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Sep, 16 2010

Marketing matters

The importance of marketing in the modern business scenario is the same as it was many years back. What has changed is its scope and horizon. Traditionally, retail marketing was found in stores, newspapers, magazines and on television commercials. Now, it

Twenty one countries, 16 languages, 1,500 advertisements and 250 publications worldwide. No, its not a statistics count of any marketing manual, but an advertising campaign that will be launched by DHL, a leading logistics company. The global campaign is designed to address, first and foremost, the decision-makers in today’s business world. The multi-tiered, multi-channel concept includes TV ads for international broadcast, advertisements in leading media in both Germany and around the world, as well as product campaigns in both print and digital format. Flyers, mailshots, banners and tactical local advertising will also supplement the campaign.

This is the extended horizon of modern marketing in the business services sector. To kick-start with new marketing plans, targeting audience in a unique way and to add spice to dormant campaigns, the franchisors, in collaboration with franchisees, are picking up new and cost-effective strategies to market their business in every corner of the county. While making a marketing plan for a business service concept, one must fix his mind on identifying the industry weaknesses and see how much he/she can put in to offer quality services to the consumers and corporate clients. In the services sector, hiring qualified and trained manpower for delivering services to the clients in an efficient way is also a key differentiator in popularising the brand’s reach.

As serviced businesses are more relationship-oriented, it is imperative for the franchisor and franchisees to offer high level of customer satisfaction to the corporate clients and individuals to win their trust. Ample research is required in terms of population density, consumer preferences, competitors in the vicinity and their business proposition to develop a solid marketing plan.

Successful marketing has become indispensable, as outsourcing is fast gaining ground in niche segments like cleaning, cartridge refilling, staffing solutions, technology and website development. The market is becoming aggressive due to direct competition from unorganised players, who serves by delivering poor quality services at low prices.

Let’s look at what companies are doing to stay ahead in the competition. Re-feel, , a retail printer cartridge refilling and recycling chain, has included s PR, advertisements and internet marketing in its national-level branding exercise. Their franchisees are supposed to take care of the local marketing activities. Samit Lakhotia, Co-Founder and Director, Strategy and Business Development, informs, “As most of the laptop users are hooked on to the internet, we have a very strong presence on web through Search Engine Optimisation (SEO), Social Media Optimisation (SMO) and other marketing methods. We also do print media advertising and support it with BTL activities, done by the franchisees at the local level.”

Deepanshu Khurana, Chief Executive Officer, i360 Staffing & Training Solutions, maintains, “We do not believe in conventional advertising mechanism. Hence, our marketing plans are created on similar lines. At present, we are very aggressive on online media and looking for right associations to help us create relevant visibility. An organisation needs to be very clear on the vision, budgets, business model and expectations before it freezes on the marketing plan.”

Allocating budget

There are various ways in which companies can allocate marketing budget funds, depending on the type of business, the size the stage (start-up or growth phase) and the resources available. There are generally four main methods of allocating funds within the marketing budget such as fixed amount, spending according to objectives, percentage of sales and identical to that of competitors.As per the total budget, one needs to decide on how much is to be spent on the media (i.e. print, radio, television, direct mails) and how much on promotion (special events or campaigns). This will chiefly depend on the particular business one is handling. The key initiative is to build up a mix that allows one to allocate resources for the activities useful in maximising sales. Talking about the money they spend on marketing activities, Lakhotia says, “We spent over Rs 3 crore on marketing-related activities in the last two years and are planning to spend around Rs 6 crore in the next two years. Our budget is distributed well within exhibitions, PR activity, BTL activity, advertisements in newspapers, magazines, etc.”

Manoj K. Agarwal, CEO and Founder, Fastclean, clarifies, “We rely a lot on professionally managed advertising and brand promotion and wish to spend 10 per cent of the annual turnover on it. To us, advertisement is not a one-time business activity but needs to be done at regular intervals for brand recall and visibility. We keep on evaluating various marketing schemes, depending on the changing market needs and try to allocate our funds accordingly.”

Many companies also decide their marketing budget, depending on the percentage of sales achieved by them in the previous year or quarter, as percentage of sales is easily calculated. . Generally, stable companies employ this process as they are able to foretell with accuracy what their cash flows will be. Certainly, right percentage of sales also varies, depending on the type of business sector the company is into. As per Vishal Gulati, Chief Executing Officer, Laksh Staffing Solutions Pvt Ltd, “Budget is generally  10 per cent of the last year’s turnover. Allocating the budget is tricky, it depends on the need of the hour but major part of it goes into internet marketing.”

The last procedure that helps to determine the marketing budget is to spend the same as your competitors. Although you will probably never know an exact amount, you can make a rough estimate by keeping a close eye on all the advertising campaigns that is being done by the competitors. By advertising in newspapers, magazines or getting aired on radio/television or by social networking websites, one can ensure that their brand is equally accessible to the clients. On this, Sukanta Pal, Marketing Head,Consumer Business, Sify Corp, says, “We have annual allocation of budget for marketing activities, which are split into brand and revenue generation. As both are inter-related, we do not follow any tight compartments but at the same time, make sure marketing team drives revenue, unique users and brand TOMA. We undertake various tactical marketing activities to manage revenue of different product portfolio.” In case of Reasoning Global e-applications, the budget planning varies from quarter to quarter but it is spread across direct marketing, internet marketing, special events and PR activities.

Determining the spending capacity on marketing promotions, the companies allocate budget for marketing purposes, keeping in view the size of their organisation and revenue achieved during the last year. Khurana says, “This financial year, we intend to spend around 30 per cent of our top-line in media. We conduct detailed budgeting and marketing discussions and have already formalised the entire marketing plan. The same becomes as the base for guiding us on revenue as well as spend.”

Role of marketing

Marketing plays a significant role in popularising and generating revenues for any business concept. Getting quick success in the business services sector is always measured to be a daunting task for franchisees. In order to give tough competition to organised players in this sector, the companies focus on mix of promotional strategies. Says Khurana, “It is important for any organisation to be conscious of the Strengths, Weaknesses, Opportunities and Threats (SWOT) to itself and the industry. Fortunately, we have drafted strategies and are satisfied with their outcome. Since inception, we have grown on quarter to quarter business in both top-line and bottom-line. We are determined to continue the same momentum in future as well.”

Marketing support to franchisees

Every franchisor provides timely support to prospective franchisee in terms of marketing initiatives, both locally and nationally. Depending on the business type, both the franchisor and the franchisee spend on marketing initiatives from time to time to pull in customers. Dashradh Ram Nutakki, Vice-President, Channel Development, Reasoning Global e-applications, says, “We extend 100 per cent sales and marketing support during the tenure of the contract and do not charge any fee except the revenue share as per the franchise agreement.”

FastClean’s Agarwal updates, “For metros, we collect Rs 1.5 lakh per area and for tier II and III cities, Rs 1lakh per area, which is one-time and non-refundable.”

Strategy and Business Development’s franchisees have to pay 3 per cent contribution on cartridge refilling bills every month. It goes towards national advertisement funds that are spent for national brand building purposes, says Lakhotia.

i360 Staffing & training solutions have a blended model, wherein the company contributes to local-level marketing to a certain extent, beyond which it is the local partner who has to sustain the spend. Khurana states, “The same is totally city-specific. We definitely do corporate branding and till now, have not charged any partner for the same.”

In terms of market spend, Agarwal says, “All local marketing and branding expenses are borne by the franchisees and we take care of the brand’s national promotion.”

Last, but most important aspect is customer relations in day-to-day marketing strategy. A customer has to be very happy with a business to refer their friends and associates to shop there. Make sure you have a well thought out customer relations chapter in your training manual.


Types of marketing techniques

Social networking: Franchisors are blogging their way to customers’ minds and hearts. Besides, there are sites like Twitter, LinkedIn, Facebook, Peer Power and YouTube to ensure online presence. Search Engine Optimisation (SEO) is being used efficiently.

Word-of-mouth publicity: Promotes business through one’s reference about a specific company, its products and services.

Email and SMS marketing: It promotes products and services by sending mails or smses to a group of contacts.

Exhibitions, trade shows: By organising or participating in such shows, companies can reach out to large number of potential customers and clients.

Advertising in print (newspapers, magazines, brochures, pamphlets) and electronic media (radio, television).

Must-do for franchisors

  • Survey market potential
  • Know your target customers, competitors & consumer expectations
  • Render quality services at reasonable price
  • Conduct SWOT analysis on company
  • Pick newest modes of marketing
  • Allocate budget for marketing
  • Decide on marketing fee, selling proposition
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