Channels of Distribution

Successful value creation needs

successful value delivery
 DISTRIBUTION CHANNELS
• People and firms involved in the transfer of
title to a product as the product moves from
producer to ultimate consumer or business
user
 Channels- Middlemen
• Individuals / business firm that renders
services directly related to the sale/purchase
of a product as it flows through from producer
to consumer.

• You can eliminate middlemen, but not the

essential distribution activities they perform
Five Marketing Flows in the Channel
Levels of channels
 Levels of Distribution Intensity
• Intensive: A form of distribution aimed at having
a product available in every outlet. Eg FMCGs

• Selective: A form of distribution achieved by

distributing to multiple but not all outlets. Eg
luxury products

• Exclusive: A form of distribution that established

one or a few dealers within a given area. Eg
Automobiles, Luxury
 Traditional Channels
• Direct (D2C)
• Retailer/E-tailer
• Distributor/Dealer
• Wholesaler
• Sales Agents
• Carry & Forwarding agent (C&F Agent)
• Logistics providing firms
• Government channels-DGS&D, Food Corporation
of India, APMC, Army Canteens..
 Channel members
• C&F Agents: Carrying and forwarding agency.
– logistics service provider for the company.
– The company owns the stock in the C&F’s
warehouse (godown/storage).
– C&F is responsible for dispatching the goods to
the distributors.
• Wholesaler:
– A wholesaler sells the products to the smaller retailers or
people who typically resell the products in their outlets.
– high volumes and smaller margins, in the range of 1-3%.
• Retailers:
– Outlets sell the products to the final customers.
– have a smaller range of stock-keeping units (SKUs)
• Reseller: Small retailers who purchase from wholesale outlets and
resell to the end consumers
• Self-service:
– Outlets where the end customer can touch and feel the
products before buying.
– hold a high number of SKUs and sell various products.
 Distributors

• Extended arms of the firms

• Purchase the stock from the company and redistribute
the products to the retail and wholesale outlets in their
designated areas of distribution.
• Supply to the outlets either on cash or on specified days
of credit.
• Usually own or lease the infrastructure for the
redistribution and are given a specific margin (usually in
the range of 3-10%) by the company for their service.
 Distributor- Salesman beats
• A beat is a cluster of 30-40 geographically adjacent
outlets that a distributor salesperson
representative (DSR) is supposed to cover and take
orders from during one single day.

• A DSR works for six days a week (with Sunday being

the weekly day off), covering six different beats,
and then repeats the beats in the next week.

• For a typical FMCG DSR Total retail outlets: 180-240

outlets; number of beats: 6; outlets per beat: 30-40
Coats Threads- Typical FMCG model
Acer
 Evolving Retails formats
• Traditional (kiryanas, mom & pop stores)
• Modern Retail Formats (Big Bazaar)
• E-tailers
• Multi channel (selling through multiple
channels- mobile, online, and physicalstores,)
• Omni channel (selling through multiple but
integrated channels)
 Services
• Firm Own service outlets
• Franchise
• Online
 Ecommerce Models
• Marketplace
– B2C – Business to Consumer: Amazon, Flipkart
– B2B – Business to Business Indiamart
– C2C – Consumer to Consumer: Quikr
– C2B – Consumer to Business : Naukri.com
– D2C
• Exclusive Brand Stores-E-tailing
– HP, Dell, Samsung, IRCTC
• Wholesaler sites- Makemytrip, expedia,
• B2G or G2B– Government to Business (gst/corporate tax filing)
• C2G or G2C Government to Consumer (incometax, e-governance)
• Service Subscriptions- Streaming sites like Netflix, Amazonprime, itunes
• Online Deals: Coupondunia.com
 E-tailing versus Market Place model
Parameter e-tailing Market place
Connect suppliers and
Buy from suppliers
Business model customers to facilitate the
and sell to customers
transaction
Listing Products Products, along with its sellers

Between the business Between the seller and the

Transaction
and the customer customer

Complaint handling Facilitate conflict resolution

Full
responsibility between buyer and seller

Highest level in the

value chain
Sourcing from Retailers
(manufacturers or
distributors)
Inventory risk Yes No
 Evolution of channels
• Unorganised distribution/wholesalers
• Organised Distribution
• Big retailers - Modern Retail Formats
• E-tailers
• https://www.youtube.com/watch?v=336YkwayCD4
• https://www.youtube.com/watch?v=iRvaWHk3A8k
Multichannel Marketing
 Government channels
• DGS&D (Closed now)
• Food Corporation of India
• Army Canteens
Food Corporation of India

505,879 fair
price shops
 Choice of channel
• Number of potential customers
• Type of product
• Type of market
• Geographical concentration
• Order size
Customer Management
 Its easy to acquire customers by
lowering prices or sales promotion
• It is not difficult to increase sales or grow market share
by dropping prices or by offering attractive incentives
to consumers.

• The goal of customer management is to grow the

business profitably by acquiring, retaining, and
developing the right customers.

• Two sides of customer value, as well as the concept of

customer lifetime value (CLV). From there we delve
into how organizations make decisions using CLV
 Balanced View-2 sides of Value
1. Customer is king and everything must be done to
delight a customer. Providing a great customer
experience by delivering superior value to their
customers

2 Customers provide value to the firm by bringing in

profits.

The real challenge for a manager is to strike a

balance between these two sides of customer
value.
 Value perspectives

1. Customer’s Perspective
• Customer Perceived Value …what value customers
get from a company’s offerings (product-services).

2. Firm’s Perspective
• Customer Life Time Value: …what value company
gets from Customers (revenue, profitability).
 1. Customer’s perception of Value ?

 Quality
 Utility
 Usefulness
 Benefits…..
 Price
 Cost

 Customer value = Benefits

Sacrifices/Costs
 Benefits
 Functional benefits: related to solving some problem
 Food (daal-chawal-sabzi or Dosa or Pizza) because of Hunger, energy
requirement, nutrition for growth
 Experiential benefit (taste, smell) E.g. double topping cheesey
pizza, ambience of the theatre
 Psychological benefits (self image, self esteem, Lifestyle. E.g.
wearing Lacoste T shirts (because I think I am tennis expert)
 Emotional : nostalgia
 Social benefits: consume because belong to a community or
NOT belong to a community E.g. Club, marriage products.
 Symbolic benefit: consume because reaffirming a Identity like
national identity - Patanjali products
 Epistemic : new knowledge, newness (New app, Breaking news)
 Conditional : nothing else is available (kerosene oil from PDS)
 Sacrifices (Costs)

 Price (Monetary)
 Decision making process: Cognitive load because of collecting
& sharing information (seeking opinions)
 Purchase-related: searching for store, visiting, choosing
 Learning cost: how to use new product
 Opportunity cost: alternate sacrifice (maybe cheaper
alternative or perceivably better quality)
 Switching cost: psychological-going out of comfort zone, getting
rid of existing inventory
 Usage cost: cost of maintaining the product
2. Customer Life Time Value
(CLTV or CLV )
Hallmark of Customer relationship
Management

17-58
 Customer Relationship Management
(CRM)
• The process of storing and analyzing the vast
amounts of data produced by sales calls,
customer-service centers and actual purchases,
supposedly yielding greater insight into customer
behavior.

• CRM also allows businesses to treat different

types of customers differently—who spend less
or charging more to those who require more
extensive handholding.
 Traditional methods of measuring
value of customer to the firm
• Share of wallet (SOW): It refers to the share of a company
of a customer’s expenditure for a given offering category.

• Past customer value (PCV). Its extrapolation on the previous

transactions of a customer (i.e., past profits) to predict the
customer’s future value. Time value of money is used to
adjust previous contributions and calculate PCV for each
customer

• where i is the customer, d is the applicable discount rate,

T is the number of periods prior to the current period, GCit is
the gross contribution of the transaction of customer i in time t.
 For example
• Let’s assume that a customer spent $60 (last month), and
$100, $110, $190, and $210 (in preceding months) on his or
her cable TV bundle package. Assuming an average gross
contribution margin of 50 percent and a discount rate of 12
percent per annum, we can calculate the PCV of the
customer as follows:

• GC = 50% × spending amount

• PCV Score = $30 × (1 + 0.01) + $50 × (1 + 0.01)2 + 55 × (1 +

0.01)3 + 95 × (1 + 0.01)4 + 105 × (1 + 0.01)5 = $343.19

• PCV and other techniques do not take expected customer

activity into account
 CLV or CLTV
• Incorporates future expected value of a customer but also the
probability of that customer remaining active in future.

• where
• T is the time horizon for the calculations
• pt is the price paid by the customer at time t
• ct is the cost of serving the customer at time t
• rt is the probability of customer repeat purchase at time t
• i is the discount rate or cost of capital for the firm
• AC is the customer acquisition cost
 College Magazine subscription
• Assume that the average subscription of a college magazine
lasts four years, by students. The annual margin per
subscriber (student) is $12, annual retention rate is 90
percent, subscriber acquisition cost is $20, and the interest
rate is 5 percent. CLTV ?
• rt =0.9, m=Pt-Ct= 12, d=0.05 AC=20
Year 0 year1 year2 year3 year4
-20 12 12 12 12

• CLTV of a subscriber would be ?

• If margins (p – c)=m and retention rates r, are constant over
time and we use an infinite time horizon, then CLV simplifies
to the following expression
 Customer Lifetime value
• The net present value of the stream of future
profits expected over the customer’s lifetime
purchases.

CLTV =

m= annual margin
r= retention rate
i= discount rate
• Can add complexities to this basic model.

• Say, if margins grow, grow at a constant rate

“g,” the margin multiple becomes
r/[1 + i – r(1 + g)].
 Traditional business focus
Product Profitability analysis
 Better business focus
Customer-Product Profitability Analysis
How does CLV contributes: Attracting and
Retaining Customers
• Managing the customer base
Reduce
customer
defection
Focus on Increase
high-profit customer
customers longevity

Terminate Share of wallet

low-profit &
customers cross/upselling
 Maximize CLTV
• To maximize CLTV, companies can follow two
types of strategies: “across-customer” and
“within-customer”.
 Across-customer strategies
(a) Efficient customer selection by targeting
customers with high profit potential.
(b) Rewarding existing set of customers based
on their profit potential.
(c) Monitoring customer behavior and making
timely interventions to prevent attrition and
thereby ensuring future profitability.
 “Within-customer” strategies
• These aim at maximizing profits by increasing the
revenue or reducing the cost or by doing both.
• Promoting multichannel shopping (revenue
maximization)
• Optimizing allocation of resources (cost reduction).
• Managing the purchase sequence of the customers
(revenue maximization and cost reduction).
Aligning Two values
Highly valuable to the company but do
not receive a lot of value in return. Very Most desirable—loyal,
important to company profitability, can satisfied customers
be poached by competitors
who deliver long-term
profits

Highly satisfied with the

company but are not
highly profitable.

Not very profitable ,may Can be charged higher

cost the company more prices to get more value
than they are worth; from them. Or reduce
frequently complain or their service to these
return products, spread customers because
bad word-of-mouth news service costs money.
• Star customers receive high value from and deliver
high value to the company. They are the most
desirable—loyal, satisfied customers who deliver
long-term profits.

• Lost causes do not value the company’s goods and

services and are not very profitable either. They may
cost the company more than they are worth because
they frequently complain or return products, spread
bad word-of-mouth news, or lower morale by
badgering staff members.
• Free rider customers, are highly satisfied with the company
but are not highly profitable. Can be charged higher prices to
get more value from them. Or reduce their service to these
customers because service costs money.

• Vulnerable customers, are highly valuable to the company but

do not receive a lot of value in return. These customers are
important to company profitability, yet they can be poached
by competitors. They might stay with the company for a short
period if they lack alternatives or hope to avoid high switching
costs, but a smart competitor could identify them and attract
them away.
Marketing Actions linkage to CLTV and Company’s
Value
DIGITAL MARKETING
MG 401 1
WHAT IS DIGITAL MARKETING?
https://www.youtube.com/watch?v=ZUG9qYTJMsI
How did this company succeed and compete with top FMCG firms like Gillette?
What do you think can be achieved through digital marketing?
 Brand awareness
 Improve consumer-brand engagement
 Generate more leads
 Increase sales

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WHAT IS DIGITAL MARKETING?
An umbrella term for marketing of products or services using digital technologies,
mostly on the internet, including mobile phones, display advertising and any other
digital platforms.
Businesses leverage digital channels such as search engines, social media, emails, and
their websites to connect with their current and prospective customers.

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Source: https://www.six-degrees.com/visual-history-digital-marketing/

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WHY DISCUSS DIGITAL MARKETING?
of urban Indian
On an 1/ users
Spend three or
average, more hours online
users 4 every day.
spend 22
minutes on
Facebook.
83%
of Internet users
Daily. conduct product
research online.

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PUSH VS. PULL

From traditional ‘push’ To consumer ‘pull’

Motivations, context,
Reach & frequency experience, emotions,
(Persuasion) moods, need states ...
(Participation)

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TRADITIONAL MARKETING: OUTBOUND

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INBOUND MARKETING METHODOLOGY

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Components of Digital Marketing

Get Found Convert Analyze

SEM Email Web

Marketing Analytics

Social Lead Social

Media Conversion Analytics

Blogs Blog
Analytics

Create, Optimize & Capture, Manage & Learn to make smart

Promote Remarkable Nurture leads to win marketing investments that
Content customers get results MG 401 9
MG 401 10
 Get Found Convert Analyze

SEM Email Web

Marketing Analytics

Social Lead Social

Media Conversion Analytics

Blogs Blog
Analytics

Create, Optimize &

Promote Remarkable
Content MG 401 11
 SEARCH ENGINE MARKETING (SEM)
IS A SET OF MARKETING METHODS USED TO INCREASE THE VISIBILITY OF A WEB SITE IN SEARCH
ENGINE RESULTS PAGES.

Search Engine Optimization (SEO) Search Engine Advertising (SEA)

Process of increasing website visibility in a Paid marketing model
search engine’s organic search results.  Text/Image advertisements posted on search
Optimization of websites for crawling and engines
indexing using on-page and off-page
optimization Effective means of generating traffic.
Caters to greater and more relevant audience SEA methods
 Paid search Ads [using PPC]
Though time consuming works in long term
 Display Ads
Major tools used in SEO are:
 Keywords Ads appear in search engine results pages (SERPs)
 Search-friendly website and is main source of income for search engine
 Link building campaigns providers

SEO and SEA together can help achieve results. MG 401 12

SEO: ONLINE TRAFFIC
Search Query

30-50%
attention
Paid (SEA)
Creates Impact
and recall

50-70%
attention
Organic (SEO) Important in
long run
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 SEA METHODS Display advertising
Paid search advertising
Online advertising model Advertisers purchase display ads through ad
 Advertisers display ads for searched links. servers which use data on consumers’ recent
 Google AdWords and Bing Ads are two popular PPC
search and click history to determine a target
(Pay-per-click) advertising system.
website.
 Google Display Network allows advertisers to build,
post, manage and track ads
Metrics: Clicks Metrics: Clicks and conversions.
 Advertiser pays the publisher every time an ad is  Cost per thousand impressions (CPM)
clicked on
 Cost per acquisition/action (CPA)
Pros:  Cost per click (CPC)
 Generates Buzz, quick traffic, flexible
Pros:
Cons:  Wide reach, easily targeted (context and audience),eye-
 Costly, junk traffic catching/Interactive content

Cons:
 Ad server decides placement of ad, Ad blockers MG 401 14
REVENUE MODELS FOR ONLINE ADVERTISING
Brand Awareness Increase Traffic Product Catalogue

Conversion
Consideration
Awareness Consumer Reach Increase Eyeballs Sales
Install apps and CTAs Store Visit
Engagement
Lead Generation

Cost per click (CPC)

Cost per Mille/ thousand
[Advertiser pays for every click on the ad] Cost per Action (CPA)
impressions (CPM)
Cost per Install (CPI) [Advertiser pays only if a
[Advertiser pays every time
[Advertiser pays for every installed app or purchase is made]
the ad loads on a page or
software]
app]
Cost per Lead (CPL)
[Advertiser pays for every completed and
submitted lead form]
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SOCIAL MEDIA MARKETING
SMM is a form of online marketing that utilizes social networking websites as a marketing
tool.
Provides companies with a way to reach new customers and engage with existing customers.
Helps increase brand awareness and broaden customer reach.
Marketers create content that is “sticky”
 Will get a user’s attention and increase the possibility of desired action (product purchase, sharing content )

Consumers seek infotainment

 Need for credible information that stands out

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MG 401 17
PAPER BOAT
Objective: To increase traffic and sales on Amazon.
Target Audience: The campaign was run on Facebook and target audience
was active users of e-commerce sites and those interested in purchasing FMCG
products online.
Geography: Tier 1 and tier 2 Indian cities.
Challenge: To filter out active users of e-commerce sites especially Amazon
and have shown some interest in purchasing FMCG goods.
Approach: Interest and behavior based targeting.
Solution: Facebook, since it is one of the most used social media platforms, it
has relevant targeting options like Geography based, interest based
targeting, along with other filters that makes the overall targeting more
personalized.
Result: 80 percent increase in the brand’s traffic on the Amazon store.

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#SWIGGYVOICEOFHUNGER
https://www.youtube.com/watch?v=vWw7LVWwTiY

MG 401 19
MERGING CHANNELS

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MAN MATTERS – HOLISTIC WELLNESS PLATFORM
FOR MEN
Built a brand community first, starting with
WhatsApp groups and then Discord
servers
Developed products after getting insights
from community members
Currently serves over 1 lakh customer per
month

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BLOGS
A WEBSITE/PAGE CREATED BY A USER IN ORDER TO UPDATE OTHERS WITH REGULAR COMMENTARIES,
OPINIONS OR SHARE CONTENT .

• Blogs are interactive and allow visitors to leave comments via widgets on the blogs
• They are easy to create and maintain
• Being Search Engine friendly, their content helps in SEO
• Innovative and new content posted by bloggers attracts traffic
• Blogs allow organizations to communicate with consumers (new products or policy, crisis
management) and monitor consumer views
• Blog posts become interesting touch points to advertise, sell, and address problems faced by
prospects and customers
• Blog types include:
• Personal blogs
• Corporate blogs
• Blogs by genre
• Blogs by media type
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Answer The Public

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Get Found Convert Analyze

SEM Email Web

Marketing Analytics

Social Lead Social

Media Conversion Analytics

Blogs Blog
Analytics

Capture, Manage &

Nurture leads to win
customers MG 401 24
 EMAIL MARKETING
Email marketing is the targeting of consumers through electronic mail (email). Often
associated with data mining, email marketing can be used to impact consumers in a
variety of ways. In general, email marketing is a more evolved, digital form of
traditional direct mail marketing.
These days bots are used to send personalized and targeted mails.
Email marketing tools:
 Newsletters
 Seasonal emails
 Exclusive offers
 Reminders
 Flash announcements

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USER EXPERIENCE (UX)
CREATES STICKINESS TO THE WEBSITE

First Impressions • Credibility, Trustworthy, Professional, Stable, Fast,

Welcoming?

Consistency • Logo, Navigation, Link, Colors

Images • Images of real people

Navigation • Primary Navigation, Footer, Search box, Links

Accessibility • Device, Browser compatibility

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SITE ELEMENTS
MAKE PEOPLE GIVE YOU INFORMATION

Click/Call to Actions (CTA)

Subscriptions

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Landing Pages and Forms

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LEAD CONVERSIONS

Offer

Promise
Promise

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Get Found Convert Analyze

SEM Email Web

Marketing Analytics

Social Lead Social

Media Conversion Analytics

Blogs Blog
Analytics

Learn to make smart

marketing investments that
get results
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WEB ANALYTICS

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SOCIAL MEDIA ANALYTICS

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 PROS AND CONS OF ONLINE ADVERTISING
Pros Cons
Targeted Campaigns Lack of physical demonstration
 Demographics
 Location Privacy
 Past purchasing behaviour
Trust
Coverage
Dynamic Industry
Personalized  Chances of becoming obsolete
Interaction and Engagement
Economical (Time, effort, cost)
Automated and efficient
Instant consumer feedback
Flexible
Real time analysis
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WHAT IS STP?

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BUYER PERSONA
Buyer Personas are fictional, generalized representations of ideal customers.
They help in understanding customers’ (and prospective customers) top concerns,
consumption preferences, and goals and make it easier to create content to the
specific needs, behaviors, and concerns of different groups.

MG 401 35
Source: Semrush MG 401 36
 BUYER PERSONA TEMPLATE
Background Job? Career path? Family? Lifestyle? Spending habits?
Demographics Age? Income? Location? Gender identity?
Goals Primary/secondary goals? Personal vs professional goals? Top metrics they track? Motivations?
Device preferences? Preferred communication style (email vs call vs Slack vs Zoom vs Loom…)?
Communication/Schedule Working hours?
Personality Traits Introvert vs extrovert? Straight shooter or wants time to analyze and question?
What does this person struggle with in relation to meeting goals? What serves as a roadblock for
Challenges this person’s success?
What can we do? to help our persona achieve their goals? ...to help our persona overcome their challenges?
Common Objections Why wouldn’t they buy your product/service?
Real Quotes About goals, challenges, etc
How can you describe your solution to have the biggest impact on your persona? What resonates
Marketing Messaging most with your persona?
Elevator Pitch Sell your persona on your solution - in a sentence or a few words!
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 DIGITAL MARKETING CHANNELS
Channel Key Objectives
Email Marketing Campaign promotions, Product Sales, Repeat Sales, Upsells, Cross-sells
SEO & Content Marketing Driving Organic Traffic to websites, Brand Visibilty, Lead Generation
Display Advertising Targeting consumers on websites they visit for brand building and lead generation
Search Advertising Targeting consumers looking for your product/service to generate leads/drive sales
Retargeting Targeting customers who left your site without converting to bring them back
Affiliate Marketing Lead generation by leveraging the reach of independent entities called affiliates
Influencer Marketing/Digital PR Increasing Reach and visibility for campaigns
Video Advertising Building brand awareness for campaigns, Increasing Reach
Mobile Advertising Reaching the right customer at the right time with the right message in the right context
(Contextual Targeting)

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DIGITAL MARKETING TOOLS
Buyer persona: https://www.hubspot.com/make-my-persona
Audience Insights: https://www.facebook.com/ads/audience-insights/
https://www.linkedin.com/campaignmanager/
Keyword research: https://backlinko.com/keyword-research
Content marketing analytics: https://www.semrush.com/
SEO toolkit: https://ahrefs.com/
Online metrics: https://www.similarweb.com/

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THANKYOU!
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Content Marketing Framework
 CONTENT MARKETING APPROACH

STORY IDEAS PLANNING PROCESS WRITING

GROW MEASURE PROMOTE REPURPOSE

 Stories are how
audiences remember.

48
49
Content clusters- Topic Clusters

50
“Weight Loss” Topic Cluster
8 STEPS TO RECYCLING CONTENT
INTO A LONG-FORM OFFER

52
 You’ll need a
CMS to create,
edit, and
publish your
content.
Google Analytics is a great
option for understanding:
• Where leads are coming from.

• What kind of device they are using.

• How long they’re staying on pages.

• Pull custom, granular reports on

your site’s traffic.

54
Use a tool like Buzzsumo to see which content has
the best social social media performance.

55
90% OF WEBSITE VISITORS
PREFER TO READ OUR
LENGTHY CONTENT IN A
PDF AS OPPOSED TO A
WEBSITE PAGE.
Types of content
 Content pillar
• A content pillar is a substantive and informative piece of
content on a specific topic or theme that can be broken into
many derivative sections, pieces, and materials. Examples of
content pillars include eBooks, reports, and guides.
Infographics
These are generally long, vertical graphics
that include statistics, charts, graphs, and
other information.

“
Videos
Videos can achieve multiple objectives –
they can improve branding, demonstrate
instructions, answer questions, provide
customer reviews, and/or entertain your
audience

“
eBooks

Ebooks are one of the most common forms

of content marketing, especially in the B2B
world. These digital books vary widely in
length, level of design, and subject matter,
but typically follow a narrative from start to
finish, have some element of design, and
contain educational, informational material

“
Case Studies

Often the most compelling story comes

from your current customers.

“
Slide Decks

Slide decks tend to be highly designed and

visual, rather than text heavy, for easy
consumption.

“
Web Pages
A webpage that offers value, brings
countless customers & drives leads. That’s
the difference between simply putting
content on your website, and content
marketing.

“
Webinars
A webinar is an online discussion among
participants on a particular topic of
interest.

“
Blogs
A company blog is a great place to share
educational thought leadership, industry
insight, upcoming events/ announcements,
and awesome new content.

“
 Blogs
A website created by a user in order to update others with regular commentaries,
opinions or share content.

• Blogs are interactive and allow visitors to leave comments via widgets on the
blogs.
• They are easy to create and maintain.
• Being Search Engine friendly, their content helps in SEO
• Innovative and new content posted by bloggers attracts traffic
• Blogs allow organizations to communicate with consumers (new products or
policy, crisis management) and monitor consumer views
• Blogposts become interesting touch points to advertise and sell
• Blog types include:
• Personal blogs
• Corporate blogs
• Blogs by genre
• Blogs by media type
66
Qualifications of Content
1. It engages individuals on their own terms, using buyer personas

2. It’s based on interactions buyers have with your brand, and mapped directly to their buying
stages

3. It tells a continuous story, with a unified narrative that evolves throughout a customer’s
journey

4. It’s the right fit for your channel –whether it’s being used on your website, in email, on
social, or elsewhere

5. It has a clear purpose, and a clear call-to-action for your audience to follow.

6. It has pre-defined metrics, and is designed to be measurable

7. It is created in the most efficient, effective way possible –without sacrificing quality
Promotion Mix

Personal Communication
Personal Selling
 Selling
“persuading the customer to purchase”

• “convince the potential buyer that the product/service offers

the best solution to his or her problem & Influence him/her
to buy

• CONVINCE –WANT INFLUENCE – DESIRE

• It takes: skill, knowledge, hard work

Buyer
 Buyer best at lowest price and capture the value
 Same skills needed as a seller
 Personal Selling Process

Identifying and Screening For

Step 1. Prospecting and Qualifying Qualified Potential Customers.

Learning As Much As Possible

Step 2. Pre-approach About a Prospective Customer
Before Making a Sales Call.

Step 3. Approach Knowing How to Meet the

Buyer to Get the Relationship
Off to a Good Start.

Step 4. Presentation/ Demonstration

Telling the Product “Story” to
the Buyer, and Showing the
Product Benefits.
 Personal Selling Process

Seeking Out, Clarifying, and

Step 5. Handling Objections Overcoming Customer
Objections to Buying.
Negotiations
Step 6. Sales Closing Asking the Customer for the
Order.
Sale Order Execution/Delivery

Step 7. Follow-Up Following Up After the Sale to

Ensure Customer Satisfaction
and Repeat Business.
Sales Funnel Approach
 Principles of Personal Selling
 SPIN method types of questions

Situation

Problem

Implication

Need-payoff
Negotiation
Negotiation
 Negotiation is usually considered as a
compromise to settle an argument or
issue to benefit ourselves as much as
possible.
 Features
 Communication is always the link that
will be used to negotiate the issue/argument
whether it is face-to-face, on the telephone
or in writing.

 Remember, negotiation is not always

between two people: it can involve several
members from two parties.
 Why Negotiate?
Negotiation, in a business context, can be used for
 selling,
 purchasing,
 staff (e.g. contracts),
 borrowing (e.g. loans) and
 legal transactions-
along with anything else that you feel are applicable
for your business.
Types of negotiations
 If your reason for negotiation is seen as 'beating' the
opposition, it is known as 'Distributive negotiation'.
This way, you must be prepared to use persuasive tactics
and you may not end up with maximum benefit .

 Should you feel your negotiation is much more 'friendly'

with both parties aiming to reach agreement, it is known
as 'Integrative negotiation'.
Hamilton
This is case of distributive (i.e.,
value claiming) tactics in a zero-sum
negotiation.
How was it ??
 Good or Bad deal

 Wide range of outcomes Low –High. what explains

the variance ??

 What does it mean—behaviorally—to be a better

negotiator?
Fundamental Negotiation Analytics

 Anchor Point

 BATNA : Best Alternative to Negotiated Agreement

 Reservation Values

 ZOPA : Zone of Possible Agreement

Step 1: Assess Your BATNA
 What’s my walk-away point.

 Seller needs to know the lowest price s/he would ever

accept;

 Buyer needs to keep in mind the highest price s/he

would pay?
 Your walk-away point is not the value you
want, aspire to, or think is fair.

 Your walk-away point should reflect the reality

you face in the current situation.
 BATNA
1. Identify all of the plausible alternative
options you might pursue if you are unable
to reach an agreement with the other party.
2. Estimate the value associated with each
alternative.
3. Select the best alternative; this is your
BATNA.
 Seller’s BATNA

Course of action that they plan to

pursue....

In this case it is to finalize a deal with

Quincy.
Step 2: Calculate Your Reservation Value

 BATNA analysis is critical, because it helps you

calculate your walkaway point in the current
negotiation.

 Walkaway point : “point of indifference” and

“reservation value”.

 Quincy has offered $38 million. But the Seller expects

that s/he could negotiate this price further. (~10
to15%) increase in the offer, ie $41.8 to $43.7 million
 Careful assessment of one’s BATNA is essential
if the negotiator is going to establish a rational
reservation value that is based on a realistic
assessment of his/her alternatives.

 But what if buyer will use land for commercial

development : what will be the values ?
 Step 3: Assess the Other Party’s BATNA
and Reservation Value
 The price at which the Buyer would be indifferent between
doing the Hamilton deal and pursuing the BATNA is
therefore $60 million (this is maximum willingness to pay
was $60 million.)

 Also important for Seller’s to evaluate the Buyer’s BATNA

and ReservationValue
 Knowing Your Batna and ReservationValue keeps you from making
fundamental mistakes like.....
 ....... accepting a deal that is worse than your BATNA, or

 ..... rejecting a final offer that is better than your BATNA.

 Assessing or estimating the other party’s BATNA and Reservation

Value is what helps you to figure out how far you can push them.
The Zone of Possible Agreement (ZOPA)

<------------|------------------------------|---------->
$42.65M $60M
Seller RV Buyer
RV

ZOPA contains all possible agreements

 The PERCEIVED Zone of Possible
Agreement
Buyer’s Perception of the ZOPA

Seller’s Perception of the ZOPA

<------------|-----------------------------------|---------->
$42.65M $60M
Seller RV Buyer RV
 Lies & Deception in Negotiation
 In case of commercial use of property
 Strategy 1: Ask direct questions, and listen carefully for a
non-response.
 Strategy 2: Propose a contingency contract.
(eg “The sale will be made at a base price of $46
million, with the condition that if the land is used for
commercial development in the next seven years,
Buyer will pay an additional $10 million to Seller.”
 The Critical Role of Information
 Evaluating not only your own BATNA and RV, but also the
BATNA and RV of the other side, is critical.

 The party that has a better sense of the actual ZOPA is in a stronger
position to capture more of the value in the deal.

 Here Buyer has more information.

Pls. note
 We use negotiation in everything we do but you have to be
sure that it is done in the best way possible to achieve
maximum benefit.

 INFORMATION is KEY

 Have confidence and be sure that you can keep control at

all times. Aim high, but don't underestimate the opposition.

 Don't close an agreement until you are happy.

 Tactic 1: Focus on the other party’s BATNA and Reservation
Value.
 Tactic 2: Avoid making unilateral concessions.
 Tactic 3: Be comfortable with silence.
 Tactic 4: Label Your Concessions.
 Tactic 5: Define What It Means to Reciprocate.
 Tactic 6: Make Contingent Concessions
 Tactic 7: Be Aware of the Effects of Diminishing Rates of
Concessions
Price
 OTT channels Pricing strategies in India

1. Netflix (199, 499, 699, 799 PM) PURE Ad FREE CONTENT

2. Amazon Prime (Prime members 999 PA includes Amazon free
delivery subsc) BUNDLE

3. Sony Liv (Basic free, 399PA, 999PA) Sports Packs

4. Disney Hotstar (Basic free+ Rs 399, Rs 899 PA, Rs1499PA)
5. Zee5 (Basic free+Rs 499/PA)
6. Voot (basic free ((ads)+ select Rs 299 PA)
7. Alt Balaji (basic free with ads)+ select Rs 299 PA)
 Differential Pricing & Dynamic pricing
 NO Price- Advertisement based revenue models
 Different pricing to different segment of customers in
different places , at different times based on different
Value perception.
 Same water bottle priced differently at Railway station,
airport.
 Uber/Ola Surge pricing based on supply demand gap.
Steve Jobs – ipad Pricing
 https://www.youtube.com/watch?v=f0uBANguiQs

 Price Anchoring & reference price

Research: Analysis of over 2,400 firms
 1% increase in the average price, with no change in sales
volume, led to an average improvement in operating profit of
11.1%

 1% improvement in sales volume (with no change in average

price) led to an average increase in profitability of only 3.3%
.
 In 2013, for instance, a 1% improvement in price realization
would have increased the profitability of Coca-Cola by 6.4%,
DuPont by 7.4%, of Nike by 10.2%, of Boeing by 18.9%,
and of Walmart by over 27%.
Pricing- basic maths
Profitability Matrix
1. Does Price depends on sales?
2. Or Sales depends on Price ?

1. More you produce, Per unit Fixed cost and Variable

cost goes down, so you have possibility to price low.

2. Low prices will attract more sales, and hence

Pricing Metrics- Basic Important Concepts
 Break Even Point analysis

 point where total costs (expenses) and total sales (revenue) are
equal.
 no profit no loss point

 BEP = Total Fixed cost/(Unit SP - Unit VC)

Break even Point
Total Revenue=SP x
n
Sales Total Cost=
Profit
₹ Break even
Fixed +
Variable
Point Variable
Cost

Total Fixed
Los Cost
s

Break even Quantity

Quantity Sold (n Units)

Price Elasticity of demand
 PED = % Change in Quantity demanded/% Change in
Price

 Historic data
 Actual Experiments
 Estimation of 1% change
What is Price?

 Only source for company’s revenues and profit.

 Determinant of buyer choice-customer value
 Cost
 Competitive forces
The Three Levels of Price management
1. Macro level -Industry supply and demand. Basic laws of
economics come into play (Changes in supply demand) Managers
must predict broad changes in pricing levels (Crude Oil price
phenomenon).

2. Market level -Product market strategy. - Value preposition

How customers perceive the benefits of products /service vis-à-vis
price & wrt competition (conjoint analysis and focus groups help).

3. Individual level: Transactions- manage the exact price -

for each transaction , base price, terms, discounts, allowances,
rebates, incentives, bonuses etc..
Three Pricing Principles
1. Value based means that differences in pricing across
customers or applications reflect differences in the value to
customer
2. Proactive: It means that companies anticipate disruptive
events and develop strategies in advance to deal with it.

3. Profit driven: It means, company evaluates its success at

price management by what it earns relative to alternative
investments and not by market share & growth relative to
competition.
Value Pricing Approach
Marketing Effort Objective Value-True
Economic Value
Price of
substitutes
Perceived Value Consumer’s Incentive to Purchase
= [Perceived Value - Price]
Competition
Product Price
Firm’s Incentive to Sell
= [Price- COGS]

Cost of Goods sold

Variable cost
Fixed Cost

The Value-Pricing “Thermometer ”

Case
Customer Perceived Value (Economic Value)

 Monetary
 Psychological

 How to understand?
 Consumer research
True Economic Value (TEV)
 TEV has two major components:
 TEV = cost of the next-best alternative + value of the
performance differential
 Case: A firm trying to sell a new air-filtration system product
to the owner of a toy factory that requires it.
Assume the factory owner faces two choices—this seller’s new
product and a well-established, next-best alternative offered by
another firm. Assume that the system will be used for a single
year for a total of 2,500 hours. In addition, assume the cost to
the toymaker of a system failure is $100,000 (because of
production downtime during repairs).
TEV for the new product to the buyer
 TEV price of next-best alternative + expected
system crash savings added operating costs
 Customer Perceived Value (PV)
 In the case of our toymaker looking for a new air-filtration
system. While the new product objectively offers a 1%
probability of failure, he might find this claim to be overly
optimistic and instead believe the probability of failure
is closer to 5%.
 What is PV
 The degree to which PV approaches TEV can often be
influenced by the level and quality of the
marketing efforts directed toward the customer.

 Ideally, an organization’s marketing efforts should

transform an uninformed, skeptical customer (with a
resulting low PV) into a fully informed, rational buyer
(whose PV approaches TEV).
 TEV of the new product for this customer is $81,500.

 Which means that a fully informed, rational buyer

with this cost structure should be indifferent between
the next-best alternative priced at $75,000 and the new
product priced at $81,500
 If COGS of $50,000.
 The feasible range for pricing this air-filtration system is
$50,000 to $77,500.
 What should be price??
 A price at some middle point, say, $65,000, would
perhaps provide a reasonable incentive for both the
firm and the potential buyer to transact.
PV-TEV Across Customer segments
 Consider the firm - an off-shore oil rig who needs a
similar system.
 Price differentially to both buyers !!
Marketing Effort Objective Value-True
Economic Value
Price of
substitutes
Perceived Value Consumer’s Incentive to Purchase
= [Perceived Value - Price]
Competition
Product Price
Firm’s Incentive to Sell
= [Price- COGS]

Cost of Goods sold

Variable cost
Fixed Cost

The Value-Pricing “Thermometer ”

Important Pricing Strategies
 Cost Plus (Mark-up) pricing
 Competition focused
 Value pricing
 Penetration (aimed at attaining high market share)
 Skimming (aimed at attaining high margins even if lower vol.)
 Differential Pricing
 Going rate Pricing
 Marginal Pricing
 Freemium
Freemium
 "free" and "premium".
 Offering a product or service free of charge (eg digital
offerings such as software, content, games, web services
or other)
 While charging a premium for advanced features,
functionality, or related products and services.
 Product line pricing strategies

 Captive pricing

 (Loss) Leader pricing, Big Bazar offer Sugar Re 1/kg

 Bait pricing

 Price lining: Dollar Stores: all merchandise is $1,

 Price bundling: Pure bundling, Unbundling,

Mixed bundling
Steps in Setting Price

1. Select the price objective

2. Determine demand-Forecast
3. Estimate costs
4. Analyze competitor price mix
5. Select pricing method
6. Select final price
 Services?

It is the part of the product or the full product for

which the customer is willing to see value and pay
for it.
 Service

Any act of performance that one

party can offer another that is
essentially intangible and does not
result in the ownership of anything.
Its production may or may not
be tied to a physical product.

1
 Tangibility Spectrum
Salt
 Soft Drinks

 Detergents
 Automobiles
 Cosmetics
Fast-food
 Outlets
Intangible
 Dominant

Tangible
Dominant 
Fast-food
Outlets 
Advertising
Agencies

Airlines 
Investment
Management 
Consulting 
Teaching
Service Characteristics
1. INTANGIBILITY -
Customer is unable to experience the' product’ prior
to ‘purchase’
2. PERISHABILITY
Can’t be stored
3. INSEPERABILITY :
Production & consumption happen at the same place
and cannot be separated
4. VARIABILITY / HETEROGENEITY
Difficulty in establishing consistency in quality
Services
Unique characteristic - 1

INTANGIBILITY
Customer is unable to experience the' product’ prior to
‘purchase’

 Implications of Intangibility
• Services cannot be inventoried
• Services cannot be patented
• Services cannot be readily displayed or communicated
• Pricing is difficult
Services
Unique characteristic - 2
PERISHABILITY
Can’t be stored

 Implications of Perishability

• It is difficult to synchronize supply and demand with

services
• Services cannot be returned or resold
Services
Unique characteristic - 3

INSEPERABILITY

Production & consumption

happen at the same place and cannot be separated
 Implications of Simultaneous
Production and Consumption
 Customers participate in and affect the transaction

 Customers affect each other

 Employees affect the service outcome

 Decentralization may be essential

 Mass production is difficult

Services
Unique characteristic - 4

VARIABILITY / HETEROGENEITY

 Difficulty in establishing consistency in quality

 across Providers or within providers

 across Time
 across Delivery Centers
Implications of Heterogeneity

 Service delivery and customer satisfaction depend

on employee actions.

 Service quality depends on many uncontrollable

factors.

 There is no sure knowledge that the service

delivered matches what was planned and
promoted
Difference between physical goods and
services
Physical goods Services

tangible intangible

homogeneous heterogeneous

Production and distribution are Production, distribution and

separated from consumption consumption are simultaneous
processes
A thing An activity or process

Core value processed in factory Core value produced in the buyer-seller

interaction
Customers do not participate in the Customers participate in production
production process
Can be kept in stock Cannot be kept in stock

Transfer of ownership No transfer of ownership

Expanded Marketing Mix for Services --
The 7 Ps
 Product
 Price
 Place
 Promotion
 People
 Process
 Physical Evidence
Expanded Marketing Mix for Services

PEOPLE PHYSICAL PROCESS

EVIDENCE
Employees Facility design Flow of activities

Customers Equipment Number of steps

Communicating Signage Level of customer

culture and values involvement

Employee research Employee dress

Other tangibles
 The Five Dimensions of Service Quality

Reliability Ability to perform the promised service

dependably and accurately.
Knowledge and courtesy of employees
Assurance and their ability to convey trust and
confidence.
Tangibles Physical facilities, equipment, and
appearance of personnel.
Empathy Caring, individualized attention the firm
provides its customers.
Responsiveness Willingness to help customers and
provide prompt service.
 SERVQUAL Attributes

RELIABILITY EMPATHY
n Providing service as promised n Giving customers individual attention
n Dependability in handling customers’ n Employees who deal with customers in a
service problems caring fashion
n Performing services right the first time n Having the customer’s best interest at heart
n Providing services at the promised time n Employees who understand the needs of
their customers
n Maintaining error-free records
n Convenient business hours
RESPONSIVENESS
n Keeping customers informed as to TANGIBLES
when services will be performed n Modern equipment
n Prompt service to customers n Visually appealing facilities
n Willingness to help customers n Employees who have a neat,
n Readiness to respond to customers’ professional appearance
requests n Visually appealing materials
ASSURANCE associated with the service
n Employees who instill confidence in
customers
n Making customers feel safe in their
transactions
n Employees who are consistently courteous
n Employees who have the knowledge to
answer customer questions
Gaps Model of Service Quality
Gaps Model of Service Quality

CUSTOMER Expected
Service

Customer
Gap
Perceived
Service

External
COMPANY Service Delivery Communications
GAP 4 to Customers
GAP 1 GAP 3
Customer-Driven Service
Designs and Standards

GAP 2
Company Perceptions of
Consumer Expectations
Gaps Model of Service Quality
 Customer Gap:
 difference between expectations and perceptions
 Provider Gap 1:
 not knowing what customers expect
 Provider Gap 2:
 not having the right service designs and standards
 Provider Gap 3:
 not delivering to service standards
 Provider Gap 4:
 not matching performance to promises
How to improve service quality
 Listen carefully
 Reliability
 Surprise customers
 Fair play
 Teamwork
 Employee research
Service Mapping
Service Mapping/Blueprinting
 A tool for simultaneously depicting the service process, the
points of customer contact, and the evidence of service from
the customer’s point of view.

Process

Service Points of Contact

Mapping
Evidence
Service Blueprint Components
Express Mail Delivery Service
Truck Truck
Packaging Packaging
Forms Forms
EVIDENCE
CONTACT PERSON CUSTOME PHYSICAL

Hand-held Hand-held
Computer Computer
Uniform Uniform

Customer Customer Receive

Calls Gives Package
Package
(Back Stage) (On Stage) R

Driver
Picks Deliver
Up Pkg. Package

Customer
Service
Order

Airport Fly to
Dispatch Unload Load
Driver
Receives Sort Fly to
& Loads Center & On
Destinatio Sort Truck
SUPPORT

Load on
PROCESS

Airplane
n

Sort
Packages
 Overnight Hotel Stay
Bill
EVIDENCE
SUPPORT PROCESS(Back Stage) (On Stage) CUSTOMER PHYSICAL

Desk
Hotel Cart for Desk Elevators Cart for Room Menu Delivery Food Lobby
Exterior Bags Registration Hallways Bags Amenities Tray Hotel
Parking Papers Room Bath Food Exterior
Lobby Appearance Parking
Key
Arrive Give Bags Call Check out
Go to Receive Sleep Receive
at to Check in Room Eat and
Room Bags Shower Food
Hotel Bellperson Service Leave
CONTACT PERSON

Greet and
Process Deliver Deliver Process
Take
Registration Bags Food Check Out
Bags

Take
Take Bags Food
to Room Order

Registration Prepare Registration

System Food System
 Figure 8.9
Building a Service Blueprint

Step 1 Step 2 Step 3 Step 4 Step 5 Step 6

Identify the Identify the Map the Map Link Add

process to customer process contact customer evidence
be blue- or from the employee and contact of service
printed. customer customer’s actions, person at each
segment. point of onstage activities to customer
view. and back- needed action
stage. support step.
functions.