Stunning Marketing Campaigns with Zero Budget?

Did you ever ponder on how you could reduce your marketing budget to Zero? Can the Customer Acquisition Cost ever be negative or is it just an ideal scenario?

Here, we look at two mind blowing campaigns that have been amazingly successful and had a zero marketing budget. In fact, they earned money instead of spending it, through their marketing campaign.

Varun Agarwal, Alma Matter:

Varun, a Bangalore based entrepreneur started his venture in 2009, Alma Matter, an online store providing apparel and memorabilia to alumni students from schools and colleges across India.

The company grew at a time when social media ads were non existent and print ads, very expensive. The only way the entrepreneurs could make money was by hustling, by literally becoming their own salesmen and pitching it to people through a lot of B2B marketing.

The problem with B2B marketing, however, is scalability, which requires a lot of human resource and time. Alma Matter needed something that could push their brand into the minds of the young Indians.

That’s when Varun came up with his best selling novel “How I Braved Annu Aunty and Co Founded a Million Dollar Company,” a novel covering his journey to success as a start up founder. The book, through the story, neatly talks about the brand, Alma Matter. While the story caught the fantasy of the young Indian reader, the brand established it’s connection with their minds.

Alma Matter earned it’s place in everyone’s household through the novel.

Years later, Varun again naively promoted Alma Matter when Ted India uploaded the video of his motivational speech at TedX Kerala. The talk again covered his story from a middle class Indian engineering student to the founder of a million dollar company.

Their marketing was about their story. They sold their story more than their stuff to the people, connected emotionally and garnered their mind share. All this, without spending a penny on anything. In fact, Varun Agarwal made money through his best selling novel as well.

Alma Matter simply created a brand and garnered Indian mind share, at Zero Marketing Budget. 

Uber, Visakhapatnam:

Uber, the technology company that revolutionised the transport industry worldwide, began it’s operations in the city of Visakhapatnam, a city in India, in July 2015. It’s main competitor, Ola had been already gained sufficient market share by then, having been present since over a year by then. Uber needed to quickly intersect the market in the city.

Uber Visakhapatnam, along with team Alloy, understood the important role students played in the city. The city’s life revolved around these young people.

Going the creative way, the team came up with an amazing competition named Mad About Marketing, aimed at the student crowd. The two week long event invited students to participate as teams of two or three, with a nominal registration fee.

The teams had to go through three rounds following which the winner was to be selected who was to then win an amazing “Paid Internship” at Uber, which is of tremendous value to any student.

Over the course of two weeks, the participants excitedly took part in the three rounds. The first round involved a lot of hustling where the teams were required to promote Uber and get in sign ups and downloads to the apps. They could pitch in to their family, friends, relatives, neighbours and literally anyone.

The top fifty teams, depending on the number of sign ups garnered by each team, were then selected to round 2, which involved the participants putting in their creative mind into play by doing a lot of social media promotions, by creating short films, ads, songs, memes or even by putting up statuses or profile pictures.

During this time, #UberVizag was trending on Facebook locally in the city. What’s more is that Uber got in three to four months’ worth of sign ups in just a week!

The third round was an interview, post which a winner was awarded the prized internship at Uber.

The event saw a huge participation of over 700 people. When 700 people go around the city, pitching and talking about the same brand, imagine the rippling effect it could create. How much did it cost Uber to get this done? Nothing. The nominal registration fee charged from the participants ensured the logistical expenses if any.

And that’s how Uber overtook Ola in it’s market share with a Zero Marketing Budget campaign.

The most successful companies spend the least in Marketing with the Best results. 

Marketing Dilema: Flipkart Vs D Mart, an analysis

The question that bothers most businesses and startups: What is an ideal marketing campaign for a business and how do we arrive at that?

Here we analyse the answer through two simple and known cases, Flipkart and D Mart, simply because of their starkly different approach to their marketing.

Do you know that an average Indian startup in the e commerce sector like Flipkart, spends about INR 600-700 crores on Advertising every year, which is more than 50% of their annual turnovers too and much higher than their profit share?

On the other hand, we’ve D Mart’s marketing budget is highly negligible when compared to today’s ‘new age’ companies.

Customer Retention Vs Customer Acquisition 

E commerce giants like Flipkart or Snapdeal have an average Customer Acquisition Cost of about INR 1100, despite the fact that an average purchase rate per customer is only about INR 900- INR 1000.

Comparatively, D Mart’s average CAC is just about INR 100 while the average purchase amount falls in the range of INR 500 – 1000. While both the companies fight it out in their highly competitive market, why do their CACs vary so much?

The reason is simple. While Flipkart has concentrated on Customer Acquisition, offering huge one time or festive discounts to tempt a person to make a purchase, D Mart has concentrated on Customer Retention, by offering quality products at a cheaper price than anyone else in the competition consistently.

Essentially, a D Mart customer more often than not sticks to the brand and even gets his near ones to a D Mart store through word of mouth. This seldom happens with Flipkart, where a customer simply makes a choice on the basis of pricing and discounts.

This brings us to our first important rule of Marketing:

A long term successful Marketing Campaign gives more importance to customer retention than to customer acquisition.

Scalability: 

It’s important to keep in mind the future of the company while designing a marketing campaign and not just concentrate on increasing the present sales.

Realise that marketing is only to let people know about you. If you have to keep spending money to retain your customers, something’s definitely wrong.

The amounts spent by e commerce companies during festivities, on advertising and then on huge discounts is massive. On the other hand, D Mart only advertises initially in any city to gain visibility. A few print Ads and they are done. Their own customers get them the flow they need.

D Mart’s marketing expenditure over time is a downward curve while their sales is an increasing curve, while in the case of Flipkart, it’s a wave. This means every time Flipkart cuts it’s expenditures, by either not advertising or not offering discounts, it’s sales decrease.

This discussion brings us to another important rule coined by us for Marketing:

Your Marketing Strategy should be such that over time, your expenditure decreases while sales increase, for smooth and gradual scalability. 

Holistic Approach:

To sum it all up, the need of the hour for any business is a holistic approach towards marketing where we take into consideration all parts of the business while designing your promotional campaign, from the procurement of raw material to the distribution to the final sales.

The best example would be D Mart itself. As seen above, D Mart only spends on advertising in the initial phase to gain initial visibility.

The study of their approach begins with the products on sale in D Mart. Clearly, D Mart has stayed away from electronics or jewellery product and has stuck to food and grocery products that are consumed on a daily basis by the consumer. It doesn’t even sell a private label product, which would have given them higher margins, but pose more inventory problems than necessary.

Our next focus is on consumer capacity and demographics. 75% of it’s stores have been opened in existing states and markets, clearly not experimenting with it’s customers.

D Mart then concentrates more on the volume of it’s sales, putting up huge stores and buying the products in bulk, at a much cheaper price than anyone else. It then sells it to the customer at a marginally lesser price than MRP, which is loved by the consumer.

At each step from procurement to sales, they have planned up everything carefully to pull in the customer, a completely holistic approach.
If you look closely, it’s all marketing in the end.

How has it paid off? Well, while buzz is so strong around India’s e-commerce industry and companies like Flipkart, the best-performing IPO in recent corporate history is a brick-and-mortar supermarket.

The Best Marketing Doesn’t Feel Like Marketing.