Strategic Marketing

Marketing and selling in tough economic conditions

Market segmentation is about identifying customer groups who have similar needs and wants. These customer segments need to be catered to, through the provision of required products and services.

1. Do not ignore the “fortune at the Bottom of the Pyramid.” Although they have limited disposable income, aspirations are quite high, examples such as sachet packs of shampoo, hair gel, malted milk, Nescafe, etc. The logic is smaller and cheaper packages of established brands, that are made affordable. Pre-paid telecommunication cards have penetrated lower income segments substantially.

2. Look for niche segments that is segments which are small in volume but highly profitable, as the saying goes “Riches in Niches.” Examples would be tourism such as eco-tourism, agri tourism and medical tourism. The name of the game in niche marketing is specialisation.

3. Identify new market segments through distribution channel development, like hardware outlets that stock electrical accessories, bookstores that stock school footwear. The idea here is to use the distribution channels creatively and to introduce different products in certain instances radically.

4. Sub-segment the middle income segment. The middle class is a broad segment in terms of customer size and sales volumes. Many lucrative sub-segments can be identified within the middle class and upper middle class. For e.g. the “new rich”, the “value-for-money” and the “traditionals.”

5. Use internet and mobile technology to reach larger customer segments as it can purchase products and services online or on their return to Sri Lanka for holiday. It is estimated that over 2 million Sri Lankans live or work abroad.

6. Develop creative and innovative products and services to open up new segments. For example social networking sites such as Facebook, Youtube and Myspace have created new markets.

7. In the marketing of services, many new segments can be identified. If medical hospitality services is considered one can identify several segments.

“Doctor on call” for patients at home, “ambulance and emergency services” for critically ill patients, “laboratory on wheels” for diagnostics and “laboratory collection centres” for patients who are living at a distance from the main hospital.

So Marketers would do well to re-visit their markets and identify ways and means of identifying new market segments. This is critical to survive and grow in tough economic times.

Article 2 in this series shortly.

BizChat promotes smart investments

BizChat organized by CIMA and supported by IFS at the CIMA Auditorium last week discussed how to make smart investments during tough times.

IFS along with CIMA have come together to tell the business community in Sri Lanka that now is the ideal time to ‘invest smart’. This business discussion session aimed at financial managers and corporate executives will encourage their belief that the tough times witnessed at present can be overcome with proper investments focused on the long-term.

The speakers at the session were IFS South Asia, Vice President Jayantha De Silva, MAS Capital Chief Information Officer Jay J. Keller and Suntel Ltd. Information Technology Director, Tariq Marikar.

“Investing in a good Enterprise Resource Planning (ERP) system is ideal in these times,” IFS South Asia Vice President, Jayantha de Silva said. And the Management Accountants and Financial Executives who rely greatly on ‘information’ to make strategic decisions can benefit greatly from the Information Systems available at present.

“We do not want the corporations in Sri Lanka to overreact to the current economic conditions in the world, but we understand that the burden is on the Management Accountants and decision-makers who need to find ways to cut down costs and increase productivity in these trying times,” he said.

We are confident that inventory costs can be cut down (close to 40%) and the process made more efficient with a customized ERP. These figures are enormous savings of costs in manufacturing concerns and provide an adequate return on investment.”

The true value of an ERP is in its ability to provide a clear profile of the company to the decision-making corporate executives. Every business has three levels of information. The domain knowledge which is the first level, involves knowledge specialists who have core competencies required to run the business.

The second level of knowledge is the core application area where the knowledge is applied and the third level of knowledge is the ERP. “A customized ERP will integrate all levels of knowledge and push the relevant information towards the decision-makers,” De Silva said. In today’s crisis struck world, the mantra is ‘cash is king’ but we believe ‘information is king’ and through information we find ways to accumulate more cash.

CIMA Regional Director, Bradley Emerson said that in times where the role of a Management Accountant has changed from ‘scorekeeper’ to ‘influencer’, ERP is a vital element to help make decisions. Management Accountants now take risks and formulate strategies. We need the technical scorekeeping and data entering to be handled by a system which complements our work.

In Sri Lanka, many operations that can be automated by efficient ERP systems are still conducted manually because in our part of the world we unfortunately measure power by the number of heads employed and not by the value added to the bottom line, he said.