Discounts, discounts and more discounts

4.  60%+40% off as discounts: This offer looks very attractive on the hoardings. It looks like 100% off. Every shoppers’ dream!. But the discount is not 100%. The second 40% is on the first 60%. That 24% extra. So the effective discount is 84% and not 100%. Similarly 30%+20% off is not 50%. Rather it is 36% discount.

    

5.  Cost to cost discount sale: A sentiment that buyers like very much. The advertisement proudly claims that the shop is offering the product at cost to cost basis. That means the shop is offering the product at a cost at which it is made available to the shop keeper himself. But logic says that it can’t be offered at cost basis. Even if no margin is taken the shop has to still take care of fixed expenditure like shop rent, salaries, electricity, water, interest payment and other expenses. At best the shop can offer a product at no margin basis but can’t offer it at a cost to cost basis.

6.      Export reject discount sale: Very popular in the vernacular (local language) media. The sob story of an advertisement details how a shipment was stopped at Karachi port or at Dubai port and how the consignment was returned to India. Most shoppers buy the story once. But to their surprise the same stunt is pulled many times. The shopper quickly realizes that export rejects are just a ploy to pull the gullible shoppers into the shop.

7.      Tie up sale discount: Here if one product is taken another product is offered at a discount. For example if shirts are taken for Rs1000/- rupees worth, on trousers worth Rs 1000/-, 50% discount will be offered. So the effective discount is 25%. Rs 500 on a total purchase of Rs 2000/-.

8.   Always on discount: Ploy of retailers of the likes of Coupons and Brand Factory. These shops are shoppers’ dreams come alive. These shops offer products always at a discount. The moot point is whether the customers believe that they would always get a discount or the discount becomes a part of the offering itself. A very difficult question to answer.

DISCOUNTS, DISCOUNTS, DISCOUNTS - It is raining discounts

Types of discounts: Discounts are reductions on basic price of goods or services. Discounts are disliked by companies but are routinely offered as they garner quick sale for the company. In the times of recession it is very common to see companies offering price discounts on their products. Many companies offer genuine discounts. A genuine discount is one where the company consciously reduces its margin and offers a deal to the customers. In the modern world customers are very business savvy and can catch on to a genuine offer very quickly. Let us see some methods of discounting that are unethical or downright sleight of the hand.

1.     Upto 60% off discounts: One of the most popular discounting methods. Up to 60% off means that the discount varies from product to product and the item that is offered to at 60% off will be a low priced product like a handkerchief. Even that handkerchief would not be available. Most of the other products sold would be available at a marginal discount of 10% to 15%.

    2.  Buy one and get 12 off discounts: This is an amazing offer. Buy one shirt and get 12 shirts free. Wait there is a catch. The MRP of shirt number one on offer is Rs 4,550/- . 1+12 = 13. 4,550 divided by 13 is Rs 350/-. Thus the cost of each shirt is Rs 350/-.

3.    Mark up and offer discounts: One of the favorite tricks of the retailers. MRP (Maximum Retail Price) is a tool that comes in handy. The shop keeper will mark up the cost of the product and offer the same as discount. For example a shirt’s MRP is Rs 500/-. It would be marked upto Rs 750/-. The shop keeper would offer a discount of 20%. 20% of Rs 750/- works out to Rs. 150/-. Even after giving a discount of 20% the cost of the shirt would come upto Rs 600/-. That is a extra profit of Rs 100/- on the earlier price of Rs 500/-.

Revisiting Maslow’s theory!

A successful business man was visiting his ancestral home. On the way to the village he saw a man idling on the Charpai (A homely bed that is very popular in Indian villages). The villager was smoking a bidi (a filter less cigarette). The villager looked very dreamy.

Taking pity on the villager the businessman wanted to impress upon him the famous Maslow’s theory of motivation.

He said “Hello”

The villager looked at the businessman and nodded his head

“What have you studied?”

“Nothing”

“Why don’t you study?”

“What will I get if I study?”

You can pass your tenth class”

“What will I get if I pass my tenth class?”

The business man was irritated but continued to answer the villager. The told the villager that he could pass intermediate (12^th grade), get a degree and a post graduate degree in Management. He told him that the Post graduate degree could land him (the villager) a good job.

Business man “with that job you can earn a lot”

“After earning a lot of money what should I do?”

The Business man was getting rattled “You can earn more money”

“After earning more money what should I do?”

“You could get married to a very pretty girl”

“After marrying a very pretty girl what should I do?”

The desperate businessman babbled “You can buy a car”

“After buying a car what should I do?”

“You could buy a house”

“After buying a house what should I do?”

“You can buy a second house” shouted the exasperated businessman

“After buying a second house what should I do?”

“You idiot” roared the business man “you could buy a farm house in a village”

“After buying farm house in a village what should I do?”

“You obstinate fool” the business man was now shouting at the top of his voice “ You can have a nice farm house, you can breed cows and poultry. You can relax, sleep on a Charpai, look at the stars and enjoy your success with a smoke”

“THAT’S WHAT I AM doing right now, Why should I do all the above and take so much pain and efforts if I have to the same thing 20 years later!"

The placid villager had already reached the stage of self actualization and taught the smart aleck city bred business man a lesson that he would never forget – that some things basic in life should not be sacrificed at the altar of materialistic success. 

There is no such thing as a free lunch in this world

There is no such thing as a free lunch in this world.

Ask any economist and within a matter of minutes he/she would say that there is no free lunch in this world. The "free lunch" referred to relates back to the once common tradition of saloons in the United States a "free lunch to patrons who had purchased at least one drink. 

There is no such thing as a free lunch on the other hand, indicates an acknowledgement that in reality a person or a society cannot get something for nothing. Even if something appears to be free, there is always a cost to the person or to society and as a a whole even though that cost may be hidden or distributed. For example bar offering a free lunch will likely charge more for its drinks.

This means that there is absolutely nothing that is totally free in this world. Let us see some examples:

May people would argue that watching Television is free. We do not pay anything for the programmes that we are watching. The payout is the cost of the television itself, the cable connection and the monthly rental for the cable, the time that we waste watching the programmes, the advertisements that we are forced to watch and so on.

In a class o economics one student said “sir one scientist has come out with a great idea. He is going to install rollers on the main roads of the city. When the vehicles roll on the rollers, energy will be generated this can be stored and used. Don’t you think that such energy is totally free?”

The professor replied “what about cost of installing the rollers, what about the friction that will be caused by the rollers on the wheels of the vehicles. What about the resultant wear and tear on the wheels of the vehicles and the subsequent replacement costs?” The student was speechless hearing the answer. 

There is no such thing as a free lunch demonstrates opportunity cost. To get one thing that one likes, one usually has to give up another thing liked. Making decisions requires trading off one goal against another. The idea that there is no free lunch at the societal level applies only when all resources are being used completely and appropriately if not, a 'free lunch' can be had through a more efficient utilization of resources. 

If one individual or group gets something at no cost somebody else ends up paying for it. If there appears to be no direct cost to any single individual, there is a social cost. Similarly someone can benefit for 'free' from an externality or from a public good, but someone has to pay the cost of producing these benefits. 

For example if one section of a society is getting a subsidy or low prices on a certain item, someone else is footing the bill for the subsidy. That somebody could be the government or a section of the population that pays extra taxes. 

Setting the face of the man will set the world itself

Small children now a days are very precocious. They are aware and can be tiring on parents. One such child was harassing his mother with innumerable doubts. The ragged mother hit upon a bright idea. She took a magazine and tore a sheet out of it. The torn sheet had the world map on it. She proceeded to tear the world map into small bits.

She presented the torn bits of paper to her son and told him to assemble the world map again. She was sure that this exercise would consume many hours as a child of that age would take lot of time to assemble the world map. 

To her consternation the child was in the kitchen with in half-an-hour. To her surprise the world map was assembled and pasted. Accepting her defeat she asked “how is it possible that you could assemble the world map so easily and that too in a jiffy". 

Her son answered "what world map? I never knew anything about countries of the world. The back side of the world map had a picture of face of a man. I assembled the face and reversed it and the world map was made"

How true. Everything in this world is made of human beings and their emotions. Manage the men and keep them happy and conquering the world should not pose any problem.

Innovative methods of marketing - Live-in Marketing (LIM), Wait marketing, Ambient marketing

Live-in Marketing (LIM) is a term used to describe a variant of marketing and advertising in which the target consumer is allowed to sample or use a brands product in a relaxed atmosphere over a longer period of time. Much like product placement in film and television LIM was developed as a means to reach select target demographics in a non-evasive and much less garish manner than traditional advertising.

Unlike traditional event marketing, LIM suggests that end-users will sample the product or service in a comfortable and relaxed atmosphere. The idea behind this technique is that the end-user will have as positive as possible an interaction with the given brand thereby leading to word-of-mouth communication and potential future purchase.

Wait marketing: On public transport, in the doctors’ waiting room, while downloading a video from the Internet, consumers have proved 2 to 3 times more receptive to advertising than when sitting in front of their television. Wait marketing helps companies turn consumers waiting time into the perfect opportunity to communicate in an innovative and effective way.

When elevator pitch turns transforms itself into a plane pitch. Richard Branson has launched a  Wait Marketing initiative called Pitch TV. Entrepreneurs and marketing managers can promote their business in a 2-minute pitch that will be broadcasted on Virgin Atlantic Airlines flights!

Ambient marketing: may be defined as an activity of the business of creating brand recognition without necessarily pushing its product. The campaign is very often carried out by finding a thing that can be clearly connected with the business and by communicating the thing instead of the business itself.

Examples are messages on the backs of bus tickets, on hanging straps in railway carriages and on the handles of supermarket trolleys. It also includes such techniques as projecting huge images on the sides of buildings, or slogans on the gas bags of hot air balloons.

The marketers have turned a traditional and boring luggage claim belt into a giant roulette wheel at Venice Marco Polo Airport.

Ambient marketing on Internet may be performed in form of placing relevant thing (an image of a stylish shoe in case of shoe retailer) as an avatar published with blog postings, commentaries or on social networks.

Innovative methods of marketing - Experiential marketing, Tissue-pack marketing

Experiential marketing — interaction with product – also called Relationship Marketing was first defined as a form of marketing developed from direct response marketing campaigns which emphasizes customer retention and satisfaction, rather than a dominant focus on sales transactions. As a practice, Relationship Marketing differs from other forms of marketing in that it recognizes the long term value of customer relationships and extends communication beyond intrusive advertising and sales promotional messages. With the growth of the internet and mobile platforms, Relationship Marketing has continued to evolve and move forward as technology opens more collaborative and social communication channels. This includes tools for managing relationships with customers that goes beyond simple demographic and customer service data. Relationship Marketing extends to include Inbound Marketing efforts, (a combination of search optimization and Strategic Content), PR, Social Media and Application Development. Brands are now also being driven by the customer themselves, through experiential elements like Converse's co-creation marketing or Nike's iD system, design your own shoes. Nike came up with an innovative idea to gauge customers by giving them an experience of being themselves. Customers can design their shoes according to their likes and dislikes, material, colour, shape etc… which was definitely creating an identity for themselves. In India many companies have tried out the experiential marketing successfully. One Indian company tried out a concept called Create your Own paint. Many paint buyers find it very difficult to decide on the shades provided by the company. To give the customers more choice the company designed paint mixers. In these specially designed shops the customers can decide on a shade or a color by themselves using a computer. Once the shade or color is decided all that the customer has to decide the quantity and the exact shade desired. The paint would be delivered to the customer within a few minutes.

Tissue-pack marketing: Companies use small, portable tissue packages to move advertising copy directly into consumers' hands. About 4 billion of these packages of tissues are distributed on the streets annually in Japan—largely outside of subway stations.

The concept of tissue-pack marketing was first developed in Japan. Its origins date back to the late 1960s when Hiroshi Mori, the founder of a paper-goods manufacturer in Kōchi Prefecture called Meisei Industrial Co., was looking for ways to expand demand for paper products. At the time, the most common marketing freebies in Japan was boxes of matches. These were often given away at banks and then used by women in the kitchen.

Mori figured tissues would have even wider appeal than the matches, and as a result he developed the machinery to fold and package tissues into easy-to-carry, pocket-size packs. The new product was marketed only as a form of advertising and was not sold to consumers.

Innovative methods of marketing - Wild Posting Campaigns, Alternative marketing, Undercover marketing, Astroturfing

Wild Posting Campaigns: Posters are put up at construction site barricades, building facades, in alleyways. In short any place that is available at construction sites. Although cost is relatively low when compared to other out of home advertising forms, wild posting is largely ineffective because the ad size is small and placement is only available on temporary construction site. Sites are not location specific and message is very hard to view unless the consumer is only feet away from poster. 

  

Alternative marketing: The Street Marketing is one of the oldest ways to advertise. Street marketing is handing out flyers when the prospect walking in the street.

It is a always better to be closer of the customer to launch a new product/service. To make it successful, the companies have to choose the best places, and have support material like stickers, free goodies etc. The low price of this type of advertising is an advantage. 

Undercover marketing also called stealth marketing:  An undercover campaign aims to generate buzz, is economical, and once sufficient buzz has been generated, is almost free, as consumers "market" the product to others, through a network of referrals which grows and grows.

An ideal consumer will not only begin using that product themselves, but will also tell their friends about it. Financial risk here is relatively small because such marketing approach requires fewer expenses and is usually more cost-effective as well. Undercover marketing is used when traditional marketing techniques have been exhausted.

It is the consumer's sense that this recommendation was spontaneous and unsolicited, and the resulting feeling that "one good turn deserves another", that drives the buzz. So, the "bought and paid for" aspect of the transaction must remain hidden.

Overall, the person doing the undercover marketing must look and sound like a peer of their target audience without any ulterior motive for endorsing the product—employees of the company cannot do undercover marketing, nor can celebrities (except possibly to other celebrities).

Sony Ericsson used stealth marketing when they hired 60 actors in 10 major cities, and had them walk up to total strangers and ask them: “Would you mind taking my picture?" The actor then handed the stranger a brand new picture cell phone while talking about how cool the new device was.

Astroturfing — disguising company messaging as an authentic grassroots mass movement. Astroturfing is a form of advocacy for a corporate agenda designed to give the appearance of a "grassroots" movement.. The term is a taken from AstroTurf a brand of synthetic carpeting designed to look like natural grass.

Astroturfers attempt to orchestrate the actions of apparently diverse and geographically distributed individuals. Astroturfing may be undertaken by an individual promoting a personal agenda, or highly organized professional groups with money from large corporations, unions, non-profits, or activist organizations.

Innovative methods of marketing - Reverse Graffiti, Presence marketing and Grassroot marketing

 Reverse Graffiti — clean pavement advertisements. Reverse graffiti, also known as clean tagging, dust tagging, grime writing, green graffiti or clean advertising, is a method of creating temporary images on walls or other surfaces by removing dirt from the surface. It is often done by removing dirt or dust with the fingertips from windows or other dirty surfaces, such as writing 'wash me' on a dirty vehicle. 

Reverse Graffiti also explored commercially as an original way of out-of-home advertising to reach consumers in an unconventional new way. Microsoft, the BBC and Smirnoff have advertised their products using reverse Graffiti.  

Presence marketing — marketing to the consumer who is at the point of Purchase (Marketing - for being there). Presence Marketing hinges on two fundamental in-store concepts: Presence Identification identifies a customer upon entry to retail establishment and session Metrics captures the duration of a customer’s shopping visit, departments visited, time spent in the various departments. It provides key insights such as lost sales -- when a shopper spends time in a department/store and does not purchase.

Consider the following example to illustrate the difference between Shopper Marketing and Presence Marketing. If P&G wants to provide a discount on Tide detergent it could use shelf talkers mounted near the shelves which carry the Tide product. The shelf-talker would present a coupon to every shopper who walks past the aisle. It has been reported that 60% of these types of promos actually cannibalize a brands own sales! So someone who was going to buy Tide and was willing to pay full price now gets it at a discount. This is shopper marketing.

In contrast “Presence Marketing” would take into consideration the shopper’s transaction history. So if the customer was buying a different brand’s detergent then a coupon could be sent to the customer’s mobile phone based on Presence Identification.

Grassroots marketing — tapping into the collective efforts of brand enthusiasts. Grass roots marketing is to market the company, organization, products or services on a local and on a personal level. Grass roots marketing is a best way to reach the customers on the basis where they get to know the company and the company gets to know them. Grass root marketing can b tried out using

Direct Phone Calls: This is the method where the company directly calls the potential customer. Better known as telemarketing, it really has garnered a negative stigma to it over the years. However, when direct phone calls are done properly, they are a great way to get to promote the company and its products or service.

Speaking Engagements: This method takes some inner talents to get in front of small and large groups to get the word across about whatever is being marketed. Public speaking may not be possible for everyone but if there is someone in the company that can do it effectively its is better to use that person.

Canvassing: This is the art form of going around in the neighborhood, speaking to people directly, placing flyers on their doors, putting up posters and so on.

There are so many ways more ways the company can implement a grass roots marketing campaign. Whatever the method the company should make sure that is reaching the potential customers on a personal level.

Sharpening the axe

      

       

       Sharpening the axe: If you have 24 hours to cut a tree, spend 23 hours and 30 minutes sharpening the axe. What it means is one needs to practice his trade. A circus performer always practices in the morning before he performs in the evening. For the first mistake that he makes will be his last. Take the example of Sachin Tendulkar.

Sachin Tendulkar once was playing a club level match. Club level matches are played only for fun and the run scored are not taken into consideration for records. Sachin came out in full gear including his helmet that had the Indian flag. There was lot of fooling all around Sachin. His team mates had their wife and children with them. But Sachin was in the zone. He was concentrating hard. He went to bat. He scored a few runs and was adjusted LBW (leg Before Wicket). As he was walking back a cricket reporter happened to see the expression on Sachin’s face. Sachin was extremely upset with himself. This happened in the year 1991. By that time Sachin was already a super star. He has nothing to lose but showed seriousness.

Sachin has a super killer instinct. He is so ultra competitive that he hates to lose in any game. It is said that he does not like to lose in any sport even in table tennis. His wife Anjali told Sachin to lose at least to his son. When asked how many times he lost to his son Arjun, Sachin innocently replied “well I lost may be 3 or 4 times when playing with Arjun. But mind you that was when he was small”

Ramnath Archekar the cricket coach of Sachin and Vinod Kambli believed that Kambli was more talented than Sachin. See where Sachin has ended up and where Vinod Kambli ended up. Vinod Kambli scored the fastest 1000 runs among all Indian cricket players but ended with another 84 runs more only. The total runs scored in Kambli’s entire career are surpassed by Sachin in a single year! Not once but many times over.

It is not enough to be supremely talented. That talent has to be translated into results. Sachin has played test cricket since 1989 that is for a mind boggling 22 years. To break Sachin’s records the next cricket prodigy has to start at the age of 16 and has to continue playing for the next 25 years.

Americans, Britishers and Indians: When a Indian sees another Indian, the first thing that one would ask the other is “what is your salary?” In India the salary drawn is very important and the pecking order in the society is decided by the salary. The higher the salary more is the respect that he receives in the society.

When a Britisher sees another Britisher he would ask “what is your designation?” In aristocratic Britain titles are very important and fancier the title more is the Britisher impressed.

When an American sees another American he would ask “what is that you do in the organization?” Americans are very practical people and get turned on by the type of work that one does in the organization. That is the precise reason why Americans do not find great charm in doing the mundane and iterative jobs that are plentifully available in the IT and the ITES sector.

Worker, Artisan and Artiste

      Three men laying the bricks: In management experts talk about three types of employees. They are workers, artisans and artistes. We will distinguish the three types of employees with the help of an example. 

Three people were laying bricks. One management expert approached the first man and asked him “what are you doing?” The first man snapped and said “can’t you see. You *** ****, I am laying bricks” thus rumbling he continued setting the bricks haphazardly. This man is a worker, one who works with his hands only. These type of people rarely go up in life and always end up cursing their luck. One make his own luck. Only a bad musician blames his tools.  90% of all employees are workers.

When asked the same question the second man scratched his head and said “well I am part of a team that is building a straight wall” Thus dismissing off the management expert he continued in his pursuit of a building a straight. This type of employee is a Artisan, one who works with his hands and head. These types of employees are smart but limit their gamut operations to immediate work. Artisans like potters, carpenters, masons learn the trade over generations and become experts in narrow areas of expertise. 9% of the employees are artisans.

The third man wiped the sweat from his brow and his face broke into a huge grin “I am part of the team that is building a great university. Bright students from all over the country will come to this university. The university will impart quality education and turn these bright young people into entrepreneurs. These entrepreneurs will set up industries and drive this country down the path of progress”. While this man was speaking there was pride in his voice and a quiet confidence. He was convinced that he is a part of the bigger scheme of things. This type of employee is an artiste, one works with his hand, head and heart. Only 1% of the employees are artistes.

      25 x 4: way of learning. There is saying in Sanskrit which goes like this. 25% of the knowledge will come from the teacher. 25% of the knowledge comes from library work.  Another 25% of knowledge comes from group work that is discussing with classmates and friends. The last 25% of the knowledge come from the mother of learning which is the real time practical knowledge that comes from working in the field.

Generally the teacher teaches only 25% of what is supposed to be taught. That is 6.25% of the knowledge. The students rarely do little or no library work, they do not have any work experience or do any group work. Effectively 75% of the knowledge is lost. Out of the 6.25% that is imparted by the teacher only 25% is remembered that is 1.56%. Out of this 1.56% is remembered only 25% of it will be remembered by the time the student comes out of the examination hall which is 0.39% of all the knowledge that can be acquired.

“Education is what you remember about a subject after you have forgotten what has been taught in the classroom”