04 January 2015

Conference: Effectual marketing for startups

Held on 3rd Jan 2015 at IIM-B, the conference on Effectual Marketing was what I thought would be about "marketing effectively", but it turned out to be something totally different. Read on...

The panel:
  • Prof. Saras D. Sarasvathy (A leading scholar on the cognitive basis for high-performance entrepreneurship)
  • Achitra Borgohain (founder of BinBag)
  • Yukti Yatish (founder of Scribie)
  • Siva Devireddy (founder of GoCoop)
  • Aditya Pisupati (founder of Artflute)

Causal vs Effectual Marketing

Causal marketing, or the usual way marketing is done is to:
  • Define your target market
  • Research on how to reach your target market
  • Identify the type of customers
  • Tailor your marketing to your customers
  • Market and sell

The effectual marketing pyramid, is the exact opposite of the causation model.

(click on the image to see it larger)

Effectual marketing starts with the causes and ends up wit an effect and a market that maybe did not even exist.

  • Bird in hand: You start with who you are, what you know and whom you know.
  • Affordable loss: Decide what you're able and willing to lose
  • Lemonade: Put surprises to work for you. Both the good and bad (when life throws lemons at you, make lemonade)
  • Pilot in the plane: Co-create the future without having to predict it.
  • Crazy quilt: Co-operate with parties you can trust. It also limits your affordable loss.

An example
If you refer a recipe for cooking, buy the ingredients and make a dish, it's like the causal marketing model.
But if you open your fridge, see what you have and use all of that to make something, you'd end up making something that you hadn't even expected. A totally new recipe which might taste excellent or awful. But you basically haven't lost much by trying it, because you didn't waste time, money or resources by going out to buy something and you got a chance to try something new instead of sticking to some old recipe. This is how effectual marketing works. If it flops, you haven't lost much.

Prof.Saras was conducting a very interesting session, where she was constantly interacting with the audience and asking them to put their "skin in the game". If they came up with suggestions, they were also asked what they could do to make those suggestions a reality. If they couldn't, they were asked if they could put the professor or the panel in touch with someone who could. If they couldn't, then they were asked if they could bring in at least ten people who could be potential customers for the panel. If you missed Prof. Saras' session, you missed a lot!

Of course, this much interaction also takes up time, which brought down the content disbursement of the session down. So we were given just a few examples of effectual marketing:

1. A carpenter in Karnataka: There are many carpenters who make furniture the customer asks for or is popular. There was also another carpenter who made furniture according to his own imagination and he paid tractor owners to transport his furniture to customers. The genius of his plan was, that he chose tractors which took a round-about route to reach the customers, instead of the usual shortest route. 
In the process, many potential customers along the route would see the furniture on the tractor, and were allowed to ask the driver for details and they'd order it. 
The carpenter says he got an average of four new orders for each piece of furniture he sent in this manner. 

This is marketing and sales combined. You don't make a cheaper product for the customer. You make what you want and say "this is what I have. Are you willing to buy". This way, you get real buyers.

The effectual entrepreneur is also encouraged to make the customer a co-creator by asking "I'm building a produce. What will it take for you to buy it?".

2. Affordable loss: Ask for forgiveness; not permission.

Prof.Saras gave use the example of a certain ski manufacturing company which when just a startup, distributed rubber balloons in a movie theater, where the balloons had their brand logo imprinted on it. People were encouraged to fill up the balloons with air and release them in the theatre itself, which they did. The theater owners were obviously upset, and the matter went to the press, which gave the ski company a good amount of publicity. It is said that even today, this is discussed as an un-conventional example of effectual marketing. 

There's also Jill who created Nerf (because children were hurting themselves with real toys, so she created toys out of foam) and distributed it to the fans of TV anchors who were waiting outside a production studio to see their favourite anchors. Normally, the TV anchors walk out and shake hands with fans. This time, the fans were so busy playing with Nerf balls, that they almost completely ignored the celebrities. The anchors soon identified who did this, and Jill was invited on a talk show where she got a good amount of publicity.


What do you think the video is about?
Luxury travel? Innovation in helicopters? Vacation?

Since the video revealed nothing, people would follow the link and go to hotelicopter's website. They received millions of visitors who'd reach the website and see a text that says that Hotelicopter is an April fools' joke. Their real intent was to make a search engine that gave results on various hotels, and the hotelicopter video was their marketing stunt to get people's attention.

Amazon using lawsuits as marketing
Amazon announced long back, that it was the world's largest retailer of books. They got sued promptly by another company that was actually the largest retailer, who said that Amazon didn't have a single book in their shops and couldn't claim that they were the largest.
The lawsuit went on for years, and Amazon made sure some news about the lawsuit appeared in prominent journals every one or two weeks, giving them a good amount of publicity.

Lijjat papad

The enterprising women in India who made papads on their terrace, had a plan of expanding their enterprise by making cheaper papads for the poor and costly papads for the rich (somewhat like RubyCup's plan). An experienced entrepreneur though, advised them not to do so, and to make Lijjat papad resonate with quality. They were advised to sell not just the papads but also their story. And this served as a very effective marketing tool, as more people joined in and Lijjat papad became known across the country.

Panel introduction

What followed were a series of discussions where the panel members introduced to us their startups and prof.Saras was asking the audience to come up with suggestions. 

Ideas came up for BinBag, and the professor asked Achitra what he'd give the ideator in return. Achitra said he'd give them some green points, to which the professor said that wasn't enough. To be effectual he ahd to engage the customer. Ask them their name, how they came up with the idea (maybe they are into the same field) and if they would actually help BinBag in doing what was suggested.

The stakeholder helps you put the stake down. Push them to engage and ask how they would do it How do you bring them to co-create and bring them in . How to make them bring more people in.

The founder of Scribie mentioned how they use content marketing by asking people to write blogs about them.

Artflute uses a special business card with a rectangular hole in the middle. People always remember them for it. The noticed that at the 1 MG Road mall in Bangalore, the architecture was such that there were no escalators to the first floor, and retailers were unhappy that customers didn't venture up. So Artflute setup a painting activity on the first floor (they got the space for free, because they were helping retailers get more customers on the first floor), which pulled people up, and in turn, the participants of the painting activity gave Artflute some valuable feedback they wanted to collect, about art. Artflute basically encourages you to buy more art from contemporary artists and to keep your walls more up-to-date with art.

This concluded the first part of the session, and I didn't attend the question-answer session which was after lunch, but this was one of the most interesting sessions I've attended at IIM-B, because there were real-world examples and audience interactions which also formed immediate business contacts. Professor Saras handled the audience and the session with elan!

More on NRecursions

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Conference: Funding for Startups
Conference: Analytics for startups

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