ACRON model of segmentation in America

ACORN, acronym for A Classification Of Residential Neighborhoods, is the first lifestyle segmentation system using multivariate analysis to accurately predict customer lifestyle and behaviors. Understanding the demographic characteristics, lifestyle, behaviors and buying patterns of your prospects is an invaluable tool to maximize your profits.

ACORN is a neighborhood segmentation analysis which allows you to understand markets and enables profit from them. It consists of a Site Location Analysis, Sales Planning, Database Analysis, Media Planning, Direct Mail, and New Product Lines. An ACORN classification accurately predicts buying trends, media types and content preferences, promotional partnerships, and other essential marketing strategies. It is probably the most respected lifestyle clustering system in English-speaking countries.

The following are the individual classification titles and descriptions:

Group 1: Affluent Families

Consumer Type 1A: Top One Percent

Demographic: “Top One Percent” households are usually older married couples in their peak earning years. Almost half are between the ages of 35 and 64 years; their median age is 43.0 years. Most are empty nesters, although many have older children attending college. This predominantly white segment also has an above-average percentage of Asians and Pacific Islanders.

Consumer Type 1B: Wealthy Seaboard Suburbs

Demographic: These older, married couples have no younger children, but a disproportionate share of their adult children still live at home: they’re empty-nester wannabes. Their median age is 40.6 years. The proportion of householders between 45 and 64 is over 30 percent higher than the national average. This population is predominantly white but has an above-average percentage of Asians and Pacific Islanders.

Consumer Type 1C: Upper Income Empty Nesters

Demographic: They are usually empty nesters: married couples with no children living at home. They also are predominantly white and middle-aged. Almost 50 percent of the householders are between the ages of 45 and 64; their median age is 42.4 years.

Consumer Type 1D: Successful Suburbanites

Demographic: This family market has an average household size of 3.1 persons, 19 percent above the national average. They are between the ages of 35 and 54 years, with school-aged children. Their median age is 37.1 years, slightly higher than the U.S. value of 35.5 years. The population is predominantly white, but Asians and Pacific Islanders comprise a disproportionate share of almost 8 percent.

Consumer Type 1E: Prosperous Baby Boomers

Demographic: The age profile of this market is singular: baby boomers who were born between 1949 and 1964 with young, primarily preschool and grade school age children; over 40 percent greater than the national average. Nearly 20 percent of the population is under 10 years of age as compared with less than 15 percent of the U.S. population. Typical of their generation, these families are very mobile. Over 35 percent of the population have moved in the past 5 years, double the national mobility rates.

Consumer Type 1F: Semirural Lifestyles

Demographic: Married couples aged 35 to 54 years with and without children living at home dominate this market. The median age is 36.8 years as compared to 35.5 years for the U.S. About 35 percent of the households are empty nesters; 40 percent have school-age children living at home. Over 92 percent of this population are white.

Group 2: Upscale Households

Consumer Type 2A: Urban Professional Couples

Demographic: With a median age of 37.8 years, “Urban Professional Couples” are older than the U.S. overall (35.5 years). They have above-average indexes for each adult age group from 25-29 years and older and below-average indexes for the age group 20-24 years and younger. They are predominantly married-couple families, with few or no children, but the mix also includes single-person and shared households, the results of high divorce rates through the 1980's.

Consumer Type 2B: Baby Boomers with Children

Demographic: Approximately two-thirds of the households are married couples, most with children; over 50 percent more than the national average. Their median age is 31.2 years; more than 35 percent of the population is under the age of 20; 34 percent of the householders are between the ages of 25 and 44 years. Typical of the cohort, many are mobile, still moving to find the best jobs or location.

Consumer Type 2C: Thriving Immigrants

Demographic: Although fewer than 30 percent of the population are foreign-born, 40 percent speak a language other than English at home. “Thriving Immigrants” are immigrants and their children. Most households are families, typically married couples with either very young or adult children. The population is diverse, including Asian and Pacific Islander at 4.5 times higher than the national average and Hispanic origin at three times the national average. The age distribution is slightly younger; the median age is 32.9 years.

Consumer Type 2D: Pacific Heights

Demographic: “Pacific Heights” are predominantly Asians and Pacific Islanders but with nearly 14 percent, there is a significant Hispanic minority. Almost 35 percent are foreign-born and half speak a language other than English at home. The segment’s age profile is almost identical to that of the U.S. overall; indexes for all age categories are within 10 percent of their U.S. counterparts. The household distribution parallels the United States - with a slightly higher proportion of adult children living with their parents - 35 percent above the national average.

Consumer Type 2E: Older, Settled Married Couples

Demographic: “Older, Settled Married Couples” are middle-aged married couples who have settled into their neighborhoods and surroundings. Although many households include school age or adult children, their age profile is slightly older, with a median of 37.2 years. The population is predominately white.

Group 3: Up & Coming Singles

Consumer Type 3A: High Rise Renters

Demographic: They are single with a median age of 37.9 years that belies the concentration of younger households. Half are between 20 and 44 years of age, compared with only 37 percent of the U.S. population. Fifty percent of these households are single-person or shared -14 percent. The population includes foreign-born residents, non-Mexican Hispanic, Asian and Pacific Islander.

Consumer Type 3B: Enterprising Young Singles

Demographic: With a median age of 30.1 years, this population is young and mobile. More than three of every five persons are under the age of 35. Approximately half of the households are single-person or single roommates or shared households compared with less than 30 percent of U.S. households.

Group 4: Retirement Styles

Consumer Type 4A: Retirement Communities

Demographic: They are older, but not exclusively elderly. With a median age of 40 years, they are actually the youngest of Retirement Communities. Householders aged 75 years and older represent over 15 percent of the household distribution, but so do householders aged 35-44 years. Single-person households are 35 percent of the total, followed by 27 percent of married couples without children.

Consumer Type 4B: Active Senior Singles

Demographic: This mature market has a median age of 43 years. Nearly 25 percent are aged 65 or older; many are widowed. Single-person households make up over 40 percent of these households. Although younger families live in these neighborhoods, there are few children. With over 85 percent of the population white, this market ranks below average in diversity.

Consumer Type 4C: Prosperous Older Couples

Demographic: Their median age is 43.2 years, but nearly half are 55 years of age or older. Most are married; few have younger children, although some families still have adult children living at home. With its population that is more than 90 percent white, this market lacks diversity.

Consumer Type 4D: Wealthiest Seniors

Demographic: Their median age of 53.5 summarizes the demographic profile of “Wealthiest Seniors”: over half of them are over 50. Over 30 percent are 65 or older, more than twice the national average for this age group. Half are married couples with no children at home, and approximately one fourth are single-person.

Consumer Type 4E: Rural Resort Dwellers

Demographic: “Rural Resort Dwellers” are usually older. Their median age is 41.7 years but they are concentrated in the 45-plus age groups. More than four of ten are aged 45 years and older. Families are predominantly married couples, many recently retired to the area. Over 95 percent of local residents are almost exclusively white.

Consumer Type 4F: Senior Sun Seekers

Demographic: The oldest in the Retirement Styles summary group, more than half of the “Senior Sun Seekers” are 55 years or older. Their median age of 59.2 years is nearly 24 years older than the U.S. median. Over 45 percent are married couples without children, but there is 32 percent of single-person households in this segment.

Group 5: Young Mobile Adults

Consumer Type 5A: Twenty-somethings

Demographic: The median age of “Twentysomethings” is 30 years, 5.5 years younger than the U.S. median. Over 27 percent of residents are in their 20s that is double that of the U.S. percentage. They are mobile and in transition, completing college or starting their careers. Nearly 60 percent live in single-person or shared households compared to 30 percent for the U.S. overall.

Consumer Type 5B: College Campuses

Demographic: Not surprisingly, almost three-fourths of “College Campuses” are college students. Their median age is 21.7 years compared to the U.S. median of 35.5 years. Over 45 percent live in dormitories; the rest, in nearby neighborhoods that are primarily student housing. Forty percent are under the age of 25; 70 percent are living in single-person or shared households.

Consumer Type 5C: Military Proximity

Demographic: This young, mobile population has a median age of 23.6 years. Over 40 percent have recently moved. Half of these households are young couples, many with preschool children, although there are some single-parent families. These racially-mixed neighborhoods are predominantly black and white with an above- average percentage of Asians or Pacific Islanders.

Group 6: City Dwellers

Consumer Type 6A: East Coast Immigrants

Demographic: “East Coast Immigrants” are the new Americans. Almost 40 percent are foreign-born and most speak a language other than English at home. Their demographic profile is a rich mix of ethnic and racial groups and household types such as Hispanic, Asian, and black. Sixty percent are married-couple or single-parent families; forty percent are single-person or shared households. Their median age is 33.8 years, with above-average percentages of younger householders aged 20-34 years.

Consumer Type 6B: Working Class Families

Demographic: “Working Class Families” are approximately 90 percent black and 75 percent family. Although slightly older than people in the U.S. overall, many households have grade-school age children or teenagers. Single-parent households comprise slightly less than one of five households at 18.5 percent compared to one of eleven U.S. households at 9.3 percent. Most are 35 to 74 years old. Their median age is 36.8 years.

Consumer Type 6C: Newly Formed Households

Demographic: These young, newly formed households are characteristic of this market. While their median age is 33.9 years, many of them are between the ages of 20 and 34 years. The mix of household types includes single parents, single-person and shared households, in addition to below national level, but still sizable percentage of married couple households with and without children. Eighty-five percent of this market is white.

Consumer Type 6D: Southwestern Families

Demographic: These families portray the Hispanic culture characteristic of the Southwest. While about 20 percent is foreign-born, most of these families have lived in the U.S. for generations. Most speak Spanish at home. Demographically, “Southwestern Families” are large; the average family size of 3.7 persons is 20 percent higher than the U.S. average. Their median age of 28.4 years reflects their emphasis on children and family.

Consumer Type 6E: West Coast Immigrants

Demographic: “West Coast Immigrants” are young and family-oriented. Almost six of ten households are families with children, either married couples or single parents. Their median age is 24 years compared to the U.S. median of 35.5 years. The average family size is 3.9 persons versus with 3.1 persons per family for the U.S. Eighty percent of the population is Hispanic and speak Spanish at home. Half of the population is immigrants.

Consumer Type 6F: Low Income, Young & Old

Demographic: The “Low Income, Young & Old” are the very young and the elderly, who are supported by a relatively young working-age population. Almost half of the households are single-parent or single-person. Their median age of 31.8 years represents the gap between those under 35 and over 64 years. These racially diverse neighborhoods are also include whites, blacks, Hispanics, and American Indians.

Group 7: Factory & Farm Communities

Consumer Type 7A: Middle America

Demographic: The demographic profile of these communities is similar to that of the U.S. population; they’re just a little older, more family-oriented, and white. Their median age of 36.8 years is slightly older with more householders aged 45-64 and fewer under 35 years. Seventy percent are married couples, compared to 55 percent for the U.S. The distribution of children is similar; the average size is at the U.S. level, 3.1 persons per family.

Consumer Type 7B: Young Frequent Movers

Demographic: Young families dominate in this market. Children are 30 percent of the population, lowering the median age to 33 years. The population is 85 percent Anglo (non-Hispanic white), but also includes blacks, American Indians, and Hispanics. Characteristic of their youth, this group tends to move frequently.

Consumer Type 7C: Rural Industrial Workers

Demographic: Primarily composed of older families with older children, the “Rural Industrial Workers” population is fairly stable. Born and raised in the same state, they are not even inclined to migrate to a different county. Most are married couples with school-aged or adult children living at home. Their median age is 36.6 years. This neighborhood type is mostly white, but also has a disproportionate share of blacks and American Indians.

Consumer Type 7D: Prairie Farmers

Demographic: “Prairie Farmers” are aging and stable as their children mature and move away. Most households are families, married couples with or without children. Few householders are under the age of 35; almost 40 percent are 45 or older. The younger householders have school-age children, which lowers the median age of the population somewhat to 37.7 years. The population is over 95 percent white.

Consumer Type 7E: Small Town Working Families

Demographic: The age and household distributions for “Small Town Working Families” almost parallel the U.S. profile. More grandparents, aged 75 or older, and more families, especially couples with school-age children live in these neighborhoods. Their median age is 36.1 years compared with the U.S. median of 35.5 years. They are predominantly white and born in the U.S.

Consumer Type 7F: Rustbelt Neighborhoods

Demographic: The population of “Rustbelt Neighborhoods” is stable, but aging. Younger people are leaving these areas while the older residents remain. Their median age of 39.6 years belies the large concentration of senior householders. Nearly 20 percent are 65 years or older compared with approximately 14 percent for the overall U.S. These households are also typical of an older population: married couples, some with adult children still living at home, and single-person households.

Consumer Type 7G: Heartland Communities

Demographic: “Heartland Communities” are older, with the median population age of 41 years versus 35.5 years for the overall U.S. Few younger householders or children are in this market. As the population ages, the dependency ratio of those under 15 years and old at ³65 years, to the working age population of 15-64 years is increasing. Households are still predominantly families, but married couples with no children at home and singles are becoming increasingly common in the “Heartland Communities.”

Group 8: Downtown Residents

Consumer Type 8A: Young Immigrant Families

Demographic: These communities of “Young Immigrant Families” are family-oriented and nearly 78 percent are Hispanic. The population is young with a median age of 30.8. Their families are large, with an average family size of 3.4. Over 45 percent of these households are either single-parent or married-couples with children. Those are the similarities; the differences are ethnic, including Puerto Ricans in New York, Cubans in Florida, and other Hispanics in the Southwest. Most of the population was born in the U.S. and most speak Spanish at home.

Consumer Type 8B: Social Security Dependents

Demographic: The profile of the “Social Security Dependents” market is straightforward: elderly, living alone. Their median age is 52.6 years. Nearly half of the householders are 65 years or older; almost 65 percent live alone. Higher proportions of adult children live in these households, possibly caring for their parents. These neighborhoods also incorporate group quarters, institutional and other quarters.

Consumer Type 8C: Distressed Neighborhoods

Demographic: In “Distressed Neighborhoods,” single-parent households outnumber any other household type. Single-person households are second. The population is very young, with a median age of 23.2 years. Over 50 percent are children under 18 years of age. The average family size of 3.5 persons is relatively large. Most residents are black.

Consumer Type 8D: Hard Times

Demographic: “Hard Times” is a population of extremes; the very young and the elderly. The dependency ratio of young (<15>

Consumer Type 8E: Urban Working Families

Demographic: Almost 40 percent of the “Urban Working Families” population is under the age of 20; their median age is 29.4 years. This is a family market with a high percentage of single-parent households. Also, economic necessity forces a significant number of adult children to live at home. Over 80 percent of the population in these neighborhoods are black.

Group 9: Nonresidential Neighborhoods

Consumer Type 9A: Business Districts

Business districts with a residential population of fewer than 100 and a significant daytime business population are included in this segment.

Consumer Type 9B: Institutional Populations

These neighborhoods are home to institutional group quarters, including prisons, juvenile detention homes, and mental hospitals. The residential population is small, except for the institution's staff and employees.

Consumer Type 9C: Unpopulated Areas

These areas are unpopulated and include parks, cemeteries, golf courses, or undeveloped land.

Pester Power Unleashed

First let me simply put across what is pester power. Pester power is children's ability to persuade their parents buy something or do something for them by continual asking until the parents agree to do it. Hilariously, there is noting new about it. Children have been doing this since ages. However this power has reached its pinnacle in recent times in India in the field of marketing and advertising. Earlier this power was leveraged only for products and services which were consumed by children. But of late this has been tactics for categories of products and services. From "My Daddy strongest" to "Mummy ka magic chalega kya", they are all over — be it cough drops or pain killers, vacuum cleaners or water purifiers, tooth pastes or floor cleansers, automotives or even home appliances. They are no longer being treated as passive viewers, but are targeted as 'influencers' in household buying.

Synovate, a global market research firm, conducted a recent survey which concluded that 42 per cent kids in India influence their parent's decision in buying high-priced goods like cars. Further, a Cartoon Network study showed 31 per cent kids were accompanied by there parents to buy refrigerators and washing machines. This phenomenon, termed as 'pester power', has opened the eyes of brand marketers and TV heads towards a new segment that for long remained unexplored in India. No wonder, every second ad features a child.

Green Marketing

Green Marketing is the marketing of "environmentally friendly" products; marketing which takes into account environmental issues such as wastefulness of the earth's resources, pollution, the release of toxins into the atmosphere, etc. Green marketing comes from products and services which are developed using "Green Technology" which focus on efficient power consumption, recyclable/reusable packaging, recycling offers for older equipment, use of non-toxic materials, or making investments in future green concepts such as alternative materials.

This concept is yet in nascent stage as very few products are really green in India. However Aware consumers have started seeking for products and services across green platforms . If they are not seeking at least they are giving preference to products and services marketed through this platform, vis-a-vis there counterparts. Heavyweight brands like Nokia, LG, Samsung and Haier et al, have rolled out products that are positioned on environment friendly platform. It is the first time that environment as a brand strategy has evolved in the Indian consumer electronics industry.

Till now, electronic brands had either used lifestyle, technology or health positioning in India. Product features are becoming similar and efforts to drive emotional USP with brand ambassadors is getting cluttered, an environment platform helps attract the top end of the market.

For starters, Nokia has just unveiled Nokia 3110 Evolve, a mobile phone with bio-covers made from over 50% renewable material, 60% recycled content in packaging and comes with energy-efficient chargers. Nokia has also made all its products completely PVC-free.

Due to changes made in the process and material of products, Nokia claims its chargers save 90% more energy, 65-80 % of the phone components are recyclable and they use 50% less packing material. So its true that there are business benefits as well in being environmentally responsible.

Globally, Nokia has developed a new concept phone made almost entirely of recycled material, named Remade. The Remade handset is made of aluminium cans, plastic bottles and old car tyres.

Coming to LG, it has decided all its newer products will be environment-compliant . "This includes forthcoming launches like refrigerators, washing machines and AC. Currently, all our products use around 90% eco-friendly materials , which will become 100% by the end of 2008,” says LG Electronics India MD Moon Bum Shin. Samsung, Haier, Motorola and many others have products lined up under similar platforms.

to be edited and contd..

360 Degree Guerrilla Marketing

360 Degree Guerrilla Marketing

Here's the problem: Your prospects and customers have short attention spans and millions of businesses attempting to attract their attention.
Here's the solution: 360 degree guerrilla marketing. It communicates with your prospects and customers from all directions and across long periods of time.

Here's the bonus: This kind of marketing is never intrusive, such as telephone calls during dinner, and very inexpensive -- even when you employ the wide range of weapons available to you, more now than ever because of the staggering growth of the Internet.

Most business owners select a wimpy arsenal of marketing weapons, figuring that if they spend enough, they're covering the bases. Today, there are more bases than ever and if you're not attending to most of them, opportunities are speeding past you at lightning speed.

The reason to employ 360 degree guerrilla marketing is because most prospects are in the market for what you sell only a small fraction of the time. If you're not talking to them at that time, they'll talk to somebody else. With less than 360 degree guerrilla marketing, your chances of connecting with them at that fleeting moment are cut down dramatically.

The fragmenting of media is still another reason to go all-out with marketing and still another opportunity to go easy on your budget because fragments cost much less than whole parts -- TV to selected neighborhoods runs a teeny fraction of the cost of TV to the nation. Guerrillas employ 360 degree marketing by blending low tech and high tech with high touch and high care.

They are always available to their customers via their Website, email address, answering device, fax, snail mail address and telephone, with many also connecting by pager and fax-on-demand software. They're involved in their communities, connecting with prospects face-to-face in non-business settings. You can be sure they have an active referral system, tapping the enormous referral power of past customers to learn the names of potential customers.

They produce and mail brochures -- printed, audio or video, or all three. They take networking seriously and appreciate that rare chance to ask questions, listen to answers and learn of problems they can solve. Guerrillas are joiners of clubs to learn industry information, meet movers and shakers, and contribute their time and energy to the organization. They offer free consultations and demonstrations whenever possible and set up alliances with other companies in co-marketing ventures -- especially online.

They are linkers of the highest order. There's a good chance they publish a newsletter, possibly even a catalog. Many pen a column for a publication read by their prospects and run a stand-out Yellow Pages ad if businesses such as theirs gain customers that way. They offer their speaking services for free to local groups and have warm, trusting relationships with people at the media in which they hope to gain publicity. When they get it, they make reprints to post and mail.

360 degree guerrilla marketing means they may run classified or small display ads offering their brochure and directing people to their Website. Many maintain awareness on the radio, with cable TV, in business magazines or regional editions of national magazines. They use signs wherever feasible and stay in touch regularly with both prospects and customers with postcard and standard mailings. Do they send questionnaires to prospects and customers? Bet on it. Even when they're doing all this, they're still engaging in only 180 degree guerrilla marketing.

Reality today means the other 180 degrees comes from their wise presence and impressive activity online. The magic words are presence and activity. Onliners see them not only at their own content-rich website, but also actively participating in forums, chat rooms, and with email that Netizens have requested. 360 degree guerrillas are frequently mentioned in online news reports, host online conferences, and run contests at their site.

As new opportunities arise online, and arise they do on a daily basis, guerrillas seize and test them, making sure their aim encompasses all 360 degrees of marketing. Combining all this weaponry on a continuing basis, over a long period of time rather than in spurts, is a tough job. But succeeding with a small business isn't supposed to be fast or easy. By using 360 degree guerrilla marketing, succeeding does become far more of a certainty.

ATL and BTL Promotions

Promotion can be loosely classified as "above the line" and "below the line" promotion. The promotional activities carried out through mass media like television, radio, newspaper etc. is above the line promotion.

The terms 'below-the-line' promotion or communications, refers to forms of non-media communication, even non-media advertising. Below-the-line promotions are becoming increasingly important within the communications mix of many companies, not only those involved in fmcg products, but also for industrial goods.

Some of the ways by which companies do BTL (below the line) promotions are by exhibitions, sponsorship activities, public relations and sales promotions like giving freebies with goods, trade discounts given to dealers and customers, reduced price offers on products, giving coupons which can be redeemed later etc.

BELOW THE LINE SALES PROMOTION

Below the line sales promotions are short-term incentives, largely aimed at consumers. With the increasing pressure on the marketing team to achieve communication objectives more efficiently in a limited budget, there has been a need to find out more effective and cost efficient ways to communicate with the target markets. This has led to a shift from the regular media based advertising.

A definition of below-the-line sales promotion given by Hugh Davidson:

'An immediate or delayed incentive to purchase, expressed in cash or in kind, and having only a short term or temporary duration'.

Methods of below the line sales promotion

1. Price promotions

Price promotions are also commonly known as" price discounting". These can be done in two ways:

(1) A discount to the normal selling price of a product, or

(2) More of the product at the normal price.

Price promotions however can also have a negative effect by spoiling the brand reputation or just a temporary sales boost (during the discounts) followed by a lull when the discount would be called off.

2. Coupons

Coupons are another, very versatile, way of offering a discount. Consider the following examples of the use of coupons:

- On a pack to encourage repeat purchase
- In coupon books sent out in newspapers allowing customers to redeem the coupon at a retailer
- A cut-out coupon as part of an advert
- On the back of till receipts

The key objective with a coupon promotion is to maximize the redemption rate – this is the proportion of customers actually using the coupon.

It must be ensured when a company uses coupons that the retailers must hold sufficient stock to avoid customer disappointment.

Use of coupon promotions is often best for new products or perhaps to encourage sales of existing products that are slowing down.

3. Gift with purchase

The "gift with purchase" is a very common promotional technique. In this scheme, the customer gets something extra along with the normal good purchased. It works best for

- Subscription-based products (e.g. magazines)
- Consumer luxuries (e.g. perfumes)

4. Competitions and prizes

This is an important tool to increase brand awareness amongst the target consumer. It can be used to boost up sales for temporary period and ensure usage amongst first time users.

5. Money refunds

Here, a customer receives a money refund after submitting a proof of purchase to the manufacturer.
Customers often view these schemes with some suspicion – particularly if the method of obtaining a refund looks unusual or onerous.

6. Frequent user / loyalty incentives

Repeat purchases may be stimulated by frequent user incentives. Perhaps the best examples of this are the many frequent flyer or user schemes used by airlines, train companies, car hire companies etc.

7. Point-of-sale displays

Shopping habits are changing for the people living in metropolitan cities. People prefer big retail outlets like Big Bazaar to local kirana stores. Most of the decisions of buying are taken by the virtue of point-of-sale displays in these retail outlets.

SOME INTERSTING EXAMPLES OF BTL PROMOTION

Most of the big brands are following the suit of BTL promotion because of rising prices of media based promotion, advertising clutter and increased impulse purchasing.

Some of the interesting examples are:

Most of the educational institutes like career launcher, Time and PT are holding informative workshops and free tests for students which give a direct interaction of these institutes with the target customer and hence a suitable platform to sell themselves.

Ring tones and music videos on cell phones are helping the entertainment industry to promote for a music video or a movie for dirt-cheap rate as compared to media promotion.

Various companies sponsor sport events to promote their brand, but nowadays media companies like Hindustan Times are holding weekly events through out the country in which companies can put up their stalls, display banners and posters and arrange for some fun activities. These events give the companies a platform at very low price to promote their brand and increase visibility among target consumer. These companies also give discount coupons to winners in the games, which in turn boost the sales of the products and ensure that first time users try these products as well.

Pepsi organized an inter school cricket event for 425 schools across 14 cities which did wonders for the company by promoting the brand amongst the right target customer for almost no cost.

Most of the pharmacy companies do BTL promotion by getting shelf space through doctors to display their products or by giving away free calcium tablets again through doctors, knowing that for a patient a personal advise from a doctor would hold more value as compared to a commercial advertisement.

Another interesting BTL promotion was by NIKE, an athlete dressed up in Nike sportswear could be seen jogging on an elevated treadmill for the whole day on National Highway 8, Delhi.

BTL promotions are gaining popularity among all big companies nowadays considering their effectiveness because of the "individual customer promotion" at a price, which is much lesser than the normal media promotions.

Funnel Management

Funnel Management (Issue 1)

Introduction

As you already know, The Lead Generator provides the best quality sales leads available, but that's not all there is to successful selling. This ezine is designed to provide you with additional practical methods to help you be more successful in sales.

Funnel Management

Prioritizing your work is the key to effective time management, but the question is, How do you do it? Do you come in in the morning, open up your contact manager and ask yourself, let's see what I have to do today? Or do you have a method for prioritizing your work that will make you, and your company, the most money in the shortest amount of time?

We have found that a simple spreadsheet is the easiest way to make sure that you're "doing the right things," not just "doing them right."

The theory behind our Funnel Management spreadsheet is the concept of the Expected Value of a prospect. The Expected Value is a function of "what a sale would be worth" if it pans out, and the "probability of success" of that sale. Thus, if a sale to Prospect #1 is worth $500 if it closes, but the probability of it closing is only 50%, then its Expected Value to you is $250, not $500.

This becomes important because, if you have an opportunity with another prospect, you can compare them and decide objectively on which one you ought to be working. So, for example, if Prospect #2 represents a potential sale of $400, but has a probability of closing of 75%, its Expected Value is higher, at $300, than the $250 value of Prospect #1. All other things being equal, Prospect #2 is the one you should be working on.

This is summarized in the spreadsheet below:

Prospect	Potential Revenue	Probability of Sale	Expected Value	Comments
#1	$500	50%	$250	Even though this has the higher potential
#2	$400	75%	$300	This is the one to work on

This gets you a long way towards effective time management, and the model can handle a lot of prospects and activities. But it's very rarely the case the "all other things are equal," so we need to add another factor.

The next most important factor to consider is time. That is, when will something close? When something closes, with "sooner" usually being better than "later," is important because we never want to have too much quota left over at the end of the month. Anyone can make quota, given unlimited time; but we don't have unlimited time, so we have to account for it.

The Funnel Management approach differentiates opportunities on the basis of when they are going to close, as well as what they are worth. Borrowing a technique from Strategic Selling, we differentiate between Suspects, "C" prospects, "B" prospects and "A" prospects on the basis of which are "closest to closing" versus those which are "farthest from closing." An "A" prospect is closest to closing, and a "C" prospect is farthest from closing, with "B"prospects somewhere in the middle. And a Suspect is someone whom we haven't qualified yet, so we don't know how close they are to closing. (Almost every prospect starts out as a Suspect on our funnel.)

In practice, the question of "closeness to closing" requires us to think of more than just time. We also have to consider the work we have to do in order to move the prospect forward in the sell cycle. (Work, of course, takes time, so you can see the connection.) In funnel management, our units of time aren't just hours, days, weeks or months; we have to include "effort."

Prospect	Potential Revenue	Probability	Expected Value	Expected Close Date	To Do	Comments
#1	$1,000	90%	$900	Oct. 1, 2000	Schedule 1 person	This is the "A" Prospect
#2	$1,000	90%	$900	Dec. 1, 2000	Schedule 10 people	This is the "B" Prospect

Think about two new examples, each one is a $1,000 opportunity with a 90% chance of closing (i.e. EV=$900,) based on what you know today. In the first case, all you have to do is schedule one User to attend a training class, and the sale is done if he likes what he sees. In the other case, also worth $1,000 and with a 90% probability, you have to schedule 10 Users for the class, and again, only the one guy has to like it. Obviously, the first case requires less work than the second. In fact, it may take you into the next month to get the second one scheduled, no less get it closed.

Even though the probability and value of the sales are the same, they don't mean the same thing to you. The second one will take more work, and it may even get "screwed up" in the process. In fact, that 90% probability on Prospect #2 might even go down if we can't get everyone scheduled.

That's why we might call the first case an "A" prospect, because getting one person into the class is a "no brainer;" while we might call the second one a "B" prospect.

It's these type of factors, mostly time and effort, that force us to categorize prospects as "A", "B" or "C;" and at any point in time, we should always be able to say who are our "A" prospects, who are our "B" prospects, and who are our "C" prospects.

An important side-note to this discussion is that this concept contradicts what a lot of sales managers and business owners think. Many people to whom we're answerable believe that your largest prospects are your "A" prospects - but it is very wrong to think of them that way. Your "A" prospects are where your near-term revenue is coming from, and that may not include the giant prospect in your funnel who may never close. You may choose to work on the giant prospect, but you should do so only because you can justify it.

This also has the benefit of focusing us on what we have to do to move the sale along. That is, as you set up your funnel to reflect "closeness to closing," you identify what you have to do to move someone from being a "suspect" to a "C" prospect, from a "C" prospect to a "B" prospect, from a "B" prospect to an "A" prospect, or from an "A" prospect to a customer.

This enhancement to the model is shown below:

Type	Prospect	Potential	Probability	EV	Expected close	To do
Suspects	#1	$500	?	?	?	Intro mtg
	#2	$300	?	?	12/1/01	Get on bid list
"C" Prospects	#3	$10,000	5%	$500	3/1/01	Offer seminar
	#4	$200	70%	$140	1/1/01	Cover bases
"B" Prospects	#5	$300	33%	$100	11/1/00	Demo
	#6	$400	80%	$320	11/15/00	Convince VP
"A" Prospects	#7	$100	90%	$90	10/15/00	Pick up contr.
	#8	$600	50%	$300	10/1/00	Wait for decision
Total		$12,400		$1,450

A very important thing to note is that it is not necessarily the case that an "A" has a higher probability of closing than a "B" or "C" prospect. In fact, it could easily be lower if you know you're going to lose this week! Think of the case where you're in a competitive bid situation with a 50/50 chance of success. There is nothing more you can do, and the decision will be made tomorrow. It's certainly an "A" prospect - but one with a low probability of success.

A second thing to note is that this approach lets you actually plan your work around what will get you the greatest return on your investment of time, money and effort. By showing your &quotTo Do" (or next steps,) on the same form as the Expected Value, you can easily determine whether you ought to work on moving that &quotB" into &quotA-ville," or on cold-calling for a few more &quotC" prospects, or on closing some &quotA" prospects. (Of course, if you need to show more than just the next steps to keep the work in context, or you need to manage your sales expense, go ahead and add them to the sheet.)

Another important feature of this example to note is the total line. As you can see, there are two totals. The total Potential reflects what the territory would be worth if everything closed, while the total Expected Value shows a more realistic measure of the value of the territory today. Unfortunately, too many salespeople count their chickens (i.e. the potential,) before they hatch (i.e. the Expected Value.) By the way, the ratio of the EV to the Potential (e.g. $1,450 / $12,400 = 12%,) is a good measure of the relative risk in the territory.

A final enhancement you can make to this method is to add a forecast module to it, something which management generally loves to see. This can be done very simply in your spreadsheet by spreading the "EV dollars" into columns (one per month,) to the right, as shown below, based on the expected close date. You can also tweak it by accounting for a collection lag by moving the revenue out a month, and/or by spreading or repeating the revenues for project or ongoing revenue streams. We even know reps who use this to calculate their commission income.

Type	Prospect	Potential	Probability	EV	Expected close	To do	Oct	Nov	Dec	Jan	Feb
Suspects	#1	$500	?	?	?	Intro mtg
	#2	$300	?	?	12/1/01	Get on bid list
"C" Prospects	#3	$10,000	5%	$500	2/1/01	Offer seminar					$500
	#4	$200	70%	$140	1/1/01	Cover bases				$140
"B" Prospects	#5	$300	33%	$100	11/1/00	Demo		$100
	#6	$400	80%	$320	11/15/00	Convince VP		$320
"A" Prospects	#7	$100	90%	$90	10/15/00	Pick up contr.	$90
	#8	$600	50%	$300	10/1/00	Wait for decision	$300
Total		$12,400		$1,450			$390	$420	$0	$140	$500

That's about all there is to it. Funnel Management can save you time, and help you make a lot more money. And all it takes is a simple spreadsheet.