the key reasons to choose a product.

So in my opinion the principles of product management / marketing don’t change. The methods / platforms for delivering the product / service may change as technology changes. In my next few posts I will cover other principles like Single Target Market, Ideal Customer profile etc.

I would love to know if any of you thinks otherwise.

Till next time then.

Carpe Diem!!!

Who’s your customer?

B2B, differentiation, ideal customer, Marketing, Marketing Ecosystem, messaging, Product Management, Sales, segmentation, single target market

This is one of the most critical questions for any product management person or a marketing person and further any sales person.

I have written various articles on this same topic taking a hit at it from various angles. Some people people call it the Ideal customer profile, some the single target market.

The critical issue is that person and what could be going on in the mind of that person which will make him think about talking to you, responding to your message, asking for your white paper etc.

Understanding this one concept is such a core to all of marketing that not addressing this one issue will cause all your differentiation be useless.

Inspite of so many years doing marketing, if I get this one thing wrong, my whole plan goes for a toss. Sometimes your colleagues will tell you that its such a small slice of the market so you should expand your attributes. Slowly you start diluting the ideal profile and the marketing becomes cluttered and the message does not attract anyone.

You also need to be clear therefore on who is not going to be your customer , so that when your message starts getting diluted your alarm bells start ringing.

Once you have clearly defined this customer – even in B2B – its a person whom you will need to profile, then the company, then the industry. What’s going on in the mind of that one person, who else is selling to that person, what could be the challenges of that person. There’s no doubt its more difficult to do this profiling than it’s to do for the consumer segment because there are many more people involved in a B2B environment.

On the other hand its easier to profile industries, loss or profit making companies etc. because that data is publicly available. In addition you have tools like Linkedin which can help you identify the colleagues of the profile, you can identify the statements made in the public by their executives etc.

Once you are clear on this one aspect, then the other things like the economics, the batch size of the market, the go to market strategy, the marketing ecosystem you need etc. become easier to handle.

Till next time then.

Carpe Diem!!!