Blockchain & Its Application in Marketing - Part 2

This is the second post in the series of three posts on Blockchain Technology and its application in the field of Marketing. While in the first post, we discussed the concept of Blockchain in a very simplistic way along with examples, the next two posts including this one, are intended to use that knowledge about Blockchain and understand how the concept can be used in the field of Marketing. 

This post will first explain the Blockchain technology again with a little technical detail since we need to know what the technology can bring in for the Marketing areas. Later we bring out the possible applications. Mind you, these are not the applications for the year 2100, hence may not be fairly imaginative. The idea is to see what can be done tomorrow!

If you have not gone through the first post yet, please take time and read it before you comeback to this post. Read time is 10 mins.

Blockchain & Its Application in Marketing - Part 1

In the previous post we saw that Blockchain is a concept which at its core has ability to create, process, store and manage data efficiently. It does this with the help of three of its inherent properties:

• Distributed ledger: Multiple entries across different systems (‘Distributed Records’ across various machines, hence the name)
• Records changed on one system will be easily identified and corrected
• Consensus mechanism: Any update that has to be made to a record must have consensus of all the machines in the network for it to be updated
• The changes cannot be made by any one of the record holder but has to be done based on the consensus
• Decentralized storage that helps in creating an indelible trail of transactions which makes the system transparent, shared, secured and watertight. 
• The ownership of data is distributed among various systems and users

Hence, Blockchain technology (while many argues it is a ‘concept’ not a technology in itself, we would not get into that debate in this post) has ability to manage issues like data security, data transparency, data manipulation, real-time tracking and ownership of data, for any given business scenario.

Without going into much technicalities, let us understand the above points through a simple example:

A data unit is stored on a system under the “Name” tag as ‘Tapish' in a bank.

Case without Blockchain: Someone, by mistake or intentionally writes the name into a document as Tapishh, with an extra h at the end.

Now, the data storage is not on the basis of distributed ledger, hence there is only one data set where the name has been updated as Tapish’h’. After this, nobody knows what was the real name?

Since the updation worked on a non-consensus mechanism, that one person was allowed to change the record all by himself.

Fig 1: Three Blocks of Information

Fig 2: Data Manipulation in Case of Blockchain

The data was kept at in a centralized manner at one place with a clear ownership lying with the bank. Hence, no one but bank can change it again, which gives bank the power to collect, record and store without any restrictions.

Fig 3: Applications of Blockchain in Marketing

Case with Blockchain:  Due to consensus mechanism, that one person will never be able to make change on his own as every change needs consensus between multiple parties.

Due to it being distributed ledger, any change made on data on one system which does not reflect in other systems, will not be accepted.

Since the data is decentralized, the bank does not have the authority to unilaterally change the data hence democratizing the right for updating information.

Now we quickly see the concept on which this works in a very simple way. The core of this concept is how the data is stored and managed. The data is kept in a block. Each block or data set has three parts:

• Data: Any piece of data unit. In this example, a name, Tapish
• Hash: Identifier of the block. In this example, AB12
• Previous Hash: Hash: Identifier of the previous block. In this example, For Block 2, Prev Hash AB12 , is actually the hash of Block 1.

As you see in the second picture, an intended manipulation in Block 2 (From Tapish to Tapishh) has ended up changing the Hash of Block 2 since the data is not the same anymore as it was. It is Tapishh instead of Tapish.

The moment this Hash changes, there is a mismatch between the Previous Hash Value of Block 3(CD34), which was nothing but the Hash Value of Block 2. Hence this change has been identified as being non-consensual, and is not reflected in various ledgers.

This manipulation can then easily be pointed out and corrected with Blockchain concept, which would either be impossible or difficult with high cost involved in case of earlier concepts without Blockchain.

Now, when we know of the clear advantages that Blockchain technology bring to the table, let us jot down where in the field of Marketing can this be used?

We now look at some of these areas where the introduction of Blockchain has the potential to bring phenomenal change.

Area	Application
Advertising	Delivery and Engagement Verification       What? – There is significant fake inventory that eats up major advertising dollars via domain spoofing. An estimated $16 billion of advertising dollars have been spent in 2017 on fraudulent sites. Brands are usually dependent upon a host of middlemen for making their product available to customer’s door through online channel. Then there is also a lot of opaqueness on whether and how many of the audience actually saw the ads and for how long.        How? – Blockchain can allow resellers to label their inventory as legitimate with public Blockchain (Public Blockchain are created when the data need not be private and cane viewed by others), that means it is easily verifiable and near impossible to fake. This is possible through decentralization and identifier tagging aspects of Blockchain technology. It can also allow to add information blocks to the specific ad piece with the audience information which will be then stored through decentralized system to various systems making it virtually un-hackable.  Partners Incentive Management         What? – Incentives to partners for advertising efforts is a key area in the advertising domain. To ascertain the attribution and its magnitude, in order to incentivize the partners and vendors, a marketer requires data on the performance of the advertisement. This could be a running ad or a campaign, and any leads or conversions it generates. However, this can be done only if there is sufficient integration and cross-platform collaboration across platforms and channels. This level of data is hardly available and even if it can be weaved together, requires expensive efforts and time with limited assurance of accuracy. It is often not clear as to who owns the data and who should be incentivized.       How? – Blockchain with the help of its identifiers (block added with every piece of data for every change made creating a chain of blocks, hence ‘blockchain’) helps in creating a trail of events which can be easily tracked for each source and each destination. So the advertiser/publisher knows which agency/middlemen should be paid what.
Consumer Engagement	Loyalty Program Management What? – Poor loyalty program integration not only costs companies dearly but they also are wildly unsuccessful in their single point objective of engaging with customers. This is caused by poor integration of reward programs, inflexible reward structures & lack of visibility of the transactions for the company as well the customers. Also that the loyalty programmed are company specific and at best alliance specific. This means that customers are bounded in terms of engaging only with the limited and pre-defined companies through the loyalty program.  How? – Blockchain with the help of its identifiers (block added with every piece of data for every change made creating a chain of blocks, hence ‘blockchain’) helps in creating a trail of each transaction and event(occurrence) which can be easily tracked for each source and each destination. So the advertiser/publisher knows which agency/middlemen should be paid what.  Customer Experience What? – Customer reach-out, engagement, relationship and bonding are some of the areas which have a strong need of record keeping of customer data which is not just collected and stored in a secured location, but can also be processed and managed to create real-time insights. This in turn should lead to positive customer experience. However, more often than not, companies find themselves in a tight spot while dealing with customers, some of them being associated with the company for a long time. This is due to poor record keeping, incorrect records and highly centralized information storage. How? – Blockchain with its impermeable record keeping mechanism with the help of identifiers, and its decentralized ledger helps in keep data not only up to date but also accurate resistant to any erroneous update. Each record is saved with an identifier block which not only stores the changes made to the data but also keeps the history of the record. Decentralized ledger help in maintaining the sanctity of the information with the help of consensus mechanism.
Influencer Marketing	Reach and Engagement Verification What? – Influencer marketing in the age of social media has adopted a whole different meaning. We have seen the rise of many influencers across the globe pan social media platforms who engage with their audience through their content. Brands piggy ride on their popularity, to achieve a ready-made set of target audience. However, there are various difficulties identified in this alliance such difficulty to ascertain if the claimed reach and engagement levels of an influencer are real. Is your dollar tagging with the right influencer? How? – Blockchain’s decentralized ledger would help in storing the correct information about the influencers and will also store all the related information like content publishing and magnitude and intensity of engagement with audience. This will not only bring out these details for each influencer in public, hence ensuring right fit that brands could find with influencers. This can also help in arriving at precise incentives that could be paid to the influencers. Authenticity of Followers What? – Bulging one’s audience list through unscrupulous measures including having bots as followers are some of the ill practices on social media platforms. In a list of thousands to millions of followers it is virtually impossible to find out how many of these followers are bots and how many are real. This has an effect on marketing strategy and marketing dollars that are paid for the influencer marketing, hence plays a critical role for the marketer. How? – Here again the decentralized ledger of Blockchain helps in identifying and segregating the genuine users from the bots. It is done by scrutinizing the activities conducted by the bots on the social media, which is identified by the means of the block or the identifier that is attached to it for every transaction or event. Consensus mechanism helps in ensuring that manual intervention is not possible and hence accurate details about bots is made available.
Sales	Online Sales What? – Brands are usually dependent upon a host of middlemen for making their product available to customer’s door through online channel. While online and direct channels have their own advantages, the overall management of the online channel is highly depended on the access, security and storage of customer and product information. Frequent data security thefts have opened fissures on this much touted channel of marketing.  How? – Blockchain will help companies manage a one stop solution for its product with secured document trail and integrated functions. Its consensus based decentralized ledger makes it virtually impossible to erroneously or otherwise manipulate the records making the online trail very secure and convenient. Sales Process What? – Companies and executives spend a lot of time in segregating leads and creating a historical data base for right focusing, which is still erroneous due to lack of veracity of data How? – Blockchain can ensure that the data available is verified and has a genuine source of each bit. This will help in reducing time in cleaning data and poor sales effort RoI.
Channel Management	Claims and Refund Management What? – A significant time of company executives and channel partners is lost in trying to resolve unsettled claims and refunds which are usually buried in tons of emails and excel sheets which are difficult to make sense of . These often lead to conflicts and poor performance and deteriorated relationships between the organization and the channel partners. How? – Blockchain with its strong trail mechanism with decentralized network architecture would ensure that all involved have the same information at all the time which is not only accurate but also consensual. Sales and Partner Incentive Management What? – Schemes and trade discounts are effective ways to push sales and increase channel demand. This also comes with a huge effort in terms of managing historical incentive payments, defining incentive payouts and managing records of all payouts. Many times this lead to issues and conflicts due to lack of transparency. How? – Blockchain technology will allow to store and manage the historical performance and payout to channel partners while also recording the transaction wise history of schemes performance, hence making it much easier and transparent for everyone.

That’s it for this post. However, we have just discussed a handful of areas here and pretty sure you can think up of a lot many if you have understood the basic concept of the Blockchain technology and where can it find its application. 

In the next post, we see some more applications of Blockchain technology which are indirectly related to Marketing, like Supply Chain, Legal Contracts and Identity protection for Marketing.

Cheers,

“What Got You Here Won’t Get You There” - Is Patanjali listening?

“Patanjali Clocks Whopping Rs 10,000 Cr Revenue, Becomes 3rd Largest FMCG Player; Will Soon Open ‘Nutritious Restaurants’”

“Patanjali eyes 2-fold rise in revenue to Rs 20,000 cr in FY18; to be biggest swadeshi brand in 2 yrs”

These and similar headlines with unsubtle exuberance were making its headway about an year back. Interestingly, both the headlines are picked up from the news in the month of May in 2017.  Patanjali had a meteoric rise from when it started in 1997 as a small pharmacy to an FMCG force to reckon with. With revenue figures of 10,561 crores Rs in FY 2017, it was rubbing shoulders with the big boys of FMCG in India.

Patanjali's Year on year Revenue in Cr Rs

While the target to close the FY 2018 at 20,000 cr Rs, set by the company for itself, at the start of the year was always ambitious, the result that is going to come out for FY 2018 is expected to be oonly marginal better than last year. So much so, that the company is expected to close the year with revenue a little higher than the FY 2017, reflecting a near flat growth.

Where did the company misfire? What led to the sudden speed-braking of the supercharged company? Well, the answer lies in what made it an overnight success. The company got too focused on sales targets and in the process became myopic.

This was exacerbated by the compulsive expansion, which strayed the company from serving the consumers with the best. Let’s look at some more specific reasons that have been attributed to the bad year of the company.

• Product and Price Issues
• Quality: There has been an increasing clamor around the quality of Patanjali products. It is not uncommon to read negative reviews about some of the Patanjali products on internet. This has significantly affected the loyalty towards the products and repeat purchase.
• Not so much value for money: While Patanjali started with the economic value for money products, there has been a shift towards premiumization. Quite a few Patanjali products have now been moved towards the premium segment and the prices are pretty similar to he other competitors in the market.

• Channel and Supply Issues
• Channel Conflict: As Patanjali, in its mission towards making the product available to customer everywhere, started selling out products to various channel partners, a conflict has risen between them on margin, supply and pricing.
• Supply Issues: With the expanded demand for the product, the logistical push has not happened and the very frugal distribution model has not come under the fire. Issues like intermittent supply, preferential supplies and holding up of orders for having minimum supply volume in the area has led to retail vying for fast running items. This has not only irked the retailers, but also the modern trade set pus which have very high real estate cost.

• CAPEX and Acquisition
• The falling profit margin, as per the company has also been because of the heavy investing that the company claims has been making in the food processing and production capabilities
• Patanjali has emerged as the highest bidder for the Ruchi Soya, which is famous for selling Nutrela soya chunks. This added expense is also going to hit the operational capabilities of the company.

• Macro Issues
• Lingering effects of the demonetization has also been blamed for the flat growth this year, though the issue along with the GST challenges is a generic phenomenon that affected the whole industry and not just Patanjali.
• While touted as a great help in long term to the economy, in the short terms this has been a major issue in the country owing to lack of awareness to handle the new systems and dependency on each supplier for the filing to right GST.

• Related and Unrelated Diversification
• A very critical reason for the flat growth of the company has been its overly enthusiastic demeanor towards expansion in the new categories. It currently sells 1,000 products spanning home care, personal care and packaged foods, and will soon launch apparel. Some of the other recently launched as well as planned diversifications that the company has are as below –
• Media and broadcasting through three broadcasting channels for southern part of India
• Solar power by acquiring Advance Navigation and Solar Technologies
• Patanjali has already launched a Sim with BSNL as a co-branded product
• Patanjali launched a communication app akin to WhatsApp, Kimho
• Besides, the company is also planning to foray into dairy products
• The company has already chalked about plans to enter into apparel, clothing and garments segment this year

• Changing Competitive Scenario
• Unlike the initial years when Patanjali caught the other FMCG giants off-guard with no herbal or Ayurvedic offerings in their stable, situation has changed a lot now. All the FMCG companies are having brands in this space and hence it is not any more Patanjali’s exclusive territory. For example, HUL, the country’s largest FMCG firms bought Indulekha, the Ayurveda hair-care brand in 2015 and relaunched Ayush in 2016.

Patanjali hit the nail right when it built its USP on ayurvedic offerings at a time when people had started looking for natural and herbal options for the personal care products. Unpreparedness of the other companies in his space and a strong brand ambassador in Baba Ramdev catapulted the company to top-5 FMCG companies in the country in terms of revenue.

However, they cannot rest on their past laurels and as Marshall Goldsmith said in his book “What Got You Here Won’t Get You There”, the first step to change is wanting to change. Patanjali need to take a deep hard look at their business model and ensure that they adopt strategies that are apt for a company their size. In the timeless book on Marketing by Al Ries and Jack Trout, Marketing Warfare, authors suggest that a company needs to adopt strategies based on what they are – leader, challenger, flanker or Guerrilla, depending upon the size, market share and available resources. Patanjali has to accept the fact they are no more a Guerrilla in the market but a credible Challenger, and hence their marketing strategies need an overhaul before they get trapped in their own web.

Amazon - An Innovation Powerhouse!

An annoying interstitial ad forced me to post it on my facebook page as a sign of protest. It is funny how social network makes you feel as if you are actually powerful. I will save a detailed note on this psychological e-phenomenon for future, but I must say that the ad did what it was supposed to do. Discounting the fact that I didn’t end up buying the colourful bagpacks, the ad did manage to attract my attention. It also made me promote it (unwittingly!) to my 500+ internet buddies on facebook.

 

The brand that was advertising vociferously on my daily news website was Amazon. Huh.

Amazon is everywhere these days. It has slowly and steadily, and with a lot of patience and innovation, built a strong-fundamental based business model in India. Many were wondering for the first few months after Amazon made its way into India about Amazon's quiet game plan. The firework that one would expect from the big daddy of online retail was far from visible.

All this while, Amazon was investing in the foundation stone of this to-be e-tailing giant of India. This has helped Amazon India to build for itself an environment and capability to roll out mind-boggling innovative ideas that has kept its customers delighted and rivals on toes so far.

Amazon demonstrated aptly the approach to build a business in a new market by challenging set rivals and even beat them on their own turf. The long experience in its home country and deep pockets though adds to its advantage, none should be taken away from Amazon for being super agile and incessantly innovative.

I wrote some time back on Amazon’s bipolar approach on improving its delivery performance to enhance customer delight. At one end, Amazon had started experimenting parcel deliveries through drones while on other hand, in India it sealed an alliance with India Post to help it deliver parcels in far-flung areas.

Very recently, Amazon introduced a fresh gust of innovative ideas that varies from category expansion to new services and from vendor empanelment to channel expansion.

Back in US, Amazon turned heads last week by inking a $ 300mn-three years deal with HBO to let Amazon Prime members watch old HBO shows. Within no time after giving its customer the HBO delight, it announced launch of the prima-pantry service for its prime members. The service allowed the prime members to shop from more than 2,000 products to fill a four-cubic foot box with up to 45 pounds of goods. The package can then be shipped at very nominal cost to the customers.

These simple innovations have not only added to the product lines it can sell but have also created benchmark for serviceability and customer responsiveness in this rapidly growing industry.

Here in India, Amazon has opened up a bottle of innovations which, with the gush these innovations are ejecting, seems to have been there ‘under-construction’ for some time now.

After collaborating with India post to deliver its parcels in 19,000 pin-codes across country through its Colosseum -like network of 140,000 Post-offices, Amazon has put into action its plan to make it easy for sellers.

Amazon, this week launched two initiatives for sellers to facilitate an accelerated and hassle-free experience. The US-based firm launched the Self Service Registration (SSR) and Amazon Easy Ship for sellers. Amazon SSR enables sellers irrespective of their size, location and size of catalogue, to self-register on the Amazon marketplace and start selling within a day without any third party intervention, making the process quick, easy and transparent.

With Amazon Easy Ship, the seller has to pack the shipment and confirm to Amazon that they are ready to ship. Amazon Logistics collects the shipment and ensures that the product is delivered to customers in 2-4 days.

Jeff Bezos is known to be the driving force of Amazon's
customer first culture and a true admirer of innovation at work

These two services have taken the e-commerce game to a different level in India. A response from the bigger rivals(so far!) Flipkart and Snapdeal is soon expected as the e-commerce industry matures in terms of technology and operational set-up.

The big question is, how Amazon has been able to pop-out one innovation after other, even faster than the TV soaps’ episode run?

The answer is fairly simple – Getting the basic rights and employing Long-term thinking in a new market.

Amazon didn’t rush to lure customers as soon as it entered in Indian market. Instead, it took its time in getting the fundamentals right. It built the logistics network, warehouses and built up a large selection of products that is now bringing in customers for them.

In a recent interview, Amit Deshpande GM of Amazon India said that its strong back-end infrastructure is helping it scale up fast. He further added on that when they decide on areas of focus, they always work backwards from the customer. Selection, delivery experience, logistics, payments and website experience are areas they are super-focused on.

Amazon has been scintillating in terms of its growth, and more importantly in its systematic business approach in terms of all modules of a business organization – Strategy, Marketing, Supply chain, Human Resource development and above all, Innovation.

Truely, Amazon is an innovation powerhouse!