Marketing Practices 2009

A summary of findings from a study anchored by

Prayag Consulting
February 2010

CONTENTS
MARKETING

Executive Summary Research Methodology and Statistics Focal Point Marketing Organizations Marketing Organizational Dynamics Best-in-Class Impact on the Business

P R A C T IC E S

2009

Executive Summary

MARKETING

P R A C T IC E S

2009

Executive Summary
Study findings Customer acquisition remains the key focus of all marketing activity, even though there is a small drop in this number compared to the previous study While companies are investing in online marketing, there is a long way to go in leveraging this medium to its fullest Leads generated through marketing programs continues to be the only major metric in use today Cause for cheer: Most companies are however able to see the impact of marketing activities on the P& L

Prayag Take: Marketing initiatives are feasible and should not be ignored by companies even during stressful market conditions. A suggested approach would be to Focus more on programs which have yielded good results in the past; this is possible only when existing programs are tracked and measured effectively Use social media tools as this is a cost effective way to engage with the market

MARKETING

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2009

Research Methodology and Statistics

MARKETING

P R A C T IC E S

2009

Survey Statistics
Indian IT Industry Structure
Revenue based Profile

$1B+ 0.2%

$100M - $1B 0.8%

$10M $100M 5%

Less than $10M 94%

Total Respondents: 62
Revenue based Respondent Profile
$1B+ 11% $100M - $1B 15% $10M $100M 11% Less than $10M 63%

Service based Respondent Profile

BPO Others 3% 10% Product 24% IT Services 63%

Others include providers of Engineering service, KPO service, Network products and online portal services MARKETING P R A C T IC E S 2009 6

Focal Point:
What are Marketing Departments focusing on?

MARKETING

P R A C T IC E S

2009

Marketing Focus - Customer Acquisition Remains the Key Focus

% of respondents who felt Customer Acquisition was one of their top priority in previous surveys

2009

84%

2008

87%

2006

55%

2005

64%

2004

59%

The continuing high priority to customer acquisition can be attributed to the tough market conditions in 2009 Although the small dip suggests that companies are looking at other marketing initiatives as well Lead generation activities continues to be the major vehicle for customer acquisition

MARKETING

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2009

Marketing Focus - Customer Acquisition continues to remain the key focus

Focus areas
Customer Acquisition Solution / Product Marketing Strategic Marketing Customer Branding Marketing Infrastructure Creation Influencer Marketing Employee Branding Others
16% 56% 47% 42% 40% 26% 84% 84% 82% 21% 27% 39% 34% 58% 8% 8% 11% 5% 8% 10% 23% 26% 19% 26%

Companies are likely to focus on customer acquisition, strategic marketing and solution/product marketing together Only a small 8% said that they are focusing on all the activities in this value chain Respondents focusing on customer acquisition appear to have a blinkered approach 35% have no focus on employee branding 38% do not focus on influencer marketing

Yes

No

Not Answered

MARKETING

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2009

Areas of Focus - Segmenting by Size of Companies

Below $100M
Customer Acquisition Solution/ product marketing Strategic Marketing Customer Branding Marketing Infrastructure Creating Influencer Marketing Employee Branding
80% 11% 9%

$100 - $1000M
89% 11%

$1000M+
100%

89%

7% 4%

89%

11%

43%

43%

14%

80%

11%9%

89%

11%

86%

14%

50%

24%

26%

89%

11%

57%

14% 29%

48%

26%

26%

44%

22%

33%

43%

43%

14%

35%

41%

24%

67%

22% 11%

57%

43%

35%

37%

28%

78%

11% 11%

29%

43%

29%

Yes

No

Not Answered

The $100 - $1000M players appear to have prioritized marketing going by their focus areas
MARKETING P R A C T IC E S 2009 10

Strategic Marketing programs

Understanding priority accorded to strategic marketing programs
Corporate Branding and Positioning
56% 34% 5% 5%

Most commonly used vehicles to implement are:

Newsletters and webinars for partners Social Media Marketing Through analyst interactions, Market intelligence marketing teams

Channel Marketing Strategies

31%

32%

24%

13%

High

Medium

Low

Not Answered

% of respondents implementing to the strategic marketing programs

Corporate Branding and Positioning
63% 27% 10%

Channel Marketing Strategies

42%

47%

11%

Yes

No

Not Answered

As can be expected, the companies according higher priority to these programs are more likely to implement them This year, these two areas are lower priorities as maintaining growth and survival took higher precedence Product companies give more importance to corporate branding and positioning according to our findings
MARKETING P R A C T IC E S 2009 11

Solution/Product Marketing programs

% of priority to the solution/product programs
Conceptualize New Services/Products/Solutions Implement Go-to-Market Strategies for Solutions / Products
56% 35% 8%

Most commonly used vehicles to implement are:

Re-packaging existing solutions Cross-selling Identification of new services & verticals Digital marketing

6% 5%

89%

High

Medium

Low

Not Answered

% of respondents implementing solution/product programs

Conceptualize New Services/Products/Solutions Implement Go-to-Market Strategies for 10%3% Solutions / Products
76% 18% 6%

87%

Yes

No

Not Answered

Most of those who prioritized go to market strategies are also implementing it Go to market strategies have been de-prioritized in 2009 as most companies were hesitant to try anything new during the hard economic conditions

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Customer Acquisition programs

% of priority to the customer acquisition programs
Market Opportunity Assessment / Market Entry/ Market Penetration Partner Management Lead Generation Campaigns Trade Shows & Events
31% 19% 65% 31% 50% 47% 39% 24% 26% 35% 6%5% 10% 6% 3% 3%

Most commonly used vehicles to implement are:

Free product trials Hiring additional sales staff in new markets Segment oriented drive/activity

High

Medium

Low

Not Answered

% of respondents implementing customer acquisition programs

Market Opportunity Assessment / Market Entry/ Market Penetration Partner Management Lead Generation Campaigns
66%
53% 81% 90%

21%
27%

13% 19%

6% 13%

Trade Shows & Events 6%3%

Yes

No

Not Answered

Lead generation campaigns have registered an increase compared to 2008

MARKETING P R A C T IC E S 2009 13

Customer Branding programs

% of priority to the customer branding programs
Customer Relationship Programs
53% 34% 45% 42% 94% 23% 34%

Customer Satisfaction Study 44% Newsletters 37% Account Based Marketing

29%

13% 11% 13% 10% 19% 10% 15% 11% 18%

Most commonly used vehicles to implement are:

Customer/Geography Summits Co branded Advertisements Customer loyalty program Account specific marketing

Whitepapers 23% Extranet 5% 2% High Customer Events Medium

32%

18%

19%

32%

16%

Low

Not Answered

% of respondents implementing customer branding programs

Customer Relationship Programs 60% Customer Satisfaction Study 58% Newsletters 53% Account Based Marketing 5%3% Whitepapers 8% 2% Extranet 34% Customer Events 37% Yes No
26% 29% 32% 92% 90% 16% 44% 19% 15% 13% 15%

Not Answered

Strangely, in a year when customer retention should have been high on the priority and when companies invested time and effort in deepening their relationship with customers, priority of customer branding programs have dropped significantly. Is this a case of not being able to distinguish between the forest and the trees?
MARKETING P R A C T IC E S 2009 14

Employee Branding programs

% of priority to the employee branding programs
Internal Newsletters Employee Satisfaction Survey Events Training & Development Programs External Programs Targeting at Prospective Employees
35% 37% 26% 48% 15% 24% 34% 31% 37% 23% 31% 45% 23% 11%

Most commonly used vehicles to implement are:

Internal branding vision, values, mission Induction to new employees on company culture, values and system, regular training to all employees on various behavioral concepts etc. Employee VoC, Rewards & Recognition

16% 10% 18% 13% 8% 16%

High

Medium

Low

Not Answered

% of respondents implementing employee branding g programs

Internal Newsletters Employee Satisfaction Survey Events Training & Development Programs External Programs Targeting at Prospective Employees
31%

53%
60% 53% 68% 50%

32%
26% 27% 18%

15% 15% 19% 15% 19%

Yes

No

Not Answered

Employee branding programs have taken quite the backseat; focus on employee branding programs is clearly tied with attrition levels
MARKETING P R A C T IC E S 2009 15

Marketing Organisations
Reflections and Realities

MARKETING

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2009

Team Size

Marketing Team Size

1 to 5 6 to 10 11 to 15 16 to 20 21 to 25
10% 10% 6% 5%

56%

Teams have become leaner with a significant jump in the 1-5 range

26 to 30 3% 30+
10%

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How much is spent?

Marketing Spend

1% - 2% 2% - 5% 5% - 10% 10%-15% 15% - 20%

16% 10% 2%

Most companies spend less than 5% of total revenues on marketing A slight dip in the 2%- 5% slab was noticed compared to last year as some companies slashed their marketing budgets Marketing budgets are aligned to global benchmarks of 2% - 5%

26% 39%

20% + 2%
Not Answered
6%

Note: x% - y% means x%< marketing spend <= y%

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How much is spent on online marketing

Online Spend as a % of marketing spend
1% - 2% 2% - 5% 5% - 10%
23% 11% 44%

10%-15% 5% 15% - 20% 2% 20% + Not Answered

5% 11%

While most of the online spends lie between 1% - 5%, comparison with 2008s responses indicate that spends are inching up slowly into the 2% - 5% band

Note: x% - y% means x%< online spend <= y%

Online marketing practices

E-mail Marketing
89% 56% 50% 40% 37%

Web tracking has scored over SEM in 2009 as companies try to analyze who is visiting their site; SEM in fact dropped sharply from 76% in 2008 to 50% in 2009
MARKETING P R A C T IC E S 2009

Web Tracking Search Engine Marketing Google Ad Words Online Advertising Social Media Marketing 5%

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How is it measured
Number of respondents using BD metrics
Leads Generated through Direct Marketing Activities Leads Converted to Sales Cost Per Activity
63% 92% 84%

Metrics used continue to remain the same and still rudimentary

79% 69%

Number of respondents using Online Marketing metrics

Total Leads Generated Leads Converted to Sales Impressions / Site Per Page Hits Document Downloads / Whitepaper Specific Actions / Webcast Registrations Email Address Opt-Ins

53% 53%

50%
45%

Number of respondents using Branding metrics

Media Mentions Mentions in the Industry
65% 55% 48% 45% 37%

Speaking Opportunities Event Registrations

ROI from Media Programs
MARKETING P R A C T IC E S 2009

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Marketing Organizational Dynamics

How do marketing departments see themselves?

Whats their role?

What are the challenges they face? How will this function grow?

MARKETING

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2009

Role of Marketing

Organization view of marketing Sales Support organization

73% 56% 47% 40%

Sales Enabler
Market Evangelizer Contribute to Service / Product Conceptualization Thought Leader Market Pulse
29% 34%

Marketing departments view themselves as closely tied to sales and this is in alignment with prioritizing of customer acquisition

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22

All the roles that marketing plays % of respondents who view the role of marketing as..
Thought Leader Sales Support organization Contribute to Service / Product Conceptualization Market Evangelizer Market Pulse
36% 33% 56% 49% 47%

Change in how marketing organizations view themselves compared to 2008 findings more of a thought leader and less of market evangelizer and gatherer of market pulse

Universe for this data set: Respondents who said that they were sales enables

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Challenges Faced by Marketing Function

Number of respondents facing the challenges..
Inadequate Budgets Lack of a Differentiated Brand Image Leveraging Partner Relationships
42% 39% 32% 21% 19% 18% 18% 16% 56%

Attrition/Access to Talent
Lack of Coordination with Sales Teams Lack of Emphasis on Marketing Lack of Involvement with Delivery Team Outgrown Current Marketing Programs Other

Budget continues to be major pain point majorly for smaller companies (revenues<$100M)
Some companies have addressed shrunk budgets by coming up with creative initiatives Companies continue to grapple with an undifferentiated brand image

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Best-In-Class
Marketing Practices worth emulating

MARKETING

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2009

What makes you a good marketing team?

A selection of ideas across responses that point to a real differentiator

Prospect outreach programs with the use of Web 2.0 platforms Go-to-market strategy for identifying undisputed niches Techno-business marketing department to communicate to nontechnical customers

MARKETING

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2009

26

Impact

MARKETING

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2009

Result of marketing programs.

High impact programs
94%

Increase in Top Line Increased Brand Recall Increase in Bottom-Line Increase in Customer Satisfaction Reduced Sales Cycle

89% 86%

Through

83% 74% 64% 60%

Existing customers

New customers

Note: 1. Universe for this data set: Respondents who gave some answer to the respective question 2. Other answers include no impact or not sure of the impact

Impact on top-line growth varied from 5% to 95%

Unfortunately the same cannot be said for bottom-line impact possible owing to tough economic conditions
Some of the respondents witnessed 1 to 3 months reduction in their sales activity due to improved marketing activities Increase in customer satisfaction is ranging between 10% to 100%
MARKETING P R A C T IC E S 2009 28

About Prayag
Prayag (www.prayag.com) is a strategic marketing consultancy focusing on the high technology market-space. We partner with emerging and established companies that facilitate the use of technology as a strategic business lever. We are the ideal partner for IT companies seeking to create a global presence. We are also well positioned to advise companies seeking to diversify into IT, or wishing to create cross-border IT sourcing relationships. Formed by a team that has extensive and intensive experience in globally reputed high technology service and product companies, Prayag is well equipped to build global technology brands.

Contact Us:
Prayag Consulting 45/B, 2nd Floor, Front Wing 1st Main, J P Nagar, 3rd Phase Bangalore - 560 078 Ph: +91 80 26593328/29 / 41200439 Fax: +91 80 26593328 Email: jayanthi.badrinath@prayag.com www.prayag.com