Strategic sizing in the Pharmaceutical Industry

Overview

The pharmaceutical industry in the United States and the EU region is a $600 billion industry. Consequently, drug companies spend over $6 billion annually in simply sending their representatives to doctors to provide samples, answer queries on use, disseminate product information, and thereby, convince them to prescribe their product.

Take for instance the US pharmaceutical industry; the patient is the consumer, the insurance companies are the payers, but the decision makers are the 830,000 prescribers in this market. The US pharmaceutical companies employ over 81000 sales reps to target these prescribers.

This presents its own operational and financial challenges. A rep can cost a company upwards of $100,000 and it is imperative that the company optimizes the sales force for maximum effectiveness. A host of operational challenges then come into play, around the domains of physician segmentation, targeting, call planning, sales force size & structure, sales force effectiveness management, and incentive compensation.

This article focuses on the key concept of salesforce sizing, and talks about the different tactics that can be employed by the firm at each stage during the sizing exercise. The final optimal size will be the one that most closely complements the strategy employed by the company

Strategic Choices before Sizing – Prescriber Segmentation & Targeting

The analysis for the right size is not an independent activity but rather a step in a process that begins with prescriber segmentation and targeting. The size is a reflection of the strategic choices made in the segmentation and targeting stage.

Let us take a simple example of this – Imagine there are two Diabetes drug manufacturers, which have ranked the physicians in the decreasing order of prescription value. The first decides to target only the first 10% with many sales calls whereas the second targets the top 60% with fewer sales calls. Consequently, there needs for salesforce will be vastly different.

Of course, this is a very simplistic scenario and the true situation is generally vastly more complex. In this section, we will explore a little more about an advanced segmentation process, and targeting choices

Segmentation

Segmentation of the market allows you to optimize your sales calls by segregating them into buckets, which have a differential amount of effort required. There are several tactics that can be used while performing segmentation. Three of the broad segmentation tactics are as follows:

1. One-Dimensional – This type of segmentation focuses only on one dimension, mostly potentia”. This means that for each of my customers, I categorize them into buckets on the basis of how much value they generate. This simplistic form of segmentation is only useful when there is a lack of data, or it is a very nascent or new market with no history of prescription of the drug.

2. Two-Dimensional – This type of segmentation brings in the added element of Penetration. Penetration is simply the market share of value commanded by our drug for each physician, i.e. a physician generating 80% of his prescriptions to our firm is a high-penetrated prescriber as compared to one generating only 20% of his prescriptions. The segmentation can be visualized as a matrix, with each physician occupying a segment in the matrix.

3. Three-Dimensional – As our understanding of our customers increase, several other dimensions, including accessibility, adoption sequence, etc. These factors can influence the relative position of a customer on the 2×2 matrix, and thus the umbrella dimension “Ability to Win” acts as an override in the matrix.

Targeting

Now, once we have performed our segmentation, the tactical decisions on targeting need to be made, specifically on – who to target and how much to target. Let us assume that our segmentation results look something like this.

Each dot represents a prescriber. The first question to be answered is who to target. We generally segregate our customers as Defend, Maintain, Conquer and Non-focus. Our top customers are the ones who are on the top-right box. They are high-potential customers that are highly penetration, and must be defended from competitors. On the contrary, the bottom right customers are low-potential, with low-penetration, and therefore should not be focused on. A complete analysis of this is in the diagram below.

Now that we have segregated our customers, we turn to how to target them, i.e. what is the sales effort required for each customer in a segment. Share-of-Voice is an important benchmark while deciding sales effort. Our effort vis-à-vis our competitors is a function of how aggressive our strategy is. That being said, there is still a differential amount of effort that should be put across different segments:

Conquer High amount of effort required. Typically much more than the next competitor. Range of 10-15 calls a year	Defend Medium effort required. General reminder calls to defend market. Can be ramped up if competitors are aggressive Range of 8-12 calls a year
Non-focus Marginal or no effort required Range of 0-2 calls a year	Maintain Low effort required. Range of 2-6 calls a year

The output of this Segmentation and Targeting Exercise looks something like this below. This below is an example of a 3-dimensional segmentation with a 3×3 matrix and overriding factors (Ability-to-win). The different cells of the matrix have been assigned strategic tactics based on their potential and penetration.

Salesforce Sizing Methodologies

The previous section gave a broad overview of how the strategic choices are made prior to the actual sizing exercise. At the moment, we have chosen a set of tactics conforming to our overall strategy. We now take it forward to create the optimal salesforce to execute it.

There are several methodologies to sizing. These range from:

1. Status Quo – Maintain the same as last year
2. Chase the Leader – Have the same or more Share-of-Voice as the market leader
3. Workload Buildup – Workload Quantification Model
4. Profitable Coverage – Effort vs. Reward from an Incremental Sales Call
5. Sales Response – Optimize law of diminishing marginal returns on sales calls

Our focus will be on the most commonly used techniques on Workload Buildup and Profitable Coverage.

Workload Buildup

The workload buildup is a simple quantification model that calculates the total effort required based on our segmentation results, assumes a rep capacity, and thus, computes the total number of reps required.

The inputs required in this model are:

1. Targeted Segments and Number of customers in each segment
2. Coverage %age in each segment
3. Number of calls per customer in each segment
4. Field force capacity, i.e. Days worked x Calls per day

A simple illustration would be as follows

Segments	Customers	Coverage %age	Calls / customer per year	Total Calls  per segment per year	Total Calls
Defend	2000	100%	8	16000	128000
Maintain	4000	50%	4	16000
Conquer	8000	100%	12	96000
Non-Focus	6000	0%	0	0

If a rep can make 6 calls a day working 200 days a year, then the rep capacity is 1200 calls/year. Consequently, we would need, 128000/1200 = 109 reps approximately.

As we see, the workload buildup model uses a very erroneous assumption. It assumes that within a segment, every customer is equal. This is a very dangerous assumption and consequently the workload buildup is used as a first pass in sizing, or forecasting exercises for financial projections.

Profitable Coverage

We saw that the basic problem with the workload buildup was that all customers in a segment were assumed equal. The profitable coverage model solves that problem by calculating the incremental return of targeting another customer in a segment versus the incremental cost of salesforce effort associated with it. The profitable coverage model has the advantage of giving us the recommended coverage as an output rather than us estimating it.

The inputs that would be required in this model are:  

1. Value generated by each customer
2. Field force cost
3. Field force capacity
4. Calls per segment
5. Target profitability

Step 1: The first step involves calculating the cost of effort.

Cost of Effort = Fieldforce cost / Fieldforce capacity.

If it costs a firm $100,000 to hire, train and deploy a rep per year, who goes on to make 500 calls in the year, then the cost of effort is $200.

For each segment, we can calculate the cost of effort by multiplying the cost per call and the calls per segment.

Step 2: Based on our target profitability, we can then calculate what should be the minimum profit generated from a customer to consider make it viable to target them.

We set our target profitability for our valuable segments i.e. Defend, and Conquer, low because we would like to ensure maximum coverage in these areas. The maintain segment, however, is not very important and we can afford to lose coverage in this segment. Consequently, our target profitability should be higher in this segment.

Segments	Customers	Calls / customer per year	Cost of Effort ($)	Target Profitability	Minimum Threshold of Return
Defend	2000	8	1600	0%	1600
Maintain	4000	4	800	50%	1200
Conquer	8000	12	2400	-50%	1200
Non-focus	6000	0	0	100%	0

Step 3: Compare the threshold of return with actual profits generated by each customer. The coverage percentage in each segment is calculated by the total number of customers crossing the threshold as compared to the total number of customers in the segment.

Step 4: The coverage percentages are input back into a simple workload buildup to calculate the optimal salesforce.

The profitability coverage model introduces the complexity of differential sales returns in a segment. In the absence of customer-level data, this model uses mathematical constructs such as modified pareto-curves (logarithmic) to simulate the sales distribution in the segment.

At the close of our analysis, a note of caution is required. While it is possible to mathematically right-size the salesforce with ease, reality offers a very different situation. The salesforce, like any other human resources, cannot be frequently reshuffled to adjust to changing forecasts and strategies. The actual size at the end of the process will have to incorporate several other operational, legal, and emotional variables.

The strategic decision to right-size is therefore taken with a horizon of atleast 3-5 years in mind to ensure that a constant turmoil in the salesforce does not lead to a potentially hostile workforce.

R Bharat Kumar is a PGP student (2014-16) in IIM Ahmedabad

Subliminal Marketing

Is anyone looking for an innovative way to popularize their product or increase sales? Why not use something tried and tested instead; the kind of advertising which will directly connect your product to the human sex and power? Yes, indeed we are talking about the subliminal advertising here. It’s not an age old formulae blindly being followed, instead has only been recorded since 1957 when a researcher called James Vicary inserted the words “Eat Popcorn” and “Drink Coca-Cola” into a movie in a single frame of a second. The viewers weren’t bothered by it because it was so short a while for that, but it was long enough for the subconscious mind to be craving for the two things. Sales went up by almost 35% overall that day!

So what really is subliminal advertising and how does it work? The meaning of the term ‘subliminal’ is “below the threshold of consciousness”. Hence, the term is coined because the subliminal messages are sent to the subconscious mind. It is that component of brain which controls some key aspects of our body like temperature and memory and also is the primary facilitator to our conscious mind. It is a type of hidden advertising that acts on the consumers’ subconscious mind. They in a very subtle way make people think about the product or something related to the product. They can be projected through very fast imagery projecting on a screen (in or within pictures), or even as slogans. It is created by the communication technician as a deliberate process whereby the receiver receives and responds to information without even realising it. The idea behind it is simple- anything that is perceived by a conscious mind may or may not be perceived, can easily be criticized and rejected. On the other hand, anything that is programmed in a person’s subconscious mind will not only enter resistance free but will also have a positive lingering effect.

A Harvard study (1999), employed a similar research like Vicary’s — subjects of the experiment played a computer game in which a series of words flashed before them for only a few thousandths of a second. One set of people got positive words like “wise”, “astute” and “accomplished.” The other set got words like “senile”, “dependent” and “diseased”. Even though the words that flashed moved very quickly to be consciously perceived, the subjects who received positive words exited the room significantly faster than those who got negative words.

Now let’s go into the real world examples which have been implemented.

1.

The FedEx logo looks like a plain text based logo but if you take a second look between the E and the x, you will see an arrow which represents the speed and accuracy of the company’s deliveries.

2.

The Amazon logo is an extremely simple logo and while the arrow may just look like a smile, it actually points from ‘a’ to ‘z’. This represents that Amazon sells everything from A to Z and the smile on the customers face when they buy a product.

3.

There is a tiny dollar bill in the KFC burger to subconsciously induce wealth and power a consumer can obtain by eating a burger from their company.

4.

In this advertisement, all we can see is a woman harmlessly raising a toast, right? Think again.

It’s actually an imagery of a woman pleasuring herself.

In conclusion, subliminal messages might have the potential of expansion of  influence/power from the fact that they may be able to sidestep the critical functions of the conscious mind, and it has often been argued that subliminal suggestions are therefore, potentially more powerful than ordinary suggestions. But on the contrary, many research findings do not support the conclusion that subliminal suggestions are peculiarly powerful. The mass is divided into believers and non-believers of it. And not too many experiments have been conducted to be able to state anything as a matter of fact. That was perhaps a major reason why I wanted to shed some light on it.

Suryansh Goel is a PGP student(2014 – 16) in IIM Ahmedabad

Winner vs Owner

Who won? …..Who owns? …..Who wins?

Not necessarily who wins our heart owns it or vice versa. I am sure most of you would back me on this…:)..

The other day I received a call from my best friend asking about a couple of people who have SBI internet banking activated. Upon asking he revealed that he needs to get bulk of tickets booked on IRCTC. For a moment I was at a loss for words either to react or respond. Then the revelation was that booking tickets through the IRCTC Quick-pay link on SBI personal banking site is much faster and hassle-free. If this is really the case then, to my mind, either every SBI user would like to book tickets through this quick link rather than browsing IRCTC and/or every IRCTC user would like to have one SBI account. Then the question arises who drives who? Who wins the customers and who actually owns them? In this particular case the answer may look very simple as IRCTC has the monopoly in the market but what if otherwise.

I believe marketers and strategists are yet to come up with a framework or model to precisely answer the above queries With the advent of social media, advancement of technology and the emergence of newer ways of promotion, it has become increasingly difficult to gauge who really owns the customer, who won them initially and who wins them ultimately. Is it the Facebook or Flipkart? Is it ICICI or Airtel? Is it the brand or the app? In my opinion with rising trend of deep discounts by the online retailers, offers and various referral promotion strategies, the phenomenon of split or divided and temporal loyalty have reached a new level empowered by the high-speed internet connections, user friendly tools to minimise the search time and social platforms showering ratings and reviews to ease the filtering process for the customers.

However despite all these, we customers are not relieved but feel a different kind of stress, for lack of a better word I would call it “time pressure which is independent of time but not of place or space” because suddenly the place for transaction has turned into a place for experience with the pervasiveness of e-commerce apps on smartphones, unpredictable timing for offers and unbelievable range of discounts.

Soon the pressure will be mounting on companies, brand managers, marketers, the sponsors and the targeted ad producers to identify where the customers really belong. On the other hand the customers would soon start categorising the brands or the retailers as 80%, 50%, 30% instead of traditional classic, premium and mass brands. The current symbiotic relationships amongst different players belonging to either same (retailing-retailing) or different sectors (telecom-banking, telecom-retailing; M-PESA, Paypal, Alipay etc.) just to cash-in on the impulsive and demanding buyers might be beneficial in the short-run but whether it will continue to benefit both the partners in the long-run is something to be assessed.

The flipside of this symbiotic relationship is that if one fails, the other fails too. Ofcourse you call it good or bad if this symbiotic relationships continue, the market will be in tandem with all its players; either all will be rocking i.e. the market is up or all doomed together i.e. there will be slump. Likewise, in case of any conflict both the symbiotic brands will have to suffer. The scope for free riding, on the part of any partner, in complaint resolution, technical support, technology updation is also undeniable.

Then the question arises “Is the customer always at an advantage?” Not really, apart from the above discussed time independent time pressure, the customer falls prey to the combined pressure from both the symbiotic brands and players than just one. Even though we have double the earlier speed to search, now we have twice the information to be acquired and double the magnitude to be evaluated. The decision making becomes too complex which calls for an exhaustive evaluation of both the partners. Yet the real losers are the sponsors who have to decide where to show up for that marginally better attention by the viewers, where to place the targeted ads to get that extra click by the users; Is it the IRCTC or SBI?

I am still trying to figure out which is more important; winning or owning? If we think about life, though many manage to win our heart, as time progresses ultimately only one owns it…:).

Biswajita Parida is a FPM Participant in IIM Ahmedabad

Will Meru strike back?

I recall it was 2006 when Meru Cabs rolled out their air-conditioned cab services in Mumbai, a city which had existed previously solely on the services of the rickety kaali-peelis. Meru was literally a fresh breath of air in a city which was trapped in the humdrum of its highly efficient but suffocating public transport system. With the arrival of Meru, one could now seek an air-conditioned ride to their workplace at the convenience of a phone call. As Meru drilled home this convenience feature through their aggressive media campaign, it was perceived as a giant innovation in the transport sector, and made you wonder why nobody had thought of this idea before. Newspaper reporters took rides in Meru cabs and waxed eloquent about the quality, the comfort and the convenience, which did not require you to sell your body organs for payment. It was a cool time to be seen hopping on and off a cyan Mahindra Logan.

Cut to 2015, Mumbai. Meru cabs lags behind Tab Cabs and Ola Cabs in terms of both fleet size and revenue. You hardly get to see Meru Cabs on the street, but one still dutifully rumbles up to your home if you care to book one. Meru, somehow seems to have lost, if not its market share, definitely its mind share. People no longer associate the zing and freshness of a new venture with Meru. Companies like Ola and Uber seem to be the new in-things, expanding vigorously in new cities, obtaining multiple rounds of funding, each with big dollar numbers and so on. Even when Meru received any funding, there was only limited news about the same. When Ola and Uber arrived with a bang in 2013, they went all guns blazing pitching their ultra-convenient booking processes (app-based). People developed a perception that booking Meru was akin to using the old, round-dial phone.

So why did Meru, despite its early mover advantage and professional driver cadre, fail to make a lasting impact in the minds of people? I think the primary reason is that they did not market themselves to the public as aggressively as the other cab companies did. Even after witnessing the entry of market disruptors like Uber (who Ola copied later on), Meru was very slow on the uptake, hardly revising its strategy across any business function (marketing, operations, pricing). The app seemed hastily developed and froze randomly (it actually still does). It did not help that the CEO of Meru, Siddharth Pahwa kept re-iterating that ‘price cuts are not sustainable’, a move that perhaps makes sound business sense, but simply told the customer that Meru was not going to drop its fares anytime soon. Given our cherished Indian ideal of deriving the maximum value of money from everywhere, customers flocked to the competition. Leave alone customers, drivers, many of whom were fed up with Meru’s erratic payment schedules, migrated en masse to Ola and Uber (this fact derived from the countless cab rides I have taken in Bengaluru, across various services). And since the driver is the first and perhaps the only point of contact between the company and the passenger, talks like the one I used to have with ex-Meru drivers only reinforced a negative image of the company in the customer’s mind. I call this a marketing failure as these interfaces – the CEO, the phone app, the drivers – are the ones which market the company’s offerings to the public. It was important to have resolved the issues at this stage.

But being where we are right now, what can Meru do to improve its image and put up a fight to the new disruptors? I think that Meru does very little justice to the strengths it brings to the table. Ever since I have been using cabs for rides across towns, one thing that has stuck me has always been the fact that Meru featured the most reliable pre-booking service. I have had Ola and TaxiForSure cancel on me at the last second, leading me to scramble for booking new cabs. It was Meru whom I relied on to carry me to my IIM interviews in Bengaluru, and I have never been let down even once. Hence, I think Meru must push its pre-booking reliability as one of the differentiators with respect to its competitors. Meru has one of the best trained driver fleets in service – they are coached in etiquette and soft skills – and the company can sell this point as a value add. Further, Meru has its own low cost service called ‘Genie’ which is truly low cost – it never operates on a surge and has a fixed cost of Rs.10/km with no ride time charges – a boon in our traffic clogged cities. I think it is high time that Meru starts advertising about this service on a mass scale, specifically focussing on the advantages mentioned. They should take a leaf out of Uber’s book and start mailing people about indicative fares on popular routes in major cities – with the added caveat that they mention these are ‘peak-time’ fares, something that nobody else will be able to match. People in clogged markets such as Bengaluru and Mumbai will definitely appreciate the value of this statement.  Granted that price cuts will lead the industry nowhere, it is still essential to drop fares every now and then to entice customers and then offer them the best services to get them to stick on.  Meru has already embarked on a media campaign last year (‘Ab Haath Na Hilao, Bas App dabao’), but this needs to be sustained and a backbone of strong service must be built to support the above claims.

It is evident that Meru still has a considerable market-share in India. But this needs to be bolstered by a media campaign which is not shy of playing to its own strengths aggressively. Else, Meru might risk irrelevance in a market which is as cutthroat as any in the world.

Abhijit Joshi is PGP student (2015-17) in IIM Ahmedabad

Are premium products and services necessarily niche? Where does mass premium fit in the world of marketing?

Gone are days when the premium products and services could be strictly restricted to the niche category of customers who were sifted on the basis of the income level. The borderline between mass and premium market is growing thicker especially in the Indian context with rising income levels and increasing levels of disposable income at the hands of the Indian middle class. This rising segment is where I believe mass premium offerings can sustain and generate profits. The youth is willing to welcome the premium offerings with open arms. Even the budget-conscious Indian middle class has developed an appetite for varying degrees of premium with respect to many products and services. These target groups ample provide opportunities for companies to venture into the mass premium segment. But if the willingness to pay the premium has to translate to purchases the major challenges of differentiation and winning the perception battle need to be addressed. The questions of what unique are we offering and how will we make the customer perceive a greater value in return for the premium have made the companies shy away from being caught in the middle of the premium and mass segment and facing the battle alongside the mass products on the same shelves. However, the example of HUL’s Magnum is an apt example of how rewarding the Indian mass premium market can be with the right marketing strategy.

Magnum was a case of going premium with ice-cream, a mass-market product. The pricing, though affordable for the middle class, was on the higher side of Rs 75 per bar. Its key differentiation came from with the rich royal taste of Belgian chocolate, the indulgence experience it entailed and the high levels of satisfaction it offered. These factors prevented the pricing from being a deterrent to large sales and gave room for expansion into tier 2 cities as well. The promotional campaigns deserve a special mention because the high price of the product demanded advertising that could create awareness of the emotional engagement associated with the product along with the other unique selling points and induce trials. Understanding the necessity, HUL put its financial muscle to good use by using the right channels for sending the message. It flooded the social media platforms targeting the youth, brought actresses on board as pleasure ambassadors, conducted point of sales activities and used visual aids that conveyed the product’s distinctness. By being different, functionally superior and offering an emotionally satisfying experience backed by the efficient communication of the same to the market the product could connect with a large of consumers which resulted in the success of the mass premium brand.

If Magnum was the case of going premium with a mass market product, there are ample examples of companies in the niche luxury segment entering the mass market with their product or launching a mass market product through brand extensions. Through these extensions they appeal to a group of High-Earners-Not-Yet-Rich (HENRY) consumers that help them enhance the volumes. This category could potentially be the market for them in the future. Hence reaching out to them early offers a competitive advantage. There are internal concerns such as brand dilution and brand confusion that need to be addressed for the mass premium venture to be worthwhile. Armani got it right by not going too far with the extension and maintaining brand integrity. Its venture into casual clothing from upscale clothing with Armani Jeans struck the right balance between managing luxury and mass premium.

Additionally, there are categories of products with which consumers attach a high degree of importance. The perception of the value brought about by the product for the consumer is high which gives a great mass premium potential to it. Beauty and skin care products are an example where prominent concerns of fairness and ageing skin have enabled high-priced premium products to receive mass appeal. Looking good is a requisite for today’s men and women. Capitalizing on that, various companies in the market launch further promotions and advertisements emphasizing the importance of grooming and reinforcing the perception of high-value addition which enables them to them to launch premium products, generate volumes and sustain in the mass premium space. Nivea and Ponds are the best examples of such companies in the Indian context.

There is industry specific caveat associated with targeting the mass premium market. Fierce competitiveness in the industry and highly price sensitive customers would act as major roadblocks for playing in the mass premium market. The highly priced product would not be able to sell itself lying alongside the other competitively priced products. One of the best examples of a failure in an attempt at the mass premium was Kingfisher red.

Post the acquisition, low-cost carrier Air Deccan was rebranded as Kingfisher Red. Competitive pricing was at its peak in the airlines industry and the Indian middle class showed high levels of price sensitivity for airline services. Kingfisher Red was priced slightly higher with extra services on offer and lost out on sales with low-cost carriers. With Kingfisher already operating in the premium segment, Kingfisher Red ended up as a misfit by not providing much differentiation in a highly price sensitive market.

Premium products and services are not necessarily niche and have a good revenue potential if made accessible for the masses. However, mass premium fitting into the scheme of things depends upon the nature of the industry targeted, mass’ appetite for premium, scope for differentiation of the product and the promotional capabilities to convey the uniqueness of the product.

Surya Jaishankar is PGP student (2015 – 17) in IIM Ahmedabad

Nestle’s strategy to revive brand Maggi?

Think 1 AM hunger pangs? Think of a cold winter evenings? Think of lazy summer afternoons? Think of exam all-nighters? Think of college canteens? What was the first thing that flashed across your mind? If it was not that familiar yellow packet of Maggi noodles, there is certainly much you have missed out in life.

Maggi has not only been a packet of noodles, it has been a way of life for us most Indians. With an image that has been carefully crafted over the last 30 years, it is a more frequent substance on the kitchen shelves that perhaps any other packaged food. Having been a savior for adolescents when they have ventured away from the comfort of their homes and home-cooked food, it has enjoyed a mother’s trust, a bachelor’s faith, a child’s crave and the nation’s affection. Just like Xerox, Zipper, Band-Aid, etc., it is so ubiquitous in its category that it has become a generic name for noodles, and that perhaps speaks a lot for itself. All this combined with a seventy plus percent market share makes brand Maggi all a really spectacular feat. But alas, all it took lose it all was a “2-minute” news bulletin.

Early this year, Maggi tested negative for harmful MSG and lead content in a government lab in Lucknow. This news spread like a wildfire through a forest and within hours Maggi was a trending topic. The consumers can be really unforgiving, and in this age of digital media, the damage is swift and brutal. Minutes after a leading news channel had covered the story, social media was ripe with negative sentiments and consumer ire. Other regulatory bodies took cue, and slowly the chips fell.

What we must all realize is that this is not something unprecedented in the history of brands. It is but human to err, and even big brands like Cadbury’s and Toyota have made their fair share of blunders. But what has helped these brands fight their way back into the hearts of customers? Let us look at some salient revival strategies one by one:

Honesty & Trust: First things first; in the wake of an already tarnished reputation, denial could be deadly.  As the oft quoted Lincoln saying ends –  “you can’t fool all of the people, all the time”, Maggi should realize that they cannot escape from owning up to the situation by terming something as glaringly egregious as this “a PR disaster”. Most long-term brand relationships are built on trust and faith, and Maggi should acknowledge and take responsibility for what has happened. In the absence of this, Maggi can find itself pitted in an already losing battle of words against social media, science and angry customers. The first message that should go out to the customers now should be, “yes I made a mistake and I am willing to correct it!” Only then will the customers be willing to lend an ear henceforth, and any corrective action that they take will have credibility.

Communication/Transparency: As far as communication has been concerned, saying Nestle has been terrible would be a gross understatement at the very least. The global Nestle site doesn’t even acknowledge the controversy in India. On its Delhi ban, the company has this to say, “”On 3 June 2015 the Delhi authorities made a press announcement that a 15 day ban would be imposed on MAGGI Noodles and that Nestlé would be served with a notice to recall the product from retail outlets in the state. We are yet to receive an official notification of this from the authorities.” When the absolute and urgent need of the hour is that for Nestle to reach out to its customers, the company has been increasingly withdrawing into a cocoon. This has not only prevented damage control, but added flames to the already growing fire against the brand. Nestle needs to tell people that it is trying to solve matters. An increase in marketing budget, dedicated social media pages, frequent Q&A sessions, industry interviews and more press conferences are the need of the hour. Even if we assume that Nestle is working to set things right, such efforts would have little effect if they are not promptly conveyed to the customers. Nestle can’t just sit back and watch their Rome burn: their leadership needs to come out in the open and speak up.

A Fresh Start: Similar to what the cola companies did with Amir Khan and Amitabh Bachchan after the pesticide controversy, Nestle needs to associate a fresh face to its product line during its resurgence from this debacle. Preferably, it needs to be someone with a clean image and who enjoys nationwide trust. An interesting coterie of brand ambassadors could be Sachin Tendulkar, Kapil Sharma, Amir Khan and Vidya Balan among others. These are people whom the nation likes, trusts and would be willing to listen to. Associating new faces with the brand would also signal a new start, and this would implicitly communicate that the brand is now a changed one.

Commitment: As the famous Carl Jung said, “you are what you do and not what you say you’ll do,” words without much action have little long-term impact. An interesting lesson can be taken from Cadbury, which invested in expensive machinery and revamped their entire product packaging after being caught up in the worms’ controversy. Similarly, Nestle can setup additional transparent systems in place to ensure that all its future products are 100 percent safe. An interesting initiative could be along the lines of a new web-domain “mysafenestle.com”, where they can get an independent testing body to continuously test their products round the year and publish this information publicly. Additionally, they can update their product packaging and labeling to change the way they convey how they ensure the safety of their products. This will send out a message to the consumers that Nestle has learnt its lessons and is ready to take on the safety concerns very seriously.

Hence, succinctly put, Nestle’s course of action should be to first acknowledge there were shortcomings, communicate that it is working to overcome them and support its words with tangible efforts such as a new brand campaign, updated product packaging and involvement of neutral testing agencies to ensure the future safety of their products, among others. Not only Nestle, even the consumers want their beloved Maggi back. Thirty years of serving their customers dutifully has reaped some serious brand loyalty, and we will be willing to trust them again if they reach out to us. After all, what one of India’s leading snack brand says,”Tedha hai, par mera hai”, perfectly echoes our sentiments towards Maggi.

Sumit Bhagat is PGP student (2015 – 17)  in IIM Ahmedabad

Reactvertising

Is it mere reaction? Or is it smart advertising?

Trace a relationship between the following:

Kitkat and iPhone

Super Bowl XLVII and Oreo

Snickers and Luis Suarez (The footballer)

Denny’s Diner and Scandal (TV Series)

NissanUK and Royal Baby (Kate & William’s child)

Don’t Google now. Making it convenient for you:

(Super Bowl XLVII’s now infamous blackout)

Didn’t social media marketing assume a new level of significance? I’ll tell you what’s different about this particular trend of “reacting” to an event, grabbing the context and “advertising” one’s own brand.

The 2013 Super Bowl blackout was a 34-minute hiatus. While the world groaned and viewers turned to their phones to respond to texts or check out Facebook, Twitter; Oreo delighted everyone with the tweet (shown above). With 10,000 retweets in 1 hour, this economically cheap mode of advertising scored better than Oreo’s actual Super Bowl ad, which ran to millions of dollars!

How did it happen in 34 minutes: The approval from the communications team, strategist, content editor etc.?

This is when we realize the fiercely smart planning for opportunistic advertisement by Oreo that night.

There was a 15-person social media team ready for any response to any event that could happened in the Super Bowl game that night. What luck! The advertisers, copywriters demonstrated agility during that 34-minute blackout window and the tweet served as the tipping point of a trend called: Reactvertising.

One may call it a form of social listening; a way of presenting your brand as one that is cognizant of world happenings or exhibiting intelligent creativity to further brand recall. These ads are reactive: the response time is a few minutes after the event they’re capitalizing on takes place. It’s a whole exciting face of social media marketing as brands feel alive, running in motion with world trends and closer to consumers’ worlds.

One of my friends, a copywriter in Hyderabad posted this as a reaction to Flipkart’s Big Billion Day fiasco:

And one of the most adorable ones is NASA’s tweet during the 2014 Oscars:

But then, there are those who pushed it too far:

Leveraging an event has a lot to do with the context of the event itself. No one gets severely affected if an iPhone bends (at least not physically, mental sour is subjective) but you cannot leverage on Hurricane Sandy and Cairo riots. Brand recall? Oh yes, but a really negative connotation to it. Not done.

Taking a dig on this trend that can oscillate between the hyper-reactive and the acceptable-reactive part of advertising, the advertising agency, John st. has come up with a hilarious video:

A personal touch, food for thought:

Sometimes we should prevent ourselves from getting subdued by the thick jargon of Kotler and view the world of marketing by analyzing such undercurrents around us.

Marketing/ advertising seems more fun then.

Nitisha Tomar is a PGP1 Student (2014-16) in IIM Ahmedabad

Text Advertising

If you ever thought that texting has been revolutionized by those umpteen emojis and add-ons that Whatsapp and other similar apps offer, you’re right. But if you ever thought that it has revolutionized “communication” per se, you might want to check out the following series of Starbucks ads:

Apology

Date

Kick

The “Conversation Films” ad series that Starbucks has recently dished out hit the spot in terms of social connect with the viewers. The abstract components that shape most of our intimate conversations have been brought to focus with an immaculate and, surprisingly, simple ad showcasing the inherent weaknesses and emotional vacuum in text-based conversations.

An important social message that resonates with Starbucks’ brand concept of a social hangout forms the crux of the ad series. The visual minimization, voiceovers with natural background sounds matched with apt pauses coupled with the most impressive part:  the screen going blank with the voiceovers continuing their talk; Starbucks should be lauded for such a simple and yet powerful brand recall strategy.

And it isn’t just Starbucks that has come up with such text-based commercials. There seems to be an upward trend towards many brands adopting this advertising approach. Do check out the following:  Google’s classic “Parisian Love” and Honda’s more recent PSAs against texting and driving.

Dwell on the impact of these ads and we see a positive connotation attached with Starbucks and subtly negative and unsettling one with that of Honda. Where Honda also intended to drive home a social message that depicted social responsibility on their part, the level of brand recall seemed to be distant from what they seemed to target. Close repeated analysis of Starbucks v/s Honda ads brings forth the importance of undercurrents that need to go with the ad theme. They need to be impactful, but of course, have to be synergized with the brand and the message they would like to portray. Summing up the difference: Which ad would you like to watch again? Starbucks’ or Honda’s?

The Google ad leaves us asking for more creativity and impact factor. It’s swift, simple, tries to be exhaustive in terms of utilities offered by Google, but again, could’ve done a better job, we believe. Google, though, has come out with great Google search commercials in the recent past (Google Search: Anarkali) but since we are analyzing text-based commercials, it just didn’t hold that a firm ground in this particular ad theme.

And we see how the trend has shifted from typographical commercials to text-based ones with a smooth transition from a narration basis to a two-way communicational setting in parallel with the onslaught of texting in the recent years: A Starbucks 2008 Presidential election ad, tempting coffee lovers to exchange their vote for a free beverage.

Starbucks has clearly been riding on a smart trend-adaptation strategy with respect to its correctly positioned advertisements. It’ll be interesting to keep a tab on their upcoming ads for trend analysis.

And do watch this space for more text-based commercials from different brands.

Nitisha Tomar is a PGP1 Student (2014-16) in IIM Ahmedabad

ATL v BTL Marketing

The presence of a vast and diverse consumer market – with different aspirations, needs, methods, preferences, etc. – necessitates a vast portfolio of products that can cater to specific segments. A consequence of this is that as each segment behaves and responds differently to marketing, there has to be a different set of tactics for each product in the market. These tactics have been clubbed into three different buckets, on the basis of how the information is disseminated to the customer.

As a marketer, this poses a huge dilemma because there now exists three varying sets of tactics for my plan. The important questions are – How does one make the split between the three sets of tactics? What underlying factors contribute to the split and why?

To understand this better, let us take the example of a Hindustan Unilever’s (HUL) promotional strategies for three brands of the same product line – Surf, Rin& Wheel.

Each of these products represents a different segment and consequently have warranted a different promotional strategy.

Analysis of these strategies give us some insights on the key factors influencing the split of the marketing tactics:

• Decision Influencers – For the higher segment of customers, the decision influencers have now turned to the internet while the rural market is heavily influenced by word-of-mouth publicity. This difference in decision influencing processes implies that there is a need for a larger mass reach with ATL marketing for some brands (Surf), as opposed to a larger need for personalized selling with BTL marketing in others (Wheel)

• Access to mass media – The target customer’s access to mass media is a key factor. Marketers realized that since a large portion of their target customers do not have frequent access to mass media, they have a larger portion of their campaign with BTL tactics. A prime example of this is a missed-call campaign floated for Wheel in 2011 which became a roaring success for the brand in UP and Bihar.²On the contrary, Surf enjoys the maximum amount of airtime amongst the three brands.

• Product Positioning–The positioning of the product plays a large role in determining how your promotional tactics will shape up. In this example, Surf was positioned for the urbane customers who were looking for top-of-the-line products. Consequently, their innovative campaigns such as “DaagAccheHain” and “ZiddiDaag Removal” warranted a mass reach.

• Price sensitivity – Price sensitivity is another critical consideration. In a highly cross-elastic market, there is a need to undercut on expenses at every level to stay competitive. BTL marketing typically costs lower than ATL and therefore is preferred by marketers in extremely competitive scenarios.

Rin v. Tide and Wheel v. Nirma typically sees lower ATL marketing than Surf because of the price sensitive nature of their markets

• Stage in Life-cycle – Typically, marketers focus on ATL marketing at the nascent stages of the product life-cycle. There is a tapering off of ATL as the product matures.

• Knowledge Disseminated to Customer– Typically, ATL marketing is required when the customer is to be educated in a new feature. An example is when Surf launched their “Bucket Wash”, a move away from the traditional scrub wash. This required a dedicated campaign to educate the customer on the benefits of this new feature.

While all these factors influence one set of tactics over another, it is important to note that simply using one set of tactics will be detrimental to the entire campaign. In our example too, Wheel has had Salman Khan as an ambassador while Surf has been creative with its roadshows. Thus, an ideal marketing decision should weigh these factors and come up with the right balance (TTL) campaign to maximise the success of the campaign.

References

[1]:http://theadvertisingclub.net/index.php?option=com_content&view=article&id=3256:difference-between-above-the-line-and-below-the-line-advertising&Itemid=175

[2]:http://www.hul.co.in/brands-in-action/detail/Active-Wheel-s-Mobile-Campaign-a-huge-success-in-U-P–and-Bihar/301896/

Empathizing with the Digital Marketer

Too much information to relay, innumerable ways of story-telling, desperation of breaking the clutter, apprehension of negative perception is a small list of many factors that brands put rigorous thinking into to become digitally relevant. Because in today’s world, the term “digital relevance” has become synonymous to “relevance”. It has transformed the traditional B2B and B2C world into a C2C world with immense power to the consumer to interpret & spread the brand in a way the companies may have no control over. So how is it that Oreo & Maggi have established themselves so well when big brands like Rahul Gandhi & Mcdonalds have #McFailed in the same scene?

The first step that marketers need to follow. UNDERSTAND. This understanding is essential to three elements. Where to implement, what to implement and for whom the implementation is done is the foundation of all communication.  For ex, Facebook with all its features, is more communicative & interactive and hence a better medium for sharing vibrant inputs capable for arousing interest.  On the other hand Twitter is more about conciseness and communication of information, and is an ideal medium that facilitates high degree of peer to peer interaction. When it comes to understanding one’s own brand, look at Volvo. They knew exactly what their brand stood for. Safety& Smoothness meant for larger vehicles was how they had positioned themselves which made the “Epic Split” memorable. Lastly, understand the consumer. As a facilitator of change and a symbol of new thinking, BJP and Narendra Modi understood what void in the consumers mind they were filling and delivered it consistently across all platforms to conquer the 2014 elections.

Once you’ve understood them, ASSOCIATE. More and more companies are now working with Twitter to identify upcoming trends among consumers to gain their share of voice and associate. Cadbury Oreo had a specialized team working on dynamic social media operations during the Super Bowl. Amul, albeit mostly traditional, comes up with brilliant links with day to day events that not only arouse interest but increase connect. As soon as Suarez performed an “Italian bite” this world cup, Brand like Snickers and Dominos rushed to become a part of it, and with considerable success.

Now, ENGAGE. Everybody likes personalization. And only the brands that can “mass personalize” themselves will win. See Maggi. After having conquered the “2-minute proposition”, Maggi knew the brand now belonged to the consumers. It had entwined itself in the culture of the country. And thus it started interacting with consumers directly. For new ideas, new variants. Kitkat, recently, sent a box ffKitkat Dark to a consumer’s home who mentioned on Twitter, how she was craving for it. Kitkat identified a potential focal point and ensured that they own it. Later, the same consumer, retweeted this incident thrice. So, Engage.

Finally, TRANSFORM. In future, only the loved brands would survive. And that will only happen, if the brand evolves with the consumer. Something Microsoft couldn’t do, but Old Spice did. From moving to “Make-Love-Not-War” from the earlier tawdry proposition, something Axe has done and gained worldwide appreciation. Only then can the Brand really stand the digital test of time. Only then will it be able to permanently make an emotional position for itself. Afterall, “emotions are loyalty beyond a reason”, and the brands that thrive in the future will be based on emotion, not reason.

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Shishir (aka Shirshir) is a PGP1 student (2014-16) at IIM Ahmedabad