The Crux of Marketing: PRICING

Wondering how to price a product or service? How much to charge from your customers? It’s easy to price a product by analyzing the existing similar products in the market but what about a new product or a service. Though there are some industry accepted figures but still it’s your business and pricing plays an important role in your business. Not everytime RFPs will help you in deciding the pricing. Sometimes we literally get a big idea written down on a small pice of paper. While other times we may get 30-page RFPs that provide excruciating detail.
Regardless of how the client writes down what they need, they often only know the rough strokes of the how to reach their goal, not the specific nitty-gritty details, which are often where the majority of costs lie. But why should they? That should be what they are hiring us for, to help them find what they want, and more importantly, what their users want.
Budgeting plays a major role in deciding the price. Vendors always want them, clients never want to reveal them. We ask every client if they have a budget that they need us to work within, every agency I’ve ever worked on the other side of the fence with has asked the same. Very very few clients ever reveal this crucial detail. The budget reveals a lot about the client and the project. We use it as a barometer of how serious the client is, if they have given their project serious consideration, how much they understand about the project, to evaluate possible return on investment scenarios, to help define scope, whether it is cost-efficient for us to pursue, and to see if we can even do the project within their budget. When we price out a project we not only price out what we know about the project, but also detail what we don’t know. We come up with worst-case scenarios, address risks, point out all the things we think could impact meeting the goals of the project. There are two major methods of billing for projects, Per Project, Hourly. Traditionally most projects are charged on a Per Project rate. The idea here is that the vendor can accurately guess the scope and attach a fixed price at the beginning of the project. This in invariably never the case, so scope and price is often padded and margin added to protect the vendor from additional scope.The problem is one way or another somebody loses, either the client pays too much, meaning paying more than it’s market value, or the vendor eats into their profit. One benefits to hourly billing is the client is responsible for increases of scope, protecting the vendor and the customer. If the project is completed early the client pays less, protecting the client. This puts the onus on both parties to communicate regularly and work more effectively. Rather, budgets and requirements should be defined, watched and met. If the hours start to go over, this should be called as soon as possible, ideally before the hours are committed. Regardless of billing per project or per hour, we believe that any project is a partnership between client and vendor. That in order to mutually achieve a goal we must work together every step of the way. Communicating expectations of scope and cost is always crucial.

Courtesy: BlueFlavour

Know your Market: Conduct Research

To know your market, research is essential. And, there is a lot to talk about research. The research methodology generally adopted by the organizations is qualitative or quantitative. Generally, for a quantitative research, sample size is determined based on the segmentation done and for qualitative research; group or one-to-one interview is conducted and the interview guide is developed. For both the research, it is important to set the overall objectives of the research. Conducting group interviews can create problems if the participants selected are not homogeneous and the moderator is inexperienced and lack the objectives of the research. And during, quantitative research, its always advisable to avoid jargons, biased questions etc.

It’s always good to use free or low cost online survey packages like Surveymonkey.com, Zoomerang.com and Perseus.com/express. The survey length should not be more than 10mins. If the survey is more than the time frame mentioned, then the participant might lose interest. The open-ended questions should be limited.

Know your MARKET

Well, are you wondering to start a firm and sell products/service? Starting a business is not easy especially when there are so many aspects to Business. And, the most important aspect to your business is your market. It’s always better to have certain facts infront of you before starting your business.

1.Is there a demand for your product/service in the market? Who are the key players in the market?

Answer: Research is the only answer to the question. The research could be primary or secondary. There are a lot of website who sell information and research reports pertaining to the business and the location. The total sales of the products in that location and the growth of the sales of the product, demand for certain services are the key figures important to you. If you think of primary research, certain websites will help you. Preparing a questionnaire and targeting potential customers will definitely add a value to the research. If you are selling a service, lets say Consulting, then it’s very important to know what kind of Consulting you are going to provide. It’s always advisable to start with Niche Consulting and then expand your services. Starting a service business needs a more prepared research. You need to know your competitors. Competitor analysis is of utmost importance. You need to research on the following:

1.Who are your competitors?
2.Kind of pricing they do for their services?
3.The list of clients of the competitors and the untapped clients in the market
4.Differentiation strategy of your services. It’s always better to add a product to your service so that you can win the clients of your competitors. The question arises, if I have a consulting firm, what kind of products I can sell? Well, products need not be tangible. It can come in the form of newsletters, white papers or industry insights.

Its also essential to know whether the market is saturated or in its infant stage. Depending on this, you will be able to know your scope and reconsider your decision to cater to the market you have decided to.

The information required can be gathered from a various of sources like Trade information, Demographic and Economic Data, Business groups, Management Universities who conducts a lot of research during their project etc.

To Be Continued...

PERFORMANCE Management: Leveraging competitive advantage

Most of the organizations believe in lateral thinking and take every possible measure that can give them competitive advantage. A market where stringent regulatory rules, changing market scenario, technology upgradation, investor pressures exists, there is a need to revamp the strategy and keep on improving the processes critical to the organization. Performance Management answers all the questions, which seem critical for the success of an organization.

It starts with strategy formulation keeping the corporate mission, vision and objectives in mind. The roadmap is clearly set and targets are set for each objective. The drivers accelerating the growth of an organization and those hampering the growth are defined. Measures are taken for each objective. The topics covered below like Scenario Planning, Risk Management are taken care of in the first step of Performance Management.

Once the objectives are defined and measures are taken, its important to communicate the same with the key people in the organization. The business units of the organization are made aware of these objective and the BU Head of each business unit sets operational plan for achieving these objectives. Key strategic initiatives and allocation of effective people lay to the foundation of successful implementation of the operational plan. Key performance indicators are set for each objective.

Once the operational plan is in process, it is essential to monitor the progress and chart the improvement in the processes. Performance gaps are analyzed and measures are taken to fill the gaps and achieve the best fitting the corporate objectives. A macro view of the organization helps in deciding the appropriate plan of action.

Last but not the least, feedback is necessary for a successful performance management plan. The success and failures achieved in the whole cycle of performance management should be documented and communicated across the organization so that the learning occurs and opinions could be taken for improvement of the processes.

An effective tool to measure Performance Management is Kaplan and Norton’s Balanced Score Card, which takes four perspectives into consideration critical to the organization keeping the objectives in mind.

a.Learning and Growth perspective
b.Business process perspective
c.Customer perspective
d.Financial perspective

HOLISTIC APPROACH TO SOLVE A CASE: A CONSULTING EXPERIENCE

A consultant might come across a lot of complex situations where he is expected to deliver some tangible insights to the case so that the situations turn simple and the case is solved. In general, the problems rotate around making profits, market expansion, which includes merger and acquisitions, industry analysis, investing decisions, marketing decisions (pricing, branding etc.). A consultant should clearly set his road map to solve a case.

1.Facts and Facts: The best information which we will have before approaching a case is facts and figures which will clearly define the condition of the organization and its strategic goals. A macro view of the situation will help to analyze a lot of things.
2.See the solutions as problems: While looking into the problems from various perspectives, we might come out with a lot of solutions. It’s better to challenge the solutions and figure out the problems implementing the solutions. This will help us in narrowing down the solutions and come out with the most effective solution.
3.No problem is new. It might share some aspects with some problems, which happened for some other company. Knowledge has no alternative. Its always better to keep on reading various cases and talk to the senior management of the companies on the problems faced by them in the past and the way it was solved.

4.The client is always a way to another client. Rather than looking on new clients, its better to serve the existing one in a better way which might help us to get new clients. Networking is the key to consulting.

5.The crux is to build a case study on the client itself before building a case on client’s problems.

6.It’s the way a consultant understands a client and communicates with him. It’s always better to be in the shoes of the client while solving cases and treat the client as a consultant. The brainstorming might lead to amazing solutions.

INTELLIGENCE Syndrome

“Students from IIMs and IITs are hired with 1crore package” but the students from “not so famous” colleges still strive to get a profile and work for a mere 2.4 Lakhs package. Consulting firms like BCG and Mc Kinsey are hiring students of IIMs as Consultants while some firms recruits MBAs from “not so famous” colleges on profiles, which can be easily handled by a B.Sc student or an engineering graduate. Some are blessed to get flooded with opportunities on day zero while others roam with their resumes just to find an opportunity to prove his worth and convince others that even they have the right attitude and the zeal to make it happen if given an OPPORTUNITY. The reasons for rejection are numerous for students from “not so famous” colleges and it ranges from working on a suitable profile, experience and lack of knowledge.

“ We are impressed with your profile but regret to inform that your profile does not meet our requirements” is the only answer which students from “not so famous” colleges deserves.

An effort to make it happen is the only thing which everyone aspires, whether he is a geek from IIMs or students from some “not so famous” colleges. The only criteria for intelligence are not having a degree from IIM but the zeal to achieve the best, whether the person is a fast learner or not and whether he is able to perform or not matters. But, do the corporate believes and are ready to give that single opportunity to the students from “not so famous” colleges. May be, exposure and opportunity can help the students and even the corporate to get the best.

The Four Steps of Visualizing STRATEGY

Visual Awakening
.Compare your business with your competitors' by drawing your "as is" strategy picture.
.See where your strategy needs to change

Visual Exploration
Go in the field to:
.Discover the adoption of hurdles for noncustomers.
.Observe the distinctive advantages of alternative products and services.
.See which factors you should eliminate, create, or change.

Visual Strategy Fair
.Draw your "to be" strategy canvases based on insights from field observations.
.Get feedback on alternative strategy pictures from customers, lost customers, competitors' customers, and noncustomers.
.Use feedback to build the best "to be" strategy.

Visual Communication
.Distribute your before-and-after strategic profiles on one page for easy comparison.
.Support only those projects and operational moves that allow your company to close the gaps to actualize the new strategy.


Courtesy: Harvard Business Review

SCENARIO Planning

Scenario Planning is all about describing what is possible rather than just predicting future. Most of the forecasting techniques fail to predict significant changes in the firm’s external environment when information is limited or not available or the change is unexpected and disturbing. In such a situation, scenario planning is used as a tool to deal major, uncertain events in the firm’s environment. The result of Scenario Analysis is a group of distinct futures, which are plausible. The challenge is how to deal with each of the scenario.

Scenario Planning Process:

1.Specify the scope of the planning and time frame.
2.For the present situation, develop a clear understanding that will serve as the common exit point for each of the scenarios.
3.Identify the elements, which can act as driving forces.
4.Identify the most important driver by rating them on their range of variation and impact on the firm. Multiplying the factors will give the significance of each factor. It could be done in a scale of 1 to 10.
5.To analyze the interaction between the variables, scenario matrix can be made using the most important variables and their possible values. Each cell in the matrix represents a single scenario. Alternatively, factors can be taken in pairs to generate several two-dimensional matrices.
6.Quantify the impact of each scenario on the firm and formulate strategies.

The benefits of Scenario Planning is the managers are forced to break out their standard world view and decision makers are better able to recognize a scenario in its early stages and there is a better understanding of the source of disagreements if any.

Talk about BUSINESS

“The business of business is Business”. Though the phrase is not new, but it truly indicates the real meaning of Business. Owning and running a business can be rewarding only if we know the nuances of Business and understand the Business terms, rules and what it takes to be a successful businessman. Well, being a Management student, I would like to use the word “Entrepreneur” rather than a “Businessman”.

PECS of Business:

Profit: No matter what business you do, ultimate aim is to make profits.
Expenses: When you run a business, you have certain expenses, which is unavoidable.
Cost of Goods: Whether it’s a product or service you sell, there is a cost to everything.
Sales: And, if you want your business to run, sales are of utter importance.

And then when we want to be an entrepreneur, we need to answer certain questions:

1.Do I understand the financial basics of Business: Assets, Liabilities, Accounts Payable, Accounts Receivable, Cash Flow, and Net Worth.
2.Who all will be involved in my business and is there a sync and proper flow of information among all the entities.
3.Do I possess all the technical skills and soft skills to conduct the business?
4.Do I have the necessary funds to have business and if not who are the potential sources?
5.What shall I sell? Why should I sell? Whom Should I sell? Where should I sell?? How should I sell?
6.How to differentiate myself from the herd? Why will people come to me?
7.Within how many years, I will be able to achieve the breakeven point?
8.Who are my stakeholders?
9.How to achieve success?
10.Do I have all the qualities to become a successful businessman?


Now, the question arises, how best you can answer the above questions. There are some ways to find the politically correct answers:
1.Do a SWOT analysis. Measure yourself on parameters like knowledge, leadership skills, communication, creativity etc.
2.How best you understand others needs?
3.Are you specific or general? If specific, then on what situations and if general, then on what situations.
4.What kind of people interests you the most? The people who share same qualities with you or the exact opposite people interest you the most.
5.Consider yourself as a product and try to sell yourself. Plan a strategy on what things you would do to sell yourself to people.
6.Consider others as Customers and try to ask relevant questions about yourself. Feedback is one of the most important things in Business.

BRAND EQUITY QUIZ 2007:SCHEDULE

Brand Equity Quiz (Regional Finals)
Mar 9, 2007 Ahmedabad
Mar 10, 2007 Pune
Mar 13, 2007 Kolkata
Mar 15, 2007 Delhi
Mar 20, 2007 Bangalore
Mar 21, 2007 Chennai
Mar 22, 2007 Hyderabad
Mar 26, 2007 Kochi
Mar 29, 2007 Mumbai
Mar 31, 2007 Indore


Brand Equity Quiz (National Final)
Apr 29, 2007 Mumbai

Watch out to know more about this happening event....