The Marketing Funnel at Baapu Market Jaipur

On a recent roadtrip, we went shopping at the famous Baapu Market in Jaipur. Its a bazaar with lots of small shops selling similar stuff mostly fabric, bangles, jewellery and the likes. One is also told to bargain hard when shopping here.

While my wife was excited about the amazing collection of fabric, jewellery etc , I was intrigued by the interesting model that these shopkeepers had adopted.

Baapu Bazaar Jaipur
Baapu Bazaar Jaipur – photo credit Eric Parker/Flickr/MakemyTrip.com

In most shops there were three different types of roles that the owner and staff were playing:

  • The Marketers – One or two people who were stationed outside the shop, about 15-20 steps away. They would shout out loudly about their speciality bangles or suit-pieces or sarees. I felt the idea was to get the attention of the people who were walking around to move towards their shop(s). They essentially brought more attention/traffic to the specific shop. Like many marketing campaigns, there focus was on increasing reach, hence they would spread in a wider catchment area.
  • The Call-to-Action – Then there was this one guy who was right at the entrance of the shop. Now, most shops here have some of their wares displayed right on the footpath. This guy would observe what me or wife were showing interest in, and would try to nudge us in saying there’s an amazing collection inside that we should check out. This is a critical step in their sales cycle. My assumption is that they have figured out that if you step inside the shop once, chances of your buying something increase multifold.
  • The Convertors – Now comes the most interesting part. In most shops (especially those dealing in fabric) one would be expected to remove shoes and sit down for the guy inside the shop to show the collection. I feel that the removing of the shoes and sitting down is like crossing a certain conversion hurdle. The prospect is now almost committed. This person(inside the shop) would be a very calm and relaxed one, who would have the utmost patience of showing us all that we asked. Its easy for one to feel bad for not buying from him since he had spent so much of his time on us. But the fact is, that its we who invest our time and end up feeling its better to buy from here, given that we have spent so much time checking out so many options. Interestingly, these guys came across as very easy to trust and in the absence of brands, its their personality and conduct that drives that trust.

Maybe I was seeing patterns where none exist.

Let me know if you visit this market and see (or fail to see) what I have just described. Will be interesting to hear from you.

Impact of un-utilized assets : A Mathematical Model

A few weeks back I was wondering what happens when we buy a car but don’t drive it. While the automobile industry witnesses a growth but is it something that increases the drag on the economy.

I spent a few hours to work on a very simple model to find what happens in various consumption scenarios.

Approach:

I had to create a simple-one -product economy. Hence  I assumed that

  • Our economy produces cars each worth Rs 12 lakhs.
  • Average utility lifetime of the car as 1lakh miles
  • Additional spends required based on consumption as 5 Rs per mile

I also simulated 6 different scenarios from a household’s perspective. namely:

  • Scenario 1: Normal usage. Uses for full life of the product
  • Scenario 2: Stops using after a time. Does not sell it or buy another
  • Scenario 3: Stops using and sells it off but doesn’t buy another
  • Scenario 4: Stops using, doesn’t sell and buys another which is used
  • Scenario 5: Sells this and buys another which is used
  • Scenario 6: Doesn’t sell, buys another, stops using that also and buys a 3rd

Once these assumptions were plugged in, I calculated a few ratios and interesting things emerged.

 Unutilized Assets

  1. The value derived from each product drastically changes between two similar scenarios where the old stuff is traded vs where it is not sold. Does this mean that in a resource constrained economy, a market place optimizes the return of invested resources through higher utilization?
  2. In the scenario 6, income generation is highest for every 1 Re spent by the households. So maybe hoarding is a good strategy when domestic income generation is important. On the contrary imagine if we do this in categories where we import the products – we might be supporting Chinese economy more than we ever wanted to.

Not knowing fully well what these ratios meant, I spoke to my Professor friend Dr Dash who gave some very interesting path of analysis. Essentially what he mentioned was that I should look at this top down rather than at a micro level. He also mentioned about ICOR – Incremental Capital Output Ratio – how much additional capital do we require for each unit of GDP increase. E.g. an ICOR of 3 means we need 3 Rs for every 1 Re contribution in GDP.

  • Assume a market size of 75 Bn USD and lets say one third of this is from private cars. Hence a market of 25 Bn USD
  • Now assume that 5% of all cars produced in a year lie idle, which means about 1.25 Bn USD worth of cars remain idle. (and this is incremental value of locked capital every year)
  • So with an ICOR of 5 , these un-utilized cars translate into 6.25 Bn USD worth of capital that is “wasted” every year.
  • But where it became tricky for me was that whether the asset is utilized or not, the GDP is impacted depending on ICOR. So is this a case of smarter capital allocation? Would this “wasted capital” helped us in producing some other more needed product or service?
  • A very interesting and probably extreme case of this top-down analysis would be the scenario where the asset is imported. In such a case, a reduction in “wasted capital” would result in better trade-balance
  • With a marketplace, if 40% of these cars are sold in the second-hand market, then we free up that much capital.
  • Moreover with cars available at a lower price, many category shifts might happen. E.g. say a Maruti Alto being sold in the second hand market might attract a person who was in the market for a 2 wheeler earlier.

Recommended feature for Google Maps Application

Gratitude First – I am really thankful for Google for the traffic layer on its Maps application. Like most others in Delhi, I have become a regular Google Maps user now, checking the traffic updates and choosing the route that I should take to reach my destination. So much so, that my driver also insists on it.

I started tracking my typical usage behavior and interesting things surfaced. I would open the application if:

  • I am going to a new/unusual place or
  • To the usual place at a not-the-usual time,
  • I don’t know the route or the traffic conditions or both
  • Faced with a traffic build-up on my usual route to work(or back) to see how long the jam was and what was the situation on alternate routes

And amongst the situations listed above, almost 90% of my usage was due to the last one – traffic buildup ahead of me on my usual route to work or back home.

Also, since my daily commute is almost 40kms one side, many a times there are multiple congestion points that I encounter. And some of those develop while I am on my way. Hence even if I check the traffic at point A and see that everything is clear downstream, chances are that the situation would change when I reach the downstream point B.It can be very frustrating, trust me.

There’s another scenario that kicks in – given the resolution at which maps open up basis my current location, I need to scroll a lot to check out the whole path. Many a times I miss out checking the traffic congestion at far-off points.

google-maps-traffic-layerAnd this set me thinking – wouldn’t it be a great feature for Google maps to

    • allow me to set my usual route for work/home
    • jump directly to my route showing the areas with traffic build-up or

better still, alert me even without my opening the Google Maps app that there are places where there is slow traffic. This would have been true delight.If this is possible, can we build a web-app to send traffic updates to people who do not have a smartphone. Can such users register their routes and get SMS updates? Why not?

As I toyed with the idea, I started wondering, why hasn’t Google done it already.

This is a very simple and intuitive need, surely someone at Google would have articulated such a need long time back.

So I started understanding how Google Maps work and what I discovered in a quick 2-3 hours of research was the following:

  • Google has a similar feature (time to destination – work or home) in its Google Now set of widgets. But its not really the kind of delight that I was referring to.
  • Google might not want to do it – Google collects and calculates traffic data from users who are using Google Maps and sending their locations to the Google servers. This means, Google would always need higher number of users to stay-on with their Maps/location services for them to get more data-points to have a better traffic estimate.
  • And maybe independent developers also cannot do it – The Traffic heat-maps are a “layer” on the Google maps and they are provided in a similar way in the API – a visual layer that sits on top of the geographical UI. This means that any developer would not get a feed of locations/latlons along with the traffic feed. To develop the kind of app/feature I referred above, the Google traffic API would not be helpful.

 Update:

With today’s experience I think Google should still go ahead and build this feature. I now feel that this feature would kick-in more signins into Google Maps. Why?

If I get an alert that there is traffic in my usual path and the alert doesnt mention the specific points, I would be tempted to login into Maps and see where the blockage is. What are the alternate routes and what is the situation there.

One challenge here is that not every one might have their GPS on and it might be tough for Google to know if the person is already on the move or not. It could choose to send these alerts only to those with GPS on. This would serve two purposes – more people would keep GPS always on, hence provide the feed to Google’s server to better calculate traffic pattern. Also with the GPS on, Google would know when the user is on the move on the pre-defined specific route.

The car you bought but don’t drive, hurts the economy

While on my evening walk I recently noticed an old Mercedes gathering dust in the neighborhood – the car hasn’t moved in the last 10 years. Or maybe more.

While this rude treatment meted out to the Merc pained me,  I noticed that there were many other cars which had rusted completely just being parked out in the open.

So I asked my economist wife – what is the impact of such reduced life cycle of an asset on the overall economy.

Unused Cars

What I was thinking was this:

  • At an individual household level, this was clearly capital being blocked or even wasted. As the same could have been re-utilized in buying another asset or investing elsewhere.
  • At a more macro level, the automobile industry was not really a loser. They might end up selling more cars if many individual households just buy cars and don’t use them. So where in our country’s GDP calculations would this waste be accounted for.
  • A car that is used regularly results in more spends – on fuel, maintenance, tires etc. All of which stimulates the down-stream industries and hence positively impacts the economy.  Discounting the fuel-price etc. So does it mean that if a society in general fails to extract the true value from its assets,it fails to stimulate the ancillary industries sufficiently? If so, would this apply to apparels and other items we usually stock?
  • The fact that the car was not sold-off meant that the supply was reduced in the 2nd hand car sales market. Does such a trend result in higher prices in the used-cars market? Would selling off an un-used asset lead to higher supply and hence a more vibrant used-assets market? if yes, then maybe a Quickr or OLX should pitch to the finance ministry and get some more funding.

Too many questions and the wifey says that its way too complicated for me to comprehend. So while I work on a mathematical-excel model to quantify this, do share your point of view.

Would our economy have a positive impact if we would learn to extract more value from each of our purchases.

The curious case of single order and multiple delivery consignments @ Flipkart

This just happened to me again in a short span of time. I ordered 4/5 books from Flipkart and the ordered was split into multiple consignments and the two consignments were delivered within one day of each other.

Initially I thought this was because the books might have been shipped from different warehouses or even merchant-locations. And maybe the second consignment’s availability and delivery- date wasn’t estimated before the first gets shipped out. But then again, both were delivered within 24 hrs of each other.

Flipkart Deliveries

Interestingly, since Flipkart does its own delivery, the same guy comes to deliver all Flikpart stuff at my place. He knows me pretty well by now and I asked him if why the same order was being split into multiple consignments. Even he was finding it funny that he delivers two days in a row to my house. He only knew that he has a certain area allocated to him and all his delivery packets come from one holding warehouse in NCR.

Maybe thats where this is coming from. That Flipkart has a beat allocated to each guy, and the delivery guy has to work that beat each day. Hence it doesnt make much of a difference in splitting the delivery into two parts – he would be around in the neighborhood anyways.

Also, I figured out that many of these deliveries were COD and maybe this was a way to put a cap on how much cash the delivery guy handles. Or maybe the risk of not shipping a big consignment to someone who turns it away or acts funny.

But I still feel, they might find an opporutnity to further trim down their logistics cost and maybe even enhance the customer experience if they could find a way to re-aggregate consignments at the last-mile. Or will that put pressure on the mini-warehouse ? What do you think?

Customer Complaints and Social Media

Facebook, Twitter, LinkedIn and other social platforms have provided an immense tool in the hands of the consumers. Suddenly the lone voice of the consumer, can get magnified if it resonates with a significant number of people – some from her own network, some who discover her woes and views through the sheer virality of the platform or the content.

While many brands have seen a lot of success with Facebook fan registrations, and started using it as a smart way to advertise. Many others have had a mixed response so far.

But for most brands, their biggest fear with social media, is the reputation loss due to consumer complaints. A research by A.T. Kearney’s on social media found that between 5% and 20% of all complaints to many organisations are made through social media. Not a channel to be ignored, if you want to keep your customers happy.

And its interesting how they have chosen to address this risksocialmedia-customer-service

They Just Ignore or Deny it

It has been documented through multiple surveys that more than 70% of consumer complaints on Facebook pages of brands are ignored. Add to this many more who just delete the customer queries or complaints. (7 out of 20 retailers did this in the Stella service sponsored exercise).

They respond one-on-one to the customer

Many companies and their customer-care teams, believe that the complaint related discussion and the resolution should be one-on-one either on phone or email. This allows the service team, sufficient elbow room to understand the issue, without getting distracted with the background noise, which may or may not be related to the specific query. Sound logic there.

But don’t forget to showcase the final resolution on the same platform. Why? because according to an American Express study , companies that resolve customer complaints via social media platforms like Twitter and Facebook see 21% more sales than companies that handle complaints on the telephone or in written form. Do see the attached infographic for more details.

They resolve it on the Platform itself

Many a brands have embraced Facebook/Twitter boldly and have started responding to customer queries directly on the platform. It is obvious, that this requires higher levels of empowerment for the individual staff members, a robust training on what messages to use (canned or otherwise) and access to customer/prospect data to swiftly resolve the query.

The successful ones have tried to follow these 3 simple rules:

  1. Don’t waste time in responding (less likely that the issue would snowball)
  2. Don’t shift blames (customers are mostly seeking a resolution and see all teams as the same brand)
  3. Don’t be defensive
Some leave it for the specialists

There are a few rapidly growing firms and agencies who have added social-media-customer-complaints-resolution as a key offering in their portfolio.

 

How much should we pay

Amazing little discussion today, which brought forth the consumer perception about pricing.

A guy walks upto the apartment across the road & offers to remove the bee-nest. He gets the job for a small sum of money (not sure how much) and the deal says, he will get to keep the honey also. He comes over to our place to ask for a bucket (to collect the honey).

Beehive HoneyDad gives him the bucket- he is back in 15 minutes with almost 20 litres of fresh pure honey. Wants to sell it to us & the neighbors & call it a day.

Bargaining starts & I watch as his would-be-customers negotiate for the right price. They want a steep discount coz they know he has already made a neat sum by removing the bee-nest . The market rate is Rs 200/- per litre & they are not willing to pay more than Rs 80/- (more than 50% discount) !

Once the deal is closed, I try to understand their logic of asking for such a steep discount. I thought its the fact that this guy is not really in a market with too many customers, so given his limited options he can best sell to those who know the honey is fresh etc. But they stick to their logic, that since the man made some money (mind you- none of them know how much he made. That is if he made any money at all) by removing the nest, he has not invested time & energy in rearing those bees.

How do they know that when they pay Rs 200/- in the market, the guy selling it has actually worked harder than this chap. Do they want to reward labor or pay the price thats right for fresh honey? It seems as consumers our satisfaction levels are dependent on the margins our suppliers have . Is this why we have advertisements & neat packaging options- so that our mind can somehow stop doing the margin calculations & be happy with the purchase.

Funny how the human mind behaves.

Rural telecom users price insensitive?

Read an interesting report in the ET today, based on some survey conducted by Credit Suisse. They survey found that the rural consumers are more quality consicous and less price sensitive. Hardly any of the polled users had switched operators basis call-rates.

Mobile operatorsThis is very interesting coz most of us (self included) had believed that this is a market where ARPUs would be low and constant reacquiring would mean that the telco’s hardly make any money.

Also the report says that the rural consumers would constitute almost 40% of the total users by 2012.These two findings have some serious ramifications:

– Infrastructure needs to be first priority when moving into a new market. Typically we had seen that most telco’s went to these markets with a promise of “cheaper” service

– The first mover will have advantage over others, everything else being same. This is evident from the lower switch rate seen in rural consumers.

– The marketing spends promos highlighting reduced rates etc will now have to be substituted with better distribution/session-experience.

But the most interesting this is that the rural consumers remain price sensitive inspite of having a clear priority for better service. This would make them a tough market for telco’s- providing high quality services at competitive price where ARPUs are anyways lower 🙂

Economies around pilgrimage spots

I remember reading this short note about how Shirdi- the pilgrim destination for Sai Baba devotess- quickly evolved from a small-hamlet-nowhere-in-the-map to a prominent-travel-destination-within-Maharastra…. all within the author’s lifespan.

The thought was re-inforced by a friend who visited Shirdi and got into a conversation with a cabbie there. The cabbie believed that this family was saved from abject poverty by Baba’s grace- he had decided to come back to Shirdi when nothing else was working and leave everything in Baba’s hands. He bought land there and within 8-10 months its price was up some 5-6 times- he sold a bit of that and bought himself a cab- and you can well predict the rest.

I was watching Evan Almighty yday -guess a sequel to Bruce Almighty- and one dialogue stayed with me. The “GOD” says- when you pray to be brave, god doesn’t make you brave- he just gives you an opportunity to be brave !If we juxtapose the above with the cabbie’s experience, I guess we will start seeing things in a clearer light. Pilgrim destinations not only generate a lot of positive energy, they create a lot of opportunities for people- complete economies start evolving around them.

India is home to many places that rank high on spiritual index. Over time, most of these places start having

– better connectivity (buses, roads, private carriers)

– more places to eat

– places to stay and rest

– Charitable trust/society- that might in due course invest in schools/colleges/hospitals etc

It thus not only creates a lot of employment, but re-inforces the circle of belief- so many people get so many opportunities ….

Washing his way to moolah !

This is the first in my series of odes to the spirit of entrepreneurship at the grass root level…

At my place we had a “dhobi (washerman)” who would come over to our place everyday and wash the clothes….Since he had small operations and lived in a hut closeby- he washed the clothes of the 8-10 families in their homes, rather than taking em to a “ghat”- a separate washing place- typically next to a natural water body like lake/river etc….

With the advent of washing machines and construction of flats (no open space for the dhobi), his biz saw a drastic drop…which threatened the source of sustenance of this family of six.

They had meanwhile developed another “revenue channel”- ironing . Whereas they were charging Rs 300/- per month for washing, they charged around Rs1.50/- per cloth for ironing. Assuming 10 households and a daily demand of 8 pieces for ironing- they made Rs 3000/- from washing and Rs 3600/- from ironing- a total of Rs 6600/- per month.

What our smart dhobi observed was that “washing” clothes was a diminishing market for him . But he found an opportunity in washing cars- with higher density of people in the neighbourhood and an average of 2 cars per family- he had a growing market in washing of a different kind.

The dude very smartly priced this service around Rs 200/- per month and approached the 10 families he already knew in the first wave. We all were more than happy to have him for this service. Now- washing car is an easier task than washing clothes- I know, coz i have done both 🙂 but more than ease, car-washing can be done in one-fifth the time and this guy washes/cleans the two cars in my family on an alternate basis…. so now he manages to clean cars for somewhere around 25 families…do the maths and u begin to see his genius- a cool 5000/- from car washing….

The job ironing is still on- with rising cost of living, our dhobi has increased the ironing rate to around Rs 2.00-2.50/- per piece and hence sees a better revenue from this old channel also…

No wonder he is the head of the dhobi association in this area !