marketers – Pertinent Observations

Bangalore Book Festival

So today I made my way to Gayatri Vihar in the Palace Grounds to visit the Bangalore Book Festival, on its last day. It was interesting, though a bit crowded (what would you expect on the last day of an exhibition? and that too, when it’s a Sunday?). I didn’t buy much (just picked up two books) given the massive unread pile that lies at home. However, there was much scope for pertinent observations. Like I always do when I have a large number of unrelated pertinent observations, I’ll write this in bullet point form.

There were some 200 stalls. Actually, there might have been more. I didn’t keep count, despite the stalls having been numbered. Yeah, you can say that I wasn’t very observant.
All the major bookshops in Bangalore barring the multicity ones had set up shop there. I don’t really know what they were doing there. Or were they just trying to capture the market that only buys in fairs? Or did they set up stall there just to advertise themselves?
It seems like a lot of shops were trying to use the fair to get rid of inventory they wanted to discard. All they had to do was to stack all of this on one table and put a common price tag (say Rs. 50) on every book in that collection, and it was enough to draw insane crowds
One interesting stall at the fair had been set up by pothi.com an online self-publishing company. I’ll probably check them out sometime next year when I might want to publish a blook. Seems like an interesting business model they’ve got. Print on demand!
I also met the flipkart.com guys at the fair. Once again, they were there for advertising themselves. Need to check them out sometime. Given the kind of books I buy, I think online is the best place to get long tail stuff.
There was an incredibly large number of islamic publishing houses at the fair! And have you guys seen the “want qur an? call 98xxxxxxxx for free copy” hoardings all over the city? Wonder why the Bajrang Dal doesn’t target those
There was large vernacular presence at the fair. I remember reading in the papers that there was a quota for Kannada publishers, but there was reasonable presence for other languages also, like Gult, Tam, Mellu, Hindi
A large number of stalls were ideology driven. Publishing houses attached to cults had set up stalls, probably to further the cause of their own cult. So there was an ISKCON stall, a Ramakrishna Mutt stall, a Ramana Maharshi stall, etc.
Attendance at most of these niche stalls was quite thin, as people mostly crowded the stalls being run by bookstores in order to hunt for bargains. Attendance was also mostly thin at publisher-run stalls, making me wonder why most of these people had bothered to come to the fair at all.
I saw one awesomely funny banner at the place. It was by “Dr Partha Bagchi, the world leader in stammering for last 20 years” or some such thing. Was too lazy to pull out my phone and click pic. But it was a masterpiece of a banner
Another interesting ideological publisher there was “Leftword books”. Their two sales reps were in kurtas and carrying jholas (ok I made the latter part up). And they were sellling all sorts of left-wing books. Wonder who funds them! And they were also selling posters of Che for 10 bucks each
I wonder what impact this fair will have on bookstores in Bangalore in the next few days. Or probably it was mostly the non-regular book buyers who did business at the fair and so the regulars will be back at their favourite shops tomorrow.

I bought two books. Vedam Jaishankar’s Casting A Spell: A history of Karnataka cricket (I got it at Rs. 200, as opposed to a list price of Rs 500) and Ravi Vasudevan’s “Making Meaning in Indian Cinema”.

Arranged Scissors 12 – Rejection Sharing Agreements

This is similar to the Klose-Podolski corollary to the Goalkeeper Theory. To refresh your memory, or to fresh it in case I haven’t mentioned this earlier, the Klose-Podolski corollary refers to a case of two close friends who decide to hit on the same person. The implicit understanding is that they don’t regard each other as rivals but blade together, and first get rid of all the other suitors before they engage in one last showdown so that the bladee picks one of them.

We came up with this corollary to the Goalkeeper Theory shortly after the 2006 Football World Cup, during which Klose and Podolki formed a cracking strike partnership for Germany. Later on, they were to play together for Bayerrn Munchen, but like most Klose-Podolski arrangements, they too ended up in bitterness with Poodolski (who scored the lesser number of goals among the two) publicly voicing his bitterness and finally transferring to his “native” Koln.

Now that the crazy digression is out of the way, let me get to the point. Today is the first day of Navaratri, and with the inauspicious “Mahalaya Paksha” having gotten out of the way, arranged scissors is back in full earnest. This also means that I re-enter the market, though I’m still yet to list myself (don’t plan to for a while at least. OTC is said to give superior valuations). And some casual conversation and some not-so-casual phone calls this morning, I have been thinking of the arranged marriage equivalent of the Klose-Podolski arrangement.

So basically, as part of this arrangements, two parties who are looking to hit the same side of the deal strike a deal to share “rejection information” with each other. “Rejection information” can be of the following two types:

Today I found out about this girl. She seems to be really good in most respects – good looking, rich, good family background, virgin and all that. But for some (usually random) reason, my son doesn’t want to marry her. Why don’t you try her for your son?
Today I found out about this girl. Talked to her, her parents, etc. Doesn’t seem like a good prospect at all. She is either ugly or too “forward” or her family background is bad. I think the chances of her getting along with your son is quite low. Don’t waste your time with her.

Note that both of this is extremely useful information, especially in an illiquid market. What is important here is the nature of people with whom you strike such agreements. The basic thing is that your correlation with them should neither be too low nor too high. Ideally, they should belong to the same/similar caste, should have a fairly similar family background, etc. but the boys shouldn’t be too similar. Yeah, I think that is a fair criterion – they should be as similar as possible in terms of “arranged criteria” but as different as possible in terms of “louvvu criteria”.

Basically if the correlation is too low, then you can’t really trust their judgment on counterparties. On the other hand, if the correlation is too high, then it is extremely likely that they turn out to be “rivals” and that if one party rejects a girl, it’s unlikely that the other party will like the girl. I supppose you get what I’m talking about.

One downside to such agreements that I can think of – it might cause bitterness later on in life, long after the goal has been scored. The feeling that “this guy married a girl that I rejected” or the other way round might come back to haunt you later on in life.

LinkedIn recos

LinkedIn in general is a useful site. It’s a good place to maintain an “online CV” and also track the careers of your peers and ex-peers and people you are interested in and people you are jealous of. If you are a headhunter, it is a good place to find heads to hunt, so that you can buzz them asking for their “current CTC; expected CTC; notice period” (that’s how most india-based headhunters work). It also helps you do “due diligence” (for a variety of reasons), and to even approximately figure out stuff like a person’s age, hometown, etc.

However, one thing that doesn’t make sense at all to me is the recommendations section. Point being that LinkedIn being a “formal” networking site, even a mildly negative sounding recommendation can cause much harm to a person’s career and so people don’t entertain them. Also, the formality of the site prevents one from writing cheesy recommendations – the thing that made orkut testimonials so much fun. And if you can’t be cheesy or be even mildly negative, you will be forced to write an extremely filtered recommendation.

Rhetorical question – have you ever seen a negative or even funny or even mildly unusual recommendation on LinkedIn? I haven’t, and I believe it’s for the reasons that I mentioned above. And if you think you are cool enough to write a nice recommendation for me, and that I’m cool enough to accept nice recommendations, I’m sure you and I have better places to bond than LinkedIn.

Anyway, so given that most recommendations on LinkedIn are filtered stuff, and are thus likely to be hiding much more than they reveal, isn’t it a wonder that people continue to write them, and ask for them? Isn’t it funny that “LinkedIn Experts” say that it’s an essential part of having a “good profile”? Isn’t it funny that some people will actually take these recommendations at face value?

I don’t really have an answer to this, and continue to be amazed that the market value for LinkedIn recommendations hasn’t plummetted. I must mention here that neither do I have any recommendations on LinkedIn nor have I written any. To those corporate whores who haven’t realized that LinkedIn Recommendations have no value, my sympathies.

Update

Commenting on facebook, my junior from college Shrinivas recommends http://www.endorser.org/ . Check it out for yourself. It seems like this cribbing about linkedin recommendations isn’t new. I realize I may be late, but then I’m latest.

Tranche of wallet

One of the buzzwords in marketing in the last few years has been “share of wallet”. “We don’t aim for market share in any particular segment”, they say. “What we are aiming for is a larger portion of the customer’s share of wallet”. Basically what marketers try to do is to design their products such that a larger portion of customers’ spending comes to them rather than go to competitors (again – they claim they have no direct competitors and everyone else who competes for the customer’s spending is a competitor).

So far so good. But the problem with looking at things from a “share of wallet” pespective is that it assumes that the wallet is homogeneous. That each part of the wallet is similar to the other, and spending for different items comes uniformly from all parts of the wallet. This isn’t usually very well recognized, but what matters more than “share of wallet” (of course that matters) is the “tranche of wallet” that this particular product sits in.

I don’t think I need to give a rigorous proof for this – but some spending is more equal than others. For example, if you are dirt poor and have only ten rupees left in your pocket, you would rather buy a loaf of bread than buy a tube of lipstick. Some goods are more important than the others. “Necessities” they call them. The rest become “luxuries”. Even the “luxuries” are not homogeneous – there are various tranches in that.

So the aim for the product manager should be to get into the deeper tranches of the customer’s wallet (assuming that the top tranche is the “equity tranche” – the one that takes the first hit when spending has to be cut). Targeting the top tranche may be a good business in good times, but when things go even slightly bad, spending on this product is likely to take a hit and thus the “share of wallet” falls dramatically. Getting into a deeper tranche means more insurance, so to say.

In the world of CDOs (from where I borrow this tranche, equity, etc. terminology), people who take on the equity tranche and other more risky tranches do so only in exchange for a premium – basically that you need to be paid a premium amount (compared to lower tranches) during good times so that it compensates for lack of income in the bad times. So this means that if you are trying to target the most disposable part of the wallet (i.e. the part of wallet that takes the first hit when spending has to be cut), you better be a premium player and make enough money during good times.

So the basic insight is that. The more disposable spending on your product is for your customer, the more the premium that you have to charge. Some products such as high end fashion accessories seem to have got it right. Extremely disposable spending, which leads to volatility of income; balanced by extremely high margins which make good money in good times.

Certain other products, however, don’t seem to have got it right. One example that comes to mind is Indian IT. Some of the offerings of Indian IT companies come near the disposable end of their customers’ wallets. However, to compensate for this, they don’t seem to charge enough of a premium. So they make “normal” profits during good times, and sub-normal profits during bad times – leading to an average of sub-par performance.

So before you enter a business, see which part of your customer’s wallet you are targeting. See if the returns that you will get out of this business in good times will be enough to tide you over during bad times. And only then invest. Of course, before the 2007-present downturn happened, people had no idea what bad times were, and thus entered into risky businesses without enough of a risk premium.