Go-to-Market Strategy
By the end of this session, you will be able to:
· Create a go-to market strategy for a product/ service
· Identify the participants in your go-to market strategy
· Choose a strategy for your sales force and Establish a sales force measurement system to link to your objectives
Read the Following case .
Bajaj Tempo on Saturday said its net profit has soared to Rs 32.17 crore during 2002-03 from Rs 1.6 crore in the previous fiscal.
The company board recommended payment of 50 per cent dividend at Rs 5.0 per share of the face value of Rs 10 each. Net sales jumped by 31 per cent year-on-year to Rs 826.25 crore from Rs 630.33 crore, a company release said.
The impressive growth was achieved on the back of improved sales of light commercial vehicles (LCVs), multi- utility-vehicles (MUVs), tractors and three-wheelers which stood at 38,125 units.
Sale of LCVs (both small load carriers and vans) grew by 31 per cent to 3,099 units while MUVs (passenger and goods carriers) recorded a 29 per cent growth at 6,537 units.
In the three-wheeler segment, Bajaj Tempo's sales went up by 26 per cent to 24,931 units while its tractor division posted a 73 per cent growth over 2001-02.
"The key factor contributing to the substantial 'across- the-board growth' witnessed by the company is Tempo's increased thrust on strengthening its existing sales channel and aggressive promotional activities, backed with product innovation and diversification," Bajaj Tempo Chairman and Managing Director Abhay Firodia said.
He said the outlook for the current fiscal "appears brighter" and that the company was optimistic of maintaining the growth momentum.
· Discuss the factors that lead to the growth of Bajaj Tempo?
Derive responses from the participants below:
Developing Go-to Market Strategy
• A go-to market strategy defines the activities and the participants that connect a firm to its customers and prospects
• It focuses on customer attraction and retention activity
- It defines the roles of the various channel members and the value they add at every stage
Participants in Go-To Market Strategy
Go-to market strategy is mainly to define the process or the channel through which the company would like to reach to the customers. Decision would be on the indirect or direct marketing channels to be used.
The following slide describes that in making a Go-To Market strategy there are 2 main activities that any organization will have to undertake. These are based on Non-sales force options and sales force options.
Every organization will have to undertake the Non sales force options such as advertising, promotions etc.
Within the sales force option, the company may take the decision to have direct contact with the customers and may employ sales force for the same.
Read the following case and discuss the overall strategy of Philips.
Philips Electronics NV, the Dutch multinational has decided to completely overhaul its India sales strategy, especially at the front end and move on from a multi-faceted approach so long in vogue to one that will present a single face to the end-customer.
Under the new scheme of things, Philips India, the 91 per cent subsidiary of Philips NV, will be moving out from its product-based sales to a system of channel-based sales. PIL has identified three separate channels for trade sales, professional & institutional sales and the own equipment manufacturers (OEM) sales.
The sales-management restructuring formulated by the Dutch parent for its India operations also targets to slash PIL’s annual sales cost by a substantial 25 per cent.
The new sales management, in effect will see a single sales team selling televisions, audios, home theatres for the trade channel and two similar teams taking care of the OEM and institutional sales channel for all consumer electronic products.
Earlier the TV sales was not involved in sales of audio products. Similarly, there were separate sales teams for lamps, industrial lighting, or luminaire businesses. In response to a set of questions on Philips new sales strategy, Philips’s spokesperson said: “we have been and continue to successfully redesign our organization for improved efficiencies and effectiveness.” She refused to comment further.
Earlier in the mid-nineties PIL product divisions, namely televisions, audio, lighting, lamps and luminaire and other businesses like semi-conductors and home appliances where bundled under three broad business groups (BGs) - consumer electronics, lighting and others.
Each PDs virtually had its own sales force and the BGs were more focused on “rear-end” activities like manufacturing, product development, etc. Philips realized that the system only led to some amount of confusion in the market with the customers and dealers having to deal with multiple sales teams.
The new dispensation for an uniform sales management system PIL is also looking at lowering product redundancy.
A high-level core management team has also been set up to make the transition to the new sales system a smooth one by ironing out the resultant temporary confusion that may happen within the company.
While the front-end will be taken care by the new dispensation of customer interface through channel sales, the BGs will now concentrate more on product development, manufacturing and product management.
Like in Philips global operation, three core areas - finance, information technology (IT) and human resource development (HRD) will be common corporate functions.
Answer the Question
· Why did Philips overhaul its sales strategy?
Direct and Indirect Sales Force:
• Insurance companies cannot sell individual policies on their own. Insurance agents are pai
d commissions based on sales achieved.
• Amway, Avon, Oriflame are huge success stories of their own. 
• Bharti has a direct sales force for large accounts and an indirect sales force for SME (small and medium enterprises). 
• Microsoft has a very evolved network of value added partners.
Go-to-market strategy encompasses the channels that a company uses to connect with its customers and the organizational processes it develops to guide customer interactions from initial contact through fulfillment. The right go-to-market strategy has a significant impact on a company’s ability to cost-effectively deliver its value proposition to each of its target segments.
Probably no area of sales and marketing has gone through greater transformation in the last few years than go-to-market strategy. Recent innovations in technology and the proliferation of channel options have certainly played a role. However, a deeper look reveals another driver. Companies are becoming increasingly focused and sophisticated in the way in which they compete to create superior customer value. As companies tailor their value propositions to better address customer needs beyond product specifications, and to better align their cost of sales and fulfillment relative to those needs, go-to-market strategy plays a central role
Go-To Market Strategy
• Analysis of business environment – to determine the essential work required to serve each segment
• Evaluation of efficiency and effectiveness – to determine which go-to-market participants should perform each piece of essential work
• Identification of company specific capabilities – to determine whether to use a direct or an indirect sales force
Discuss on:
The first step is to study the business environment; this may include the analysis of various products, studying the market and competition in the industry.
On analysis the scope is narrowed down to the essential works such as narrowing down on the pre-purchase decisions and post-paid decisions.
The efficiency of the organization is analysed and then only, the go to strategy is derived. In this strategy decisions regarding the contact with customers is made. Depending on the efficiency and effectiveness of the company, the choice among various channels is made. The decision can be made among the option of telesales, advertising, direct sales, trade shows etc. then depending upon the company specific capabilities, the choice between the direct or indirect sales force (such as retailers, distributors etc. is made.)
Read the case on ITC e-Choupal.
ITC is setting up eChoupals across the agricultural belt in India to “offer the farmers of India all the information, products and services they need to enhance farm productivity, improve farm-gate price realization and cut transaction costs. Farmers can access latest local and global information on weather, scientific farming practices as well as market prices at the village itself through this web portal - all in Hindi. Choupal also facilitates supply of high quality farm inputs as well as purchase of commodities at their doorstep.” A paper describes the phased approach:
In Phase I, the business goal was to create a physical infrastructure of eChoupals at the village level and create local level ownerships through the identified Sanchalaks. At this stage the business goal was supported by creating a local language portal, which provided the required information to farmers such as local weather, market prices and best practices.
In Phase II, the business goal was to get the farmer registered and transacting by selling directly to ITC Ltd. through the virtual market. This goal was supported by creating a B2B site, which integrated the transactions directly to the back-end ERP and ensured that there was no latency in processing any of the procurement by the processing units.
In Phase III, the business goal was to create a full fledged ‘meta-market ’. In this phase, the market would facilitate other operators like inputs providers and rural distributors to work effectively through the eChoupal to deliver and procure goods from every participating village.
The technology road map to support this phase was to have a secure, consolidated Farmers database with all information pertaining to their holdings and credit worthiness to be available online. This database, along with identification provided by smart cards would enable support for online transactions through the eChoupal leading to integration with participating financial institutions such as banks, insurance and credit agencies.
A more detailed description of the ecosystem being created by the eChoupals comes from a note on the World Resources Institute Digital Dividend Knowledge Bank site:
The business model centers around the deployment of a network of Internet-connected kiosks, known as e-Choupals, throughout agricultural areas in India. An e-Choupal is a high-tech version of the traditional "choupal," or "village gathering place" in Hindi, where farmers are provided with the latest weather reports, local and international produce prices, and farming best practices. Costing USD 3,000 - 6,000 each to set up, they also serve as procurement and purchase points, allowing farmers not only to sell their produce to ITC, but also to buy agricultural inputs and consumer goods for daily household use.
Each e-Choupal is managed by an ITC-appointed "Sanchalak", a respected farmer of the community who takes a public oath of office upon accepting the position. While ITC covers equipment, the day-to-day operating costs, which consist primarily of electricity and Internet connection charges, are covered by the e-Choupal Sanchalak. These costs vary depending on usage, but average about USD 60 and USD 160 per year respectively. Miscellaneous travel and equipment maintenance costs add another USD 20 in yearly fixed costs. ITC, for its part, spends an average of USD 100 annually on each kiosk, which goes toward training and infrastructure management. Such activities include maintaining a helpdesk, addressing equipment and software complaints, and repairing or replacing broken equipment.
This reorganization of the role of middlemen results in lower procurement costs for ITC, despite having to pay higher prices to the farmers. Transaction costs are also minimized for the farmer by buying output at the farmers' doorstep, and through transparent pricing and weighing practices. A substantial quantity (120,000 MT of various commodities) has already been procured through this channel, resulting in overall savings over a million US dollars. The savings are shared between buyer (ITC) and seller (farmer). According to company officials, the average soya farmer saves US$ 5 per ton of beans when he sells through the e-Choupal network. ITC, for its part, saves US$ 4 per ton, even after paying transportation costs.
On the marketing front, ITC is able to maintain and grow the trust of its farmers by enhancing their productivity and wealth. ITC leverages this position of trust among farmers, as well as its distribution capabilities, to market its own consumer good brands and those of partner companies offering products and services that ITC does not. Sales of consumer goods through the e-Choupals have been particularly successful because the cost-savings associated with dealing directly with the manufacturer allow Sanchalaks to offer goods at lower prices than other village-level traders or retailers can afford to do.
The total network already includes 1,286 kiosks, reaching almost a million farmers across some 9,000 villages. Enthusiasm from farmers is helping ITC to rapidly scale up its network. Current plans include diversification into a wider variety of crops in 11 other states across India. Expanding at a rate of 3 to 4 kiosks a day, the company expects to have 20,000 choupals covering 100,000 villages, or one sixth of rural India, within 10 years.
Discuss on:
How is ITC using e-choupal for sales?
Value Driven Segmentation
• Segments from this methodology truly represent what the customer values the most in purchasing a product, rather than using traditional demographic segmentation
• It will provide significant insight on requirements for success in each segment
Company’s market offering frequently extends beyond its core product to include services, programs and systems elements. The value proposition translates this market offering into a statement of the benefits a customer will derive. Effective value proposition delivery is accomplished through well-designed and executed organizational sales processes and go-to-market channels. In combination, value propositions, organizational sales processes and go-to-market channels are the basis for the consistent and profitable delivery of customer value necessary for sustained business success
The value propositions that a company translates to their market offering are in forms of following statement of the benefits a customer will derive.
1. In form of Specialized features.
2. High service segmentation
3. Assortment value and
4. Convenience and price.
The segmentation of the marketplace is evaluated by factors such as the industry that the company aims at, the customer size, customer buying behaviours, benefits that are offered to the customer and how does customer perceive these benefits. This analysis will lead to decisions relating to the essential work that would be required for segmentation, whether the company is deciding on using the direct or indirect sales force.
Segmenting the Marketplace
Framework for Essential Work
The matrix explains that there decisions on the framework of the organization would largely depend upon the Customer size and opportunities available in relation to the buying process.
When the customer size is large but the buyers have low information or perceive a low solution need for the product, then the work would largely be based on proving prompt deliveries, and maintaining relationships so as to maintain the account.
When the customer size and opportunities are low and the buying process too is low then the company has to bring efficiency in the system by considering self-ordering and they will aim at bringing efficiency in selling.
Similarly, when the customer size and buying process are both large, then the main work is targeted at building a partnership with the customers by providing solutions, consultation and cooperation.
Lastly, as explained in the matrix, when the customer size is small and the information and solution need is also low the company has to make a crucial by making an economical evaluation of the project and work.
Parameters for Efficiency and Effectiveness
Improve the selling expense/ sales ratio
Efficiency
• Activities
• Quantity
Effectiveness
• Result
• Quality
Summary
– The sales environment is changing at a rapid pace
– There is a morphing of sales and service across the industry
– Organizations are revisiting fundamentals for meeting the market demands
– There are several participants in a go-to market strategy
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