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Hello!
We are delighted to share with you the December 2021 issue of the quarterly Marketing Excellence Newsletter. This issue is special as we bring to you the work of the Indian School of Business (ISB) marketing faculty members. We have presented summaries of the research articles published in renowned journals.
We are happy to report that we have faculty members who have expertise across different domains of the industry and can curate customized programmes on any niche topic broadly falling under the spectrum of marketing and sales.
At the ISB-Centre for Business Markets, we excel in taking up marketing challenges being faced by organizations, and through our research-based consulting help our client succeed in the market.
We hope that you will find the content relevant and insightful.
I encourage you to send your valuable feedback and suggestions to us to continue to add items that interest you and are relevant to you.
Warm regards
D.V.R. Seshadri
Clinical Professor of Marketing and Director,
ISB-Centre for Business Markets

How to use self-selected incentives to increase sales
Raghuram Bommaraju, Assistant Professor of Marketing at Indian School of Business and Sebastian Hohenberg, Assistant Professor of Marketing at McCombs School of Business, University of Texas
Summary by Minal Agarwal, Manager ISB-CBM
Sales incentives are essential tools to motivate sales force of any organization. Companies incur significant expenditure on sales incentives. They often come up with new incentive plans and structures. But have these incentive plans been able to inspire their entire sales force? The answer is NO.
Companies generally offer identical incentives for the entire sales force as customizing incentive plans could be a complex process and require more resources. It is not uncommon that only the top performers benefit from these incentives’ schemes leaving the middle and lower performers not motivated and sometimes even demotivated by the incentives.
In this article, Professor Raghuram Bommaraju and Professor Sebastian Hohenberg have tried to address this challenge by designing a customized sales incentives structure. Every salesperson differs in their preferences, behavior and needs. A good incentive plan should leverage on these individual differences and set realistic goals. In other words, targets should be tailored to each salesperson based on their characteristics.
The authors developed an actionable self-selected incentives scheme and tested it across various industries and geographies.
The self-selected scheme has three features:
  1. Choice feature: It allows salespersons to choose the reward from the menu of goal/reward levels that match their preferences.
  2. Individualized goals feature: These goals are set based on the salesperson's last performances; hence they are realistic and achievable yet at the same time challenging.
  3. All or nothing: The rewards are given to salespeople only after they achieve their goals fully. There will not be any reward if the goals are not achieved, and the mechanism will be followed strictly. There will also be no extra reward for overachieving the set goals.
The reward increases as the difficulty level of the goal increases, motivating salespeople to choose challenging goals.
Key findings:
The experiment's findings on numerous companies showed promising results of the self-selective scheme. The test's findings were that the self-selected incentives outperformed the regular incentives (assigned incentives) by 25%. More importantly, the performance improvement has been observed across the salespeople – top, middle, and low performers exhibited an improvement in performance, the higher improvement observed among the middle and the bottom performers.

How employees across generations can learn from one another in a firm
Peeyush Gupta, Michelle D. Steward, James A. Narus and D.V.R. Seshadri
Summary by M.V. Srikrishna, Manager, ISB-CBM
For a long time, ‘mentoring’ has been a powerful learning process to impart knowledge to young executives. In the late 1990s, Jack Welch, former Chief Executive Officer of General Electric, introduced a new process known as ‘reverse mentoring’, where senior executives keep up with the rapid change in technology by engaging and learning from young executives.
In this article, we have four authors, Peeyush Gupta, Michelle D. Steward, James A. Narus and D.V.R. Seshadri, share their insights about a new intergenerational mentoring programme called ‘two-way mentoring’ implemented rigorously by Tata Steel Ltd., on a large scale. The programme’s objective is to break through the traditional walls of intergenerational conflict by creating a supportive structure that leverages the strengths and capabilities across generations through mutual cooperation.
The article first explores the intergenerational conflicts in organizations, whose stories are often disseminated by pundits in the popular media and are riddled with stereotypical aspersions that divide different generations. The authors, however, highlight that it is important to understand the unique skill sets each generation brings to work and find a way to capture and employ these skills.
Intergenerational conflict is arguably more acute in Asia, where a deference to age and authority results in senior positions being occupied by older persons. Consequently, many large organizations today are finding it difficult to retain top talent as younger employees see limited opportunities for career advancement. These employees find the organizations to be bureaucratic, top-heavy, lacking in agility or innovation and unwilling to digitize.
The new employees at Tata Steel were no different; they were dissatisfied with their work environment and were leaving their jobs at a rapid rate. Cognizant of these issues and faced with external challenges related to the nature of the steel industry, Tata Steel created a task force composed of leading executives to understand the generational differences in worldviews. The task force found that while the senior managers were well versed with the company’s processes and operations, they had limited awareness of the potential of digital technologies and data analytics. New employees were well versed with digital capabilities but lacked organizational context. The task force saw that the senior manager and new employees can complement one another by sharing their distinctive capabilities through a two-way mentoring programme.
The programme invited participants to apply for the mentorship role. Through a series of evaluations 16 new employees were paired with 16 senior executives and the pairs met at least once a month. In the second year, many more executives took part in the programme.
The programme delivered promising results. Senior executives had become more familiar with emerging technologies and new employees developed personal skills and improved their strategic capabilities. The programme resulted in a lower attrition rate among new employees compared to those who did not participate.
There were other learnings too. The success of the programme depended on the quality of the engagement between the mentor and mentee. It was found that the best pairing happens when the mentor and mentee were from two different business functions, and are from the same city. It is also important to manage the workload of the mentee as they may be overwhelmed with too many requests from other teams aspiring to make improvements on the digital transformation front. The programme also needs to have an exit plan and new mentors and mentees have to be re-assigned to refresh the relationships.
Key Findings
The programme offers employees to build a network of relationships and this enables the company to attract and retain talent and effectively create cross-generational interactions.

New product introductions for low-income consumers in emerging markets
S. Arunachalam, S. Cem Bahadir, Sundar G. Bharadwaj and Rodrigo Guesalaga
Summary by Ratna Geetika, Research Manager, ISB-CBM
Emerging markets are the world’s leading drivers of growth and profit-generating drivers. They make up for a dominant share of the world's population and natural resources. Moreover, selling consumer products to the low-income consumers, who constitute a significant amount of the population, manifests as an attractive opportunity for the emerging markets. This has become a necessity for large corporations, which are trying to accelerate their growth. Hence, the new product introduction to the low-income consumers in the emerging markets holds a significant position of discussion in the relevant context. Multinational corporations which address low-income consumers in the emerging markets face the challenge of crafting business models that provide truly beneficial products and services to the poor. In this context, a significant research on the product innovation in the emerging markets brings forth two streams which includes usage of case studies to examine the challenges of catering to low-income consumers and how to overcome these challenges across product categories and empirical studies that exhibit diffusion of new products in emerging markets but lacks an explicit focus on low-income consumers. Effectively, the study considers a unique 12-year longitudinal panel dataset comprising of nine consumer packaged good product categories across 27 emerging markets and is split into two parts. The first study is about exploring the supply- and demand-side factors that influence the introduction of new products for low-income consumers. The second study is about the empirical investigation of drivers of new product introductions for low-income consumers across countries and product categories. Furthermore, in-depth interviews were conducted with consumers and managers from India and Chile to figure out the unique factors as well as to strengthen the existing evidence-based factors that influence the acceptability, awareness, availability and affordability of new products for the target consumers.
Key Insights
  • The low-income consumers are identified with affordable aspirations and premiumization, wherein they aspire to buy branded goods and premium products, but their inadequate income impedes their ability to buy. However, it is important for the firms to map their product offerings with these growing aspirations of the target consumers.
  • There is a significant interest in the product knowledge and awareness. This results mostly due to the exposure to the urban environments owing to urban migration in search of better paying jobs.
  • More emphasis on the family utility. They give more importance on the consumption of the all the members of the family and hence they opt for the family-wide preferred offerings, even for repeated purchases of the products. Thus, most of the purchase decisions are made keeping the collective needs into account.
  • Retail sponsorship and product guarantee displays a specific pattern of the group of consumers. They buy from local small shops based on the sheer trust and the recommendations of the owner who typically belongs to the local community.
  • Since the low-income consumers are not cognizant with the products and their correct usage through media advertising, there is a direct awareness through demonstrations which is predominantly prevalent in the rural regions which are not covered by media networks which makes it impracticable to build awareness.
Key Findings
The study presents an excellent multi-dimensional approach towards the perspective of product introduction for the low-income group by unearthing several findings put together. The number of products introduced for the lower-income consumers is higher in product categories where there are more global brands. More so, the product categories with global brand presence have more product introductions than those without global brand presence.

Faculty Spotlight
Astha Sharma (AS), Consultant at the ISB-Centre for Business Markets and Minal Agarwal (MA), Manager at the ISB-Centre for Business Markets, spoke to Professor Rajendra Srivastava (RS), Novartis Professor of Marketing Strategy and Innovation, Marketing. Professor Srivastava shared unique insights on marketing and innovation.
Day and date: Wednesday, 20 October 2021
Interview performed digitally
AS: Professor, what is the one insight you would like to share with the marketers as the markets start opening up and the demands gradually increase post-pandemic?
RS: I wish the answer was so simple, but there will be more than one thing I would l like to share. First, let me talk about some things that are going to continue to happen. One is that the markets will continue to see turbulence as, with the uncertainty, the market gets a little schizophrenic and reacts too much to the news. So, I expect to see turbulence in the market; therefore, what is needed is flexibility and agility in the marketing plans.
Secondly, given how things have changed technologically, there is a lot more movement towards online. So, even for traditional manufacturing companies that were using the retailers for their distribution, we will see more and more direct-to-customer approaches. Just as Amazon sells through kirana stores to you and me, so can Procter & Gamble and Hindustan Unilever.
We will see that manufacturers will adopt some changes that online companies have made. At the same time, I expect that some online retailers, such as Amazon will begin to expand their brick-and-mortar presence. So, what is happening in the United States is that Amazon is purchasing these retail malls. They already own Whole Foods. Furthermore, in India, Amazon is fighting with The Future Group.
What is happening is that the structure of the market is changing. We are also seeing many hotels changing hands because as some companies are going out of business, it is an opportunity for other companies to grow.
Basically, if one hotel goes out of business, it is not that property will go away. It’s just going to re-emerge in somebody else’s hand. So, I would not be surprised if companies like OYO start acquiring properties rather than simply being business partners. They were already doing it. Oyo’s business model was to work with small hotels and make them more efficient, provide them countrywide marketing, digital services, procurement services and so on. Now with many people getting affected by the pandemic, there are a lot of businesses in trouble. You can buy those businesses at 50 paise to the rupee; so, many changes will occur in the structure and processes. This is happening the world over. Amazon is acquiring space in shopping malls.
Additionally, as retailers and distributers integrate backwards and/or set up omni-channel arrangements (e.g., you can buy online and return at a store), manufacturers with strong brands such as Nike are going direct to customers.
The world that people will come back to will not be the same as the pre-pandemic world. These changes are pretty permanent. The way I look at it, people’s habits have also changed. For example, people are now buying more online. We are seeing a big surge in people making online purchases because of all the problems we had during the pandemic.
AS: Professor, we all know that you have worked and consulted with a lot of companies. What was the most exciting project you have done for any corporate, and what was the unique insight that came out of it?
RS: It’s not really a single company; I have worked quite intensively with many companies. For example, we designed an entire executive master of business administration (MBA) programme for Texas Instruments. The idea was to take technical resources and convert them into strategy people.
My learnings have come from across companies, and I have observed that sometimes a problem faced by a steel mill is actually no different from a problem faced by a fast moving consumer goods (FMCG) company, for example, in the supply chain. When manufacturers or distributors offer a discount on the product, they load the merchandise with the retailers, and retailers push the products to the customers. This is called push strategy. It is called channel loading. Manufacturers do this because they are not agile enough, and consequently, the retailers face the burden of carrying the inventory, making their business less efficient. I found the same thing happening in the steel industry. It is complicated to shut down Tata Iron and Steel Company (TISCO) (for example). Even if the steel demand has reduced from TISCO’s customers, TISCO will keep producing steel, and distributors will have to stockpile. However, the steel distributors are not Big Bazaar. So, many things that we think are unique to one industry are really not that unique.
Coming back to the question that you asked, what is it that I found most exciting? A lot of changes that come in an industry typically come from outside that industry.
Of the things that I have been able to contribute if I think of marketing scholarship as an industry is I was able to bring into marketing the thinking from finance, operations, etc. My biggest contribution has been, I think, and I have not succeeded entirely, but to try to make marketing people think in financial terms. So, what is the financial impact of brands?
This is just a very quick and dirty example, supposing we take a typical FMCG product and, let’s say, the end margin is 10% (after we paid for everything). As a consumer, would you pay more for a better advertised, better-branded product? If the brand is Unilever, would you pay 5% more?
The answer is yes because the price is maybe 20% more if you look at the price. So, if the margin for the lower-end product is 10% and you can now get a 10% price premium for a very similar product, where does that get you? The net margin is closer to 20% for branded goods from a company like Unilever. And, therefore, the profitability is 100% higher because you have gone from 10% to 20% margin. As Unilever has an extensive distribution system, their volume is higher than many other players. Doubling the margin with 10 times the market makes branded products from a company like Unilever much more profitable.
There’s something called the price-to-book ratio. Price is the stock price, and market capitalization is the number of shares multiplied by the stock price. That is called the market cap or market capitalization. What is the market capitalization for Unilever? It is 60 times the accounting book value. That is, only <2% of the value of Hindustan Unilever is on the balance sheet.
We marketers are creating a lot of value through the margins, turnover or increasing the distribution system. Take Coca-Cola, for example. Why is Pepsi never able to catch up with Coca-Cola? It’s not the brand issue. Coca-Cola has a much more extensive global distribution network built during World War II that Pepsi has never been able to replicate.
What I’m trying to say is we marketers do not know how to communicate to top management the value that they have created. Marketing’s contribution to a firm’s business performance, growth and resilience is captured in two seminal papers:
1998
“Market-Based Assets and Shareholder Value: A Framework for Analysis,” Journal of Marketing, 62 (January), 1–14 (with Tasadduq A. Shervani and Liam Fahey).
1999
“Marketing, Business Processes and Shareholder Value: An Organizationally Embedded View of Marketing Activities and the Discipline of Marketing,” Journal of Marketing, 63 (Special Issue), 168–179 (with Tasadduq Shervani and Liam Fahey)
The 1998 paper is the one that set the marketing–finance interface field moving and is probably one of the most influential and cited papers on that topic. It is the only paper in the history of the Journal of Marketing that has won the award for impact on both the theory and practice of marketing as well as for long-term contributions. However, I consider the 1999 paper far more comprehensive – and better – as it integrates the impact of all market-facing processes such as product innovation, supply-chain and customer management in both value creation and value appropriation. These two papers, particularly the 1999 paper, are very appropriate for what is happening today. We are talking about risk and resilience today. In 1998–1999 I was talking about de-risking the corporation. Same concept. Different words. Marketing people never communicated that by increasing customer loyalty, you are really reducing the risk for the company. As when you lose your customer, you lose your business, and that’s the biggest risk. And we, as marketing people, have not positioned it that way.
When marketers ask the management to give us a budget to acquire customers, we should also be saying to the management that you better hang on to the existing customers because customers are worth money, and one of the analogies that I use is that brands and customers are the only assets that grow other than trees.
OK, that is what I’ve tried to bring to the marketing scholars; through branding and all kinds of marketing mechanisms, we can accelerate the market and speed up the product adoption rate. What is the value of speed? We can create customer lock-ins through satisfaction, switching costs and other ways. What is the value of a 2% increase in customer loyalty? Can we quantify that?
In this process, I’ve worked with and learned from many companies. My learnings have not come, specifically from any one company. I just feel that just as there’s value in mixing accounting, finance, operation and, marketing. There is value in learning from across industries also. For instance, DuPont can learn something from Bank of America and vice versa.
We hear about the Japanese just-in-time inventory management. Do you know where it came from? It came from American retailing. The Japanese managers went on a tour of America. They noticed that the American retail stores carried minimal inventory in the back storeroom because they didn’t have a back storeroom. About 90% of the real estate was devoted to the store, only 10% was used as a warehouse in the back. Their logic was that if you could have a 2% margin in the retail sector but turned over your inventory 24 times, the margin multiplied by turnover was 48%. In order to increase turnover, they had to minimize the inventory, which meant they would lean on their suppliers. The Procter and Gamble’s of the world were asked to deliver more frequently when the retailers needed it. Hence, the Japanese automotive industry learned about just-in-time thinking from the American retail sector.
One of the cases I like to teach is Zara. Now, Zara is seen as a fashion retailer. The reason for their success is automation. They are like the Dell of the fashion industry. All their strength comes from flexible manufacturing and automation, even design automation. Anyway, to make a long story short, I think we can all learn from things that we think have nothing to do with our business. And the question, for example, right now is what can education learn from Amazon?
AS: Professor, as an extension to this question itself, Indian companies are still wary of engaging with academia and still prefer to on-board consulting companies to solve their unique problems. What do you think academia brings to the table, and how do we differentiate ourselves from the consulting companies?
RS: Well, firstly, we tend to take more time to do the analysis. We have to understand the marketplace better, and the marketplace has to understand us better because we are creatures of habit. We like to do things thoroughly. We do not like to shoot from the hip. So, for example, the last project I ran when I was in the United States was for DuPont Company.
This was for repositioning and branding of Teflon. Teflon was used in pots and pans as a non-stick coating. We were looking for new markets for Teflon, and we looked for Teflon being an ingredient in the paint. So, think of your wall being washable, being scratch resistance. So, think of more durable paint. Then the question was who would want that paint? The answer is families with children, and others are factories where there is a lot of industrial wear and tear. These are two very different kinds of markets.
I, along with the faculty member from Penn State, was the mentor. There was a group of 19 people from DuPont from four continents, and we were two academics who were the coaches. Think of it this way – we provided the guidance but these 19 people did all the work. This is very different from how any consulting company will work, which will go in with the 19 people and say we will do all the work in billable days.
So what is it that we like to do as academics? Or at least I like to do as an academic? Here is an analogy I like to give the industry the fishing rod and let them do their own fishing, whereas consulting people will bring the fish to them. Industry needs to understand how to engage with academics, and we as academics need to understand that the industry has time deadlines and that they need to solve the problems ‘Now’. We also need to understand how to scope the problem of the practitioners.
But where we are better than a consulting company is that we will not give you readymade solutions. I’m not going to bake the cake for you, but I’ll teach you how to bake the cake, for you come up with your own solution. This approach keeps the entire knowledge of solving the problem within the company rather than with the consultants. And your team can teach other people how to bake the cake.
AS: Professor, your area of interest includes innovation, and in the tough times that the companies are facing right now, and markets are getting disrupted by the people who weren’t even considered competition, what would be the right strategy for a company to spend on innovation? Should they spend like 50% on innovation and 50% on their existing products? Or should they spend more on innovation and less on business as usual?
RS: The answer to this and most strategic management questions is, ‘it depends.’ This is the answer to most sincere questions related to multi-faceted or ‘wicked’ problems. For example, if your company is producing pens. There are not many technological advancements coming in. Products haven’t changed that much and therefore what you need to do is you need to put your money on operational resources. Maybe think of some ways of selling directly to customers.
On the other hand, there could be other products which are new to the world. Let us say some new pharmaceutical products like a vaccine. Timing is critical, and getting the product into the marketplace is essential, in which case I would spend 100% on innovation. Moreover, I am defining innovation broadly. I define it as doing things better, better products, better distribution, better risk management and a better understanding of customer needs; so, your supply chain has to be better, the way you service your customers has to be better. I do not define innovation as an invention.
If you look at the figure below, what it is showing is what you should do in times of turbulence. The turbulence could be because of competition, the pandemic or a technology change. What happens is you take a hit and become vulnerable.

Source: Brand response to environmental turbulence: A framework and propositions for resistance, recovery, and reinvention by Lopo Rego, Michael Brady, Robert Leone, John Roberts, Chandra Srivastava, Rajendra Srivastava, published in International Journal of Research in Marketing.
Figure 1. The phases and dynamics of brand agility and resilience.
Look at the left side of this figure; bottom left, your vulnerability is in part dependent on the strength of your relationships. All this was done in the context of brands. What do brands bring to the table in managing change during turbulence? Strong brands are less vulnerable than others. Why? Because they have brand loyalty and people are more willing to stick with them. Strong brands are also able to recover faster; so, they have higher agility than others. And when other companies, other brands die, which is brand demise on the bottom right-hand side, you then have the opportunity to take over that business, so I’m calling it a brand re-invention.
The figure provided a very dynamic picture of recovery. The paper was co-written with five other people, and it will be published in the International Journal for Research in Marketing (IJRM). But this is a very practical paper. It says, what do we really need to do? Actually, when you look at the dip when everybody is suffering, if you’re looking ahead and you have money, you should be saying, whom should I buy out now? When other people are in trouble, that’s the best time to take over their business. This pandemic isn’t the worst thing that could have happened to proactive, resilient companies.
In dynamic, turbulent markets there is no quick answer. The last chart I use in my executive MBA classes focuses on the complexity in the marketplace, where different approaches may be appropriate for banking, consumer electronics, FMCG for infrastructure companies. I ask the participants, what does this slide mean? What does it imply? And what it implies is that answer to everything is ‘it depends’.
Even within the same industry, answers will be contextual. For instance, in the snack industry, let’s take Pepsi and Balaji Wafers. Both have a different network, different ways of distribution, different ways of branding and different ways of working; so, the answer to the same problem is quite different for the two companies in the same market – both selling potato chips.
What I am trying to get my students to do is to ask the question ‘why’ instead of asking me what to do. You should first understand why something is happening? Why should you be time-sensitive versus when should you take more time to think? Why should we spend money on advertising versus price promotions? When should we look at fighting off the competition versus going to war ourselves? When should we defend and attack?
The answer to all of these is it depends. It depends on the opportunity. It depends on your understanding of the market, the competition, the customers, your partners and many other elements in the equation. You have to answer all these questions to come up with your own solutions.
         
 
 
About us
 
The ISB-Centre for Business Markets (ISB-CBM) has evolved from the need for dialogues, insights and course offerings that can provide practitioners with the skills to understand, create, deliver and capture value in the marketing world. This is the first-of-its-kind initiative in Asia. ISB-CBM is committed to helping organisations based in India and Asia find innovative next-generation pathways to grow their businesses profitably, especially in the era of rapid change that is a reality of today’s world.
For more details contact:
Minal Agarwal: minal_agarwal@isb.edu
 
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