Is Bin Sight September 07

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Dipak Jain Jeffrey Sachs

INSIGHT

SPECIAL

Interview

with

Marshall

Goldsmit

Marshall Goldsmith

MarketingThe Changing Face

Rs. 100


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3/56September 2007|ISB insight|

ISB Insight TeamBhuvana Ramalingam

Mohan Chandran P

Varshaa Ratnaparke

Mrinal Kanti Ray

Monidipa Mukherjee

Madhavilatha G

Pallavi DuttSulagna Bishoi

Photography

Kasarla Visual Communications

Design & Cover IllustrationTrapeze

ResourcesLearning Resource Centre at the ISB

Printed At

Kala Jyothi Process Pvt Ltd

Indian School of BusinessGachibowli, Hyderabad 500032, India

Phone: 91 40 23007000, Fax: 23007012

Email: [email protected]

Inside CoverThe architectural spectacle of a student village at theISB. Photograph by Kiran M Shete, President, ISB

Photography Club, Class of 2008

Dear Reader,

Marketing is a favourite subject amongst B-school students and the media. Its colourful,

exciting, and touches peoples lives tangibly, everyday. With various new media to

influence people with, Marketing is growing more and more complex. The demographics

of the bottom of the pyramid and the emerging markets, along with the World Wide Web,have made a marketers life extremely difficult. We bring the views of our faculty experts

to you, neatly packaged and stamped worldclass, as they are all top-notch researchers

and academicians from some of the leading B-schools around the world.

We have had some senior visitors to the ISB of late Professor Jeffrey Sachs, Dean

Dipak Jain from Kellogg, ISBs ex-Dean, Professor Vijay Mahajan, and many reputed

academicians who attended the international Finance Conference held at the ISB. We

bring some of them in this issue and promise to share expert opinions from the others

in the next issue.

India is a land ofgurus. Yet, an Executive Coach has never before been a part of the CEOs

resource to turn to as a mentor from time to time. The Centre for Executive Educationtook a bold step in offering Executive Coaching as a special course for would-be coaches

and invited Marshall Goldsmith, one of the best Executive Coaches to have coached

CEOs of leading Fortune 500 companies, as the teacher-coach. Little wonder then that

the course got oversubscribed in no time, proving that there has been a long felt need for

coaching CEOs to do better. We feature an exclusive interview with Goldsmith, who has

many mantras from Buddhism for us to practice in our daily lives.

To add spice, we share the experience of the ISB students exploring Salsa, theatre, and

films.

We welcome your feedback, as always. So, please email me at

[email protected].

From the

editors desk

Copyright, 2007. Indian School of Business (ISB). All

rights reserved. All articles have been copyrighted by

ISB and no part of this magazine may be reproduced

either in part or full, or electronically stored into

a retrieval system, or disseminated in any form

(electronic, mechanical, photocopying, recording or

otherwise) without ISBs prior written permission.

For Subscriptions [email protected]

Bhuvana Ramalingam

Editor


4/562|ISB insight|September 2007

ffrey Sachs, Director, The Earth Institute, with M Rammohan

Rao, Dean, ISB

Contents

4 Cover Story: Marketing TheChanging Face

With everything changingrapidly, and change being the

only constant thing in this world,

we examine how marketing has

changed its face over the years

and what organisations should do

to cope with this rapid change.

6 The 86 Percent Solution Destination India

Professor Vijay Mahajan explainshow India is changing the face

of marketing by producing 86

percent solutions that cater to

the problems of developed and

developing countries of the

world.

10 The Nanosecond CultureDipak C Jain, Dean, Kellogg

School of Management,

in a tte--tte with K

Ramachandran, Clinical Professor

of Entrepreneurship at theISB, discusses how emerging

economies and organisations can

cope with rapid change through

anticipation and proactivity.

14 Online Consumer Behaviourand its Implications for FirmsStrategiesProfessor Siva Viswanathan

describes how tracking of

consumers online infomediary

usage can help traditional firmsdevise better strategies for

market segmentation and price-

discrimination.

18 Brand Building: The Next BigDistributed Knowledge Process

Professor Piyush Kumar exploreshow brand management in India

could be developed into a distributed

knowledge process to transform

the Indian service sector into the

Worlds Brand Office.

22 The Changing Face of MarketingMalcolm Frank, Senior Vice

President, Marketing and Strategy,

Cognizant, explains how marketing

teams need to evolve and adapt

themselves to rapidly changing

technologies, markets, and customers

26 ISB Insight Special: MarshallGoldsmith InterviewMarshall Goldsmith, a leading

authority in the world on Executive

Coaching, shares his perspectives on

leadership and behavioural change

with Deepak Chandra and Professor S

Ramnarayan.

30 Challenges of SustainableDevelopment in New IndiaProfessor Jeffrey Sachs, Director, The

Earth Institute and Quetelet Professor

of Sustainable Development,

discusses how India can overcome the

challenges posed by climate change

and ensure sustainable development.

34 Beyond Microfinance, TowardsM-Finance

Assistant Professors, ShamikaRavi, Mudit Kapoor, and Professor

Jonathan Morduch delve into the

possibilities of Mobile Finance in

taking microfinance beyond villages

and transforming the nature of

banking relationships.

Dipak Jain, Dean, Kellogg School of Management,

interacting with the ISB students

Meera Sanyal, Head, Asia Services, ABN Amro, at the ISB


5/56September 2007|ISB insight|3

38 Towards MultisourcingThe ISB organises an industry-

academia meet on multisourcingto discuss the motivations

and governance structures of

multisourcing relationship, and

vendors challenges in competing and

cooperating.

40 Pioneering Executive Coaching inIndiaThe ISB hosts the most sought-after

Executive Coach, Marshall Goldsmith,

and organises an exclusive Executive

Coaching Programme in India for

CEO coach aspirants.

42 The Great Turnaround of IndianRailwaysSudhir Kumar, IAS, Officer on Special

Duty to the Minister for Railways,

reveals how a debt-ridden public

enterprise giant was transformed into

a profit-making one.

45 Class Notes with Professor AmitBubnaAmit Bubna, Assistant Professor of

Economics and Finance at the ISB,

shares the secret of his inexhaustible

energy inside the class and what keeps

him going.

46 The Stage for Corporate TheatreThe Theatre Club at the ISB unleashes

the power of soft skills through

theatrics to facilitate leadershipenhancement and simulated learning

experience.

48 Creating a Barista of CinemasAditya Bhattacharya, Producer,

Director, Actor and Writer, in a tte--tte with the ISB students, shares

his perspectives on the business of

film-making.

50 ISB HappeningsA potpourri of happenings activities,

entertainment, visitors, social work,

and talks at the ISB.

52 Book ReviewDhiraj Sharma, Academic Associate at

the ISB, reviews the bookConversationswith Marketing Masters.

ISB students enjoying Salsa

Marshall Goldsmith with participants at the ISB

N Viswanadham, Executive Director, GLAMS, planting a

sapling at the ISB during World Environment Day


6/56

MarketingThe Changing Face


7/56

Every business enterprise has two and

only two basic functions: marketing

and innovation, said marketing guru,

Philip Kotler. Innovation itself implies

constant change from the status quo.Today, everything is rapidly changing be

it organisations, business environment,

consumer behaviour, products, markets,

or competition. Take for instance, the

telephone. Few decades back, telephone

was considered more as a medium of

telecommunication. But, with changing

time, telecom companies have been vying

with one another, offering several hours

of free talk time to users, and forcing

them to talk, thus marketing telephone as

a medium oftele-conversation. Similarly,

fairness creams, once regarded as a bastion

of the fairer sex, is no more so today, as

companies are intensely competing forthe attention of males, too, with a glut

of mens fairness creams in the market.

Organisations have turned their focus

from being a mere provider of customer

solutions (reactive) to being an anticipator

of customer needs (proactive). There has

been a paradigm shift from satisfying the

articulated needs of the customer to

foreseeing the unarticulated needs, and

coming out with innovative solutions.

Change is the only constant thing and

the only reality in the world today. It is asine qua non that signals rebirth and leads togrowth. The average Indian consumer and

his/her behaviour have changed drastically

over the years. Rapid urbanisation has

made the Indian consumer more trend-

conscious. Today, the Indian consumer

does not base decisions on price alone,

but also takes into account aspects such as

design, quality, style, fashion, etc. There is

a marked change in the mindset, too, from

saving for a rainy day to living for the day.

With more and more banks and credit card

companies extending loans generously,

the distinction between necessities and

luxuries is fast disappearing. The changing

face of marketing is conspicuous from the

way companies in various sectors such as

airlines, hotels, tourism, telecom, etc.,

are changing their strategies and slashing

prices to attract the low-end consumers in

urban as well as rural areas.

According to McKinseys forecast(The Bird of Gold: The Rise of India s Consumer

Market, McKinsey Global Institute, May 2007) ,the Indian market is expected to undergo

a major transformation in the next two

decades. Income levels will be trebled, and

India will climb up from being the twelfth

largest consumer market today, to being

the worlds fifth largest consumer market

by 2025. More than 291 million peopleare expected to move from below poverty

line to a more sustainable life. India s

middle class is also expected to expand

ten times, from 50 million today to 583

million by 2025. Over 23 million people

(outnumbering Australias population)

are expected to be in Indias wealthiest

list. The spending patterns of Indians will

also undergo a transformation, with a shift

from food and apparel to communications

and healthcare.

This issue features cover stories onMarketing and its changing face from

some of the who s who of Marketing,including Dipak Jain, Dean, Kellogg School

of Management, and Vijay Mahajan, John

P Harbin Centennial Chair in Business

Marketing and former Dean of the ISB.

Industry executives also share their

perspectives on the dynamic behaviour of

Marketing and its implications for India.

The author of the above article is MohanChandran P



This article is based on a talk delivered by

Professor Vijay Mahajan to the ISB students

in July 2007. Mahajan is John P Harbin

Centennial Chair in Business Marketing,

in the McCombs School of Business, the

University of Texas at Austin, and Former

Dean of the ISB. The talk was based on the

book, The 86% Solution How to Succeed

in the Biggest Market Opportunity of the 21st

Century,authored by Vijay Mahajan and

Kamini Banga, and published by Wharton

School Publishing, 2006.

India is changing the face of marketing

by producing solutions that cater to

the needs of consumers in developing

countries, where 86 percent of the world

population live. Indian IT companies

such as Tata Consultancy Services (TCS),

Wipro, Infosys, and Satyam have found rich

opportunities by focussing the resources of

the developing world (86 percent) on the

needs of the developed world (14 percent).

Indian ITES-BPO exports are growing at a

rate of 33.5 percent annually. Over the last

decade, India has fortified its leadership

position as an offshore destination with an

estimated share of 65% of global offshore

IT and 46% of global BPO. Most of Indiassoftware and IT-enabled services is exported

to the developed world. These companies

are helping raise their employees standard

of living in a sector employing over a

million people in India and improve

their regions. Indian companies and Indian

entrepreneurs, who had earlier offered

solutions to 14 percent of the world, are

now focussing on 86 percent of the world.

Welcome to India, the destination for the

86 percent solutions! Indian enterprise is

alive and thriving.Let us first examine the 2x2 matrix as

shown in figure 1. Firms face four paths

- A, B, C, and D. Some companies from

the 86 percent markets, eg. Infosys, focus

on serving developed markets (D). Others

such as two-wheeler maker Hero, in India,

founded and led by Brijmohan Lall Munjal,

is focussing on opportunities close at home

or in other 86 percent markets (B). Many

companies from the developed world

from car companies such as Ford to FMCG

companies such as Unilever are moving

into the developing world to seize the 86

percent opportunities (A). Other firms indeveloped countries, in the bottom-lefcorner (C), focus on 14 percent markets

where the field is crowded, growth is slowand competition is intense.

These strategies have some public

policy implications, because different

regulations encourage different approaches

If developing countries have incentivethat encourage exporting their goods and

services to developed markets, companie

tend to overlook opportunities closerto home. Regulations and trade policie

need to be designed in a way that balances

the pursuit of the 14 percent markets

of the developed world with focussingentrepreneurial attention on the needs of

markets at home. Although, there is no one

path to prosperity and growth, companiesneed to recognise that bulk of the worldpopulation is in developing countries

Managers, particularly in developingmarkets, should look carefully at the

opportunities that might be before them.

Strategies For Developing With TheMarketHow can companies recognise shifts and

transformations in developing marketsand take advantage of them? How can they

export their successes from one culture to

another?

Strategy#1: Develop Solutions with Government, NGOs and OthePlayers

As emerging markets develop, governments,

foundations, and non-governmenta

The 86 Percent Solution

Destination India

ay Mahajan, John P Harbin Centennial Chair in Business Marketing

the McCombs School of Business, The University of Texas at Austin



organisations (NGOs) play a central role in

development. Public-private partnerships

(PPP), such as Emergency Management

and Research Institute (EMRI), are

critical in addressing social and economic

challenges. EMRI (www.emri.in), started in

April 2005, by the Raju brothers of Satyam

Computers, provides comprehensive

emergency management services (medical,

police and fire emergencies) in the state

of Andhra Pradesh (AP), India, using a

single toll-free number (108). It receives an

average of about 23,000 calls everyday, and

takes an average of 15 minutes to reach the

victim/site. EMRI deploys 380 state-of-the-

art ambulances, catering to a population ofabout 80 million.

The Indian-made ambulance van used

by EMRI is uniquely designed to handle

48 kinds of emergencies at an economical

cost, and is equipped with latest and highly

receptive communication equipment to

ensure patient and public safety. It contains

extrication tools, fire extinguishers, rescue

blankets, shovels, public address system,

defibrillator, and fi ve different kinds of

stretchers. A unique feature of this ambulance

includes an oxygen cylinder behind the

drivers seat. EMRI has leapfrogged the

services offered to the developing world by

entering into tie-ups with hospitals across

AP. EMRI also tracks the patients status

and records the number of lives saved.

Unlike 911 services of the US, EMRI also

focusses on providing research and training

to doctors, paramedics, and other medical

personnel.

EMRI has proposed to increase thenumber of ambulance vans to about 500

by the end of September this year. Within

just a year, EMRI has saved more than

13,000 lives.

By working together, EMRI and the

Government of AP created a win-win

India is changing the face of marketing by

producing solutions that cater to the needs

of consumers in developing countries, where

86 percent of the world population live.

Indian entrepreneurs, providers

of 14 percent solutions hitherto,

are fast emerging as dominant

providers of solutions to the 86percent world.

Figure 1: Matrix showing companies offering 14 percent and 86 percentsolutions to 14 percent and 86 percent of the world

Selling From

A

Satyam, Infosys

Marketing To

14% C D

Ford India,

MercedesUnilever

86%

14% 86%

B

Hero, Shantha Biotech,

Bharat Biotech, Reva,Apollo Hospitals, Basix

Destination India



situation for the people, where over 30

percent of the population fall below poverty

line. By 2010, EMRI plans to extend its

services across India and save 1 million

lives a year.

Strategy#2: Export Successes

Solutions for one developing market canoften be exported to other developing

markets that have similar income

constraints and environments. Hero Cycles

(www.herocycles.com) have been a hit in

India, and its various models and bicycle

parts have been exported successfully to

about 89 countries, including developing

countries such as Paraguay and other African

countries, and developed countries such

as the US, the UK, Japan, and Germany.

Hero collaborated with Honda Motor

Company of Japan in making motorcycles,and one of its models Hero Puch is

exported to developed countries such as

Mexico, Argentina, Turkey, Holland, Spain,

and others. The vehicles, designed for its

domestic markets (India), also appeal to

the broader developing world.

Strategy#3: Import Customers fromthe Developed WorldIn addition to exporting products to the

developed world, digital technologies

and inexpensive travel allow developing

countries to import customers from the

developed world. Developing nations are

becoming hot destinations for medical

tourists, not only from other developing

nations but also from the developed world.

Thailand, Malaysia, Jordan, Singapore, and

India collectively host more than 1 millionmedical travellers each year, earning more

than $1 billion in treatment costs alone.

The market in India alone is expected

to reach $2.3 billion (Rs.100 billion) by

2012

The medical tourism industry in India,

with global revenues of approximately

$20 billion, is one of the worlds largest

industries, with an annual growth rate

of about 30 percent. The cost of surgery

in India can be one-tenth that of the US

or Western Europe, or sometimes, evenlower. About 10-12 percent of all patients

in Mumbais top hospitals are foreigners. It

is estimated that there are about 20 million

NRIs or Persons of Indian Origin (PIOs),

spread across 110 countries, who are

potential customers for medical tourism

in India. In 2006, about 150,000 medical

tourists came to India.

Apollo hospitals (www.apollohospitals.

com) in India, started by Dr. Prathap C.

Reddy, have created the largest chain of

hospitals outside the US by focussing

on the needs of developing nations and

international visitors. About 10-15 percent

of Apollos total patients constitute medical

tourists. They have treated about 100,000

international patients. Apollo caters to

about 60 countries, including medical

tourists from developed countries such asthe US, the UK, and Canada.

Apollos network also include retail

pharmacies across India, and Health and

Lifestyle Franchise Clinics, with globa

presence in developing countries like Sri

Lanka, Bangladesh, Nepal, Ghana, and

Nigeria, and developed countries such as

the UAE, the UK, and Saudi Arabia. Apollo

offers everything from hospital back-office

data processing to surgery in a chain of

38 hospitals, with over 7,000 beds across

Asia. It has a range of customised packagesexclusively developed to cater to the needs

of a diverse cross-section of individuals

The specialists in Apollo have performed

about 200,000 major surgeries of various

kinds.

Strategy#4: Address the GrowingPainsDevelopment brings with it many challenges

and growing pains. The path to development

is often lined with political and economic

Break-up of Emergencies Treated by EMRI

Emergencies

Injuries

Cardiac

Suicides

Stroke

Respiratory

Diabetes

Epilepsy

Pregnancy

Paediatric

Abdominal

Burns

Animal Bites

Electrocution

Fall from height

Drowning

Other accidents

40

35

30

25

20

15

10

5

0

Percentage

34

1415

5 5 56

3 3 31 1 1 1 12

Chart showing the break-up of number and type of various emergencies catered to by EMRI



turbulence, strains on fragile infrastructure

and environmental challenges. AIDS/HIV

is a growing concern in many developing

countries, including India.

Estimates by UNAIDS/WHO for 2006year-end indicate about 39.5 million people

globally suffering from the silent killer. Of

these, adults amount to 37.2 million. Young

people (below 25 years) account for half

of all HIV infections globally. In South

Africa and Zambia, about 15-20 percent of

adults are infected with AIDS. In the US,

AIDS has killed more than half a million

people, with about 40,000 new HIV

infections annually. The Indian condom-

manufacturing company, Hindustan Latex

Ltd. (HLL), has been developing solutions

to address the growing pains of the

developing (86 percent) as well developed

nations (14 percent) of the world.

About 75 percent of the companys total

production is supplied to the government

and international institutions like the UN,

WHO, IDA, etc. HLL is targeting to achieve

sales of Rs. 10 billion by 2012, considering

that around 2.5 million people in India

are affected with AIDS and 70 percent of

Indian population are less than 30 years ofage, of whom one-third are potential users

of the product. HLLs sales went up from

Rs.1.05 billion in 2000-02 to Rs. 2.43

billion in 2005-06. Also, about 100 million

pieces of condoms are exported to the

African continent, where the fear of AIDS

looms large. Today, HLL has emerged as the

largest condom manufacturer in the world,

with a production of about a billion pieces

per year.

India: An Emerging Economy Offering

86 Percent Solutions

Indian entrepreneurs, providers of 14

percent solutions hitherto, are fast emerging

as dominant providers of solutions to the 86

percent world, as can be seen in cell B of

Figure 1. Indian entrepreneurs are coming

up with innovative and cost-effective

solutions to problems. The 86 percent

solution is competitive, quality-driven, and

economical.

Bangalore-based company, Reva (www.

revaindia.com), launched Indias first

electric car in Hyderabad in September

2003. Reva offers 86 percent solution to

the developing and developed nations. Over500 Reva cars are exported to the UK.

Reva cars are operational in the developed

countries such as the US, Switzerland,

Japan, Australia, etc., and in developing

markets such as Cyprus, Norway, Nepal,

and Sri Lanka. Revas running cost is

approximately 40 paise per kilometre the

lowest in the world!

Bangalore has already carved a niche

for itself in the IT history as the Silicon

Valley of India. Total software exports from

Bangalore went up 33 percent to $11.3

billion in 2007. Hyderabad has taken the

mantle in IT from Bangalore. Software

exports from Hyderabad for the year 2007

witnessed a 48 percent increase to $4.5

billion from the previous year, contributing

14 percent to Indias total exports.

Hyderabad is taking the lead in offering

86 percent solutions to the world be it

in pharma, education, banking, software,

IT, hospitality, or tourism. Without

exaggeration, Bangalore and IT, andHyderabad and 86 percent solutions have

become synonymous in India.

No wonder, India and Indian

entrepreneurs are changing the face of

marketing by offering 86 percent solutions

to the rest of the world. Several Indian

companies, particularly from Hyderabad,

are leapfrogging the global competition

by offering 86 percent solutions to both

86 percent and 14 percent of the worlds

markets. Several additional examplesfrom various sectors include: Dr. Reddys,

Aurobindo Pharma, Matrix laboratories

(pharmaceuticals); Medwin hospitals, LV

Prasad Eye Institute (hospitality); Shanta

Biotech, Bharat Biotech, and Ocimum

Bio Solutions (biotech). India is indeed

heading towards becoming a sought-after

destination for The 86 percent solutions.

EMRIs unique state-of-the-art ambulance van with ability to

handle 48 kinds of emergencies.

Several Indian companies,

particularly from Hyderabad,

are leapfrogging the global

competition by offering 86

percent solutions to both 86percent and 14 percent of the

worlds markets.



Ramachandran: In this rapidly changing

socio-economic environment, very often,

people including experts say that

strategic planning is not possible, and that

you cant find any patterns. Is it really

possible to identify mega trends?

Dipak Jain: Yes. There is a term that

Professor Philip Kotler and I use The

Nanosecond Culture. NanosecondCulture means things are changing very

rapidly. Not only is change inevitable, but

change is happening at an accelerated

speed. So, when the world is changing so

rapidly, anything that you predict is going

to be wrong. By the time you predict,

things would have changed. We believe that

rather than prediction, you need to focus

on anticipation. Anticipate the mega trends

and prepare for it in a proactive way. That

is leadership and vision - that you have

anticipated a trend and are prepared for iteven before the market has identified it. In

this way, you are always close to customers,

but ahead of competition. This is the simple

mantra of success Close to customers but

ahead of competition. Rather than being

market-driven, be market driving. Drive

the market towards the trend.

I always tell my students never to

jump in the same river twice. The river

is the same, but the water has changed.

Anticipation rather than prediction, and

anticipation of mega trends are areas where

good visionaries have made a difference.

The emerging economies are rapidly

changing and the socio-economic platform

is also changing. In context of emerging

economies, can you elaborate on mega

trends and its relevance?

First, I dont like the word emergingeconomies. I think a better word would be

economies in transition. India, China and

Vietnam are all economies in transition

though at different scales.

When there is an economy

transition, I put my marketing head in

position, see the demographic profile of

people and examine their demographic

evolution. This is the first thing you have

to anticipate. The second part is to look

for the purchasing power. We have a large

number of poor people, but we still havea fairly large middle-class segment. Middle

class is the engine that keeps driving the

economy and, as a leader, I want to make

sure that this economic class remains stable

and stronger. When it comes to economies

in transition, you have to look at what is

changing and how the economy can cope

with the change. Rather than looking fo

growth in economies in transition, you

should look at disciplined growth. By that, I

mean, having the infrastructure to manage

Dipak C Jain, Dean, Kellogg School of

Management, in a tte--tte with K

Ramachandran, Clinical Professor of

Entrepreneurship at the ISB, talks about

the rapidly changing face of marketing, and

explains how important it is for marketers to

anticipate customer needs and be proactive

rather then being predictive and reactive. Here

are some excerpts.

CultureThe Nanosecond



growth. Otherwise it can get chaotic.

The economies in transition should

have an entrepreneurial mindset. They need

to make the best return of their limited

resources. So an entrepreneur should create

a small team, and seek venture capital that

can put the seed capital. Because, with

venture capital, you not only get the captain

but also get the management. This is what Icall control. When you are in economies in

transition, you need to create alliances with

countries, where they can come and do that

part of work. In many countries, where they

are investing in other countries, they took

the liberty to create the infrastructure. I

have been told that China is spending lots

of money in Africa building roads and dams

because they think that tomorrow Africa will

be the largest source of natural resources.

But, in order to extract things from mines,

you need to have roads.

Yes, China is investing lots in Africa. That

raises another question. We have most of

the frameworks of marketing principles

of the developed countries, largely in the

western context. If you take economies in

transition, including places like, say, Africa,

the context is different. To what extent are

these principles or framework or theories

of marketing, lets say functional areas,

relevant, especially, as you have also added

the entrepreneurial dimension?

The first point is that the marketing principles

or concepts would remain the same. But

what would change is the execution. Because,

execution depends on the context.

Execution is not context independent.

That is why they say think global and act

local. Thinking global is thinking of global

concepts. Act local means implement thoseconcepts depending on the local conditions.

Thus, the marketing concepts are global

concepts but they need to be executed with

local data or local conditions. If you have to

apply that in Africa and say that you want

to have a look at the database of all the

customers there, its a foolish question to

ask, because we dont have the database.

But that does not mean that

segmentation cannot be done. You might

have to use adhoc or other proxy measures.

You should do segmentation with whateverdata or information you have. Like in India,

you can go and talk to the village leader. He

will give you the insights and direct you.

There are other sources and resources that

we can tap into in order to get a better

understanding of these concepts. If we look

at marketing and talk about segmentation,

targeting and positioning, we have to do

that whether we go into emerging economy

or a developed economy. The notions of

segmentation, targeting and positioning

Dipak Jain, Dean, Kellogg School of Management, in discussion with K Ramachandran, Clinical Professor of Entrepreneurship, ISB

Nanosecond Culture means

things are changing very rapidly.

Not only is change inevitable,

but change is happening at an

accelerated speed. So, when the

world is changing so rapidly,

anything that you predict is

going to be wrong.



My first message is not to think of marketing as

a functional expertise. Marketing is a mindset.

Mindset means you have to think in terms

of customers and segmentation. Thinking is

independent of context.

are still the same. You still have to position

the product, look at the kind of people,

anticipate what they would look for, and

what you can give them. As economies

are in transition and if I am a Marketing

professor I would still teach the same

concepts. But I wont teach a case on

Citibank credit cards, because that may

be irrelevant for them because there is no

credit card there. Now, people talk about

micro files. You have to bring the examples

which are relevant to the context today butalso give few examples of the future.

According to me, the context in

the developed economies will not be

entrepreneurial but the mindset will be. For

economies in transition, not only do you

need to have an entrepreneurial mindset

but you also have limited resources. To

me, entrepreneurship means that you

have to go beyond boundaries to get your

work done albeit bureaucracy is stopping

you. Because, in an entrepreneurial world,

there is no bureaucracy, to start with.

Mobile penetration is significant even in

villages, and to a large extent people have

started using mobile for the promotion of

the product, branding, etc. Is there any

learning coming out of all this? Do you think

there is any major theoretical contribution

emerging from these economies from this

context?

There is a big difference here. Text

messaging is so popular in India and it is

virtually non-existent in the US. Why

First, the penetration of cell phones may be

high in the US. The use of mobile phone

is very limited as compared to countries

like China and India. So, how do we keep

in touch in the US? We go for the alternate

technology, which is the Blackberry. People

find that Blackberry is more convenien

than text messages, because one not only

gets messages sent through email but can

also send emails to others. Now for tha

system to work, other person also has tohave a Blackberry. The penetration of this

product is higher in the US as compared to

Indian context.

Now about the missed call concept in

India. India is a country where the incoming

calls are free. In the US, if you make a

missed call, you are charged the moment

the computer accepts that call. And that is

the reason people in India give missed calls

because they know that nobody is going to

be charged. In the US, both the caller, and

the receiver pays. Here, in India, only thecaller pays. Secondly, they might say: for

you it is free and for me it is money; so

you call me. But the real brilliance here

is that you have communicated without

communication. In developing countries

or economies in transition, rather than

focus on product innovation, we need to

focus on processing. A missed call to me

is a process innovation. I believe that there

are two new innovations that will happen

in economies in transition: one is process



Marketing is just not about marketing

a product or service. Marketing means

enhancing total customer experience.

Focus on the total customer, not just on

your product.

innovation and the other I call is business

model innovation. It is the new way of

doing the same business.

This leads me to the other question. Do you

find any of these learnings coming into the

MBA classroom? Take entrepreneurship,

which is today all-pervasive and is entering

into all functional areas - not only in

the start-up stage, but every stage of

organisational growth and it is a continuous

change. Does it get reflected in the MBAcurriculum at either Kellogg or other

leading business schools?

The answer is yes. Its not that you create

another course. In marketing course, you

should pick up a case, which deals with

economies in transition. Because, if you

create a whole course of economies in

transition, then you dont have the body

of knowledge. So, I think that rather than

creating a course, the more important

thing is to show how the same thing can

be done in a different context. When youbuild these things into the curriculum,

the standard practice is to add another

course called Economies in Transition

or Managing Economies in Transition.

Of course, students may feel that

same marketing is applied to Vietnam,

Cambodia and similar countries, and they

may not be interested in working in those

countries.So, they may think, why should

I take care when I have not come to Kellogg

to study about Bangladesh or Vietnam!

What is your message to the marketing

executives who are working in this kind of

environment?

Myfirst message is not to think of marketing

as a functional expertise. Marketing is a

mindset. Mindset means you have to think

in terms of customers and segmentation.

Thinking is independent of context.

Second, marketing is just not about

marketing a product or service. Marketing

means enhancing total customer experience.

Focus on the total customer, not just on your product which means before the

customer buys the product, while the

customer is buying the product or using the

product, and after the customer buys the

product. The total experience is where you

need to find that differentiation.

Third, I believe that marketing does

not mean huge expense. Many people think

of marketing only in terms of price. To me,

a simple definition of marketing is how I

make the product cheaper than others. So

I say price is transparent, value is opaque. All customers can see the price tag but

many customers cant see the value. When

I have to define marketing, I give a simple

definition: educate the customer of the

value you are offering. So, marketing is

nothing but customer education. Whether

you are in Africa or elsewhere, you have

to show the same thing to the customer

what the value is. And once the customer

perceives that the value is greater than the

price they have to pay, they will go for it.



In this article, the author, Siva Viswanathan,

Assistant Professor of Information Systems,

Decision and Information Technologies,

Robert H. Smith School of Business, University

of Maryland, describes a recent study that

examines how tracking of consumers online

infomediary usage can provide valuable

insights into underlying consumer differences

and help traditional firms craft better market

segmentation and price-discrimination

strategies.

O

ver the last few decades,

developments in information

technologies have dramatically

increased the amount of information

available to consumers. The Web, in

particular, has emerged as the primary

source of information for consumers in

various product categories, and in industries

as diverse as auto-retailing, brokerages,

real-estate, mortgages, and insurance,

among others. Most of this information is

provided by third-party online information

intermediaries (or infomediaries), who

have not only established themselves

as pivotal and trustworthy sources ofinformation, but also led to the creation of

new linkages with the potential to disrupt,

and fundamentally change the dynamics of

traditional business. The growth of online

infomediaries has given rise to new and

interesting information seeking behaviours,

which has only recently begun to garner

the attention of researchers. As consumers

increasingly begin to rely on online

infomediaries as their primary source of

information, these online intermediaries

provide traditional firms new avenues forsegmenting consumers and formulating

strategies based on their online behaviours

the analysis of which forms the primary

focus of this study. In particular, this study

examines differences in consumers online

information seeking behaviours, and seeks

to understand how firms can actively

leverage this knowledge to devise effective

marketing and pricing strategies.

The auto-retailing sector provides the

research context for this study. Estimated

at around a trillion dollars a year, auto-

retailing is the biggest retailing sector

in the US. While there are over 22,600

new car dealerships, the market is mostly

fragmented and sales largely localised. In

addition, the presence of franchise laws ha

helped strengthen the position of dealers in

the retail value chain. Added to the lack o

transparency in the pricing and purchase

process, significant differences exis

among cars in terms of performance and

features as well as in the pricing strategie

of dealersmaking the car buying process

a complex decision for most consumers

However, over the last few years, the advenof the Web, has led to the rapid growth

of several online intermediaries (Online

Buying Services) that have emerged to

improve overall market efficiency through

better information availability. These OBS

(Online Buying Services) such as AutobyTel

Edmunds.com, Cars.com, not only serve

as infomediaries providing information

on various facets of the purchase, but also

act a referral intermediaries by referring

consumers to dealers.

As in other sectors, these onlininfomediaries typically provide price and

product comparison information, enabling

consumers to find the right product and

negotiate better prices with dealers. Prior

studies examining the implications of the

increased availability of such information

have typically found that the increased

availability of price information leads to

lower average prices in the market, resulting

from greater price competition among

sellers. In addition to price information

Siva Viswanathan, Assistant Professor of Information Systems,

Decision and Information Technologies, Robert H. Smith School of

Business, University of Maryland

Online Consumer BehaviourAnd Its Implications For Firms Strategies


17/56

given the heterogeneity of consumer

preferences the high involvement nature

of the purchase and the high degree of

differentiation among cars, product-

related information is also very valuable to

consumers, enabling them find products

that better match their preferences. While

the increased availability of price-related

information to consumers leads to lower

prices, the increased availability of product-

related information is thought to decrease

consumers price sensitivities and lead to

higher prices on an average. Our study begins

by examining whether these differential

impacts of price and product informationavailability on outcomes are indeed borne

out in the market for new cars.

Data drawn from an annual survey

of new vehicle shoppers, conducted by

J.D. Power and Associates, forms the

basis for this study. A random sample of

new vehicle purchasers and lessees, based

on registration data, was taken to reflect

actual sales of new cars. A response rate

of 24 percent was achieved for 116,317

surveys mailed out. The dataset also reflects

details of online information sources usedin the consumer search process, as well

as detailed consumer profiles, which are

linked to a recent automobile purchase.

Consumers answered questions relating

to their usage of specific online OBS, the

specific type of information found through

the different OBS, price paid, vehicle

choice, and satisfaction, among others.

Other measures in the study included

consumer demographics, psychographics

(price sensitivity and involvement with the

product), internet usage, and technical

competence.

Key Findings

Our preliminary analysis uses a 3SLS (three-

stage least squares) systems estimator to

examine the relationship between the type

of information obtained by the consumer

and the resulting price paid, controlling

for individual and vehicle characteristics.

These results (based solely on the type of

information found irrespective of the specific

source used) show thatfinding more price

information results in the consumer paying

a significantly lower price, while findingmore product information results in the

consumer paying a higher price, on average,

for the same vehicle. While this finding

points to the existence of distinct consumer

segments, this knowledge is of limited

practical value without a viable mechanism

that enables firms to specifically identify and

target these customer-segments. Given that

different OBS provide different types of

information, a natural question that arises

in this context is whether consumers usage

of OBS can be used as a viable mechanismto identify these consumer segments.

To answer this question, we examine

consumers OBS-usage patterns and their

consequences in greater detail.

Interestingly, our data shows that

consumers typically visit more than one

OBS during their vehicle purchase process,

and a pair-wise analysis of OBS-usage allows

us to examine if particular pairs of OBS

tend to be used together by more (fewer)

consumers than would be expected if

Effective market segmentation, which

is vital for price discrimination, canalso play a critical role in afirms

profitability and survival.

September 2007|ISB insight|15



selected at random. A Chi-square distance

metric is used as a measure of proximity

among OBS pairs and a cluster analysis helps

us uncover the presence of three distinct

clusters of OBS. OBS within a cluster are

used together more when compared tothose across clusters. Cluster 1 consists of

OBS such as Edmunds, Autobytel, KBB,

etc., while Cluster 2 consists of OBS such

as Motor Trend Online, Car & Driver, Road

& Track Online, etc. Cluster 3 consists

of OBS such as Lycos Autos, Netscape

Autos, Yahoo! Autos, etc. We further find

that using Cluster 1 results in consumers

finding more price information, while

using Cluster 2 results in consumers finding

more product information, and using

Cluster 3 results in consumers finding less

of both. Given the differences in the type

of information found by consumers using

these three clusters the price, product,

and portal clusters we then examine the

outcomes - the price paid, vehicle choice,

and customer satisfaction related to the

use of these OBS clusters.

We find that the usage of these different

clusters is associated with significant

differences in consumer outcomes. In

particular, we find that the price paid byconsumers is systematically related to the

type of infomediaries they visit in their

search process, implying that all referrals

dont have the same value for dealerships,

and pointing to a new basis for consumer

segmentation. We also find that the users

of the product cluster were more satisfied

with the productfit, although they paid a

higher price compared to the price cluster

users. The users of the portal cluster

were the least satisfied with their price

as well as product choice outcomes. Inaddition, we also find that the observed

behavioural choicesi.e., consumers use

of OBS clustersare related to underlying

systematic differences in consumer

characteristics and the properties of the

information found. These findings have

significant implications for traditional firms

as well as online intermediaries.

Effective market segmentation, which

is vital for price discrimination, can also

play a critical role in a firms profitability

and survival. However, although price

discrimination can boost a firms profits, i

is very challenging to identify the right

consumer segments. Compared to other

segmentation and price discrimination

strategies such as versioning, product lineextensions, or couponing, our finding

suggest that segmentation based on OBS-

usage can serve as a low-cost, effective, and

robust self-selection mechanism. Dealers

and manufacturers can design their value

proposition and marketing strategies and

allocate their resources in an efficient way

to deliver the maximum value to these

different consumer segments by tracking

their online infomediary-usage

Our findings also show that consumers

using price and product OBS clusters differ

in their psychographic profiles, but are

demographically similar. While difference

in demographics characteristics are usually

more easily observable by sellers, attitudina

differences as revealed by psychographics

are less conspicuous. This makes the

findings of the effectiveness of using online

infomediary clusters for segmentation and

price discrimination more compelling.

Our findings also have interesting

implications for dealers partnership with online infomediaries. Contrary t

conventional wisdom about the optimality

of exclusive referral arrangements between

an OBS and competing dealers in a given

geographical area, our results suggest that

a traditional dealer can benefit from using

these different categories of infomediaries

as complementary referral mechanisms. A

for OBS, given that consumers are clearly

differentiated on their underlying needs

for the different types of information

OBS would benefit by better highlightingtheir domain of specialisation. Greater

specialisation and differentiation of OBS

clusters would help facilitate consumer

self-selection and enable OBS and dealers

to more effectively understand the value o

a referred lead.

(Viswanathan S, Gosain S, Kuruzovich J, Agarwal R. Online Infomediaries and PriceDiscrimination: Evidence from the Auto-RetailingSector, Journal of Marketing, Vol. 71, No.3

July 2007.)

Dealers and manufacturers can

design their value proposition and

marketing strategies and allocate

their resources in an efficient

way to deliver the maximum

value to these different consumer

segments by tracking their online

infomediary-usage.

16|ISB insight|September 2007


19/56



The author, Piyush Kumar, Associate

Professor of Marketing at the Terry College

of Business, University of Georgia, and a

consultant in the areas of brand strategy

and service management, explains how

brand management could be developed

into a Distributed Knowledge Process

in India, transforming the Indian service

sector from the Worlds Back Office to the


According to a recent news story,

Lenovo is setting up a global

marketing hub in Bangalore for its

brands. The hub will formulate and track

its brand strategies and help optimise the

use of the firms brand assets deployed

across the globe. While the news may

not be completely unexpected, what is

certainly surprising is the amount of time

it has taken for brand management to be

widely recognised as a business processthat can be de-linked from a corporations

headquarters and even outsourced.

Over the last decade or so, we have seen

the emergence of what could be called a

brand-and-source global economy (BSGE).

In this new and still emerging environment,

a separation is taking place between brand

owners and what we could call product

fulfillers. Today, the owners or holders of

brands are increasingly less likely to be

the producers of the products or services

that are marketed under it. For example,a brand owner in the US may design its

products in Europe, manufacture them in

Asia, and distribute them globally.

This trend has resulted in a structural

shift in what a corporate entity is, and what

it does and does not do. Many entities have

undergone organisational peeling or an

unbundling of the tasks that they perform

as an organisation, and the associated

competencies that they need to develop

internally. In a BSGE environment, many

tasks that were traditionally performed

within are increasingly being distribute

and spun off to where they can be

performed best and often at lower cost

And, because some of these processes have

been distributed to entities across nationa

boundaries, terms like outsourcing and

off-shoring have become a part of everyday

management vocabulary.

However, it is perhaps ironic

that globalisation and outsourcing areoften talked about in the same breath

Globalisation represents the move

towards a unified singular market for both

production and consumption and the

notional dissolution of national boundaries

The concept of off-shoring, on the other

hand, is tied to the acknowledgement o

the importance of national boundaries and

a clear separation between what is inside

those boundaries and what is outside. And

when the intellectual component of what is

developed outside is high, it gets labelledas an outsourced knowledge process

However, if consumption and production

markets are becoming truly global, then

it is perhaps inappropriate to strategise in

terms of outsourcing versus in-sourcing.

Instead, an organisation should be

thought of as a combination of a holding

entity and distributed processes. And, with

the emergence of cost-optimised centres

of excellence for a variety of processes

including design, manufacturing, customer

Brand Building:The Next Big Distributed Knowledge Process



Over the last decade or so, we have

seen the emergence of what could becalled a brand-and-source global

economy. In this new and still emerging

environment, a separation is taking

place between brand owners and what

we could call product fulfillers.

relationship management, software

development, customer service, accounting,

and financial portfolio development, there

is increasingly less need for holding entities

to develop a range of competencies and

deploy a variety of assets. Specifically, with

regard to processes that require a high

intellectual component, it is important for

these entities to think beyond knowledge

process outsourcing (KPO). Instead, they

should think more generally in terms ofcore knowledge processes (CKPs) and

distributed knowledge processes (DKPs).

CKPs are those that are strategically

important and best performed within the

holding entity. On the other hand, DKPs are

those that may be reasonably critical for the

organisation but can be spun off to entities

beyond the organisational boundary. Over

time, the holding organisation should evolve

into a network where few processes are

performed within the organisational entity

and most others are spun off to specialistentities located anywhere.

Brand Management as a Distributed

Knowledge Process

Traditionally, branding has been viewed

as an endowment process whose purpose

is to separate competing products or

services from one another in order to

maintain differentiation and extract a price

premium from the marketplace. This has

resulted in a product-plus mindset for

the conceptualisation, development, and

management of brands. Under this paradigm,

a product or service comes first and it is later

branded appropriately to achieve certain

strategic objectives in the marketplace. As

a result of this product-plus mindset, brand

management has been largely held within

the confines of the holding organisation and

has been thought of as a CKP which cannot

be easily distributed to external entities.

However, the process of brandmanagement shares many characteristics

with other processes that have been

successfully distributed or outsourced.

It requires a blend or a combination of

three core skills: analytics, mathematics,

and aesthetics. The analytics pertains to

the logic of brand management and the

selection of good versus bad strategies. The

mathematics pertains to the sizing of brand

management problems and the evaluation

of the quality of solutions based on data

and models. And finally, the aestheticspertains to elements of creativity as well as

the knowledge of product category specific

issues such as being able to identify good

package designs from bad ones. If we view

the brand management process not merely

as a creative process but as one requiring

these three skills, then it is easy to see that

it is ripe for being treated as a reasonable

and strategically important DKP. It has all

of the following characteristics that have

been associated with business processesPiyush Kumar, Associate Professor of Marketing, Terry

College of Business, University of Georgia



that have been successfully distributed in

the past:

1 Separability: A key feature of a DKP

is that it can be separated from the

rest of the organisational activities

of the holding entity, conducted at a

different location, often by a different

enterprise, and then integrated back

into the holding entity. If we move

away from a product-plus mindset,

we can easily think of brand building

and management as an almost holistic,

independent, and complete process

that can be executed by an externalprovider and then folded back in. In

fact, much like a software product,

a brand can be fully developed by an

external service provider and then

marketed to holding entities for

merging with a product or product

class to create integrated branded

offerings.

2 Arbitrage: One of the objectives

of migrating processes outside the

organisation is to lower the cost

of production by taking advantageof specialised, low-cost providers.

Brand building and management is a

knowledge process that lends itself

well to being conducted by specialised

entities at lower cost than by holding

entities that ultimately deploy these

brands in product markets. These

entities can therefore take advantage of

the lower cost of brand development

by specialised entities anywhere around

the world and then unleash them in

markets where they could be harnessed

for maximum value extraction.

3 Leverage: A knowledge process

is especially worth distributing i

the holding entity can leverage the

benefits of superior performance

Processes that have little magnification

or leverage effects from improved

quality are worth outsourcing only

because there might be savings in the

cost of capacity. Brands tend to have

a strong magnification effect because

the market and pricing power they are

capable of generating far outweighs thecost of developing or refining them.

4 Scale effects: It is prudent to

outsource those processes and tasks

where the concentration of capacity, in

terms of either the physical assets being

deployed or the intellectual power

being harnessed, results in significan

cost savings. Brand development and

management requires the interaction

among specialists in areas of analytics

mathematics, and aesthetics and

synergies from close interactionamong them would result in cost

savings from these skills being amassed

in centres of excellence.

Developing Brand Management as a

DKP

So what would it take to set-up the brand

building as a viable and vibrant DKP here in

India? First, it would require a change in

mindset from thinking of brands as product-

plus to that of products as brands-plus

The process of brand management shares many

characteristics with other processes that have

been successfully distributed or outsourced. Itrequires a blend or a combination of three core

skills: analytics, mathematics, and aesthetics.

The development of viable brand

solutions would provide a proof of

concept for the notion of a brand

as a platformand would spur

further brand building activity.


23/56

This change should unleash brand building

as an independent and standalone business

process, where brands could be developed as

platforms even without a client or product

in place. The development of viable brand

solutions would provide a proof of concept

for the notion of a brand as a platform

and would spur further brand building

activity and help holding entities migrate

towards accepting branding as a DKP.

Second, brand builders will have to

embrace evidence-based marketing and

adopt brand building not as a creative

process but as a strategic process. Theywould have to treat a brand as an engineered

product whose feature set can be unbundled

and developed in parts and the development

process itself can be modularised. The

benefit of this approach would be two-

fold. On the one hand, it would help

subject the elements of a brands feature

set to evaluation metrics and assist in the

re-engineering or refinement of the brand.

On the other hand, it would facilitate the

evaluation of the team members involved in

the development of the individual modulesthat are integrated to create a brand as an

engineered product.

Third, unlike what has been witnessed

in many sectors where KPOs are flourishing,

developers who participate in brand building

as a DKP will have to resist the temptation of

treating their service as merely distributed

knowledge producing capacity. If they do,

this DKP sector will become commoditised

and largely provide only arbitrage benefits

to its client sector. The service providers

should instead aim to deliver productised

capacity wherein their knowledge capacity

is converted into appropriate intellectual

property that can be deployed to serve

the holding companies that would be their

clients. The productisation of knowledge

capacity will help maintain separation

among DKP service providers, prevent the

migration of clients to lower cost centres

over time, and increase their own valuation

because of the presence of intellectual

property component.

Finally, these firms will have to support

the cultivation of a focussed talent poolthat is indoctrinated with the brand-plus

mindset, and trained for the creation of

productised brand building capacity. This

set will have to be complemented by an

army of what could be thought of as brand

application engineers, who will customise

these productised offerings to a global

client base. As we have seen time and again,

there is no shortage of raw intellectual

power in the country. If it is organised and

harnessed correctly, there is no reason why

brand management cant be created as avibrant DKP right here. And, if done well,

then the Indian service sector can migrate

from being the Worlds Back Office to the


Copyright, 2007. Piyush Kumar. All rights reserved. No part of this article may bereproduced either in part or full, or electronicallystored into a retrieval system, or disseminated in any form (electronic, mechanical, photocopying,recording or otherwise) without the authors priorwritten permission.

Brand builders will have to

embrace evidence-based marketing

and adopt brand building not as acreative process but as a strategic

process.



The Changing Face

Marketing, particularly in IT and

IT Services, has been in crisis

for some time. With the rapidly

evolving nature of markets, client needs,

technology and most importantly

how clients make buying decisions, most

marketing departments have not keptpace.

There are myriad reasons for these

failures, butfive of the key ones that must

be addressed are:

1 The You Are Here dot: The role of

strategic marketing in determining

your market position

2 Build your Brand: Make a choice, take

a stand

3 Naked Marketing: How one markets in

fully transparent environments

4 Flat World Marketing: Translatable

messages and marketing approaches

5 Get a (Second) Life: Leveraging new

technologies

The You Are Here Dot: The Role ofStrategic Marketing

I love the You Are Here dot. You know

it - the dot that one finds on the map of

a shopping mall, zoo, or airport. That dot

provides a sense of clarity, which is rarely

found in life, and certainly not in our markets.Our markets are increasingly dynamic, and

the mistake that many marketers make

is that they never know where they are.

Is your market an emerging one, or is it

mature? And if its mature, specifically,

what is its level of maturity? How much is

the economy (good or bad) impacting your

messaging and value proposition? How has

the competition hurt, or helped, you in

the past few quarters? What are customers

really looking for now?

At the end of the day, do your marketing

messages and your marketing methods fi

with your current market position? Some

firms never find the dot. Others find it once

but then dont recognise that it has moved

and are stuck with marketing messages and

approaches, which no longer resonate.Sam Walton, the founder of Wal-Mart

was once asked about his marketing budget

He responded by saying, I know I have

to cut 50 percent. I just never know what

50 percent. What he was really saying is

that, Some of our marketing is on the

dot, other aspects are not. As a marketing

leader, if you dont understand all these

contextual issues and then properly place

your firm over the right spaces with the right

messages you will most certainly waste

more than 50 percent of your marketing

budget on useless campaigns.

To find the dot, take a continual walk

through your firm and your industry

In both formal and informal ways

poll employees, customers, analysts

competitors, economists and thought-

leaders. Understand how other industries

might be influencing your own. And stay

humble in this journey, being open to

new information along the way, always

remembering you were born with two earsand one mouth.

Make a Choice, Take a Stand to Build

Your Brand

If one looks at the worlds great brands

they ve all made choices. They ha

consciously decided that they will appeal (in

the strongest sense possible) to a minority

of their target market. This seems counter-

intuitive in its nature. After all, why ignore

the needs of the majority of your buyers?

The author, Malcolm Frank, Senior Vice

President, Marketing and Strategy, Cognizant,

explains that as markets shift, technologies

change, and customers gain superior

information in new ways, marketing teams

need to continue to evolve and adapt.

Of Marketing

Malcolm Frank, Senior Vice President, Marketing and

Strategy, Cognizant



But the simple fact is that if you attempt

to appeal to everybody, you will appeal to

nobody. I refer to this problem as lowest

common denominator marketing, and its

a marketing death-trap. Unfortunately, far

too manyfirms are wallowing in this trap.

However, great brands such as Apple,Starbucks, Nike or Harley Davidson have

decided on distinction. They have decided

with amazing success to appeal to their

target buyers in ways that no other firm can.

And once they make this decision, they will

not deviate. Could one imagine Steve Jobs

standing for mediocre, run-of-the-mill,

mass-market products? Its inconceivable.

And because its inconceivable, the brand

builds distinction and ongoing trust with

customers. These customers become

amazingly loyal, raving fans, who in the case

of Harley Davidson, tattoo the brand to their

bodies. Ask yourself the question: Would

any of your customers tattoo themselves

with your logo?

Professional services marketing, in

general, is so horrid specifically because of

this lowest common denominator trap. By

and large, these firms attempt to appeal to

all potential customers in the Global 2000

market segment. This occurs due to human

nature and the distributed structure of thesefirms, for the sales group in Los Angeles will

want to position one way for their 25 target

clients, as will the groups in Paris, Mumbai

and Tokyo. As a consequence, the firm

provides no overall distinction at all.

Thus, marketers must lead in defining

and driving the brand. The marketing

department must force the company (yes,

force) to make hard choices on which

customers they will create unique value for.

As Scott Bedbury (former head of

marketing at Nike and Starbucks) likes to

say, when it comes to your brand, you need

to know it to grow it. First, know what

makes your firm truly special, and then

build upon that. The marketing group must

start this process by asking a set of tough

questions, such as: What do we do betterthan anybody in the world? What can we

deliver that others simply cannot? What

is our organisational culture, and whats

our passion? Whats our unique story as a

company? Hopefully you can answer these

questions. If you cant, then bring in the

senior management team and have them

attempt to answer them. For without these

answers, your marketing group (and the

firm overall) is a rudderless ship, blown in

the winds of your market, and unable to

raise itself above the pack.

Naked Marketing: Winning in

Transparent Environments

The world is becoming more and more

transparent. Spin no longer works. Claims

are easily corroborated or rejected.

Therefore, you must be genuine, for things

cannot be faked.

Why is the global world more

transparent? Because the medium has

changed, turbocharged by the Internet (andassociated Web2.0 models, blogs, online

communities and second life). With these

platforms, information about your firm is

continually racing around the world at light

speed, and there is no way the marketing

department can contain or control such a

spread of information.

The simple fact of the matter is we live

in a fully naked economy now. Transparency

reigns. What was once containable

information inside your firm is now available

Marketers must lead in defining and driving

the brand. The marketing department must

force the company to make hard choices on

whichcustomers they will create unique value

for.

The world is becoming more

and more transparent. Spin

no longer works. Claims are

easily corroborated or rejected.

Therefore, you must be genuine,for things cannot be faked.



instantly almost anywhere. And marketing

departments must fully appreciate how this

works, adapt to it, and work with it. Your

customers may know more about certain

aspects of your company than you do. The

same is true with your recruits. As such, a

successful marketing organisation must fullyunderstand, and then represent, the true

nature of their organisation. To do anything

to the contrary simply comes across as

disingenuous, making the marketing group

look like the designated corporate liars.

How fast does this information

move? For example, just over a year ago, I

delivered a speech at Syracuse University, in

upstate New York. It was a moderately sized

audience of about 100 people, and I shared

perspectives on the flat world economy. A

few hours later, at the reception, I looked

at my BlackBerry. On it was a note from an

associate in Chennai, who was taking issue

with a point I had made in my speech just

three hours earlier on the other side of the

world! It was a truly global and transparent

moment. (It turns out a reporter from a

local newspaper wrote a story on my speech,

immediately put it on the paper s website,

which was then picked up by Google).

You must approach your job with

the assumption that everybody knowseverything. As such, you need to speak to

the market particularly potential clients

and employees not in the patronising ways

of the past, but with a very human voice

in a peer-based manner. These people are

out there in the blogosphere, continually

researching you, developing a full picture.

To not speak to them in a similarly candid

and human voice is to be discredited.

Flat World Marketing

The flat world is posing significantchallenges to marketing departments. After

all, in a firm that has a global reach, how

do you communicate in a style that is clear

and compelling across myriad cultures? In

short, can you craft and conveyculturally

translatable messages?

This is harder than it seems. At the

end of the day, marketing is a form of

education. You need to grab the attention

and imagination of your potential buyer,

and then inform them on your offer,

working with both their logic and emotion

to make a decision to choose your company

over others. This needs to fit within their

personal patterns of learning and that

where the challenge resides.

For example, as an American with

deep experience in India, I ve learnethat the fundamentals of the American

and Indian educational systems are quite

different. That is, the American system

(with a liberal arts bias) tends to be very

tops down, in that students are shown

the concept or the general picture, and

then start to investigate the supporting

detail (if they wish). On the other hand, the

Indian system (with a bias towards math

and science) is more bottoms up, in tha

students learn the fundamentals (in grea

detail) and then with that foundation

work their way up to understanding the

entire system. As such, simple messages

(which often leverage metaphors) work

well with American customers. On th

other hand, more content-rich (and to

the point) messages work well with Indian

customers.

For example, look at the websites

of Accenture (www.accenture.com) and

Satyam (www.satyam.com). These are

both successful and respected companiesin the same industry, but their marketing

approaches are very different and reflec

their cultural roots. The Accenture website

takes the American approach (leveraging

Tiger Woods as a golfing metaphor for

business performance, utilising pictures

and containing precious little content)

Satyam takes the Indian approach (where

the homepage is very text-heavy, full of

content, and very straightforward without

leveraging imagery or metaphor). These are

global firms that have erred on one side orthe other with this global challenge. There

are many other examples in many other

industries and as a marketing leader, you

must be aware of how your customers learn

and then communicate to them in that

manner.

Get a (Second) Life: Leveraging New

Technologies

As a final point, we are in the midst o

a fundamental transition in individua

At the end of the day, marketing

is a form of education. You

need to grab the attention and

imagination of your potential

buyer, and then inform themon your offer, working with

both their logic and emotion to

make a decision to choose your

company over others.



Building a BrandMake choices to build the brand.

Leveraging New Technologies

Harness new technologies to evolve and adapt.

Naked Marketing

Understand transparency, and

turn it from a threat into

a weapon.

Flat World MarketingBuild fully translatable messages

for the flat-world economy.

Role of Strategic Marketing

Keep the firm over the right markets with the

right messages.

BRAND

YOUARE HERE1

23

45

THE CHAN

GIN

G

FACE

OF

MARKETING

technologies. While were yet to give this

new wave a name (similar to what we had

in the client-server or Internet waves),

its happening and its big. This movement

is being fuelled by Web 2.0 models, the

broadband and mobility explosions, and the

recent yet powerful emergence of modelssuch as second life. These platforms are

enabling an amazing powerful and rich

way to communicate with your clients.

However, too manyfirms continue to have

a brochure mentality in this day and

age, through which they speak at their

potential customers instead of engaging

with them.

Recently, I was at a major IT industry

trade show. I spent more than four hours

walking the floor, amongst over 10,000

other attendees. While the event was

terrific for social networking, it turned

out to be simply pathetic as a platform

for gaining information on the presenting

vendors. I went to booth after booth, and

instead of engaging with people who could

provide in-depth (and objective) product

information, I would meet with junior salesor marketing staff members who couldnt

articulate much more than the corporate

brochure.

Fortunately, my hotel room had

broadband access, for in the following hour

at my PC in my room, I gained far more

information and insight on these vendors

than I did downstairs at the tradeshow. It

was something of an epiphanous moment

for me, in realising the current superiority

of online channels over traditional (and

very expensive) physical channels.

The Changing Face of Marketing


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Marshall Goldsmith, ranked one of the top

ten executive educators by the Wall Street

Journal, and a world authority in executive

coaching, visited the ISB to conduct an

Executive Coaching Programme for CEO

Coach aspirants. The ISB Insight team,comprising Deepak Chandra, Associate

Dean of Centre for Executive Education

(CEE), and S Ramnarayan, Professor of

Organisational Behaviour, ISB, interviewed

Goldsmith. Here are some excerpts.

ISB Insight: How has your experience at

the ISB been during this programme?

Marshall Goldsmith: The participants

are very impressive, dedicated, and

hardworking. They came from all over

India, and have great backgrounds top HR

people, executive coaches, and executivesthemselves.

Are Indian participants similar to those

from other countries?

I found excellent work ethic here, a very

strong focus on business, and lots of

respect for education and educators. I

did an exercise on team building without

time wasting, and had the group rank

their teams on teamwork in terms of how

they should be versus how they actually

are. The scores were virtually identical toparticipants across the world. So, in some

areas, the group was different; in others,

they were similar.

Any areas of improvement for Indians or

Asians?

There are lots of very smart people here,

but there is a tendency to think too much

getting lost in analysis and complications, as

opposed to cutting to the chase and figuring

out what is really important, and move on.

The title of your recent book What GoYou Here Wont Get You There is interesting

What should leaders do to get there?

I teach leaders to get confidential feedback

from important stakeholders. They should

pick the most significant behaviour to

improve, follow-up with key stakeholderson a regular basis, and realise that the same

behaviours that led them to where they are

will not necessarily help them get to th

next level. It is very important to get into

a disciplined habit of continuous learning

continuous leadership development

reaching out, asking people for inputs

continuously educating themselves

realising that in the new world everything

is changing, and thatWhat Got You Here

Wont Get You There.

What would be the most importa

demands or skill-sets for the leaders of the

future?

One of the most common issues I work

with, is the issue of winning too much

You want to win all the time whether i

is important, or meaningful, or trivial. The

more successful you become, the more you

want to win. I use a case study in class. It

a lot of fun. Lets say, you want to go to

dinner at a restaurant X. Your partner wants

Feed Forwardto Get There

26|ISB insight|September 2007


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to go to restaurant Y. You go to restaurant Y,

but it is not your choice. The food tastes

awful and the service is terrible. What do you

do? Option A: critique the food and prove your

partner was wrong; Option B: shut up, eat the

stupid food, try to enjoy yourself, and have a

nice evening. When asked, what would youdo? 75 percent of the class said, critique the

food, and when asked, whatshould you do?they said, shut up! Only win the things that

are worth winning. If its not worth it, take a

deep breath, and let it go.

It sounds so simple. Why then do successful

people find it so difficult?

Understanding the theory is easy, but

changing behaviour is very hard. My CEO

clients have spent their entire life winning all

Is Bin Sight September 07

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