complete guide - how to go to market

Course : PGEMP - Batch 41 Contact 3 Marketing Management Prof S K Palekar : November 2013

S P Jain Institute of Management & Research, Mumbai

In this contact we will cover the third leg of the marketing strategy.

1st leg : choosing target customers / competitors / collaborators

2nd leg : Using “Positioning” to arrive at the “Marketing Mix”

3rd leg (now) : arriving at “Go To Market” strategy

In this contact we will cover the third leg of the marketing strategy.

1st leg was covered in Contact 1 and consisted of using the 5Cs model to study the market In order

to choose the target customers / competitors / collaborators

2nd leg was covered in Contact 2 . It consisted of “Positioning”

the offer vis-à-vis chosen customers / competitors / collaborators In order to arrive at the “marketing mix” consisting of “7Ps”

Product, Place, Price, Promotion,

AGENDA

Introduction to Go-To-Market Hunting and Gathering Sales Funnel Sales Management Selling through channel Direct selling Other Points

Introduction Go-To-Market

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M A R K E T I N G P R O C E S S

Description of “Go-To-Market” Activities

All activities “between the factory producing the

products to the customers consuming them” Spending by the marketing , sales, distribution ,

service and CRM departments All manner of customer connect activities like media,

promotions, sales force, channel margins, discounts, incentive schemes, PR, conferences, merchandising, web sites, digital media, exhibitions etc.

All activities impacting various customers : end users, influencers, channel members, franchisees, agents etc

The “Marketing Budgets” of most companies are spent on such Go-To-Market activities through their marketing, sales and service departments

Customers’ Buying Journey The purpose of Go-To-Market activity is to help customers move on their buying

journey from left to right and make them more ready to buy.

Problem Recognition

Gen Needs Description

Supplier Search

Proposal Solicitation

Industrial Process

Problem Recognition

Search

Evaluation

Purchase

Consumer Process

Supplier Selection

Setting up procedures

Routine Purchase

New Buying Task

Routine Buying Task

Generic Model “Customers’ Buying Journey” : Visible Signs

1. Not aware that he needs to solve a problem 2. Recognizes the problem and is open to discuss it 3. The problem is understood and gets defined 4. Search begins for solution options 5. Options narrowed : “consideration set” emerges 6. 1st Preference gets defined 7. Terms and Conditions agreed 8. Order placed 9. Transaction completed 10. Assessment of satisfaction post purchase

You will need to create a model specific to your business

Hunting Gathering

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B2C Your usual soap

B2B ERP For SME

Company Customer

B2C : Your usual soap. Customer searches actively.

G A T H E R I N G H U N T I N G

Company Searches Actively Customer Searches Actively

B2B : ERP system for SME firms. Marketing company searches actively

Marketers use different approaches to the customers who are at different stages in their “Buying Journey”

For customers at the early stages of their buying journey ( Those who do not know that they have a problem, those who only have a vague idea of what they need); the approach is to help the customer to discover / own the problem

For customers who are at the middle stages of their buying journey ( who are weighing features, vendors and terms in order to narrow their options) the approach is to help the customer discover right criteria and enable comparison and choice between various features, vendors and terms

For those customers who are ready to transact, the approach is to work out deals, provide selling outlets, improve stock visibility, take orders, make delivery / collection / service arrangements.

Where are most of your customers now? Is your Go-To-Market suitable?

If most of your customers are at an early stages of their buying journey

Your focus needs to be on hunting and concept selling ( creating need and budget)

Hunting Developing criteria for identifying prospects Using these rules to locate and contact prospects Engage and pave the way for concept selling

Concept selling is needed when there is no existing BANT ( Budget, Authority, Need and Time Pressure) This is a very skilled level of selling “Art of complex sale”

If most of your customers are at the middle stages of their buying journey your focus should be on COMPARATIVE SELLING

and you should help the customers discover what are the criteria he should use in selecting

• the right features • The right vendors • The right terms and conditions

If most of your customers are Ready to transact

Your focus should be on GATHERING This means you should Expand your reach : more distributors, more retailers,

more agents Improve visibility and presence on the street and

inside the outlet Work out better arrangements for

• order-taking • Delivery • Payment • Service • Ease of access

Remember To use different approaches to the customers

who are at different stages in their “Buying Journey”

Hunting and Concept selling

Gathering and Distribution

Comparative selling

Hunter’s Journey

Customer Active / Searches Customer inactive co searches

G A T H E R I N G H U N T I N G

Appoint channel to sell Appoint sales force to sell

Sales force manages channel Sales Force sells to Customers

Demand created thru ads / display Demand created thru conversation

Std simple mass products Customized complex products

Low Price, High volume High Price, Low Volume

“Product selling” “Consultative selling”

Go-To-Market : 2 Different Systems

Hunting ( Business Development / Sales Management) • Requires more own / dedicated people • They cover a large portion of the customer journey • 2 stage process : filter (leads) and focus (conversion) • They are skilled in customer / problems / solutions • They have order-creation capabilities

Gathering ( Channel Management ) • Channel provides manpower - but not dedicated • They cover only a small portion of customer journey • 2 stage process : Appoint channel member & manage • They are skilled in working capital management • They have order-taking and not selling capabilities

Metrics Used in Hunting / Gathering

Customers Come–To-Market on their own • Try and use independent trade outlets to stock and

display where and when the customers come • Example of metrics in TV business : counter enquiries,

calls at the call center, off take of brochures, price quotations, demonstration, sale

Customers who don’t come on their own to market • Universe suspects prospects • Contact present QA Negotiations Close • Transact Install Train • Customer Relationship Management / Aftermarket

Various Go-To-Market Capabilities

Capability to define who are the prospects Capability to recognize the prospects easily Capability to locate them at relatively low cost Capability to Contact them Capability to Engage their attention Capability to communicate when engaged Capability to persuade and take the order Capability to conduct he transaction Capability to maintain relationship and give service Capability to eplace, up-sell, cross-sell, referrals…

Low

High

Rea

dine

ss to

Buy

Number of Customers Low High

B2B B2C

Customers Searching Actively ( You Gather )

You Search Actively ( You Hunt )

When customers search actively, structures to meet their demand come up. Retailers, wholesalers who supply to these retailers, the company warehouses and distributors who supply to these wholesalers .. All these come up as independent businesses. When customers do not search actively for you, there are no readymade “gathering points”.

Low

High

Rea

dine

ss to

Buy


B2B B2C

Push You can deal

directly You need a

channel

In B2B businesses you can deal directly with a few large customers and you can customize for them and you can first take order and then make to order. But for mass products, the channel is a more economical option to reach the market. In such case you are available through channel but reach through mass media. There are multiple tiers in the channel and multiple handling points. The products are standardized and made to stock and have many packaging layers.

4 Paradigms of Selling

You need to hunt for Customers - Reach Directly

You need to hunt for the Customers – Use channel

Customers are searching - Reach Directly

Customers are searching – Use channel

Low

High

Rea

dine

ss to

Buy

Number of Customers

Low High

B2B B2C

4 Paradigms of Selling

Low

High

Rea

dine

ss to

Buy


B2B B2C

Match Box Staples

Insurance Concept Products

Common Machinery B2B Consumables

ERP “No Buying Budget”

Sales Funnel

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Pre Sales

Post Sales

Sales Cycle

Prospecting

Servicing

Planning

Contacting

Presenting

Negotiating / QA

Closing

Transacting

Commissioning

Revisiting

For Private Circulation Only : Sales & Distribution Course By S K Palekar : [email protected]

Best Practice : Lead Management

OBJ : Weed out people unlikely to buy ASAP Suspects (Target Audience ) who may buy Prospects : who have the need, budget & desire Hot Prospects : who are favorably considering us

Lead Management Generation : Separate prospects from suspects Qualification : Separate hot prospects from prospects


Best Practice : After Market Cultivation

Customer database maintenance / updation Customer grading RFVR

Recency, Frequency, Value, Referrals Direct Marketing of “offers”

To sell AMC To sell accessories To sell someone else’s products To replace To upgrade To dispose or sell off

Agst 13, 2003

Best Practice for Revenue Over Time TLV ( Total Life Time Value )

1st Purchase

2nd Purchase

3rd Purchase

After Sales Revenue

After Sales Revenue

After Sales Revenue

Agst 13, 2003

Best Practice for Revenue Generation Value over cross-selling potential

1st Product

2nd Product

3rd Product


Communication Mix Practice in FMCG

Step FMCG 1 Prospect Identification Brand Management based on MR

2 Pre-approach Ad & Concept testing

3 Approach / Contact TV / Mass Media

4 Presentation TV / Mass Media

5 Pre-close, Q/A, Negotiation TV / Mass Media

6 Close TV / Mass Media

7 Transaction Retailer

8 Install / Commission Not Applicable

9 Post sales activity Not Practicable


Communication Mix Practice in Durables

Step Durables 1 Prospect Identification Brand Management based on MR

2 Pre-approach Ad & Concept testing

3 Approach / Contact Mass Media

4 Presentation Mass Media builds traffic

5 Pre-close, Q/A, Negotiation Retailer negotiates and closes

6 Close Retailer

7 Transaction Retailer

8 Install / Commission Company Service

9 Post sales activity Company Service


Communication Mix in Tele-Shopping

Step Tele Shopping Network 1 Prospect Identification Brand Management based on MR

2 Pre-approach Demo documentary

3 Approach / Contact Mass Media

4 Presentation Mass Media

5 Pre-close, Q/A, Negotiation Demo documentary + Call center

6 Close Demo documentary + Call center

7 Transaction Call center

8 Install / Commission Franchised Service

9 Post sales activity Telemarketing


Communication Mix in Life Insurance

Step Insurance Policy 1 Prospect Identification Agent

2 Pre-approach Agent

3 Approach / Contact Agent

4 Presentation Agent

5 Pre-close, Q/A, Negotiation Agent

6 Close Agent

7 Transaction Agent / Office

8 Install / Commission Agent

9 Post sales activity Agent


Communication Mix in PCB Makers

Step PCB Maker 1 Prospect Identification Electronic Mfg Directory, Exhibitions

2 Pre-approach Net Research

3 Approach / Contact Sales Rep

4 Presentation Sales Rep

5 Pre-close, Q/A, Negotiation Sales Manager + Technical Manager

6 Close Sales Director

7 Transaction Accounts & Logistics

8 Install / Commission Initial handholding by technical

9 Post sales activity Supply department


Ad Agency Looking For New Accounts

Step Agency 1 Prospect Identification Grapevine, Networking

2 Pre-approach Checking with clients / references

3 Approach / Contact Casual and informal

4 Presentation Formal pitch by Directors

5 Pre-close, Q/A, Negotiation Modalities and Fees

6 Close Contract signed

7 Transaction Contract signed

8 Install / Commission Briefs, Budgets, etc

9 Post sales activity Account Servicing

Best Practice : Separate Hunt & Gather Teams

CUSTOMER ACQUISITION. HUNTERS

CUSTOMER RETENTION GATHERERS

Sales Management

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Definition of Selling

Presenting yourself and your product / service / idea to your prospects, personally and interactively, in the light of their needs / beliefs / alternatives,

and persuade them to come to a conclusion Favorable to you.


Checklist For Sales Managers Tasks

1. Role statement and competency specifications 2. Prospecting and qualification criteria and methods 3. Classification and prioritization of customers 4. Who calls on whom, what frequency & depth, which product and how. 5. How do we measure contact and sales performance 6. Number of persons of each type needed at which headquarter. 7. Interviewing and selection 8. Inducting, training and deploying 9. Wastage of time on administrative chores 10. Time spent traveling vs for customer contact 11. Motivation, Meetings, Performance Reviews, Corrective actions 12. Refresher training for latest market, product information. 13. Creation of relationship assets with customers 14. Development of future leaders


CONTACT MANAGEMENT ISSUES

What type of personality and capabilities we need at various levels in our sales force Role statement and competency specifications

How do we prospect and qualify our customers, how do we classify them so that appropriate salesperson and method can be used, how do we prioritize them. Prospecting and qualification criteria and methods Classification and prioritization of customers

Who in the sales force and what kind of time spends with which customer. Who calls on whom and with what frequency and depth To sell which product and how.

And achieves the call objectives How do we measure contact performance Result or efforts, quality or quantity, short term or long term


People Management Objectives - A

Compute number of persons of each type needed at each headquarter.

Interviewing potential candidates and selecting the ones that fit the role and capability statement in

terms of personality, knowledge, attitude, behaviour and motivation. Inducting them through training and handholding. Deploying them

in the market in such a way that they waste less time on administrative chores & travelling;

and more time in front of the customers so that they can create value for the customers and revenue for the company.


People Management Objectives - B

Motivating them to bring out their best and training them to keep them abreast of latest market, product information.

Conduct meetings communicating, motivating and directing the salespersons so that not only sales targets are achieved

but even the relationship assets in terms of customers and the manpower assets in terms of existence of skilled leaders are created which lay foundation for the future growth.

Selling Through Channel

What your customer wants = What you can provide + what your channel can provide

[email protected]

S K Palekar : Contact : skpalekar@ hotmail.com

Examples of Channel Services

Availability Want toothpaste at the shop downstairs I don’t mind traveling but want to see wide range of sarees

Delivery Want my monthly grocery delivered to my home I don’t want to order and wait for it to be shipped

Financing Want installment scheme to buy LCD CTV I want to try it and then own it

Awareness Want to know new types of insurances plans Want to see all variety of chocolates before I select



Education and Updation Latest advances in treating termites Latest clinical tests of new medicines

Consulting / Diagnostic Shall I repair my fridge again or… Annual check up… do I need any proactive medical help

Customization Measure my hall and supply carpeting Assess wall condition and recommend treatment and paint

Commissioning Install the garden sprinkler system Fitting the modular kitchen in my house



Training, handholding, coaching How to use the latest software How to use all the accessories of my vacuum cleaner

Upgradation want to fit GPS on my car Want to renovate my house

Replacement , Disposal Take away my old fridge and give new Garbage disposal

Repair and maintenance Annual pest control contract for my flat Electrician when something goes wrong with my wiring



Enquiry Response Be able to register a complaint 24 x 7 Need to know fares of different airlines

Order taking Take my order on the phone Visit me and see how many tiles I need to buy

Status / alert information Flight delays Pending Bills

Convenience I don’t want to wait too much in the queue I want tickets delivered to my house


Review Question : Why channels ?

Many customers; spread everywhere : soap One company cannot reach all

Customers buy from local / trusted middlemen Customers don’t know the company

Customers buy assortment / bundle of products Company cannot supply this

Company does not know all customers well enough Hence may not be able to extend credit and facilities

Company not close / good enough to serve well Local proximity : better response time

Company’s person not be in the market all the time Channel members are in the local market all the time

Costs of a separate channel unsustainable Channel works for multiple firms hence cost effective

Main Channel Decisions

The 3 decisions are 1. Horizontal coverage of the market ?

Intensively or selectively? 2. Vertical Length of the chain. How long ? Number

of tiers in the chain? 3. Own (full control) ? Use others (part control)?

Use existing outlets or set up own outlets?

When Selective ? When Intensive ?

Use selective (sparse) distribution when Generally high ticket (price) items

Consumers’ perceived risk high ( cars )

Consumer rely on technical advice ( Professional camera )

Assurance of post-purchase service important ( durables )

frequency of purchase is low ( luggage).

brand loyalty is high (Levi’s)

Retail personal influence important ( fashion )

Use Intensive (Mass) distribution When the situation is opposite.

Selective or Intensive ?

Product characteristics Intensive Distribution : For products purchased frequently , For

products purchased with a minimum effort , for Convenience goods

Selective Distribution : consumers shop around extensively before final purchase, shopping or specialty goods

Degree of control Intensive Distribution : Manufacturers willing to relinquish significant

control over the marketing of their products within the channel might prefer an intensive strategy.

Selective Strategy : for close control over selling prices, type and extent of selling assistance at point of sale, display standards and product image

Channel Architecture : How Long ?

Company Customer ? ( DIRECT SALES) Used by industrial products and high value products

Company Retailer Customer ? ( 1 TIER ) Used by consumer durables and brand showrooms

Company Distributor Retailer Customer ? (2 TIER ) Used by fast moving packaged goods companies

How many tiers ? 2 Extremes

For industrial products, the number of customers are few and the value of the order per delivery is high. Yhey use DIRECT SALES system where the vertical length is zero (company directly sells to the end user).

For FMCG products like WIMCO matchboxes, virtually everyone in the country is a potential customer and the behavior of these customers is such that they don’t want to walk and plan much to purchase a matchbox! Therefore WIMCO wants to make their products available in smallest of the paanwalla shops ( 20 Lakh nationally in over 5000 towns) and it is impossible for the company to do this on their own. They have 3 Tier system : company selling to 2000 wholesalers who in turn sell to 20 Lakh outlets.

Direct sales ( Zero Tier )

Own sales force selling direct to end user Prevalent among industrial goods manufacturers If large volume per customer, this is cost effective More control over own sales force than of distributor’s Customers prefer to deal directly with the manufacturer. Direct touch with market : better / faster feedback.

Own Channel or Someone Else’s ?

It is always a dilemma whether to use an existing trader or to set up one’s own trading establishment ( store)

2 extreme options are :

Setting up one’s own store. You can select the location, the interiors, how to display, what to display, how many people of what kind to employ, how much moving space to keep, whether you want the store only for your brand exclusively.

Using someone else’s existing store but then you have to learn to live with his location, interiors, display facilities, what he stocks and displays, his people. And he is of course stocking and selling existing brands (your competitors).

Using Conventional Channels

They invest in your stock, display your goods, deliver goods, make invoices and extend credit on your behalf.

Many of them also feed marketing information back to you. Advantages of using existing channels. They are more efficient marketers : They know local customers. Their costs are shared by many brands : They are more efficient. They can respond faster to local requests. You don’t need to invest in space, stock, people and administration. You incur only variable costs - you don’t spend if you don’t sell

Disadvantages to manufacturers Channel members independent : not bound by contracts Co-ordination through power, bargaining, negotiation Low concern towards what happens to you : before &after Low member loyalty, low entry and exit barriers Less control, less systemic economies, and less stability

Manufacturers manage these disadvantages…

STICK : agreements on sales terms and obligations like Price maintenance Demonstration facilities that meet certain technical requirements Qualified sales staff Refraining from illegal, deceptive, and unethical practices.

CARROT : Working closely in planning and carrying out inventory plan advertising plan sales training plan.

OVERALL ATTEMPT IS TO BE THE “CHANNEL CAPTAIN” responsible for achieving systemic coordination within the channel. The more success manufacturers have with these attempts, the closer

will a conventional system resemble corporate and contractual systems.

“Fully Controlled Vertical”

May be either Owned or Franchised Gas stations, Bata stores.

Advantages List price maintaninence

Quality control ( gasoline quality, baking, freshness )

Market feedback from stores on new design

Better services offered at the outlets

Disadvantages Investment in real estate, stock and human resources

inflexible in adapting quickly to new opportunities

Type of “Franchising”

Product trade name franchising The right to market the franchisor’s product

within a designated market area using the franchisor’s trade name.

Examples : Automobiles and truck dealers, soft drink bottlers.

Business format franchising. All above plus the franchisee acquires the right to utilize the business

know how - operating manuals and standards, quality control, information systems, or marketing plans

Examples : fast foods, motels and hotels, personal services, rental services, stores, real estate services.

How “Franchising” Helps …

Benefit to franchisees opportunity to be “own boss”

“Pre-packaged” business with no prior business experience.

A well-recognized trade name

Assistance in starting up : site, layout, equipment, training

continuing support : new products, promotions, operations

Benefit to franchisor Rapid scaling up without losing control

expand the business using someone else’s time and money

Yet exercise control / coordination on local marketing policy.

Franchisees are more motivated and willing than dealers

How “Franchising” Hampers …

Problems to franchisees Fly-by-night franchisors.

Inflated sales and profit projections.

Overcharged by franchisors in buying supplies.

vulnerability : franchisor may pull the plug for no reason.

Problems to franchisors Franchisees are “independent minded” : hard to control

Large-chain franchisees can exert considerable pressure

Legal costs / battles over franchisee autonomy/ termination clauses

Bata uses multiple channels

Through their own “Bata” stores (Bata brand) Space, Stock, People .. All by Bata.

Through multi-brand stores ( BSC brand) Space, Stock, People belong to the independent store

Through multi-brand stores under other brand names Bata manufactures for other labels

Also sells direct to customers (some areas) In some stores when people cannot find the color and the size they

want in the style of shoes they like, they take orders direct along with an advance and delivers shoes straight to customers via couriers.


Tiered systems Note : At each stage there is a buyer and a seller

Company Customer

Company Customer Retailer

Company Customer Retailer Distributor

Direct Sales System : Company sells to end user

Adopted when number of customers are low And when order size is high. Example : B2B.

Adopted when number of customers are many But not high and order size is average. Example : Durables : Cars, CTV

One tier system

Adopted when number of customers are high And when order size is low. Example : Match Boxes

2 tier system


Tiered systems Note : At each stage there is a buyer and a seller

Company Customer Retailer

Company Customer Retailer Distributor

One tier system

2 tier system


Value Added By Sales Force is Not only persuasion and promotion

C O M P A N Y

C U S T O M E R

Transportation of physical goods

Title / Ownership of the goods

Intelligence and Information

Payments

Persuation and Promotion

Outbound Services, Inbound complaints / enquiries

Waste, Reconditioning, Buy Back, Disposal


Industrial Products : Go To Market

Channel Options

Direct Selling Force

Own

Another firm’s

Channel members’

Few and large customers – can contact direct. Promotion is done personally.


Direct Promotion : Go To Market

Channel Options

Direct Marketing

Direct Response Ads

Tele Marketing

Direct Mail

Catalog Selling

Direct Selling

Company Customer

[email protected]

Sale

Demand

Supply

Sale

TV

Retailers

Sale

Mailer

Courier

Mass Direct Economics

Direct Marketing Advantages

Can be individually targeted.

It is less wasteful than mass media.

The approach can be customized for better impact.

Direct Marketing Advantages

Can evaluate response from each contact

Whereas in mass media you need spend huge sums before you can conclude if it is working or not.

Direct Marketing

1% response

100 test mailers

1st improvement

2% response

1000 test mailers

2nd improvement

3% response

10000 mailers

Commercial success

Mass vis-à-vis Direct

Mass reach Low cost per reach Easy to organize One way communication Low impact per contact Response comes late Response requires huge money

Individually targeted Less wasteful Can be customized for impact Ease of evaluation of response High cost per contact Difficult to organize

Suitable For Mass consumption items Items well stocked by the trade Items well understood by people

Suitable For Niche products Items not easily available Items requiring concept selling

13% of all goods in USA

Catalog houses : Sears Tele-shopping networks : Tele-Brands Ads inviting phone contact : Citibank Net shopping : Dell computers Telemarketing : Nationwide insurance House to house selling : Electrolux Multi-level marketing : Amway

Eureka Forbes / SKP

CIRCUMSTANCES FOR DIRECT MARKETING

Concept / Complex products : extensive explanation Custom made product : customer presence Custom made service : pre or after sales Customers don’t know where it is available Too few potential customers : mass market wasteful High priced product : makes personal contact viable High scope for after-market revenue : good TLV

What only direct contact can do

Customization ( DIRECT MAIL ) Interactive ( DELL ) Multi Sensory ( ARIAL SAMPLING ) Context Sensitive ( AMAZON . COM ) Sensitive to body language, tone of voice ( SELLING ) Engaging and Relational ( LIFE TIME VALUE ) Referrals Potential ( PROFESSIONAL SERVICES )

Eureka Forbes / SKP

Other Points

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Conveying Value : Limitations of Ad vs Selling

1. Ad : Same message / story / positioning for all 2. Ad : 1 way, duration short, attention poor, simple message 3. Selling : more time, 2 way dialogue, 5 senses

1. Complex products 2. Abstract services 3. Demonstration

Communication Mix in Customer Acquisition & Retention

Advertising : Mass, trade, niche Public Relations Direct Marketing : mail, call, letter Personal Selling : Trade Shows, Events, Seminars, p call

Cost / Reach Reach in TA

Engagement Personalized, 2 Way, 5 senses, Interactive

4 Criteria for Media Selection

Agst 13, 2003

Cost

Persuasiveness

(40)Salesman

(0.5) Media

(15) Call Center

(10)Phone Call