Sales and marketing

On Saturday evening, I drank a Pepsi.

You might wonder why I’m making such a big deal about it. Because it is a big deal. Because I don’t normally drink pepsi. My preferred choice of cola is Thums Up, and if it’s not available I have a Coke. The only time when I have a pepsi is when both Thums Up and Coke are not available. There are times when I end up at PepsiFoods only stores, and sometimes I even have dew instead of pepsi.

You might think I’m extrapolating based on one data point. But I know more people who swear by thums up. For whom Pepsi is only a third choice cola.

The reason I’m bringing this up now is that Pepsi has spent a bombshell on sponsoring the IPL. Yes, despite being on HD, I managed to see a number of their ads. Pepsi Atom seems cool but they didn’t seem to have had its distribution in place when I wanted to try one. I reverted to my old faithful thums up. Now, I hear news that the India head of Pepsi has been sacked because he was deemed to have over spent on the IPL.

Why someone like Pepsi would spend so much on advertising is beyond me. Yes, they need to be on the top of people’s minds. But considering that everyone they advertise to has tried each of the major colas once, and loyalties to cola brands being rather heavy, I don’t see how they seek to influence sales by advertising. That Shah Rukh Khan drinks pepsi doesn’t alter my opinion one bit – I’m loyal to my thums up. I would think the same to be true to a loyal pepsi fan.

After having said so many times that I’m a loyal Thums Up customer, you might want to know why I drank Pepsi on Saturday. Because that little shop in Malleswaram I went to stocked only pepsi products. And he didn’t have dew. Faced with the choice of Pepsi or Mirinda or 7Up, I opted for the first. It was that exclusive agreement that PepsiCo had with that shopkeeper that made me consume their product.

Pepsi should invest more in this. Give higher margins to retailers who are willing to stock only pepsi products. Cola is something in which people have loyalties, but those loyalties are typically not so strong that the shop tends to lose business if the customer’s favourite brand is not available. Given lack of choice, customers will switch.

But then I guess the problem is that Pepsi is a “marketing-driven” rather than “sales-driven” company (we used to hear a lot about this distinction during recruitment time at business school). And the thing with marketing everywhere is that they are not measured. Like this friend who markets phones once gleefully told me that an advertisement he put out had a million likes on facebook. I asked him how many extra phones his company sold as a function of that ad. He had no answer. Marketing is like that everywhere. It is not judged based on real tangible numbers. And I hear that marketers like to keep it that way!

The last time I was in this guru mode I had commented that Nokia’s strategy of promoting Lumia by the strength of its camera was doomed to fail – for people don’t buy phones because they want a camera. Nokia seems to have learnt. The latest ad for the 520 talks about the apps that are available. This time they seem to have got it right.

 

Wine buying

Today, for the first time ever, I went out to buy wine, and in hindsight (I’m writing it having finished half of half the bottle) I think I did a pretty good job.

I had gone to this “Not just wine and cheese” store in Jayanagar hoping to pick up some real good wine to go with our cooking experiments for the evening (we’re making pizza and pasta). Having had really bad experiences with Indian wines (Nine Hills, Grover’s, Sula), I gave them a wide berth and moved over to the international section. The selection wasn’t particularly vast, and interestingly as soon as I moved over to the international section, one of the shopkeepers came over to assist me.

He first showed me a 2009 wine from France, when i asked him to show something older. For a slightly higher price, he pulled out a 2006 wine from France. The pricing seemed suspicious to me. A six year old wine from France, one of the more sought after wine-producing countries, for just Rs. 1600 (inclusive of 110% tax, so the duty free dollar price comes to around $15)? May not be very good wine, I reasoned, and now I decided to let go of all details on production date, etc. and simply asked the shopkeeper to recommend to me a good bottle.

Maybe it was the fact that I had quickly moved over to the international section, or that I was talking about year of bottling, but the shopkeeper assumed I was a rather serious buyer, and enthusiastically recommended to me a few bottles. Now, picking wines is tougher than picking whiskeys (where it’s easy to have favourite brands. Mine, if you would ask, is Talisker). Each country has several estates, the year of bottling, weather in the country in various years and several other factors go into determining how good a bottle is. Also, there’s inverse pricing, where you perceive more expensive wines to be better. So one has to look upon raw economics skills in order to judge wine bottles and pick something that is likely to be good.

What particularly interested me was a bottle of 2010 wine from Chile. Now, at Rs. 1300, it seemed rather highly priced for its vintage (given that France 2006 went for 1600). And then, I realized that Chile is a rather unfashionable wine producer, since most people tend to prefer European wines, and that being in the temperate weather zone, it is capable of producing good wines.

The shopkeeper mentioned that the particular bottle had been procured after a customer had specifically asked for it, and that it was made of superior quality grapes. Now, given that it was a wine of recent vintage and from an unfashionable producer, that it cost almost as much as a much older wine from a much older vintage told me something. That it was likely to be good.

It’s about two hours since I got home, and the bottle is half empty. The wine has been absolutely fabulous, and I hope this is the beginning of a great wine-buying career.

Branding and traditional retail

Last night, the wife sent me to the grocer with a rather long shopping list. The grocer in question is Bhuvaneshwari Traders, a rather efficient “traditional retail” store close to home. There are lots of shop-boys there to service your requests, billing happens in a jiffy (yes, you get a printed bill) and they usually tend to stock most items that you are likely to  need. Of course, being a small kirana, they’re not able to stock a particularly wide variety of SKUs (and I don’t think that makes business sense, as well), but they seem to do quite awesome business by serving most of the customers’ needs, and very quickly.

It is in this kind of a context, I realize, that branding plays a major impact. Twice in my “shopping process”, I had to decide on the brand of a good quickly, and both times, I went for a brand that was on top of my mind – a brand that had “pull marketed” well enough for me to remember them. So, the shopping process consisted of my reading out from my long prepared list, and the shop boys producing those items at a phenomenal speed. The speed at which those guys worked made me believe that it was an insult to myself, and to them, if the speed at which I ordered was to be much slower. This was like Vyaasa dicatating the Mahabharata to his scribe Ganesha. Since Ganesha was so fast in writing, Vyaasa was compelled to dictate at the same rate.

So, when I asked for “1 kg salt”, the shopkeeper responded with “which brand?”. Given that I had to respond quickly, I had about a split second to decide what brand of salt I wanted. Captain Cook came to mind, with its ads of the “free flowing” salt. But then, I remembered having been told that the brand stopped production some ten years ago. The next thing that came to mind was Tata Salt, and I immediately remembered that my mother used to use the same. I also remembered their recent ad on Kannada TV “deshada uppu” (the country’s salt). I didn’t need to think further.

A few items down the list, when I asked for Garam Masala, two shop boys popped up with two different brands. Now, I don’t recall having bought too much Garam Masala earlier in life, and  I didn’t recall any ads either. But then, one of the packets produced was “MTR Garam Masala” and the other had a name that I had never heard. Here, the general branding of the two manufacturers in question played its part, and I instinctively went for MTR.

The purchase process for “traditional retail” is significantly different from that of “modern retail” (the supermarkets and the likes), and I hope, and think, that Indian marketers understand this difference in order to market their goods appropriately. While it is true that in the traditional retail context, “sales” plays a large part – give higher margins to the shopkeeper, and he will “push” (since some customers take his recommendation) your product rather than a competitor’s – there is also the “pull” factor. It is very rarely in these contexts that a customer sees a number of competing products side by side and has time to make a rational decision – most shopkeepers don’t afford them that luxury. The key to this is efficient branding, which leads to the customer demanding a particular brand of products, so that the shopkeeper has no opportunity to push the one that gives him better margins (some shopkeepers do try this – offering a competing brand claiming it is superior, but I’m not sure customers buy this).

And I think a lot of Indian marketers understand this.

Vegetable shopping – It’s not about percentages

Some habits are hard to change. One that is especially hard to change is bargaining for vegetables. I was trained well, I must say, in the bazaars of Jayanagar 4th Block Shopping Complex. I was taught that one needs to do a full round of the market before making any purchase, in order to understand the “market price”. I was taught  techniques that would make the shopkeepers give the goods for the price I offered, I was told what demographics to approach for what kind of vegetables, and over time I must say I became an excellent vegetable shopper, when sent to Jayanagar 4th Block that is.

Another thing that is hard to change is willingness to pay, and this is where I see some irrationality. For example, I’ve just returned from the fruit and vegetable shop close to my house, having refused to buy a cucumber because the shopkeeper asked for Rs. 10 for it, a 100% markup on the not-so-longterm average price of Rs. 5. And that is precisely the problem – looking at it as percentages.

We don’t usually consume too much cucumber. If I’d bought that cucumber it would’ve lasted about a week. So by refusing to pay the “100% premium” for it, I’ve essentially saved my family a maximum of five rupees over the course of a week (and this is in the best case – conditional on my being able to procure cucumber at the “normal rate” soon. Else the loss is larger). And given our not-so-inconsiderable weekly expenses, and the fact that our “discretionary spend” is an order of magnitude larger than the five rupees I’ve saved on the cucumber, this just doesn’t make sense.

The mistake we make here is to look at the percentage increase in weekly budget of the particular item, and base our decision on that. Instead, if we were to look at the increase in the “total weekly budget” (across all items), that could help us get a more realistic figure for our willingness to pay for certain things.

Of course, the big problem here is that even if my rational mind says this, there’s a behavioural issue in paying much more than the price we’ve been “anchored” to. I don’t know how we need to get over this.

Money and religion

No matter how much you preach, how much you write, how many arguments you make in favour of your stand that there is no god, the believers will ignore you. And given that believers usually have strong sense of belief, it is very unlikely that your preaching and reasoning will have any effect on them.

Instead, the easiest way for you to spread your message is to make the religious ones pay. Literally. Religious arbitrage, I call it. Religion usually comes with a set of beliefs. And superstitions. And the religious people are more likely or less likely to do certain things because of their beliefs. And you need to exploit these beliefs. Exploit them as much as you can, and try make money at the believers’ expense.

My argument is this: if you think your religion or the lack of it is better than any other religion, there must surely be a way in which you can exploit this to make money at the expense of the other religion. So go ahead and do it. Nothing talks like money.

I did my bit in this direction last Diwali. I went to buy a mobile phone, and figured that it being dhan teras the shopkeeper was loathe to send me away without selling me anything. I managed to get the phone for almost a thousand rupees below what it cost the shopkeeper (I confirmed this figure with a friend who is a sales manager at Nokia). The poor guy even gave me a bill for an amount much larger than what I’d actually paid.

You might claim that I could have bargained harder. But as I said, even religion has its monetary limits, and the shopkeeper would’ve figured that incurring the wrath of the gods would’ve been cheaper than selling the phone to me for lower than he actually did.

So stop preaching. Stop preaching when you know you have no chance. Stop bringing up the FSM in every line of conversation. And let money do the talking.

PS: Religion might just be a special case for this argument. You should be able to take advantage of all sorts of beliefs (including the non-religious ones) using this strategy.