Mohit Sewak

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His Holiness, Pandit Sri Sri Ravi Shankar at

Great Lakes Institute of Management

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Today, the 26th of November, 2009, His Holiness, Pandit Sri Sri Ravi Shankar ji (also called Guruji), blessed the green campus of the Great Lakes Institute of Management, Chennai, with his divine presence. The occasion was the inauguration of the MILK (Meditation and Inspiration Center for Living and Kindness).

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MILK (Meditation and Inspiration Center for Living and Kindness)

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Guruji began the session emphasizing upon the need of innovation and creativity. He said that when we talk about management, we confine ourselves to controlling (managing) what has already been created. But, life will be too dull, and in short, lifeless, if there were nothing new. It would be like a dead body, beautifully decorated, and dressed, and being taken to its grave. The only thing that can infuse life in this dead body is creativity and innovation, and hence all should rise up to take the risk of creating/ doing new things.

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Sri Sri telling about 7 areas of excellence for India

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Guruji also took the opportunity to highlight the importance of meditation in our life. He was of the opinion that we, Indians, should rise up to take the ownership of whatever belongs to us. To illustrate his point, he said that there are 7 areas, namely:

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1. Vast Variety of Food
2. Dresses and Jewelery
   
3. Meditation and Yoga
4. Ayurveda and herbs
5. Historical Monuments
   
6. Dances
7. Values and ethics

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which are our core competencies. But, since we are not taking a collective ownership of our precious belongings, outsiders get a chance to exercise their claim on it. For example, the Market for Yoga, and Yoga related products in United States alone is $28 billion, and 90% of it has been claimed by local American residents. Right from books on yoga, to yoga mats, none are made by Indians there, and we share only a minuscule part of the market that should have been entirely ours.

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Sri Sri on Innovation

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Guruji also observed that though, we Indians, have immense talent, but we fail to market ourselves and our talent, and that is the reason why, despite such great, non-replicable assets that we have, our market share in international tourism is pretty low.

On this point I find great similarity in the thoughts of Guruji, and Dr. Bala V. Balachandran (Padmashree Holder, and Dean of Great Lakes Institute of Management). Dr. Bala also recited similar reasons when he was inquired about his motivation behind visualizing Great Lakes as the Institute for “Excellence in Marketing” in India.

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His holiness also offered to answer any question that the house had had for him. All devotees made the best use of this opportunity, and asked all those questions which were troubling them for a long time. Some of the questions that were asked to Guruji, with the answers that he gave for them are:

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Question: You have highlighted the importance of innovation and creativity, but with that comes a lot of risk and uncertainty. Its only after numerous failures that a successful new technology/ product is evolved. So how should one manage the failures that comes as a by-product of striving for innovation? How to rise up after each failure and restart the journey to discover something new?

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Answer: The answer to all this is Meditation! One fails in his pursuit of creativity, and discovering the non-existent, only because of lack of intuition and foresight. With meditation, not only one attains the highest degree of intuition, but he also gains the strength, to rise after every failure, and the serenity to keep himself composed even after the most frustrating failure.

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Students presenting their doubts before sri sri

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Question: In Bhagwad Gita, Lord Krishna says that one must not care about the result of his work. But if we do not think about the fruits that follow our hard work, then what will motivate us to do that hard work.

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Answer: Lord Krishna’s preachings have been the most practical ones of all. He did not say not to care about the results. He only urged you not to get distracted thinking about the outcomes of your task.

For example, when a racer, in a 100m race keeps thinking about his opponents, and his relative position with respect to all his competitors, he is not able to concentrate fully on his performance, and that is a sure recipe for a non optimal results, if not failure.

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Sri Sri clarifying Students’ Doubts

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Question: (With reference to the above answer)There are some school of thoughts that say that you must always be aware of what your competitors are doing. Because if you don’t see you competitors you will be like a bridled horse. You will end up making the best calculator of the world when the world has moved to computers. So how do you reconcile the two school of thoughts?

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Answer: It is really tough. But you have to strike the right balance between being aware of others, and being focused at your own work. Meditation can help you in this. You have to manage your expectations and ambitions, and align them with your ability. And this should help you in deciding the correct equilibrium point between the two approaches.

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Sri Sri being honored with a Ponnadai

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Other eminent guests that had come for the inauguration are:

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Khurshed Batliwala or ‘Bawa’:

Khurshed Batliwala

Director of World Alliance for Youth Empowerment, an NGO which addresses and provides sustainable workable solutions for the contemporary issues faced by young people fo our times.  Under the guidance of Sri Sri, he has designed the YES!+ series of courses that inspires youth the world over to realize their self identified aspirations. Bawa did his maths from IIT Bombay. In his own words, he decided “it was better to teach people meditation and make them happy rather than teach them mathematics and make them miserable”!

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R. Prasanna:

R. Prasanna

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A South Indian Carnatic musician who is one of the very few people who play the south Indian musical art form of Carnatic music on the electric guitar. He not only plays carnatic music but is also a jazz musician. Some also categorize Prasanna’s music under world fusion. Prasanna received a Bachelor’s degree in Naval Architecture from the Indian Institute of Technology, Madras in 1992. In 1999, He was awarded an Honours Bachelor’s degree from the Berklee School of Music majoring in Classical Composition and Jazz Composition.

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Vinod Kumar Menon:

Vinod Kumar Menon

Director of Sri Sri Centre for Media Studies, director of Sri Sri Institute of Management Studies, teacher of meditation for 20 years, currently propagating the need for human values as a solution to conflict among people.

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GRK Reddy:

GRK Reddy

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Chairman and Managing Director of MARG Group.  A Post-Graduate in Commerce and a Honorary from Kellogs USA, Mr. G R K Reddy began his career in 1985 in the Merchant Banking industry where he gained rich experience in advising and structuring financial closures. Later in 1994, he moved to the construction industry and promoted the MARG Group. He envisaged that ” Space Creation ” will be a critical factor to drive the Indian economy.

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Rathish Babu:

Rathish Babu

CEO of SAE College in India and is a part of the SAE International chain of colleges, the largest media college in the world. He is on the academic board of IGNOU, Dibrugarh University and SAE Asia for Media and entertainment studies. SAE runs 7 campuses in all the metro cities. of the country. An engineer by Academics and a marketer by profession, he has over 18 years experience in Marketing, Direct Sales, Operations and Scale management in the fields of IT, Networking and Media& Entertainment industries. Rathish has worked directly and indirectly with corporate companies  as HCL HP, DEC – USA ( now Hewlett Packard), Siemens, Calcomp , John Deere etc to name a few. Rathish’s interest are in the areas of technology, Reading, networking, traveling, studying human behavior and adaptability and thought leadership. His aim is to encourage the youth of the country to form groups which will further the knowledge of traditions, change management using local resources albeit with a bent of science. He likes poems of Rudyard Kipling and management books which maps history to current management practices.

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Kiruba Shankar:

Kiruba Shankar

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CEO of Business Blogging Pvt Ltd . He is Director of Wikipedia India. He has 13 years of experience in the Internet space. Prior to this, he was Associate Director at Sulekha.com. He is a technology columnist at New Indian Express and Business Standard Newspaper . Kiruba loves teaching and has taught at Asian College of Journalism, IIT Madras and IIM Bangalore. He is the chief organizer of TEDxChennai.

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After the question-answer round with Guruji, all proceeded to plant saplings at the Green Campus of Great Lakes Institute of Management.

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Sri Sri Proceeding to plant a Sapling at Great Lakes

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Picture Courtesy: Aravind Rajgopalan

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Affective and Cognitive Factors in preferences

Food preferences changes from place to place. Humans by birth don’t like chilli pepper. But in the case of Mexicans, they like chilli pepper once they mature. If it is possible to change an innate aversion to something like chili pepper, then it should be possible to change almost any attitude and any preference.

Significant affective factors such as parental reinforcement and social conformity pressures, identification with the group, machismo and so on. This paper, “Affective and Cognitive Factors in preferences” by Robert Zajonc and Hazel Markus, stresses on affective factors. In doing this, the authors do not intend to negate cognitive influences on preferences nor minimize their importance. Cognitions that have generally been taken to be the very basis of this preference can actually occur afterward – perhaps as a justification.

Acquiring preference through Exposures

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When objects are presented to the individual on repeated occasions, the mere exposure is capable of making the individual’s attitude toward these objects more sensitive. This is called as Exposure effect. When confronted with a familiar object, the individual was said to experience a warmth, a sense of ownership, a feeling of intimacy.

Preferences acquired in infancy and childhood are formed primarily on affective basis. By the time the child develops an extensive knowledge structure about chili peppers – i.e. before he learns to discriminate among them, identify various subtle features and discover all their uses – his preferences for them may well be completely established.

It is possible to change preferences by cognitive means alone only in early stages of preference formation, because even when a preference has been built up from cognition, its affects may become partly and fully autonomous and independent of the cognitive elements that were originally its basis. Social psychologists have tried to see what information could be given to a person so that he would become fond of some item. They asked how should this info be imparted and for best results, who should do it. Needless to say, the method of attitude change by means of persuasion has not met with a great deal of success.

It is quite reasonable to say that when a person “stores” affect, what he stores is the motor tendencies and other somatic manifestations. The behavior patterns are hard to change and hard to overcome by persuasion. The headphone experiment (where people said that they heard better when nodding than when they where shaking their head) proved that attitudes can be changed by simple things and he approached properly could be improved to a great extent. Motor basis of preferences says that change in preference can be accomplished by attention to motor correlates.

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Socially Responsible Distribution

DISTRIBUTION STRATEGIES FOR REACHING THE BOTTOM OF THE PYRAMID

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The article “Socially Responsible Distribution: DISTRIBUTION STRATEGIES FOR REACHING THE BOTTOM OF THE PYRAMID”, by Sushil Vachani & Craig Smith, says that inadequate attention has been given to the specific strategies and business models for effectively engaging the bottom of the pyramid. The World Bank determined that about 1.1 billion people with daily consumption income of less than $1.08 (rounded off to $1)10 lived in extreme poverty in 2001.

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Challenges for Distribution:

Poor Road, Communications, and Electricity Infrastructure. Poor roads can present a significant barrier to school attendance.

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Information Problems

Inadequate infrastructure and lack of information providers result in unavailability of the information necessary for the rural population to make informed choices about buying and selling goods and accessing services.

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Lack of Knowledge and Skills

In order to extract the benefits of information, farmers must know how best to use it. For example, they must understand how to decide what practices to adopt for tackling threats to agricultural crops.

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Illiteracy

The average years of schooling in India is only 5 years. The illiterate are especially prone to being confused by counterfeits as they rely entirely on package design to recognize and evaluate brands.

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Socially Responsible Distribution Strategies

We refer to socially responsible distribution to describe initiatives that provide poor producers and consumers with market access for goods and services by helping neutralize the disadvantages they suffer from inadequate physical links to markets, information asymmetries, and weak bargaining power.

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There are three creative market-based alternatives that we identified in our research:

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▪ Taking cost out: This approach increases access by lowering the costs of distribution.

▪ Reinventing the distribution channel: This approach increases access through innovation, by identifying different routes for reaching rural consumers and for rural producers to get their products to market.

▪ Taking the long-term view and investing for the future: This approach entails increased private sector investment anticipating a long-term payback and/or as a social commitment.

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Poor farmers suffer significantly from lack of free and well-informed access to markets, which limits the income they can derive from the commodities they grow. The improved market access that socially responsible distribution provides the rural poor can give them better product choices and help them derive greater value from their purchases. In order to study socially responsible distribution strategies across multiple sectors in India, we chose a multinational company, an NGO and a government department that have implemented successful programs to bridge the gap. ITC Limited, Gyan Shala and Indian postal department.

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ITC Limited

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ITC uses information technology to empower small farmers by providing them with realtime market information, and it has set up a direct procurement system that gives farmers an alternative channel for selling their produce. In 2004, ITC has committed to a significant enhancement of its rural distribution by investing in a chain of mini-malls to sell a range of goods and services. It has succeeded by taking cost out and reinventing the distribution channel and, arguably, invested by taking a long-term view.

Typically, small Indian farmers bring their produce, such as soya bean, to the “mandi,” a state-sanctioned wholesale marketplace. They are discouraged from turning down an offer because they have already incurred the sunk cost of bringing their produce to the market and would need to spend more money to take it back. ITC set up an IT-enabled procurement system. With the assistance of the village representative, farmers access ITC’s web portal, which provides information on commodity prices the previous day. The savings accrue from lower transportation as the produce moves directly from farm to ITC rather than via the mandi.

Initially, farmers were suspicious of ITC. Once it had signed on the initial set of representatives and they saw how the system worked, they were convinced of its value and it became easier to sell it to others. Using the e-choupal route, ITS now sells from salt to motorcycles some of which are its own brands.

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Gyan Shala

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Illiteracy is a significant barrier to enhancing welfare at the bottom of the pyramid. Gyan Shala relies on several key design elements:

▪ Classes are located in the village, or in the urban slum

▪ Costs are contained by hiring teachers who live in the community

▪ Teachers are given solid training and are continually and closely monitored and assisted to ensure that they deliver quality instruction.

▪ High-quality materials are developed and used, and detailed teaching plans guide delivery of each class session in the year to ensure consistent high-quality education.

Gyan Shala’s annual cost per student is about a quarter of that in government schools.

Gyan Shala has re-engineered the role of the teacher, by transferring selected tasks of traditional teachers. Gyan Shala’s design team puts together the curriculum and the schedule for daily classroom activities to translate its goals into the educational program and class experience. The team creates daily lesson plans for teachers, with

detailed worksheets and small-group activities for students. The typical class consists of about 30 children, all at the same learning level—grade 1, 2, or 3. A unique aspect of Gyan Shala classes is that they are physically located within the village or slum where children live so that they can easily—and safely—walk from home to class. The decision to establish a class in a community results from surveys conducted by field staff who visit various communities to assess their needs. When a community is identified as a potential class location, staff take time to explain their proposal to community leaders and enlist their support. Teachers are also selected from among the unemployed members of the community.

The net effect of Gyan Shala’s programs is that at the end of a 3-year education, young children can read, write, and perform basic arithmetic functions.

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Department of Posts

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Extended the reach of its network by relying on private entrepreneurs who serve as its representatives and offer a range of postal services from their own private premises. Technology is used to enhance service. With the advent of the Internet, the Department of Posts has introduced services to bridge the digital divide.

Strategies that can enable organizations to design and implement socially responsible distribution are:

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Selectively Bridge the Infrastructure Gap

Department of Posts and ITC that are willing to bridge the infrastructure gaps, such as lack of Internet access and reliable electric power. They did not begin to build roads or set up poles to hook up power or telephone lines, which would have called for prohibitive levels of investment. They carefully chose technologies.

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Aggressively Control Cost through Differential, or Layered, Distribution

All three organizations run village-level operations with low fixed operating costs and very low variable operating costs. Outsourced the “last mile” to BOP entrepreneurs.

Broadening the distribution network’s scope and sharing it for multiple purposes such as reverse distribution and selling products of other companies.

A remarkable aspect of Gyan Shala’s model to bring basic education to the poorest children in villages and urban slums is that instead of striving to provide a rich educational environment using college graduates, it

decided to strip out non-essential aspects of education and focus on providing high-quality essential education.

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Cluster retail locations: Cluster village-level locations in a way that the infrastructural and supervisory backbone is efficiently and economically utilized.

Develop benchmarks for retail locations: Ensure that proposed village-level operations meet benchmarks for activity level and financial performance.

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For companies, the benefits include lower procurement costs, future profits, Corporate Image, Preemptive distribution and competitive advantage.

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Better Advertising Planning Grid

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The article “Better Advertising Planning Grid”, by John Rossiter, and Larry Percy, says that the manager now needs a more comprehensive model which accounts for the major differences in how ads work depending on the advertising situation. Purpose in this article is to present and discuss a newer and improved alternative advertising planning grid based on the work of Rossiter and Percy (1987), which we call the Rossiter-Percy Grid.

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These sections discuss:

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(1) Brand awareness as a necessary precursor to brand attitude;

(2) the involvement dimension of brand attitude;

(3) the motivational di-mension of brand attitude;

(4) advertising tactics based on the grids; and

(5) theoretical extensions of the Rossiter-Percy Grid.

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Article mainly criticizes FCB grid on various parameters and explains why Rossiter-Percy grid is better.

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The areas of contentions are:

Brand Awareness as a necessary precursor to Brand Attitude

The Rossiter-Percy Grid posits brand awareness as a necessary communication objective for advertising, prior to brand attitude. Brand attitude without prior brand awareness is an insufficient advertising communication objective. Various other devices, such as bizarre

executions and jingles, are also recommended for specific types of advertising where they may be appropriate to increase brand recall.

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The involvement dimension of Attitude

It is consumer’s level of involvement in making the product or brand choice. FGB conceptualization of involvement is inadequate on atleast three counts.

Firstly, a consumer could be quite an experienced buyer of the product category such that it has become low involvement, yet become highly involved when a new brand enters the category. The second problem with the FGB conceptualization of involvement is that it confuses product-category involvement with various brands’ involvement. Third problem with the FCB conceptualization of involvement is that involvement is seen as a continuum, despite the dichotomous-looking diagram they use to portray their grid.

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Motivational Dimension of Attitude

Product or brand attitudes are distinguished not only by the level of involvement in making the choice but also by the purchase motive which caused the attitude to be formed initially. Qualitative researchers spend a good deal of their time trying to identify purchase motives, and advertising agencies, too, are always seeking these “triggers to action.”

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The FCB Grid’s classification of “think-feel” does not allow for differences between product-category and brand-purchase motivations.

FCB matrix considers think and feel as the 2 primary factors motivating purchase, but there are so many other parameters too. Rossiter-Percy grid gives wide array including informational and transformational motivators. A further difficulty with the FCB approach, and with that of many other writers who have focused on “emotions” and “feelings,” is that the writers tend almost always to be referring to positive emotions or feelings when they use these terms. Yet another difficulty with the motivational dimension in the FCB Grid concerns measurement.

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A final criticism of the FCB Grid’s conceptualization of the “think-feel” dimension is that it correlates highly positively with the “involvement” dimension.

The Rossiter-Percy model allows product-category purchase motives and brand purchase motives to differ, whereas the FCB approach does not. Rossiter and Percy’s model identifies eight operatively distinct purchase motives, in comparison with the FCB model which distinguishes only one “think” motive and several “feel” motives and cannot measure the obviously important motive of social approval.

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FCB grid doesn’t tell advertisers what they should do once they identify the quadrant.

The low-involvement tactics tend to focus on just one or two benefits as in the typical consumer packaged-goods (“USP”) type of approach. On the other hand, the high-involvement tactics tend to focus on the multiple-benefits type of approach which characterizes the carefully considered comparative decisions.

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Overall, therefore, a further advantage of the Rossiter-Percy Grid is that it can accommodate other theoretical constructs in consumer decision-making and advertising.

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The Quest for Customer Focus

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Getting closer to customers is not just a matter of installing a better CRM system or of finding a more effective way to measure and increase customer satisfaction levels. Tools and technology are important. But they’re not enough.

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Example of Continental Airlines-

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One of the first things it uncovered was a service mess that was costing the airline millions of dollars every year. Continental took a systematic look at how passengers were treated when a plane was significantly delayed, when they were bumped from a flight, or during some other unfortunate event. What it found was that compensation was offered on an arbitrary basis by the gate agent, and, somehow, the lowest value customers were, on average, receiving the highest compensation. Worse, some passengers were finding ways to be doubly compensated; a customer who was bumped from a fiight might first approach a gate agent, pick up a voucher for a free flight, and then minutes later telephone the airline and ask for another. The representative answering the phone would have no way of knowing that the same request had just been filled. Now everyone who is delayed for, say, nine hours gets the same compensation, and when a gate agent hands a passenger a fight voucher, that transaction is reflected immediately in the customer  information database.

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Another example, Royal Bank of Canada (RBC)-

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To the company’s surprise, a survey of more than 2,000 current and potential customers revealed that people didn’t choose a bank on the basis of how convenient it was. Instead, what customers wanted was a bank that demonstrably cared about them, valued their business, and recognized them as the same individuals no matter what part of the bank they did business with.

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Customer focused companies consistently embrace three concepts. First, they know they can become customer focused only if they learn everything there is to learn about their customers’ at the most granular level, creating a comprehensive picture of each customer’s needs-past, present, and future. Second, they know that this picture is useless if employees can’t or won’t share what they learn about customers, either because it’s inconvenient or because it doesn’t serve their interests. Finally, they use this insight to guide not only their product and service decisions but their basic strategy and organizational structure as well.

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There are four distinct stages on-route to becoming Customer focused companies –

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1. Communal Coordination –

Creation of a centralized repository of customer information, which records each interaction a customer, has with the company. As volumes are high this stage can take even more than 4 years.

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2. Serial Coordination –

Coordinating gets a little trickier as the centralized coordination role expands to manage not only the continued collation of data but also a sequence of tasks performed by certain functional units so that information can be analyzed and the resulting insights shared throughout the company.

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3. Symbiotic Coordination –

Move away from the one-way information flow that characterized the previous stage toward a dynamic give-and-take.

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4. Integral Coordination –

Here employees are given the autonomy and latitude they need to focus on the customer in virtually every action. At this stage, companies are coordinating key activities across vertical and horizontal boundaries, which are in many cases irrelevant to customers.

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When Customers Get Clever…

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Companies have always been on their toes dealing with clever customers. There are different strategies how to best use these clever customers to enhance the value of the brand, but before understanding these strategies, we have to understand the different types of “Clever Customers”.

Clever customers can be of two types: -

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1. Creative Customers: -

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Creative customers, also called as underground innovators are identified as those who adapt, modify or transform a proprietary offering and represent an interesting paradox for businesses. What should a firm do when creative customers start to modify products, hack code and adjust services to suit themselves?  This article identifies that creative customers can represent a black hole for future revenue or be a gold mine of ideas.

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2. Lead users: -

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Lead users are those whose current strong needs will become general in the marketplace months or years in the future. Since lead users often try to fulfill the need they experience, they can provide new product concept and design data as well.

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Differences between creative customer and lead user

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• Creative customers work with all types of offerings while lead users work with just novel or enhanced products
• Creative customers generally do not face needs that will become general; they work on personal interests that remain personal or expand to a subset of users.
• Creative customers need not benefit directly from their innovations but indirectly through peer recognition etc.
• Firms use a formal and disciplined process to find, screen and select lead users. Creative customers rarely ask permission to experiment with a firm’s offering.
• Creative customers are usually independent of the organization while lead users are contacted by, communicated to and their process of interaction with the firm controlled by the organization.

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Reasons for treating creative customers strategically

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• They exist and are here to stay. They are bound to grow in number
• They are a rich source of innovation
• Recognizing and utilizing creative customers is a form of outsourcing the process of new product development

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Firms’ stances towards creative customers

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Discourage – Firm’s attitude towards customer innovation is negative but actions are de facto passive. They verbally berate customer innovation but take no overt action

Resist – Firms verbally berate customer innovation and back that up with punitive action

Encourage – Firm verbally lauds and applauds customer innovation but takes no overt action to facilitate it.

Enable – firms cheer customer innovation and back words with deeds to actively help customers innovate on their products.

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Awareness, analysis and response

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Once managers are aware that their offerings are being modified by customers, they should analyze the phenomenon and then respond. Response should be unambiguous and send appropriate messages to all stakeholders.

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Beyond Advertising and Publicity:  Hybrid Messages and Public Policy Issues

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The article “Beyond Advertising and Publicity” by Dr. Siva K. Balasubramanian (Assosciate Professor of Marketing, Southern Illinois University; Professor of Consumer Behavior, Great Lakes Institute of Management, Chennai), observes that Organizations generally rely on two forms of non-personal communications, namely advertising and publicity. Advertising refers to communications that are paid for and clearly identify the sponsor; publicity refers to messages that are unpaid for and do not identify the sponsor. The key advantage of advertising is that the sponsor has control over the content of the message but this is not so in case of publicity. Because publicity messages do not identify the sponsor, audiences tend to perceive media as credible sources. Advertising and publicity individually do not provide the desirable mix of credible source and content control. Hybrid messages are developments in this field and are communications that are paid for but do not identify the sponsor.

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“Hybrid messages include all paid attempts to influence audiences for commercial benefit using communications that project a non-commercial character. Audiences are likely to be unaware of the commercial influence attempt and/or process the content of such communication differently than that of commercial messages.”

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Types of hybrid messages are: -

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Established hybrids– They have a ling history and have attracted some regulatory attention in the past. Product placements, program tie-in, program length commercial are various forms.

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• Product placement – paid product message aimed at influencing movie or television audiences via the planned and unobtrusive entry of a branded product into a movie or television program.
• Program tie-in – paid product message where the arrangement requires product sponsor to buy advertising spots broadcast with the program in exchange for product exposure within the program.
• Program length commercial – paid product message broadcast to television audiences using a format that resembles a legitimate program in content and in length. Also called infomercial.

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Emergent Hybrids – are of a recent origin and not subject to much regulatory attention. Masked art, masked news, masked spokesperson are forms.

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• Masked art – any work of art such as painting, sculpture etc that features branded products with deliberate but usually not obvious commercial intent. Friedman calls this ‘sponsored word of author communication’.
• Masked news – messages are embedded in news sources
• Masked spokesperson – two types: namely masked expert and masked celebrity. Masked expert messages are delivered by persons who legitimately play an expert role that accentuates credibility and deliberately suppress other roles that may damage credibility. Masked celebrity messages involve celebrities who mask their role as paid spokespersons while promoting products in public appearances.

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History and current status: -

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Product placement – evolved from successful publicity efforts directed at film medium several decades ago. It was neither a high profile nor a well organized area until late 1970’s. Firms now pay moviemakers substantial amounts for product placements perceived as advantageous. History suggests two conditions necessary for product placements – sponsors should perceive that they offer value; media should be motivated by the economic incentives.

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Program tie-in – existed in rudimentary form prior to 1960’s as FCC (Federal Communication Commission) discouraged program tie-ins. New developments in 1980’s relaxed these self-imposed standards. Program tie-in compensates for opportunity losses in advertising revenue by extracting a sponsor’s commitment to advertise heavily in the program. They also make it easier to sell ads in less successful programs.

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Program length commercial – originated in 1950’s as a tool to promote products for children. However, limits were sanctioned on PLC’s following concern over broadcast materials directed toward children.  Limits were removed post 1984  and their popularity expanded beyond children’s products to financial products, real estate investment planning, political candidates etc.

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Current regulatory status: -

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Hybrid messages that emanate from broadcast/cablecast media are required to comply with the FCC on sponsorship identification. Hybrids embedded within all other media are not subject to such rules.

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Policy waivers, specific provisos and impact of new technology and new habits help accommodating hybrid messages within broadcast/cablecast media.

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Pros and Cons of hybrid messages: -

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Advantages

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Recall – Von Restorff effect states that almost any technique that serves to increase the novelty of particular items or leads them to be unexpected enhances the subsequent recall of those items. This stems from the ‘surprise’ factor. Actual recall of a product placement also depends on whether product is displayed in the background or in close-up,explicitly mentioned in the script etc.

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Persuasion – 3 rationales namely attribution theory, classical conditioning, modeling

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Attribution theory – persuasiveness of a message is adversely affected if recipient infers a bias in the message communicator, also called reporting bias. Masked spokesperson messages are beneficial as there are lesser chances of reporting bias.

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Classical conditioning – as ad messages are short, development of a positive paired association between unconditional stimulus and conditional stimulus is expensive. Product placements and PLC’s are more effective.

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Modeling – product demonstrations through modeling(actors) can facilitate learning when they experience positive consequences following product use.

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Disadvantages

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• Audience impact of hybrids is less direct and less immediate
• No established measure to assess persuasiveness of hybrids
• Effectiveness of hybrids hinges on sponsor exercising control over message but such control dissipates in practice
• Limited in availability and applicability, cannot accommodate planning.
• Substantial risk involved. Uncertain investments as product exposure and mpney spent can evaporate if movie flops.

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Multichannel Marketing: Mindset and Program Development

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The article, “Multichannel Marketing: Mindset and Program Development”, says that 65-70% of today’s shoppers are multichannel shoppers identified as those who utilize a variety of different purchasing channels such as the telephone, internet and retail stores. Therefore, it is critical for organizations to adopt a multichannel mindset and develop a multichannel marketing program to enhance profitability, customer experience and satisfaction.

Multichannel systems are highly complex and require integration, coordination and the oversight of components that previously functioned in an independent manner. The article mainly provides guidance in designing a multichannel marketing program. Three major actions have been identified in this regard:-

• The internet creates opportunity – with emphasis being placed on web advertising and customers overwhelmingly communicating via email, internet is the key driver in multichannel marketing opportunities. Organizations have shifted their focus to one-to-one marketing as online traffic has begun to exceed that of some traditional channels such as telephone. The diversity of needs any customer can have is used in developing the nature, structure and integration of channels.
• It’s the value and not just cost – value is a function of both cost and benefits and should be taken into account when an organization allocates its channel mix resources. An organization’s focus should be to enable customers utilize channels that are most valuable to them. Most organizations have begun to shift to online channels mainly because of the low cost associated with them. However, this is not recommended. The firm should consider its overall marketing objectives and decide whether low cost should be the main driver of success to the firm. Differentiation is the key and some firms have chosen to drive their customers away from online channels for this purpose.
• Focus on customer experience, journey and lifetime value – successful multichannel strategy requires thinking about the customer experience holistically and satisfying customer needs throughout the product/service life cycle. The firm needs to understand consumer behavior, the buying process and advancing the customer from one stage to another. It needs to recognize human characteristics when designing online-related experience processes find a balance between technology and human interaction and exercise caution in pushing internet applications too aggressively.
• Create a super-additive effect through synergy – the super additive effect occurs by integrating different channels and relies on the notion that a multichannel shopper spends more than the single channel shopper. Multichannel synergy can also help maintain a customer’s interest in an organization’s goods or services. It can also be realized post purchase by using an online channel as a buffer against offline issues.
• Communicate one brand and create a shared experience – It is important for firms to be consistent across channels and present a single company view and a single brand image.

• IT is important in multichannel marketing – the IT systems of most companies are not designed with multichannel marketing in mind. As firms record more data, security and privacy issues become significant. Therefore, firms need to examine their existing IT structures and understand the amount of investment that is needed for a multichannel IT architecture.

• Develop cross-channel interaction at all levels – Establish and maintain connections between channels and product groups for successful multichannel marketing. Employees or group representatives called brokers or liaisons need to be unified, coordinated and well connected. Cross channel coordination needs to be ensured at the lower operational levels of the firm.

• Design incentive systems – incentive systems need to be created to mitigate channel conflict. For example, reward salespeople for directing customers to the company website and create incentives for driving customers from a website to a physical store.

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3. Create metrics that measure impacts and overall performance of multiple channels.

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• Think holistically across channels and choose the right metrics – companies should start slowly and try to measure value as they move along with implementing their multichannel strategy. Metrics should be decided based on what is meaningful to a business manager such as customer satisfaction, retention and loyalty. As there are numerous channels, firms should measure the impact of only two channels at a time.

• Leverage web-based analytics- Firms now have the ability to track metrics such as website traffic, catalog products viewed, no. of page views and click-through conversion rates. This can be used to measure multichannel effectiveness. For e.g., a company observed an increase in conversion rate from search stage to purchase stage regarding consumers who used online chat.

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How valuable is the word of mouth?

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The article “How valuable is the word of mouth?”, by Kumar, Peterson and Leone, talks about identifying the customers who bring in the most referrals., and then capitalize on that knowledge. It highlights the following points: -

1. What your customers feel about you and what they are prepared to tell others about you can influence your revenues and profits just as much as, or even more than, what your customers do themselves.

2. To estimate the value of a customer’s referrals, take the value of the business brought in by the customers she refers and subtract the marketing costs that prompted her to make the referral. You base your estimates of future referral behavior on past behavior.

3. Once you segment customers according to their referral value and the value of their purchases, you can see how those values relate. Often, it turns out that the customers who buy the most from you are not your best marketers. What’s more, your best marketers may be worth far more to your company than your most avid consumers.

4. Understanding how much value a customer brings in from purchases and how much from referrals can help companies target their marketing campaigns appropriately, enabling them to achieve superior marketing ROIs and reap the full value of all their customers.

Based on the research conducted, following were the four categories of customers that were formed called as the customer value matrix. This was based on the calculation of their CLV (Customer Lifetime Value) and CRVs (Customer Referral value)

1. Affluent – The customers with high CLVs but low referral values.
2. Champions – Customers with high CLVs and equally high referral values
3. Advocates – Customers with low lifetime values and high referral values
4. Misers – who scored low on both accounts

Implications to the marketer –

Now the job of the marketer with respective to the current findings is now to:

1. Make the affluent become champions by encouraging then to refer more new customers while maintaining their highly valuable purchasing behavior. Give them incentives so that they refer more customers.
2. Turn the advocates into champions by increasing their lifetime value without compromising their high referral value. Give them personal attention and send them personalized direct mails. Provide bundling of products for them to get attracted and purchase. Try to increase value specifically for them.
3. For misers try to offer incentives that will make them buy as well as refer. Do price/product bundling and send them personal mails.

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How sustainable is your competitive advantage?

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The article “How Sustainable is your sustainable competitive advantage” by Jeffrey R. Williams, in short says the following factors help you determine the sustainability of your business:  –

• Innovation
• Cost
• Economies of scale
• Unique selling propositions (USPs)
• Location advantage

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Nothing! Nothing lasts forever. Competition responds to all the above answers with superior features, lower prices, new ways – any which and what way. There is no escape. Yet we see certain companies sustaining for ever and ever; Microsoft, IBM, Compaq, Apple etc. what is the sustaining advantage that they have and others do not inspite of having all the answers stated above?

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Two major differentiating points for sustenance are

1. fast learning
2. Proactive changes

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Strategically these can be implemented as:

1. estimate, within broad parameters, different product life-cycle patterns, upon which profit margins and cash flows for projects can be estimated in capital budgeting exercises
2. forecast dynamic pricing patterns—the strategic, long-term pricing policies needed over extended periods of time to sustain different classes of products;
3. project life-cycle manufacturing targets—the extent to which a manufacturing process will come under intense pressure to meet productivity and time-to-market objectives;
4. estimate, for products, their brand durability—the inherent sustainability, absent infusions of capital, of a product’s brand loyalty with customers; and
5. Most importantly, establish strategic guidelines for organizational learning processes—those management procedures and organizational routines needed to sustain advantage as conditions change.

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The article is based on research conducted on a range of industries that differ in sustainability. The sustainability here is in terms of resource sustainability i.e. how well the products survive and how long does it take to imitate the products. So it is a fight against imitation and we measure the cycle time.

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The resources were therefore categorized into three categories:

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Class 1 – Slow Cycle Resources: Think of these resources as those products that have monopoly, they have gained a capability that is idiosyncratic or one-of-a-kind. Product advantage is therefore well secured with in the firm and confined to it.

e.g given are : Hospital rooms(per day), Medical appliances, Entertainment etc.

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Class 2 – Standard Cycle Resources: Product and services that are typically standardized for production at high volume.

e.g: fast food, automobiles, credit card services, refrigerators, broiler chickens etc

They face direct competition for extended periods. The focus is discipline, coordination and market control. They serve the mass markets and competitors have more incentives to duplicate them.

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Class 3 – Fast Cycle resources: These face the highest resource-imitation pressures. These products are idea-driven and have high chances of getting copies quickly.

E,g : RAM computer chips, cell phones, portable music players etc.

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Interpretation of data:

Constant technology change, regulatory and political shifts and global competition are compelling companies today to broaden their understanding of sustainable competitive advantage.

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What can companies do in these times?

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1. Let sustainability guide design of your strategic control systems.

Processes must be proactive yet evolutionary in nature, recognizing the incremental processes by which companies seek out new sources of advantage. E.g. Sony, Lotus 1-2-3, Intel etc

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2. Let sustainability guide your organization’s policies on innovation.

Innovation has to be done and consistently done. But at what speed – is the important question to be answered. As with IBM and AT&T, the “right” speed of innovation often depends on the sustainability of a company’s resources. Remember, sustainability is based on the interrelationships that develop, over time, between a company, its customers, and its competitors.

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3. Recognize that sustainability shapes diversification success.

Today many well diversified companies are unable to identify their core competencies. The moves and shifts have to more align with dynamic environment.

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4. Anticipate when changes in sustainability will be frame-breaking

Examples such as the advent of hub control in airlines and the arrival of cellular handsets in telecommunications show how shifts in sustainability are associated with changes in the “rules of the game” to which organizations and customers have become accustomed

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Conclusion –

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Sustainable resource analysis helps to:

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• determine product-specific competitive benchmarks (dynamic pricing and costing criteria, advertising policies, capital budgeting procedures) appropriate to the needs of each business;

• predict hidden entry barriers within supposedly homogeneous industries, as typified by AT&T’s difficulty in entering the cellular phone business or Campbell’s barrier in speeding up the pace of innovation in food products;

• identify similar strategy and organization (i.e., opportunities for entry) between traditionally different businesses, as shown by AT&T’s entry into credit cards;

• pinpoint compatibility problems that may exist for especially-complex products and markets, as in the case of personal computers and telecommunications, that may require special, high-level policy coordination efforts to resolve; and

• specify, within broad parameters, the range of organizational learning processes, e.g., different styles of management, disparate control systems and dissimilar cultural norms, that the globally diversified, multi product company must master to grow.

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Power of Biological Neural Networks in Different Species

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Numerous experiments, and researches have been conducted over how we remember, identify and recall things. It has often been seen that once we see something, we are reminded of something else. This concept is widely (although without our knowledge) often being used by advertising and publishing companies to associate their brands with something that has a distinctly positive connotation in our lives.

For example, Coca-Cola with its widely popular advertisement slogan “Thanda bole to Coca Cola”, has attempted successfully to link Coca Cola with the concept of “Cold Drinks” literally. So that the next time you think of having a cold drink, you can instantly recall Coca Cola. There has been numerous such examples, but the bottom line is that there are some networks/ associations in our brain that have the capability of linking two different concepts residing in two different (sometimes seemingly unrelated) corners of the brain.

This can be done either by enforcing an already existing connection (axon-synapse-dendrite) between two nodes (neurons), or (re)creating a connection which (has been broken)never existed earlier.

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There have been several experiments with birds and animals as well which further proves this concept of the working of memory, identification, association and recall through the processes in our biological networks. One of these is:

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The Pigeon in Skinner Box Experiment:

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In this experiment pigeons are made to recognize the paintings of two different artists (here Chagall, and Van Gogh). First they are shown the same paintings that they were shown earlier (when the distinction was made between the artists and their paintings), and then they were shown an entirely different sets of paintings of these two painters which has never been shown to these pigeons earlier. the results were:

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1. In the first case the pigeons could distinguish between the paintings of the two artists with 95% accuracy.

2. In the second case of previously un shown paintings the accuracy was still remarkable high with 85%.

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Implications and Uses of the findings of the capabilities of the Neural Networks:

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The accuracy of 85% (for unknown, uncertain cases) is quiet high than what is possibly with any computer algorithm present (being used). Also the working of these neural transmitters (at the unit level) is quiet simple, and as they work on impulses of electric signals, so is also replicable in today’s sophisticated electronic chips.

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It is only the volume, and the complexity of these networks that make them solve such complex and typical problems that seems impossible for a single neuron, or even a human to solve. And computers (especially with their increasing processing power and memory) are ideally suited to be programmed for such voluminous, fast (yet simple) inter-connective transmissions to solve a problem similar to how a human brain solves them.

Thus we come to the concept of ARTIFICIAL NEURAL NETWORKS, which will be covered in greater detail in the subsequent articles.

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There has been considerable hype on CRM solutions, the productivity, the information, the improved customer relationships, you name it. But everything has its flaws, and the seemingly perfect philosophy has its own too, both psychologically and financially.

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• Difficult to work with, complex, needs extra training to work with
• It is hard and time consuming to populate a database. The initial data entry takes a lot of time.
• Many processes involve human touch and dehumanizing such a process reduces its effectiveness.
• CRM systems require continuous maintenance, information updating, and system upgrading which adds to the costs.
• In some cases it might be difficult to integrate with other management information systems this would lead to extra costs or problems due to incompatibility.
• In the companies of smaller size, lack of formalization of the procedures and the lack of the employees’ interest in the importance of CRM may lead to problems.
• Sometimes, too much information is in the CRM system, and it simply frustrates users to find the information that they want.

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Content Courtesy: Abhishek Chauhan,  Abhishek Choubey.

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There are several benefits that businesses can derive from effectively using CRM. Some of them are:

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1. Improved customer service

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CRM enables organisations to understand their customer and customer’s needs. This helps organisations to offer a more focused value proposition that cater to customers’ needs.

Moreover, organisations can create customer profile and their specific needs and importance. Organization can adjust their offerings or level of service to match the customer’s importance and needs.

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2. Prospective customers

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CRM provides insights into your customer profiles and provide information about which customers are more profitable. It helps organisations in deciding their prospective customers and this increases customer retention.

Capital One increasingly uses CRM to create a profile of customer they want to focus on for a particular financial product. It enables them to capture customers that are going to be profitable for them in long or short run depending on the strategy.

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3. Enhance profitability of existing customers

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Understanding the existing customer helps organization understand their needs and change in their needs and demands over the time. CRM enables them to understand their customers better than the customer. Organisations can forecast what sort of products might a customer be interested in future and how his/her taste has changed over time. It gives organization an opportunity to Cross-sell and Up-sell their offerings which improve not only profitability but also customer satisfaction.

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4. Traditional marketing to One to One marketing

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CRM has given a fundamental shift to the marketing strategy of the organizations. Understanding your real customers, gives organization focus on whom to pursue. This reduces marketing and advertising cost. Also, conversion rate of customer is higher. This significantly reduces the operating costs for organisations.

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5. Understanding shift in the market place.

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CRM helps to a great extent the behavioral changes happening in the market place as far as the customers are concerned. Organization can quickly adapt to changing demands (latent) and come up with new products that cater customer’s needs.

For example, Lego was losing its toy market share as children became more and more occupied with computer games and TV. Lego realized this shift due to interactive technology and came up with a interactive product which included touch sensors and microprocessors. It increased Lego’s revenue significantly.

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Content Courtesy: Abhishek Chauhan,  Abhishek Choubey.

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Do companies pursue CRM because of a genuine interest in customers, or because of the fear of being upstaged by competitors that are already pursuing CRM?

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As per Gartner research, the worldwide CRM market revenue has grown to $9.15 billion in 2008, a 12.5% increase over 2007 revenue of $8.13 billion. The market growth was driven by enterprise investments in technologies, focused on customer retention, analytics and on-demand solutions. Interest in social networking and social software also escalated in 2008 as businesses were confronted with the sales, marketing, and serviceability impact of increasing consumer participation in online forums.

There are several key business drivers to pursue CRM. These could vary from Small and Medium Business(SMB) to large enterprises like banks. These could be classified as follows:

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1. As as a tool to push sales and build brand equity for SMBs
2. To reduce lead times and improve information flow.
3. To retain existing customers
4. To listen to customers
5. To respond to competition
6. Top management strategy
7. We had surplus IT budget

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Few examples of CRM Adoption by Indian companies:

• With stiff competition in banking sector, Indian banks such as ICICI and HDFC are deploying a CRM solution with the aim of increasing their customer base and retaining existing customers to offer higher service levels, while foreign and private banks have already adopted CRM solutions for expanding their customer base.
• Bharti, India’s no. 1 telecom operator adopted CRM as a tool to manage customer expectations and offer innovative products and services. Moreover, its ability to solve customer problems has gone up from 40 to 90% with CRM.
• Shoppers’s Stop, leading retail chain in India adopted CRM to improve customer relations and to increase merchandising response time by intergrating with their ERP system.
• ICICI Prudential AMC is an asset management company powered a major CRM drive, and has built a completely automated system, which will enable the customer to virtually ‘serve himself’.
• Tata Motors intergrated Siebel CRM with Dealer Management System to improve response time and customer service, to meet rising competition from global players and overcome the hurdles of a widely dispersed dealer network,

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From above we can that there are both types of companies, ones that genuinely pursue CRM and those that pursue to fight competition.

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Content Courtesy: Minil Singhai.

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References –

• http://www.infosysblogs.com/customer-relationshipmanagement/2009/08/why_do_companies_implement_crm_1.html#more
• http://www.cxotoday.com/India/News/CRM_Market_Registers_Double-digit_Growth/551-104418-908.html
• http://www.livemint.com/2007/08/30181534/Tata-Motors-widely-uses-Oracle.html
• http://www.expresscomputeronline.com/20040105/ebusiness01.shtml
• http://www.cxotoday.com/India/News/Prudential_ICICI_Powers_CRM_Drive_With_Talisma/551-1054-908.html
• http://www.collegeresearch.us/show_essay/8476.html
• http://www.cxotoday.com/India/News/Shoppers_Stop_Shops_For_Business_Objects_CRM/551-616-908.html

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Assessing the value created to the firm by a CRM program

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Cap Gemini Ernst & Young (CGEY) published a CRM Index based on a survey of nearly 200 European companies concluding that over 66% of companies cannot identify the ROI from their CRM investments. This is not that there is no ROI but that these companies have not put in place metrics to measure the ROI. Simply stated,

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ROI = Returns (cost savings, incremental revenues) * 100
Investment (total cost of ownership)

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The key steps in assessing ROI will be to breakdown Returns and Investment into smaller measurable elements and define a metric to assess each of them.

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Returns:

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Measuring Returns for CRM systems is most complex as there are many tangible/intangible benefits. One way to classify various benefit streams is to break it down into four main areas:

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a. Revenue Enhancements

CRM s