"Start Your Business" Course One Day Masterclass consisting of 4 Workshops

S P Jain Institute of Management & Research November 2013

Marketing for those who want to start a new business

By Prof S K Palekar 34 Years of experience in marketing

and 5 years experience in executive education

skpalekar@hotmail.com

Siemens MDP – Feb 2013 – Confidential Material – Please do not copy – Contact Prof S K Palekar – sk.palekar@spjimr.org - 9821046013 Axis Bank – Max New York Life – MDP – Nov 2011 Novartis – Next Destination MDP – July 2012 Pfizer MDP – Feb 2013 Pfizer MDP – Feb 2013 – Confidential Material – Please do not copy – Contact Prof S K Palekar – sk.palekar@spjimr.org - 9821046-13

Agenda

Pre-requisite I am not assuming any knowledge of marketing But you should have an idea of what you will market

You will learn today How to make your idea more marketable How to avoid some common mistakes

In case of a query : first mail me and then call me Mail : skpalekar@hotmail.com Cell : +91 9821046013

Siemens MDP – Feb 2013 – Confidential Material – Please do not copy – Contact Prof S K Palekar – sk.palekar@spjimr.org - 9821046013 Axis Bank – Max New York Life – MDP – Nov 2011 Novartis – Next Destination MDP – July 2012 Pfizer MDP – Feb 2013 Pfizer MDP – Feb 2013 – Confidential Material – Please do not copy – Contact Prof S K Palekar – sk.palekar@spjimr.org - 9821046-13

4 Workshops will be conducted today

Workshop 1 : What will be your first year …. Revenue, costs, profit

Workshop 2 : Which of “6 reasons for business failure” you want to avoid for your proposed idea?

Workshop 3 : Identify Where you can cut costs and where you want to add costs

Workshop 4 : Write your positioning statement And hence what activities you need to perform

skpalekar@hotmail.com

Estimate Your Revenues and Costs WORKSHOP 1 : Try To Estimate the following and Present in the class

Your Annual Revenue

How many invoices ?

Average value / invoice?

What “offerings” you will invoice?

Price of these “offerings” ?

F i r s t a n s w e r t h e s e c u s t o m e r r e l a t e d q u e s t i o n s

Your Annual costs

How much cost of mayerials?

How much interest?

How much cost of manpower?

Time related costs

T h e n a n s w e r h o w m u c h w i l l i t c o s t t o m a k e t h i s h a p p e n

Your Annual Profit How much profit will you generate ?

T h e n s u b t r a c t c o s t s f r o m t h e r e v e n u e

skpalekar@hotmail.com +9821046013 Axis Bank – Max New York Life – MDP – Nov 2011 Novartis – Next Destination MDP – July 2012 Pfizer MDP – Feb 2013 Pfizer MDP – Feb 2013 – Confidential Material – Please do not copy – Contact Prof S K Palekar – sk.palekar@spjimr.org - 9821046-13 Siemens MDP – Feb 2013 – Confidential Material – Please do not copy – Contact Prof S K Palekar – sk.palekar@spjimr.org - 9821046013

Were some of the difficulties same as The 6 items mentioned on the next slide?

There are 6 common reasons why new businesses fail.

What difficulties did you have in WORKSHOP # 1 ?

Siemens MDP – Feb 2013 – Confidential Material – Please do not copy – Contact Prof S K Palekar – sk.palekar@spjimr.org - 9821046013 Axis Bank – Max New York Life – MDP – Nov 2011 Novartis – Next Destination MDP – July 2012 Pfizer MDP – Feb 2013 Pfizer MDP – Feb 2013 – Confidential Material – Please do not copy – Contact Prof S K Palekar – sk.palekar@spjimr.org - 9821046-13

6 common reasons why new businesses fail

1. It costs more to produce the product / service than what they thought Entrepreneurs do not know what will really cost to make

2. It costs more to find and convince customers than what they thought Entrepreneurs do not know what will really cost to sell

3. Interest to finance inventory and credit is more than what they thought Entrepreneurs do not know what will really cost to finance

4. The price the customer is willing to pay does not leave much profit Entrepreneurs do not know what customers will really pay

5. Entrepreneurs do not really know if customers find them better /equal / worse than competition

6. Not enough customers are being reached / attracted / convinced Entrepreneurs do not really know what the customers want or

where they are located or how to reach them

WORKSHOP 2 : List Your Biggest Needs in the order of priority from these 6 - FOR YOUR BUSINESS

Siemens MDP – Feb 2013 – Confidential Material – Please do not copy – Contact Prof S K Palekar – sk.palekar@spjimr.org - 9821046013 Axis Bank – Max New York Life – MDP – Nov 2011 Novartis – Next Destination MDP – July 2012 Pfizer MDP – Feb 2013 Pfizer MDP – Feb 2013 – Confidential Material – Please do not copy – Contact Prof S K Palekar – sk.palekar@spjimr.org - 9821046-13

Learning Objectives For Today

To learn how to undertake planning activity which will force you to analyze and systematically estimate the following : Customer related questions

What price the customer will be willing to pay for my offering Will customers find my offer better /worse than competition Will enough customers be reached / attracted / convinced What do the customers want, where they are located and how to reach them

what will really cost to make the product / service I want to sell to popularize and sell it to the targeted extent To finance I will need during the gestation period To finance the inventories and credit

Answering these questions will enable you to make a business plan You will need a business plan before you start your business in order to

successfully influence investors, banks, employees.

skpalekar@hotmail.com

The “3 Circles” concept teaches you How to be competitive

1. How to reduce costs : take out what does not create value 2. Increase price : Give more value through unmet needs 3. Find who is the right competitor : compare with him (only) 4. Your competitor may be even outside your industry

Please note you cannot satisfy ALL customers! You need to choose those customers to whom you can make a difference.

Please note you cannot fight ALL competitors! You need to choose those competitors against whom you can win !

WORKSHOP 3 : Identify where you can cut costs And where you need to add costs

Who is your competitor ?

All in your industry are not your competitors. All your competitors are not in your industry.

Positioning

1. Who are your target (prospective) customers ? What application area of such customers are you targeting? How many are there ? Where are they ?

2. What is these customer doing now for such applications? This defines who is your competitor

3. How can you become better than these competitors ? What costs to take out which do not matter to these customers? What additional benefits will you give these customers ?

4. Finally, write down your offer What will you, therefore offer, in terms of product, pack, place of

availability, process, proof, people’s expertise etc… 5. Therefore what activities will you perform

Which are different ? Or performed differently? Or not done at all.

WORKSHOP 4 : Write and present your positioning !

Siemens MDP – Feb 2013 – Confidential Material – Please do not copy – Contact Prof S K Palekar – sk.palekar@spjimr.org - 9821046013 Axis Bank – Max New York Life – MDP – Nov 2011 Novartis – Next Destination MDP – July 2012 Pfizer MDP – Feb 2013 Pfizer MDP – Feb 2013 – Confidential Material – Please do not copy – Contact Prof S K Palekar – sk.palekar@spjimr.org - 9821046-13

Learnings from The Case of Wallace Fort Hotels

Any feature of product / service has no value by itself The value ( willingness to pay) depends on who the

customer is. Customers are different

and hence their willing to pay is different for the same feature / product.

Hence the concept of “Target Customer” is very important In fact you can design a product / service only when you

understand who is the target customer / segment. You must meet customers to understand what they value

Otherwise you will take wrong decisions regarding who is your customer and what does he want

Siemens MDP – Feb 2013 – Confidential Material – Please do not copy – Contact Prof S K Palekar – sk.palekar@spjimr.org - 9821046013 Axis Bank – Max New York Life – MDP – Nov 2011 Novartis – Next Destination MDP – July 2012 Pfizer MDP – Feb 2013 Pfizer MDP – Feb 2013 – Confidential Material – Please do not copy – Contact Prof S K Palekar – sk.palekar@spjimr.org - 9821046-13

Learning from the Case of Forbes Facilities

The company turned from loss into profit by following simple marketing process : Company, Customer, competitors,

collaborators, context

Who is the target customer, what is the positioning, how to reach and convice the target customers

Marketing Process as seen in Forbes Facilities

1. Analyzed Different customers at different stages of evolution and needs

2. Choice Customers with large floor plates and mission-critical cleaning

3. Value Proposition We look after your workplace leaving you to focus on your main tasks We bring not only men but machines, methods and materials too We create a service level agreement - charge on per square foot basis

4. Alignment and Go-To-Market Use of questionnaires for prospecting Communication concepts for customers and employees Measuring customer satisfaction in every shift Setting customer satisfaction and retention goals Customer focused organization structure and systems Alignment of customer promises to internal motivation plans Quotation system , Scope control system

sk.palekar@spjimr.org http://marketing-eye.blogspot.com +91 9821046013

S K Palekar : Draft June 4, 2008 with inputs from Vinay

Score Board

1. TOP LINE Higher price realization > Rs 11000

2. PRODUCITIVITY Operations Business Development

3. BOTTOM LINE Improved gross operating margins

4. BUSINESS SHARE No business expansion went to competitors.

5. CAPACITY Could attract and train people .

sk.palekar@spjimr.org http://marketing-eye.blogspot.com +91 9821046013

Siemens MDP – Feb 2013 – Confidential Material – Please do not copy – Contact Prof S K Palekar – sk.palekar@spjimr.org - 9821046013 Axis Bank – Max New York Life – MDP – Nov 2011 Novartis – Next Destination MDP – July 2012 Pfizer MDP – Feb 2013 Pfizer MDP – Feb 2013 – Confidential Material – Please do not copy – Contact Prof S K Palekar – sk.palekar@spjimr.org - 9821046-13 Siemens MDP – Feb 2013 – Confidential Material – Please do not copy – Contact Prof S K Palekar – sk.palekar@spjimr.org - 9821046013

Advice to SYB Batch 15

Get to know the customers : move in the market : do not make plans sitting in an office : Understand from these customers What creates value for them : do more of it What does not create value for them : cut those costs from your offer What are their unmet needs

Do not aim to make everyone as your customer, select only those To whom you can make a difference with what you have Who have BANT ( Budget, Authority, Need and Time Pressure) Who can make a difference to you (All customers are not for you)

Do not plan to fight with everyone in your industry Pinpoint who you want to fight with as a competitor Remember that some competitors may be from outside the industry

Do not aim for the moon when you start Start with selected customers. Position yourself well Begin making profit with this business model and then expand

Thank You