Sunday, 16 May 2010

marketing as the core of all strategy

Met a classmate from university at the airport. Exchanged notes and began to discuss marketing in the tech industry- Infosys/ Wipro/ TCS/ Satyam...

Here is what i think:

1. Indian companies do not do any marketing. No matter what industry- we simply do not do marketing. What we are very good at is setting up sales and distribution systems, and creating a lot of advertising (not necessarily good ones). We love market share and confuse our capitalistic ideas with pseudo socialistic desires.

2. Marketing begins with the consumer. Segmenting the market, identifying segments and choosing among the segments to target resources on those segments that promise growth and profits.

3. Indian companies love to target volumes.... make lots of product and sell them cheap so that lots of Indians buy them and even if we make 10cents per product, with volumes we hit god profits.

Very good. But this is the end of marketing.

The Indian IT industry has for the past 2 decades promised cheap and accurate offshore delivery. No matter which customer, the promise remains the same. Price is the key parameter. And all competitors race to the bottom of the pyramid. Unfortunately, CK Prahalad, this is not a very good idea unless well understood. Now being associated with 'low cost', they are all struggling in an industry downturn, with no 'value added' products with which to entice customers to pay more.

IBM, on the other hand, with its new focus on 'analytical' software is entering a new business area in a very aggressive way. I believe it will be successful....

Another example is the Indian mobile phone industry. Call rates are 1 paise per second or 15 cents per minute. New players offer rates of 7.5 cents per minute. Unheard of. All to gain quick market share.

And offer no differentiation to a consumer who bills USD 100 per month or one that bills USD 5 per month.

It is important that the corporate strategy is built by a team that includes a marketing professional. In contact with customers/ consumers and the market place, marketing can help align business ambitions with customer needs, provide options and direct a business to a 'life cycle' of opportunities:
a- where and when to enter a market (and for what objectives)
b- where and when to exit a market )and for what objectives)
c- Where to invest in the next 5-10 years and transition through steps a, b. How to create a unique identity and how to continue preserving this identity.

Innovation is the key for 'super normal' profits. New processes/ products/ services/ consumer segments.....but the challenge is to continue the innovation process. Only the paranoid do this with any degree of consistency. (Apple?)

Brands take decades to build- because their true test is the test of time, of changing consumers and emerging competitors.


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