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Welcome!
I hope you are doing well and excited for the upcoming new year as it bring hope of new opportunities and new possibilities.
It gives us immense pleasure to share with you the December edition of Marketing Excellence Newsletter. This issue contains some information on marketing that practitioners like you may find useful. The newsletter has the following sections:
  1. An article by Madhu Viswanathan, Senior Assistant Professor of Marketing at the ISB
  2. A summary of the research articles published in renowned journals
  3. A summary of the cases published in Harvard Business School Publishing
  4. A summary of the webinars organized in the quarter October–December 2020
  5. An insightful interview of Ms. Roshni Das, Marketing Director, Intel India
Please send your feedback and comments to the ISB-CBM team, so that we can continue to make this newsletter more relevant to you.
Last but not the least, let me take this opportunity to wish you all a very happy new year in advance.
Warm Regards

D.V.R. Seshadri
Clinical Professor and Director
ISB-Centre for Business Markets
Category Captaincy: The Next Evolution in Retail Management
By Prof. Madhu Viswanathan
What is category captaincy?
Category captaincy is the latest evolution of a management concept that transformed retail practices in the 1980s – Category Management. Category management for the first time placed the customer at the centre of retail decision making wherein retailers made product, price and placements for the entire category as a whole as opposed to making these decisions for individual products. This allowed retailers to allocate scarce and limited resources such as shelf space, display and feature in an efficient and profitable manner. The paradigm transformation was to think in terms of category profits, i.e., retailers become more concerned about customers purchasing in a particular category than what brand they purchased.
Over the years, the massive increase in the number of categories and products within a category has meant that retailers often lack the resources and capabilities to implement category management efficiently across all the categories they manage. On the other hand, manufacturers have developed considerable expertise in understanding their categories better, especially those related to consumer behaviour. This has led to the rise and popularity of category captaincy arrangements.
Category captaincy is an arrangement between a retailer and a manufacturer in a particular category where the chosen manufacturer aids the retailer in category planning decisions such as price, assortment and shelf space planning, end-aisle displays and promotions. For instance, Abbott Nutrition, one of the winning captains of Progressive Grocer (2019) worked extensively with a retailer in the area of adult nutrition and diabetes management to drive conversion in the category through cross-category promotions and out-of-aisle merchandising [1]. Captaincy arrangements come in many different flavours and forms with some involving all aspects of category planning while others incorporate some but not all (some retailers prefer to not delegate pricing power to manufacturers). However, common across all these arrangements include (a) better retailer-supplier coordination and (b) increased influence for the captaincy manufacturer over the entire category (including rival’s products).
What are the concerns?
There is an inherent trade-off at the heart of any category captaincy arrangement. On the one hand, the arrangement can be efficiency enhancing and beneficial to channel members and consumers if captains increase channel coordination, provide new services or generally operate at lower costs (relative to retailer management). On the other, there is also significant concern that category captains can use their special status with retailers to significantly disadvantage their rival, undermine competition and consequently hurt consumers.
Not surprisingly, a lot of work has been done to examine the existence of captaincy, selection of captains, information exchanges and barriers and the impact of captaincy on channel member profitability when captains are delegated price and non-price aspects of category management. The key takeaway from this growing literature is that retailers can benefit from captaincy arrangements despite concerns about captain’s opportunism and push back from rival suppliers. While these studies provide us rich theoretical insights, one of the drawbacks is that most did not involve evidence from real-world applications (more theoretical in nature). This is where our study by Viswanathan, Narasimhan and John (2020) forthcoming in Marketing Science makes a contribution [3].
Our study
Using a unique dataset that was obtained through an academic-industry research collaboration (ISB and CBM also do such collaborations) with a large frozen food manufacturer, we collected information on category captaincy as well as SKU-store-level sales and price across 24 retail chains and 8 local markets in the United States for a frozen food category. We then developed an econometric model that models the behaviours of different channel members (retailers, consumers, rival manufacturers and captains) to quantify the impact of captaincy on prices, assortments, profits and consumer welfare. We assess the practice through its impact on assortments and prices and find evidence for three effects: (a) an efficiency effect that reduces the cost of assortment planning, (b) a market coverage that leads to different assortment mixes and (c) a substitution effect that leads to captains gaining at the expense of rivals. Interestingly, our estimates suggest that captaincy can lead to welfare gains for consumers, which argues against a purely negative view of captaincy.
Our study has some interesting takeaways for both practitioners and policy makers. First, category captaincy can affect the retail environment through both price and non-price (assortments) elements of the marketing mix. First, our study reinforces some of the theoretical studies in this context. Second, captaincy can lead to positive welfare gains for the consumer under some circumstances. This often happens under increased retailer control and judicious selection of captain by the retailer. Finally, manufacturers have an incentive to be appointed as the captain when a move to category captaincy is contemplated by the retailer; captaincy improves profits, or at least holds down losses from a manufacturer’s perspective.
What should you do?
Retailer – Retailer benefits the most from this arrangement. So, if you are a retailer and have a category where you are not devoting enough resources or lack sufficient capabilities, consider captaincy. However, be wise in the captaincy selection process and in identifying the boundaries of the arrangement such as what is the captain allowed to do, what are the boundaries of the selection process, etc. Start the selection process from first principles. Sometimes, the biggest manufacturer may not be the best alternative for captaincy. Evaluate decisions based on what each manufacturer brings to the table. Finally, remember that the arrangement requires better retailer-supplier coordination. However, it is prudent to analyse whether you have the resources and capabilities to enable this coordination.
Manufacturers – If captaincy is being offered by the retailer, compete to become the captain as results unequivocally show that captain’s rivals suffer. However, weigh the losses of not becoming a captain against the cost and resources required to become a captain. If you are a small manufacturer who doesn’t have enough resources invested in understanding the customer in the category, investments required to become a captain can be substantial. Finally, if a manufacturer is unable to be appointed as a captain, our results show that it would be advised to focus its efforts on further differentiating their products from those of the captain.
The future category captaincy is an evolution of category management that makes the increasingly competitive and complex retail space more efficient. Over the years, category captaincy itself has evolved. Nowadays, retailers can choose captains in either delegatory (manufacturer makes decisions) or advisory roles (manufacturer advises and retailers makes final decisions). Further, captaincy arrangements can enhance retailer-supplier coordination on pricing and non-pricing aspects through informational value provided by captaincy decisions on non-price dimensions. This and related aspects are the focus of on-going work by Timoumi, Essegaier and Kockesen (2020) [2]. Keep glued as this is the future of retail!
References
  1. Progressive Grocer (2019), “2019 Category Captains”. https://progressivegrocer .com/2019-category-captains
  2. Timoumi Ahmed, Skander Essegaier and Levent Koçkesen, (2020) “Advisory versus Delegation: Which Type of Lead Supplier Arrangement is Worth the Trouble?”, Working Paper, ISB.
  3. Viswanathan Madhu, Om Narasimhan and George John, (2020) “Economic Impact of Category Captaincy: An Examination of Assortments and Prices”, Articles in Advance, October 19, Marketing Science.
Improve your Marketing Organization’s Performance
( Based on ‘Is Your Marketing Organization Ready for What’s Next?’ A framework for aligning growth strategies and capabilities by Omar Rodriguez-Vila, Sundar Bharadwaj, Neil A. Morgan, and Shubu Mitra, Harvard Business Review, November–December 2020)
Summarized by: Astha Sharma, ISB-Centre for Business Markets
This research reveals how marketing has become increasingly complex due to technological advancements and the rise in customer expectations to associate themselves with supplier firms that champion social cause(s) over and above their normal lines of business. The research offers a strategy and framework that marketing heads can use to make marketing departments more effective in contributing to the company’s growth in this new and fast-evolving context.
To succeed in the transformation of the marketing department that is so essential to succeed in this context, marketing leaders need to avoid the following traps:
  1. Looking at transformation as an exercise to adopt new technologies instead of looking for new opportunities to generate value.
  2. Framing the transformation project as a transition from one state to another, thereby not getting the full benefit of the transformation project.
  3. Taking up transformation projects in silos, leading to uncoordinated efforts across teams and fragmented value creation, which undermines the marketing team’s ability to drive growth.
The authors recommend marketing leaders to define a clear value-based goal before starting the transformation project. Their framework divides value into two categories: (a) value for the customer and (b) value for the company.
How to use Online Reviews in your favour
(Based on the article: ‘How Consumers Really Use Online Reviews: The the latest research reveals some surprising facts about reviews that every business should know’, by Andrew Blackman, published in the Wall Street Journal [online] New York, dated October 25, 2020.)
Summarized by: Astha Sharma, ISB-Centre for Business Markets
This research gives several findings on how consumers use online reviews to make purchasing decisions. Due to the bombardment of the advertorial content, the customer has started blocking the companies’ messages. Consumers are now referring to online reviews more than before. The following are the key takeaways for the companies in terms of the reviews that should be featured:
  1. In contrast to the common belief that five-star reviews are better than four-star reviews, it has been observed that consumers tend to give more weightage to the four-star reviews as it reflects the reviewer’s genuineness.
  2. Consumers also give more importance to the reviews posted through mobile phones. These reviews are considered more credible as it is believed that it takes more effort to write reviews on mobile phones. Therefore, companies should encourage customers to write reviews through mobile phones and add necessary features to distinguish such reviews.
  3. Research also shows that customers pay more attention to the reviews that talk about previous mistakes in purchases. The reviews that are written in the form of a story also get much attention. Companies should bump up and feature these reviews for driving up sales.
  4. While talking about reviews, the research addresses concerns about negative reviews. The consumers are usually empathetic towards the companies that have received a few harsh reviews and may also buy their products. It is good to highlight the reviews where the negative comments are due to factors beyond the company’s control. Also, responding with personalized messages to harsh reviews can drive empathy in the company’s favour.
  5. Customers also use online reviews more for good than for the experience, as it is difficult to review experiential offerings objectively. The experience could range from visiting a holiday destination to watching a movie.
  6. Typically, while browsing for the products online, customers see a chart summarizing the product’s ratings. These charts help customers make a quick opinion about the product. The consumers should try to reduce the 1 star and 2 star ratings rather than convert some 4 star ratings to 5 star ratings. This strategy will considerably impact the bottom line of the company.
These recommendations can be highly useful in today’s digital world for companies operating in online-only, omnichannel or brick-and-mortar models.

Read the full article at https://www.wsj.com/articles/how-consumers-really-use-onlinereviews-11603570504.
Software Acquisition for Employee Engagement at Pilot Mountain Marketing Research
by Michelle Steward, Jim Narus and D.V.R. Seshadri
Published in Harvard Business School Publishing (HBSP)
on August 17, 2020
Summarized by Minal Agarwal, Manager ISB-CBM
Pilot Mountain Marketing Research (PMMR) is a mid-sized marketing research analytics company based in Rural Hall, North Carolina, USA. It was founded in 2005 by Suresh Venkatesh, Ph.D., a well-respected statistician and researcher. The firm provides market research and analytics services to customer firms in the manufacturing, professional services, retail and distribution sectors.
PMMR’s senior management was concerned about the low level of employee engagement and its impact on their business. They noticed that the employees rarely communicated with senior management or with their colleagues. This disengagement between the employee had started affecting the quality of work and the company began losing business from its long-time clients. To find a solution to this problem, Venkatesh attended a leadership conference in San Diego where he learnt about the potential benefit of an employee engagement software (EES). After coming back from the conference, he assigned Sheryl Taylor, the head of purchasing department with the task of acquiring the EES and deploying it across the firm. Venkatesh instructed Taylor to use online tools to gather information on software performance and to make the purchase decision. However, she was not clear on which online tool to rely on as there were several hundred EES programs available in the market.
Taylor decided to first meet with Bea Bavier, the head of human resources management (HRM), to find out about HR’s requirement. Based on their discussion they identified the ideal product specifications which the selected software should have. Taylor was now clear on what the PMMR required in the EES program. She then began searching for a supplier of the EES. She visited the website of several vendors of EES to learn about their respective product specifications. She summarized the information in a Fit Analysis Table. Based on this analysis, Taylor was able to narrow down the choice to five contender’s firms. She then turned to Wright’s achievement grid which is commonly used to evaluate each vendor firm’s technical characteristics on parameters such as maintainability and reliability. To gain a feel of the ‘word on the street’ about each offering, Taylor asked her colleagues to conduct a ‘sentiment analysis’ of recent comments made on social media and online communities for the selected firms.
Lastly, she contacted one of the leading software rating and review sites, Evergreen Insights, for evaluation from peers who had purchased and used the prospective offerings of each of the vendors. Evergreen provided Taylor with an ‘Excellence Matrix’, which has all the customers’ experience data, summary of overall ratings and composite rating scores. Taylor sent out the request for proposal (RFP) to the selected five vendors to assess the required features for each of the EES packages. All the suppliers replied with the requested details and quotes. She now had all the required information to combine and analyse, to make the final purchase decision.
Taylor and Bavier then scheduled a meeting with Venkatesh to review their rationale for the chosen EES package.
Learnings from the Case Study
  1. What is the process to make the right buying decision for software products in a situation of ambiguity, which requires critical thinking?
  2. Extensive data collection reduces the uncertainty in the process of making the choice but does not eliminate it completely.
  3. The job of a decision maker is to critically think through the data available to make a better decision, which would not be possible to make in the absence of the appropriate data.
Cloudphysician: Collaboration between man and machine to save lives
By Rajesh Pandit and D.V.R. Seshadri
Published in Harvard Business School Publishing (HBSP) on July 24, 2020
Summarized by Minal Agarwal, Manager ISB-CBM
Cloudphysician is a healthcare start-up that offers comprehensive remote monitoring and advisory solutions to hospitals’ intensive care units (ICUs) in India. It was founded in 2019 by Dr. Dhruv Joshi and Dr. Dileep Raman. They met each other at the Cleveland Clinic in the United States, where they worked as ‘intensivists’.
While working at the Cleveland Clinic, Raman and Joshi discovered that even at one of the most advanced hospitals in the world, there is a lack of technology integration in critical care decision making. Realizing the crucial condition of healthcare in India and other developing countries, they decided to leave their respective jobs and return to India to fix some of these problems in healthcare, especially in the area of their expertise.
The primary target segment for the Cloudphysician services was hospitals in tier-2 and tier-3 cities and towns across India, particularly smaller hospitals. Due to various reasons, most of these hospitals did not have the specialized in-house expertise required to provide emergency care in their ICUs, resulting in a high patient mortality rate. Recognizing these hospitals’ unmet needs, the Cloudphysician team built a solution that significantly increased the capabilities of doctors who were in-charge of the ICUs at these underresourced hospitals.
The team developed a sophisticated technology platform using a combination of new-age technologies such as computer vision, artificial intelligence (AI), machine learning (ML) and analytics. They built the platform from the ground up, keeping in mind the hospitals in non-metro locations at their different stages of maturity and varying degrees of the ICU staff capabilities at these hospitals. Cloudphysician had to face the initial challenge of resistance to change from doctors and nurses in these hospitals. However, in the end, they were all convinced of the significant improvement in outcomes, which were noticeable in a short span of time.
The team decided to partner with a national distributor of the ICU medical equipment to accelerate the customer acquisition process. Cloudphysician has ramped up its customer base progressively, with more than a dozen hospitals using the services of Cloudphysician as of January 2020. The COVID-19 crisis has pushed up the demand for its services. Having demonstrated the proof of concept, the founders hoped to rapidly scale up the number of hospitals that would embrace the solutions offered by the Cloudphysician. To prepare for the envisaged growth in customer base, Raman and Joshi had to address the following critical questions that would put them in the right direction for the next phase of growth:
  1. Was this the right time to raise fund from strategic investors?
  2. What organizational structure would be appropriate to manage the potential growth, while preserving the dynamism of the start-up?
  3. What would be the right pricing strategy?
Learnings from the Case
  1. It is crucial to gain a deep understanding of the market before coming up with a product or solution
  2. The value proposition that the product or service is offering should be clearly articulated to the customers
  3. Understand the involvement of key decision makers in a business-to-business (B2B) purchase decision, and understand their individual motivations on making a purchase
‘Do Activity Based Incentives Plan Work? Evidence from a Large-Scale Field Experiment’ Panelists
Prof. Madhu Viswanathan, Assistant Professor, Indian School of Business
Mr. Satya Mahesh Kallakuru, Head of Business Excellence,
Emcure Pharmaceuticals
Mr. Ajay Kumar Mishra, Chief Marketing, Tata Steel Limited
Prof. Raghuram Bommaraju, Assistant Professor,
Indian School of Business (Moderator)
Date: September 03, 2020
Compiled by Minal Agarwal, Manager, ISB-Centre for Business Markets
ISB-Centre for Business Markets is conducting a series of Knowledge Creation seminars. These seminars aim to create new knowledge in the marketing and sales domain. The objective is also to provide a platform that allows for easy exchange of ideas and better collaboration between academicians and practitioners. The first seminar in this series was a discussion on activity-based incentives (ABI) for salespersons and sales managers.
During the session, Professor Madhu Viswanathan presented his research done on the impact of ABIs on sales productivity, which identified conditions under which they work and on whom they work (salespersons or managers). His presentation was followed by a discussion with Mr. Satya Mahesh and Mr. Ajay Mishra, who are industry practitioners, with long experience in leading sales efforts in large companies. They shared their insights on the practices followed in their organization and the practical challenges they have faced in implementing ABI. Professor Raghuram Bommaraju moderated the session.
The Research
Sales incentive is an extensive topic, and there is an expenditure of around a trillion dollars done on sales forces globally by organizations. However, there is a need to study and understand the impact of sales incentives on the performance of the sales team and the sales productivity of an organization. In the recent past, due to the availability of microlevel data, it has become feasible to study and analyse the implications of marketing and sales strategies employed by the organizations.
ABI incorporate activity scores from the salesperson’s call reports into incentive compensation. Research reveals that 15% of firms have incorporated ABI into practice.
Although some firms have deployed ABI for sales force compensation, they do not have concrete answers to the following questions:
  1. Do the ABI work?
  2. Are they improving the performance, or are these just an additional activity?
  3. Can the firm pay only on performance-based measurements?
  4. Who should be incentivized for these activities, salesperson or his/her supervisor?
A joint study on the ABI pay was done by Professor Raghunath Rao, the University of Texas at Austin; Professor George John, University of Minnesota; Professor Madhu Viswanathan, Indian School of Business and Mr. Sunil Kishore, Partner at McKinsey. They ran an experiment for three years on a large pharma company. In the first year, there was no ABI pay. The second year was divided into two periods of six months and three months. For the first period, the ABI pay was introduced for both front-line salespeople as well as their supervisors. For the second period, the ABI pay was given only to the supervisors and was taken away from the salespeople. In the third year, they returned to the status quo ante after removing the ABI pay from both salespeople and supervisors. In this period, all the other factors which could impact sales were kept constant.
The study done on the front-line salespeople and their supervisors across 305 sales territories showed a robust sales gain of around 8% from each ABI interventions relative to the ‘no ABI pay’ situation. Some of the significant findings of this research are the following:
  1. ABIs are very valuable, and they do increase sales performance.
  2. The research also showed that the territories with more salespeople recorded a considerable gain in sales.
  3. The ABI pay increases the output of both the salespeople and their supervisors.
  4. The supervisors exert more control on salespeople for successful execution of the activities designed.
  5. The return on investment (ROI) is better if the organization incentivizes the managers only and not the salespersons.
The takeaway is that the organization is better off introducing the ABI pay for the managers as the managers are the ones who are controlling and allocating the activities of the salespersons. The ABI pay is more effective in the territories where there are more numbers of salespersons.
Comparison between the pharma industry and manufacturing industry for the impact of ABI pay on sales performance
In the pharma industry, ABI payments have become prevalent in the last decade. Previously, when there was no ABI pay, the organization would do the following:
  • Recognize the salespersons for their work in quarterly/annual meetings
  • Reward the salespersons based on the revenue generated for the organization
  • Award them for overall excellence, taking into account sales revenues as well as activities performed to achieve them
However, during the last decade, companies have moved from traditional sales incentives to effort-based incentives after realizing the importance of the ABI pay. The pharma industry requires well-thought-out activities that help in building a brand. Therefore, ABI help in achieving sustainable sales and building relationships with clients.
Manufacturing industry, on the other hand, has various other integral divisions apart from sales, which are involved in creating the overall customer experience: mining, supply chain and production, among others. There are various cross-functional projects undertaken, and hence it becomes challenging to incentivize just one team (namely sales). Therefore ABIs do not work very well for organizations that are primarily into manufacturing. Such organizations focus on building a culture that encourages a collaborative way of working.
Impact on incentives and especially ABIs during COVID-19
The COVID-19 situation has forced organizations to move faster into the digital mode of communication with their clients. A lot of organizations are focusing on training their salespersons and enhancing their skill sets. They are also taking care of the well-being of their employees, not just through monetary incentives but also by the empathy and care shown for them.
Companies have enhanced communication with channel partners as well as clients, which helps them cultivating enduring relationships in these times of crisis.
‘Cross selling B2B Services’

Presenters
Professor Vamsi Kanuri, Assistant Professor of Marketing,
University of Notre Dame
Ms. Jigyasa Kishore, Global Director, Moglix
Professor Kiran Pedada, Assistant Professor of Marketing and
BAT Research Fellow, Indian School of Business (moderator)
Date: November 04, 2020
Time: 6:30 PM to 7:30 PM
Compiled by Minal Agarwal, Manager, ISB-Centre for Business Markets
The ISB-Centre for Business Markets conducted its second seminar in the series of Knowledge Creation seminars. The seminar was a discussion on ‘Cross Selling B2B Services’. These seminars aim to create new knowledge in the marketing and sales domain by showcasing faculty research. The objective is also to provide a platform that allows for easy exchange of ideas and better collaboration between academicians and practitioners.
Business-to-business (B2B) suppliers are increasingly cross-selling additional services along with the core service to improve profitability, yet the effects of cross-selling on individual buyer relationships across multiple service adoption stages remain unclear. During the session, Professor Vamsi Kanuri presented his research on the dynamic impact of cross-selling on buyer retention in on-boarding and post on-boarding service adoption stages. His presentation was followed by a discussion with Jigyasa Kishore to understand the industry perspective. The discussion also enabled correlating between the research findings and some of the best practices followed by companies. Professor Kiran Pedada moderated the session.
What is Cross-selling?
Cross-selling is a practice where supplier firms sell add-on services to their customer firms in addition to core services offered. These add-on services help in enhancing the feature functionality of core products. It is becoming a common practice for B2B firms to move from transactional selling to subscription-based services by offering add-on services as value-added offerings for their clients.
There are various types of selling activities which firms deploy, such as solution selling, service infusion, service transition and service bundling. These are the selling activities in which the firms sell unrelated products/services vis-à-vis their core offering.
Cross-selling is different from the above selling activities; it enhances the functionality of the core products by selling services related to the core products. The following are following benefits of cross-selling:
  1. Create sticky customer relationship
  2. Increase customer retention
  3. Increase purchase frequency
  4. Enhance contribution margin
  5. Enhance customer’s lifetime value
  6. Enhance supplier firm profitability
There are the following two stages in cross-selling: initial on-boarding and post on-boarding. At the initial on-boarding stage, the customer firms evaluate the services. Once the learning happens in the initial stage, the offering moves to multiple organizational units of the customer firm in the post on-boarding stage.
In the case of B2B subscription services, most of the add-on services are sold in the initial on-boarding stage itself along with the core services. The supplier firms incentivize their sales team for cross-selling. The salespersons in return push their customers to buy addon services along with core services.
The Research
A joint study on cross-selling B2B service using the multi-method approach was done by Professor Vamsi Kanuri with his co-authors Professor Lena Steinhoff at the University of Rostock; Professor Jisu Kim at University of Washington and Professor Rob Palmatier at the University of Washington.
They partnered with a global B2B SaaS provider of travel, expense and invoice management software services, which provided its offerings to business in the retail, education, healthcare, manufacturing and financial services spaces. The SaaS provider with which they partnered is valued at more than US$ 6 billion and generates annual revenue of approximately US$ 700 million. They offer 1 core service and 14 add-on services that enhance functionality of the core service. Examples of the add-on services include audit services, business intelligence and invoice management.
The question which they were studying was: ‘What are the downstream consequences of selling multiple add-on services along with the core service at the beginning of the sales cycle?’

To get the answer for this research question, they conducted the following three different studies:
  1. The researchers interviewed nine senior firm executives to understand what drives them to conduct business in the manner they are doing and how their customers react to their selling practices.
  2. They analysed data for 75,000 subscription contracts between 2015 and 2018 across 37 countries.
  3. They ran scenario-based experiments to understand customers’ perspective on the firm selling multiple add-on services along with selling their core service.
The findings from the study showed that at the initial on-boarding stage, customer firms were essentially trying to adapt to the new service. Their information technology (IT) teams also evaluated means to integrate the new software into the existing system to use it seamlessly. Firms incurred significant costs in these learning activities and in overcoming hurdles. There can also be a lot of push back from the end users, as they would like to conduct businesses in their usual way, which they had been following for many years.
While the supplier firms try to overcome some of these barriers during initial negotiations at the time of selling software, the actual learning begins when the software is deployed at the customer site, which is typically referred to as the on-boarding stage. The supplier firm trains end users in the customer firm and makes them acquainted with the software.
The study showed that selling a lot of add-on services with core services exponentially increases the perceived complexity of the services. As the end users also have negative notions about the software since their initial belief is that it will cause a lot of disruption in their day-to-day life. Selling add-on services will further complicate the process, which in return will result in customers dropping out during the crucial on-boarding stage.
Once the software is integrated in the system and the users have got acquainted with it, offering add-on services at that stage time will help in overcoming barriers to acceptance of the core service and the add-on services. This will further increase the switching cost for their customers and will lead to higher retention during the post on-boarding stage.
Communication plays a huge role in mitigating the complexities and increasing switching cost for end users
Supplier firms are embracing various means to communicate with their customers effectively. Technology has enhanced the means of communication and helps the sales team in moving from face-to-face communication to remote communication, which is now possible with the rapid advancement in communication technologies.
However, the study showed that during the initial on-boarding stage, using richer communication such as in-person communication through face-to-face interactions and teleconferencing enhances user’s perceived complexity. It is therefore a better practice to have richer communication that reduces any such complexity. This is even more applicable in the case of large customer firms, with more people and departments to deal with.
In the post on-boarding stage, the customers have learned how to use the services. They are now looking for efficiency and do not necessarily require in-person communication. For them, leaner communication channels such as live chat is adequate. As per their research, at this stage, leaner communication is more effective than richer communication.
What is the right number of services to offer at the beginning of the sales cycle?
The research study showed that offering more than three add-on services along with the core service at the beginning of the sales cycle decreases the customer lifetime value. The magic number is three!
However, if the firms do not consider the attrition of customers during initial on-boarding stage and look at the customers who have stayed after initial on-boarding, the firm might incorrectly infer from a customer lifetime value analysis that the optimal strategy is selling more add-on services.

The following are the three key findings from the study:
  1. The suppliers need to understand that there are downsides of selling too many add-on services at the beginning of the sales cycle.
  2. There are benefits to employing richer communication, especially in early stages of deployment.
  3. As more B2B services are moving towards subscription-based services, it is important to estimate customer lifetime value not as a whole, but to split it up based on the phases of deployment and then cumulatively assess the returns on selling these add-on services.
Practical implications of the study: What does it mean to a practitioner?
The industry speaker, Jigyasa Kishore also confirmed the perception of complexity associated with deploying add-on services during the initial on-boarding stage. Frequent communication geared towards education, awareness and issue resolution determines the effectiveness of cross-selling in the on-boarding and post on-boarding stages.
In addition to that, supplier firms must keep the following in mind for building relationships and establishing trust with customer firms:
  1. The new technology should be better than the existing one
  2. Start small with one service, drive adoption and gain trust before offering other add-on services
  3. The supplier cannot become everything to everyone; it is important to pick and choose
  4. Build a connected ecosystem and not a standalone product
  5. Transition from being a vendor to a trusted business partner
Spotlight
Astha Sharma, Senior Manager at ISB-Centre for Business
Markets spoke to Ms. Roshni Das, Marketing Director at Intel India.
Ms. Das shared useful insights from Intel on how technology is changing
the landscape of marketing and how Intel is innovating at a furious pace
on this front. Scroll down to read the full interview.

Day and date: Friday, November 27, 2020
Digital Interview
1. What do you think is the most exciting marketing trend at present?
This year and the next year will be pivotal for customer experience, as the essential human need, ‘connection’, has been limited due to COVID-19. Many brands have had to build a human connection using creativity and innovation by leveraging technology. A few exciting trends that I see are the use of artificial intelligence (AI) in marketing, chatbots to assist shopping experience and the creation of hyperpersonalized experiences.
Another area to drive experience has been augmented reality (AR) and virtual reality (VR). Intel recently launched the 11th Gen Intel® Core™ processor in September 2020, and we created the highest resolution Extended Reality (xR). Banks, automotive companies and many more organizations are all leveraging AR and VR to create an experience of the product and the brand and create a virtual connection with the customers.
Another exciting trend is the emergence of co-created content from influencers, key opinion leaders or celebrities. I also think data-driven and data-backed marketing is growing in business-to-business (B2B) marketing.
2. There is a recent article published in the HBR, ‘Is your marketing organization ready for what’s next?’ The authors talk how marketing teams can create value for the customer by offering experience, exchange or engagement value. They also talk about marketing teams’ ability to create value for the organization in terms of knowledge generation, strategic and operation value. All this is possible and challenging because of the advancement in technology and also increase in social awareness of the audience. What’s your take on how has marketing changed in your particular industry and how are you making sure you are future ready?
The role of marketing has become more extensive. From the conventional role of product-led communication, marketing teams are now involved in purpose-led communication. Marketing has become more agile and accountable for driving the growth of an organization. Many companies are using analytics not only to determine communication timing or contextual marketing plans, but they are also using it to inform decisions across the company. Social listening has provided a lot of valuable inputs to companies.
Intel has been a front runner in marketing technology investment for many years now. We started seeing many social media cues during this pandemic, like customers looking for business continuity, cloud migration and online learning. These were opportunities for brands and marketers to provide for those needs of consumers and drive empathetic action. Intel collaborated with the Times of India and launched a personal computer (PC) Paathshala program that was born out of listening to students’ and teachers’ online discussions. Intel brought several leading brands including original equipment manufacturers (OEMs), collaborators, retailers and education solution providers, to put together a program that would help people navigate online learning. This program has been very well received.
Many companies are now investing in marketing technologies and reassessing the tools for marketing. Rather than expanding into many technologies, tech stacks are getting smarter, more streamlined and connected. We are going to see this trend continuing for a while. Intel’s in-house information technology (IT) team has built a customized tool for account-based marketing. Intel has its self-service dashboard that presents the entire customer lifecycle. Many customer tools are required in marketing to deliver hyper-personalized messages.
3. In current times when consumers are bombarded with marketing messages, how do you ensure your communication stands out?
Privacy is very crucial, and adhering to privacy norms is very critical. We ensure that the right message goes to the right consumer. For this reason, Intel employs pull-based marketing rather than push-based marketing. We use specialist platforms efficiently. For example, combining Flipkart’s data target, which has active shoppers and Facebook, which provides attitudinal signals, gives us a more accurate target segment and more precise information on what the consumer wants. With this, we can create more precise and personalized messages for the audience that we serve.
4. What does Intel brand stand for? What is your differentiator?
Our brand represents our vision for creating world-changing technology that enriches the lives of every person on earth. We recently unveiled a transformed Intel brand that reflects our essential role in creating technology that moves the world forward. As we continue to transform our business, from PCs and servers, to a company that is poised to unleash the potential of data, it is imperative that our brand positioning reflects our business strategy. Our new Intel brand features a modern and contemporary visual identity system and an inspirational new marketing platform that is built on action and positive impact – “Do Something Wonderful”. Our brand, in service of our product and technology roadmap, reinforces Intel’s position as a modern technology leader focused on the future.
5. Everyone knows ‘Intel Inside’. In today’s context how you would define the role of Intel?
Our brand positioning is keeping pace and staying true to our business transformation. Intel’s diverse portfolio is unparalleled, and as we enter new markets and broaden our technology, Intel sees a more significant role in its customers’ success. We started with the PC era and Intel Inside was synonymous with powering most of the world’s PCs. Today, we have a new revenue mix powered by data and the rise of AI, 5G network transformation and the intelligent edge. Intel stands for world-class innovation. ‘Do Something Wonderful’ is Intel’s new brand platform, built for taking action and rooted in the belief that our technology creates positive impact for people, business and the planet. Our brand platform will come to life through our innovative products that demonstrate Intel’s relentless commitment to creating ‘Wonderful’ technologies.
6. How do you segment your customers given that all your known customers are big brands in themselves? What are some of the ways in which you engage your customers?
We have a spectrum of customers. As a brand, we are all-pervasive across various touch points because we have transformed our business, from PCs and servers, to a company that is poised to unleash the potential of data.
Co-marketing and co-engineering are two prominent ways in which we engage our customers. Our deep-rooted engineering excellence positions us uniquely to work with customers such as OEMs or even global system integrators and others to co-engineer solutions that we can customize for our business customers or consumers alike. For instance along with our global system integrators such as Wipro, TCS, HCL, we’ve co-engineered workplace transformation solutions leveraging the Intel vPro platform which help large Fortune 500 companies across the world remotely manage their workforce’s IT requirements in a seamless and secure manner.
Additionally, Intel recently announced the Intel Evo platform brand that represents the class of laptops built for getting things done, made possible by the Project Athena innovation program.
Project Athena is Intel’s overarching, long-term innovation program. It is the original framework that deploys a combination of social science-led insights, experiential innovation, optimized PC platforms, ecosystem investments, partner co-engineering and true-to-life testing and verification that builds on traditional benchmarking.
Our promotions and go-to-market strategy reflect what our customers want. For instance, earlier this year, when the pandemic induced the ‘Learn From Home’ phenomenon, we corralled the entire PC ecosystem from the OEMs, retailers to ed-tech players to form a consortium along with a leading media publisher called PC Paathshala which provided solutions for parents, teachers and students to navigate this new normal of remote learning.
We work with our retailers and sales representatives because they are interacting with the customer where the rubber meets the road. This is where Intel’s ‘moments of truth’ are created. This is where we sell all the wonderful products we make. We have put in-store interactive point-of-sale mechanisms, which help in effective customer segmentation and profile each customer based on what s/he needs to enable them to make the most appropriate choice. Equipping the retail salesperson (RSP) with the right information to make the sale is very important.
In our B2B markets, we work with our broader ecosystem on projects such as migrating to the cloud and getting ready for new generation servers. At Intel, we believe that technology enriches the lives of every person. During the COVID-19 pandemic, we have worked with many start-ups using our Internet of Things (IoT) products to create contactless monitors for health indicators and converting acute care beds into monitored intensive care unit (ICU) beds powered by Intel technology.
7. What has been the impact of the COVID-19 pandemic in your industry and how are you dealing with it?
Of all industries, I personally believe that the IT industry was best equipped and also one the most agile industries in responding to the pandemic. The pandemic brought about the ‘Life from Home’ phenomenon in full force from working, learning, gaming to innovating from home. What we observed during the pandemic was a significant growth in the use of digital technology and cloud first service delivery models. Whether it was the rise in healthcare teleconsultation or increase in digital payments, or an estimated threefold growth in e-commerce, consumers started adopting digital technology more seamlessly across every sphere of their life. As Intel we responded on many fronts, helped enterprises remotely manage their workforce with the effective integration of the Intel vPro platform, which is built for business. We reached out to CIOs and IT decision makers with tactics on how to manage their workforce and infrastructure remotely. We worked with cloud service providers to reshape their service delivery and enable unique opportunity for businesses, especially through integration with AI, data analytics, automation and edge computing. The agility and resilience demonstrated by humankind and organizations during this pandemic has defined a few key trends that we believe will define the future. The first fuelled by the unprecedented shift to cloud is the ‘Cloudification of Everything’. The second is the ‘Diversification of the Ecosystem’ that will cater to India’s local needs as well as innovate for the world from India. With remote working, gig economy and a younger workforce becoming prevalent, the ‘Fluidization of Talent & Workplace’ is apparent and finally we foresee the ‘Localization of Infrastructure’ aided by the government’s policy impetus, world class tech ecosystem and widespread deployment of AI, big data and IoT solutions will define India’s growth story in the future.
Value for the Customers
Value for the Company
Marketing leaders need to define the importance of each of these categories, both from the perspective of value for the customers and value for the company, to propel the organization’s future growth. This exercise will help them define their function’s value proposition. No company can deliver value in all of these categories. By looking at its priorities and capabilities, the marketing leaders need to create a roadmap relevant to their organization.
         
 
 
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
Astha Sharma: astha_sharma@isb.edu
 
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