How active are your customers?

How active are your customers:

For a sales manager it is important to know how many of their customers are active and how much efforts they should put in to make their customers active. One way to identify the activeness of customers is Recency.

Recency is the state of being recent. In sales actions means, when did the customer last time purchased from you. Recency helps in identifying the chances if customers will buy again from you? The customer who has bought material in recent time is more likely to buy from you again. The recency can be defined on the basis of the product consumption cycle. The product consumption cycle is the period in which a product will be consumed and the customer shall be again at store to buy. For example for a bread, it can be consumed in a day time & hence the consumption cycle would be a day while for a Salt packet it might be 30 days.

If the consumption cycle of a bread pack is one day then on the basis of recency the customers can be divided in following categories:

Active Customers are those who have bought the material in recent times and are most likely to buy again. For Bread pack those will be who has bought it yesterday.

Warm Customers who has bought material a little late than the recent past and will buy products on intermittent basis. For a bread pack, The customers who has bought in last 2 weeks will fall in the category

Cold Customers are those who have bought material some time back and would have shifted to competition, for a bread pack they might be someone who has bought a month back

Inactive Customers are those who have bought it long back and not thinking to buy again your products,  for Bread packet, someone who has not bought your products for last 2 months.

The Active Customers are likely to buy more often and regularly as compared to old customers and hence you might need more resources to keep them interested in your brand.

People who have not come back to your stores might have shifted to competition and need more efforts to bring back and hence require attractive sales pitch. While the cold customers are not happy with you and hence probably switched the brand and thus gives you a chance to introspect and analyse why did you lost them.

The Active customers require regular visit by sales team and need to be monitored & followed up with more promotion, while Inactive Customers can be touch based once in a while to know their interest in brand.  But if someone is very important and large customer and he has gone to cold or Inactive mode, then you need to put large amount of promotional efforts.

Hence while recency helps you to segmentise your market and help you in resource allocation, it also helps you to identify the important customers and track them.

The recency phenomenon can also be used to segment the market and for utilisation of your resources.

Authority and Responsibility

Who is Superior?

 Once few friends were crossing a river in a boat and they all were wearing live saving kit. Lifesaving kit is the equipment which allow a person to keep afloat in the water.

While travelling, all of them spotted a hole in the boat and realized that the hole will allow to come water inside and then the boat will be sink. All knew that each of them has also seen the hole and thought, it is other person’s responsibility to take initiative to close the hole. As all of them felt that individually they are superior than other and what if the water comes inside the boat, they are wearing life saving kit which will keep them afloat and they will cross the river. And finally the boat sinked  and all were left with lifesaving kit. They all crossed river but they lost the boat. They did not realized it was boat which could have saved them every time they were crossing the river. All of them thought that they are big and it is the other person’s responsibility and why I should initiate?

Unfortunately they all were considering themselves superior than other one, they could not realise that the bigger person is boat which selfless helped them crossing the river whenever they need it with full responsibility.  One needs to be more responsible and as much as one is powerful or authority, he needs to  take initiative to resolve the issues.

Authority Always comes with Responsibility and one who initiates for resolution of any problem is considered as the right leader.

Market Segmentation

We all know Consumers are complex and to sell them, it is important to understand them well. Consumers buying behavior depends on various factors like their priorities, needs, interests and it is very difficult to understand them in a complete group.  Hence to target & cover the consumers effectively , the consumers/markets are divided into various subsets on the basis of common interests, needs, geography etc. This division helps companies to design and implement the strategies effectively and efficiently.

The process of dividing and defining large market or all consumers in the  subgroups or subsets is known as the Market Segmentation. In the process of segmentation, the consumers are divided into identifiable groups having common characteristics. The market or customers can be divided on the basis of following:

• Demographical features
• Geographical features
• Psychological features &
• Behavioral features

The groups identified under marketing segmentation should have following features:

• The group must be measurable and effectively sized
• Group must be clearly identifiable and segmentised
• It can be targeted with the promotional efforts
• It fits to the marketing mix
• It must be easily definable 

The subsets defined in the market segmentation process helps in defining the right marketing mix for the company. It helps in identifying the prospect opportunities to the companies & developing the correct promotional programs and making adjustments in the various selling strategies and tactics.

The market segmentation also helps in developing the product or solution for a particular subset. It helps in servicing the group better and correct selection of media and execution of media efforts. It helps companies in drafting distribution strategies, fixing the prices and thus better servicing to the consumers,

The customer segmentation has to be done very carefully. It not only assist in productive sales territory management but also in customer retention and thus increasing the customer life value.  

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Marketing Experimentation in Modern Marketing

Marketing Experimentation in Modern Marketing

Miranda is thinking to invest in Bilboard campaign for his bicycle b
rand Avendus. The national campaign cost is $ 50K. His company currently sales $60MN bicycles.  He is willing to invest in the campaign with an aim of net lift of 20% in revenues. There are many correlations and casual factors to achieve the desired objectives. The holiday seasons is approaching and the historically the Bicycle sales increases in school vacations.

Miranda decided to roll out the campaign on national level but the result was not as per the expectations and the sales dipped by 5%.So what went wrong? Why sales could not lift as per the expectation?

The campaign did not succeed because the competition BiMax launched a new range of bicycle based on Disney cartoons with added features in it. While the other competition Newbike offered an added inventory of head guard and water bottle with their Bicycles. The young customers who are crazy about cartoons preferred the BiMax over Avendus and the others opted for competition offer.

She did not make a marketing experiment and hence the results were not as what she expected. While implementing decision to rollout the campaign she could not discount the external factors. She failed due to lack of marketing intelligence, she did not had the right inputs on what competition is doing and planning. She could not anticipate the competition actions and the marketing campaigns were planned in isolation. This all happened because there was no marketing experimentation.

Marketing Decisions are complex because the outcome of any decision depends on several other variables; how competition will behave to your actions, the response of customers, season/force majeure and many others. The brand managers make mistake of making the decisions in isolation and hence could not succeed.  Marketing experimentation helps in overcoming these barriers and can benefit in achieving the organizational goals.

In Marketing Experimentation two groups are selected – Test Group and Control Group. These groups are small in number & representative identities of the complete market. The groups are selected on the basis of their proximity in term of geographical area, consumer sales and their behavior. The external factors are considered and then the experimentation is carried out.

The Test group is selected on advertisement/campaign/offer to be implemented on national level. The discounting factor for external factors is calculated and time frame is decided. The control group is selected on various vicinity. Post all this, Test market is exposed to the campaign or offer.

The results are measured and compared with control market and then the decisions are taken whether to implement the decision on national level or not?

The marketing experimentation work like a chemical laboratory where many experiments are done and the final solution is selected after testing many. For all modern brand managers it is must that before implementing any campaign offer the tests are conducted and the results of test are evaluated both on economic and viability scales and then the decisions are implemented.

Brand Managers: LIFT your marketing

In the Digital Era: LIFT You Marketing Tools

Digital Marketing has offered a number of tools to reach to customers. The tools like Facebook, YouTube, Blogs, Periscope, Twitter, LinkedIn, Instagram, Direct mail system, and many more, helps to reach to customers. However, other than Website, which of the 5 tools most of companies employ. They use LIFT You tools for most of Digital marketing efforts.

LIFT a word we all are familiar and whenever we have to move vertical we use LIFT . So in marketing brand managers need to elevate their brands, they use various conventional & digital tools. Add You tube to it and make it LIFT You. So how do we LIFT  our brand digitally

Company Website- the ultimate information adda, 

Twiter- Mouthpiece of company, 

Linked In - a tool to connect with prospect employees, 

Instagram- Tool to share pictures, 

Facebook- share anything, 

Youtube- online video broadcasting service

Direct Mails- Share information with subscribers

Each of the above mentioned tools helps to reach the customers. Website and direct mailers are used for a long time, however in recent past social media has taken lead role in digital marketing. Companies are spending huge amount in LIFT You model.

Each of LIFT You tools serve a unique purpose and provide a unique way to increase the brand reach to audience. 

While Linked In has become a favourite source of connecting with new prospective employees and Informing the brand developments. Instagram helps in converting text messages in pictures and pictures are known to speak better than words. Instagram is often used to broadcast the messages in graphics and images. Instagram is increasingly becoming famous and brands are using this platform to convert words in pictures.

Facebook initially , crafted as a friends messaging service is converted in to corporate messaging platform. Each of major company has their facebook pages and the brand managers are working hard to get likes and the war is ON. Facebook is a unique medium to reach consumers through text, image and videos. It supports all three formats and make it interesting to managers to reach to consumers. Facebook also helps customers to reach to company and appreciate and complaint to brands.

Twitter, the Micro Blogging site is new way to make brand announcement and react/respond to market. The character limit makes it exciting and challenging for brand managers to communicate messages. 

Youtube, an alternative to Television is an experimental video messaging service. The low cost and targeted gives edge over traditional TV medium.

All the abve LIFT You mentioned tools have edge over conventional broadcasting mediums, these tools are agile and provide an opportunity for immediate modifications. The tools unlike conventional medium, are specific, target oriented and easily measurable. Brands are increasing their marketing budgets on digital media. If use efficiently these tools help in reaching the target customers in most effective way.

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Marketing resource Allocation Process

Marketing resource Allocation Process

The financial success of organisation largely depends how well resources are allocated. 

Marketing is considered as one of the four wheels for company growth. Along with Product, Human Resources & Quality;marketing may drive the companies to the pinnacle of success very soon. It is one of the most critical tools for inherent growth of the company. It involves huge resource investments in terms of both capital & human efforts.  And for that very reason, the marketing resources need to be optimally allocated.

Marketing Resource allocation is a complex process. It involves the resource allocation at various levels in various media vehicles, territories and sales force. Every day new vehicle  emerges and asks marketing manager for its share of the money. Digital Media, Print, Pay Per click, Radio, TV, OOH and many more are lined up and each of these vehicles excite a manger to invest in them, and thus makes the resource allocation decision very complex. The marketing resource allocation in common parlance is also termed as Drafting Marketing Budget.

This complexity of decision makes a marketing manager to play safe and opt for a time tested “percentage of sales” rule. The “percentage of sales” rule varies from industry to industry. Many Industry associations publish such details, which helps the organization to decide the allocation ratio. This kind of rule works well with smaller organisations. For example an organization operates in all 29 states of India and the 50 % of its business comes from Northern region and accordingly 50% of Marketing resources are allocated to Northern region while remaining 50% is allocated to other parts of the country. This model is also referred as the Advertising to sales model (A2S).

In some of the cases the company monitors the competition and act accordingly. Some time they choose the vehicles which are used by the competition and act according. This holds good for the geographical allocation also. The agencies like BARC, TAM, IRS etc. provide information about spending patterns of various companies on various vehicles and in different territories.

However for bigger organisations the process needs to be more systematic. On the basis of information obtained from various internal and external sources, the marketing budgets are drafted. The process of drafting a marketing budget is a function of desired level of awareness and the cost of various media vehicle to achieve that awareness. In addition, it has to be in line with the organizational objectives.

While drafting Marketing Budget the economic impact of various activities are estimated. At the end of the period the impact of spends are evaluated and compared with respect to the planned activities.

The other way to look at marketing resource allocation is to allocate as per the opportunity available. The brand manager has to estimate the opportunity available in monetary terms and then decide the allocation of resources.

The process of allocation, as discussed initially. is a complex process. There are a number of tools available like the BCG Matrix in which four quadrants define the four stages in term of the relevant market share and growth rate, and accordingly the resource allocation.

Another model, Miles & Snow Typology helps in defining the existing status of organization in territories and then accordingly in  the resource allocation. They defined the status in 4 positions: Prospector, Reactor, Defender & Analyser. e.g. in a given territory, if you are in Prospector position, then you are willing to capitalize on emerging opportunities and increase investment. If you are a reactor in that geography, then you are willing to maintain the status quo and investments are limited. If you are defender in that territory then you want to invest in defending tactics While if you are in anylser position then you act to defend the existing markets and invests aggressively in emerging opportunity markets.

There are various resource allocation tools and the tool you chose depends upon the company strategy and its existing position with respect to competition. You may like to select any tools, but the key to its success is constant evaluation of resource allocation with respect to the planned goals and then correcting for the next cycle.

The process starts, like any other management process, with identifying the objectives and the resources required. After identifying the objectives, the organisation needs to monitor the competition and analyse the resources invested by them. Parallel they need to study their customers and their journey to purchase and buying behavior. The 4 Ps also play an important role in resource allocation. The companies need to invest as per the brand positioning they want in terms of pricing and brand stature. Once all these factors are analyzed the company can then effectively allocate the resources to achieve the desired organizational goals.

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Effective Resource Allocation

Evaluate Resource Allocation in Your Organisation

Rahim, MD of Asman Groceries, is not happy with some of his territories. While the northern region territoreis are performing well, the Eastern region territories are struggling.

He decides to stop investing in the eastern region and invest Eastern region resources in Northern region.

However his marketing manager Ashok is asking him to reconsider his decision and evaluate the resource allocation pattern. He believes that being the home market, Northern region get more attention and all other kind of marketing support including sales force, marketing campaign etc.

He believes that the Northern territories are over invested and eastern territories has not been allocated the resources, it needs, to pay required dividends. After carefully analysing the resource allocation process, Rahim found that Ashok is right and Eastern region needs to be given more attention and support. After correcting the resource allocation process and optimising the resources, Eastern region started to contribute more than what it was doing earlier.

Resource allocation in strategic marketing is the plan to use available resources. Marketing resources investment in Sales is the function of the potential of a territory, market share and historical sales performance data. And for optimally allocating the resources, one need to analyze the potential of the territory , the revenue contribution from that territory and how it behaved in past with the increase and decrease in marketing investment . For instance, analyze the below given graph for Asman Groceries. The X axis is for marketing investment and Y axis is for Sales. And centre line is devised on the basis of past historical data.

You may notice that the Northern region is in the top right corner while the eastern region is in left lower side which means that the none of the area is optimally resource allocated. The Northern territories are over invested in terms of sales force & marketing resources allocation. While Eastern territories are not provided with enough marketing resources. So Asman Groceries needs to optimized the resources. They need to pull out some of resources from Northern region and invest in Eastern territories. With historical data, it is noticed that by pulling out resources, sales in North will not get any hit. The resources were re-allocated and re-planned by analysing the historical data, sales revenue and sales potential of the all regions. Consequentially The results were visible and post rejigging the all regions were in linear line as per their resource allocation.

Hence it is very important that we all allocate our resources optimally to drive home the desired results. Most of us are tend to invest in the areas which are doing well, weather it is in any function, or territories or media vehicle. The resource allocation is an important function. It is the strategic plan for using available resources to achieve organisation goals. For Marketing manager it is very important to allocate its marketing resources judiciously. The marketing manager needs to employ scientific methods to analyse the historical data and then allocate the resources. Optimally allocated resources can surely lead to the achievement of desired organisational objectives.

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