Cummins Vis-a-Vis P&G

Had a great time teaching PGDM marketing students today -  how marketing practice of a B2B company like Cummins defers from an FMCG company like P&G. The STP or Marketing Mix concepts are not of much use here. What is useful is to use the 5 fundamental marketing processes - and it immediately becomes clear what the differences are because each company runs its processes very differently:

1. MARKET INTELLIGENCE PROCESS : Cummins has few customers and they do not really need a separate market research function to get to know what the customer wants : its customers are quite vocal and upfront about their needs. Many people from Cummins are in touch with their customers every day. On the other hand, almost everybody in P&G is far removed from the actual customers and they need a significant market research function to bring "Customer Voice" inside the organization and also to seek feedback from their customers on their various plans.
   
2. STRATEGY FORMULATION PROCESS : This process consists of using the market intelligence to decide whom to serve, with what, and how to do it sustainably. This process for Cummins is relatively straightforward because its customers will convey and commit - what they want and how they want it - in an unambiguous and clear manner. For P&G it is much more tricky - its millions of customers will neither be forthright about the specifications of what they want (lay customers cannot write out specifications) nor will they commit to buying anything.
   
3. CUSTOMER FULFILLMENT PROCESS : In P&G this is an expensive process consisting of developing the products, manufacturing the stock, distributing it to various towns and advertising to create an awareness. And after all this, it may be entirely possible that the products turns out to be wrong, inventory requirement forecasts may be wrong, the stock may be extra in some towns and short in some other towns. This is unlikely in Cummins since the customer gives in writing what products he wants, in what quantities and when.
   
4. GO TO MARKET PROCESS : This consists of  REACHING (locating, prospecting, accessing and  contacting the potential customers), COMMUNICATING (presenting, objection handling), SELLING (Negotiating, Closing, Transacting, collecting), SERVICING ( installing, training and handholding)  and  AFTERMARKET ( preventive and breakdown maintenance, reconditioning, up-gradation, disposal). Since P&G has millions of customers, they are forced to standardize the products and aim for mass market and hence price their products low. Cummins has only a few customers and hence they can even explain and sell complex products.
   
5. CUSTOMER SATISFACTION PROCESS : Under this comes the process of  handling complaints and the process of regular monitoring. In P&G this is handled by the market research department but for Cummins this is handled by the sales and service function.

Commodities exist only in the marketer's minds.

Why do students who are otherwise intelligent get caught up in tools and lose sight of purpose? They go to the stationery shop filled with different types of ball pens and think that they are in a "competitive market" and that the "ball pens are now a commodity".  To become a great marketer they should not look at the products (industry) but look at the customers (market). Once they do that, there will be a sea change. They will see many opportunities for usage of ball pens where they are not used. They will see many people still not using ball pens at all. Then they will get out of the commodity mind set.

One girl asked me are safety pins not a commodity. I asked her to put 50 pins side by side on a table and then conceive, for each pin, a different customer and a different application. I told her by the time she comes to the 20th safety pin in front of her, she will have at least one good idea how to break out of the commodity mindset.

That's the difference between engineers and marketers. Engineers consider the ball pen as a product and looks at finding a customer for the product. A marketer considers "giving gift" as an occasion which creates a market and ball pen as just one of the things that a customer can buy to fulfill that market role. 

 

Height of Jargon ( Dont do this !)

I downloaded this piece recently from a management article - can you make anything of it ? I cannot !

“As we initiate push-back on the paradigm shift and gain traction – you know, actionable leverage — by examining gap analysis data on the more seamless core competencies at our centers of excellence, it’s possible to go to the next level without having to circle back on predictable low-hanging fruit. In other words, we can bring value-add to the table, and capture a win-win solution, so long as we stay on the same page and keep everyone in the loop regarding deliverables. That’s our takeaway, net-net.”

My only advice to students is not to do this. 

Smartphones - bane or a boon of education ?

We all have read the writing on the wall. The mobiles are changing the way people live. Already everyone has a cell phone - family, friends, students - and even maids, drivers, plumbers.  But there is another writing on the wall. Most mobiles will be "smartphones" - I guess already 50% of the beings on the campus are carrying a smartphone. I define a smartphone as one which can connect and browse the net. These days every phone costing more than r Rs 10000 has an internet connectivity. What are the consequences of this?

A survey of 1500 smart phone users shows that people with smartphones have twice the propensity of ordinary cell users to connect to the net ! Among smartphone users, 45% check email constantly during the day via multiple devices ( phone, PC)  and 28% check Facebook with the same frequency, The same figures for non-smartphone users were 28% and 12% respectively.

I am already beginning to see this in our classrooms. The students don't need a laptop anymore to be on the net - they can now do it by merely looking down under the table and reading off their smartphones. Even the mentors in a major company mentioned recently that attention spans are coming down and it is difficult to make people sit in one place and concentrate for a given time - to complete an assignment or an essay or something which requires reflection and creativity. What do you think?

Red Book Day

Red book is a compendium of articles. Each student group 'teaches" the class the essence of the article assigned to them. The students were expectedly articulate. But they put too much material on each slide. I was confused whether to read the slide or listen to the presenter. Don't they know that the slide is an "aid" but the presenter is the student herself. They also did not realize that less is more. The less you speak, and more slowly you speak, the better the impression.

The students did not seem to notice a very fundamental contradiction. They were not even aware they were "parroting" from the article without giving their own opinion - in life you cannot operate without a mind of your own.  Some students argued for "customer focus" (wear customer goggles, do not think of products but only of customer needs and behaviors etc) whereas others showed tools which were "product" based ( like BCG matrix ). Dont they realize there was a contradiction? Marketing should actually be a bridge between what the customer needs and what the company wants to do.