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!!!

Ferocity

Energy, Habits, Human Brain, Marketing, problem solving, Sales

This is another of the new words which have got added to my Lexicon after reading Steven Kotler’s book The Art of the Impossible.

The word ferocious is a well understood adjective generally used with wild animals and people who are very savage or intensely angry kinds.

However Steven over here is using the word as a noun and is calling it a habit. Now that is what I found unique.

Ferocious, fierce are all words which are generally used in the negative or wild sense. I have not found them being used in positive sense and that’s why I thought of sharing this with you.

Here Steven has made it an essential habit if you need to have enough motivation to achieve the impossible. If you know the big dreams you want to pursue ( he calls them MTPs and HHGs) then you need to be at them day -in and day – out for a long period of time. The impossible is not something which can be achieved in the short term.

But if you attack your dreams by ensuring you are continuously solving the big problems that come your way, sooner rather than late you keep getting better at it. Then it becomes a habit. Once something becomes a habit it takes less energy. Something similar to what I was talking about in my post a couple of days back. Once the habit gets ingrained into your system the brain goes into automatic mode. It does not need to spend energy. As I have mentioned in my earlier posts, the brain uses almost 25% of the requirement of energy that the body has. By making something a habit you conserve energy.

The advantage of this is 2 fold when you attack the challenges with ferocity and make its a habit – the first is the saving of energy which means you have more energy to handle other tasks and the second is that you save time. If you can solve more problems in the same time than I can, you will be way ahead of me. This attribute of being able to save time in the long helps you target impossible dreams.

The bigger the problems you solve, and more problems you solve, the more valuable you become. The more valuable you become the more people get aligned with you.

This is true in all facets of life. Even in sales / marketing, the more prospects you interact with, the more challenges you handle, the better your responses become, faster. You therefore are able to handle even larger number of prospects. If your sales team has the habit of ferocity to target a large number of prospects in a limited amount of time, success will be with them. We generally use the term fire in the belly of the sales person. Now this is a new term I have learnt to push my teams

Till next time then.

Carpe Diem!!!

Three Hundred Posts

Affirmative action, Financial Independence, Habits, Marketing

I didn’t realise it but yesterday was my 300th post. What an achievement. For someone who didn’t know what to write and was always wondering why will anyone read my posts, to today watching this number made me so happy.

This journey started about 4 years back and I took my domain name around this time. Then I took the WordPress subscription to link my website to my domain.

Initially even putting up one post was an ordeal. As a matter of fact when I hit the 25 mark, I actual had a celebration post. To write my first hundred posts took me almost 3 years painful years because each time I would sit down to write on a weekend, I would think I did not have enough data and so I would go in search of data and the post would not get written.

Last year because of the lockdown due to the Covid pandemic, I got some amount of time at home and I started listening to various podcasts, one among which was I Love Marketing which is run by Joe Polish And Dean Jackson. Joe keeps talking about 2 things which I have taken to heart.

One is that – Its better to be prolific than perfect and

Two – You learn a little by hearing / reading / watching, you learn a lot more by practicing and you love the most by teaching it to others.

I have always had this penchant for wanting to share my knowledge but I didn’t think it would be of value to others so I never bothered. Then I cam across the video series on YouTube by Gary Vaynerchuk where he would put out a video everyday on wine tasting and the kind of wines he was tasting. These were short videos.

That got me on this journey to take affirmative action, to share from my practical experiences in marketing and in finance and then whatever I was reading in terms of improving our performance and health. All my articles after that have been keeping one principle in mind, you should get bite sized information in a quick read while you are standing in the line to take your coffee.

Thank you for being active readers of my blog. I hope I am able to give you even more value in the future. This writing everyday has now be one a habit and I don’t let a writer’s block come in my way. I just put down my thoughts as they flow.

Till then

Carpe Diem!!!