Small is Beautiful

Whether it is B2B or B2C, Human beings need personal touch. We should all strive to make smaller and leaner business units which can cater to each individual client with care.

Small is beautiful. Small business is a great thing to be and if you are a small business you possibly can invent new formats to compete with bigger businesses. No doubt that small will be under pressure and will have to face competitive threats. And if you are a big business its time you start consolidating, and start hiring for your businesses and your marketing procedures and everything that is to do with consumer interfaces into smaller units.

Small is organised and systematic. It is not a bulky elephant; it is an ant which can move fast. It is savvy and can reinvent itself. Small is real and small businesses are more connective. Only 2% of the business in India is organised retail and 98% is unorganised retail run by small kirana shop. We find typically that most of these shops are quite personal. People even call the owner by their name and Indian woman go in their nightgowns.

Competition is a reality in every aspect of life and not just business. Nature is the best place to watch out for competitive models in business. There are four typical models in marketing: Earthworm, Snail, Porcupine, and Everyone Else model. In B2B business many of us try to adopt any one of these four models. In B2B you pick and choose and pass a value judgement based on any of these models.

The Earthworm Model is the one followed by the multinationals even in the most advanced markets. Earthworm model is a non-competitive and very passive model, where you just wait for the early bird to come and catch the worm. Similarly it is about a big business waiting for small ones to innovate and grab the market from them. This model suits the fatalistic theory of Indians where we believe that whatever happened was our fate.

The Snail Model is a reactive model. It seems to be proactively reactive bacause when the enemy attacks; it withdraws into its strong shell. This is the withdrawn or philosophic marketer’s play. This kind of marketer notices that his world is breaking apart and retreats into a cocoon; when the environment becomes better he comes out. He watches his competitors going gung-ho on advertising and waits till they burn out all their resources. In Japan we see lot of this kind of market play including the maligned consumer electronics category.

The porcupine has very little flesh and the rest is spikes. Similarly, in the Porcupine Model, the market players believe in the display of armoury as significant, like India and Pakistan building up weaponry and showing it on their respective Independence Day. Half the weapons we are displaying are prototype which could take 20 years to become a reality. This model is passively proactive and most of us follow this model.

The last model is the Everyone Else Model which is quite proactive. You anticipate and do things even before the other guy does. More like Guerrilla marketing. For this you have to do scenario planning, a fantastic tool for every marketer. A company in Japan had done a study of our country during the last elections to actually find what will happen. It was obvious that this company had done the study since it has a huge stake in the realm of iron and steel. Similarly we need to do a scenario planning exercise, for understanding our industry segment. My suggestion to big businesses is to have smaller customer oriented units taking independent decisions.

Customer relationship gets distorted with system and processes in a big business. Big businesses send mailers to their customers without bothering to establish a personal contact. Right from credit card to a power equipment business, we don’t do price leveraging; we think that all customers need the same product at the same price. In Costarica they sell three brands of water; one premium, another at middle and another at the actual base price. Customer service is becoming the norm. Company which handle 20,000 customers are able to manage customers reasonably, companies which handle 3 millions customers are not able to manage them effectively.

While the bigger companies are trying to implement CRM, it has mostly become Customer Irritation Management where they handle only the customer with serious complaints. But how do you handle proactive customers and what about customers who are sitting on the fence waiting to jump out. We have churn management which is a common lingo in telecom segment. We need to know and respect the consumer as a knowledgeable person and give him better things.

In B2C advertising we have to communicate to the lowest denominator in the masses. Unfortunately even most of B2B companies have been focusing on external branding. My advice to B2B business is that never go for external branding; focus on internal branding. That is the big difference we need to make.

Every product in B2B is a service business. Actually every business itself is a service business, a coffee which is a commodity at home, becomes a service when you drink outside. The Dosa you eat at home is a product, in MTR it is a service. B2B business is not an insulated arena. What happens in B2B also happens in B2C.

Issue BG52 Jul05