faculty speak

Myth 2 : Marketing isn’t required if you sell whatever you produce

 “Success isn’t permanent,
and failure isn’t fatal.”
– Mike Ditka   

In the ’70s and ’80s, if you wanted to own a Bajaj scooter, you had to be lucky that your father booked it some 4-5 years ago or you had to find someone who was willing to sell his ‘allotment letter’ at a premium. Imagine a company selling its products to consumers who were willing to wait for them for around 4-5 years. And mind you, it wasn’t a specialized product or something like that. Even a second-hand (these days they call them pre-owned – which is much more dignified) scooter could cost you almost as much as the new one. Why should such a company waste its time, resources and money on marketing?

Bajaj was in a situation where demand for its products was much more than the supply. All through the ’70s Bajaj did not even advertise, except on the occasions when it wanted to open ‘bookings’ for its scooters. During the ’80s also, Bajaj’s ads represented their arrogance about being ahead of the pack. They used to say, “You just can’t beat a Bajaj.” Throughout these years, the company didn’t even make a single change in its product. In fact, when the Supreme Court made the indicator lamps compulsory for all types of vehicles in the late ’80s, Bajaj simply retrofitted a plastic panel each on the front and rear of the scooter, which made it look rather ugly.

However, from the early-nineties, all this started changing. First, LML entered into the market followed by Kinetic in collaboration with Honda. This was the first time when Bajaj felt the real heat from its competitors. In the subsequent years, the whole industry (two-wheeler) changed rapidly. It transformed from being a scooter dominated to motor-cycle dominated and so on so forth. The industry also grew very rapidly since the early ’90s. And Bajaj found itself at a disadvantage in not only encashing the new opportunities but also to safeguard itself. Fortunately for it, the Pulsar happened and it was saved. However, its original product line (scooters) is no more in its stable.

The point to be noted from Bajaj’s experience is: it became comfortable from the fact that its products were selling without much of efforts, which later turned into over-confidence and then complacency. This nearly killed them!

Bajaj is not ‘one-of-a-kind’ of a case. If you take a quick tour of the industrial area in any town of the country, you will notice more sick units than the functioning ones. This is because, when the going was good for them they became so much complacent that when things started changing around them, they couldn’t effectively react to the change.

For any entrepreneur, it is very heartening to know that whatever he is producing is getting sold. After all the sales will ensure that you are not stuck with finished goods inventory and hence short of working capital. However, this phenomenon should never be seen as an ever-lasting phenomenon. (In case of Bajaj also it worked for some 20 years because Indian economy itself was ‘license oriented’ during that period). For the simple reason that if some industry (or product line) is doing well, some more manufacturers are bound to join the race sooner or later and then you will face a situation where supply will match or even outwit the demand. That is when the issue of survival crops up.

It is important that for a business to be successful and profitable in the long run, it must have a good pipeline not only of orders (or potential orders) for its current product line but it also must have a good pipeline of products itself. And this can be done effectively only through ace marketing practices.

Another important way to look at this is when you leave your product to the mercy of consumers – that is if they like it they will queue up for it, what you end up doing is, you do not explore the real potential of your product in terms of its value. Hence, when the scenario gets competitive, you are forced to ‘sell’ your product at a (low) price.

The companies which emphasize on marketing even when the going is smooth, remain ahead of their competitors even during the turbulent times.

There are innumerable companies in SME sector which depend on only one or two customers to sell their entire production. It may be seen as a very comfortable business proposition. However, there are potential dangers in such a scenario – one, your survival will directly depend upon the survival of your customers; two, knowing well that you fully depend upon them for your survival, your customer may exploit you and; three, the worst danger is if your customer’s technology becomes obsolete and they go out of business, you also face the unpleasant situation of going out of business.

Hence to avoid such pitfalls, as a smart entrepreneur, you should adopt ace marketing practices when the going is smooth. These practices will help you in more ways than one – build up on pricing of your product; create a pipeline of orders thereby reducing your dependence on a handful customers; and evolution of your own product line because new customer may demand and facilitate a better product.

The biggest advantage of adopting ace marketing practices is you consciously work towards creating value for your customer and end up creating value for yourself in the process.

And all this is best done during the smooth phase. During this phase, while serving your existing customers, use ace marketing practices to target your product to a new segment which may value it more than other segments. Also use these practices to claim a better price from your existing customers by creating better value for them.

When you are able to sell your product comfortably and earn well, you are in a much better position to invest in product development or other improvements with regard to your business processes which keep you in good stead during the changing and difficult times.

rajeev-kamble
Prof Rajeev Kamble
Associate Professor
Marketing