Ssangyong Motor Co shares bull run post Auto Expo-example of savvy B2B marketing

In the Hindu business section, I recently saw an article(http://www.thehindu.com/todays-paper/tp-business/article2794132.ece) about how Ssangyong's shares rose 75% in just 5 trading days, as a ripple effect of an auto expo held in India. This episode deserves a case study in itself, as it illustrates several key tenets of both marketing and investor relations. As per the article, M&M had invited 35 Korean journalists(both print and electronic) to the Auto Expo, and then took them on plant visits to Chakan and Pune, where they could appreciate the technological advancement of M&M, and its abilities. This was an artful mix of investor relations in a B2C setting(auto expo), resulting in B2B brand enhancement and immediate share price boost. According to M&M, the media could appreciate that M&M was  'walking the talk' as evident by

1. showcasing of the joint capabilities of the two companies
2. communicating the company's intent about SMC, to work and turnaround SMC, the potential of SMC's models such as Rexton in India
3. Convincing them about M&M's technological capability after seeing the new SUV model XUV50
4. Hence they also realised how mature the Indian auto industry was now 

Seeing is believing, as evident in this case. In the world's best broadband enabled nation('South Korea'), journalists would certainly have had access to M&M annual reports, analyst reports, television/print ads, commercials etc, and could even have done conference calls with those executives. But even for them, it took a physical visit to India(at M&Ms expense) to appreciate the reality with their own eyes. And ironically, all they saw was the carefully scripted plant show/auto expo of M&M, and not really any critical thinking/independent exploration effort seemed to have been made. But the trip improved the perception of M&M(and built credibility about its avowed intentions for Ssangyong). So what do we learn from this episode?

1. Sponsoring media junkets still seem to work
2. When there is a trust deficit/cultural gap, showing evidence helps
3. Sometimes, there is no substitute for 'on the ground' efforts despite the tempting ease of digital communications.
4. Even developed markets can be irrational in pricing stocks.
5. Even trade fairs can be used for investor relations(although auto was an extreme case)
6. Investor Relations function should focus explicitly on media, rather than just analysts and investors
7. Traditional media can still move markets, because even alternate media like blogs use traditional media as the base. 

That ends this longish post, but this episode was quite interesting.Maybe asset heavy companies like realty cos could explore this also.

Why finance professionals should be marketing experts too

At first blush, marketing and finance guys seem poles apart(atleast in Bschools). Right from their MBAspeak(the finance guy talks of ROE/NPV/ROI while the marketing guy speaks of brand recall/ad impressions etc), choice of electives('number work' against 'globe') and in personal likes(market watching v/s consumer mind reading); these two seem very different. But years down the line, there will be more similarities than differences. The brand manager would have learnt to build metrics and investment case for marketing investments(ASPM) while the finance guy would have learnt that marketing the product(Yes, even banking services are increasing becoming products!:() needs that it should be tailored to the investor profiles and needs(viz marketing fundamental!).

Some examples of marketing expertise needed in the finance world are

• Important and expensive financial sales(capital market funding, debt financing, PE sales, selling to institutional clients) happen through small group interactions like pitches, road shows, hedge fund meetings etc. There, Marketing 101 fundae apply in abundance like investor segmentation, tailoring the message to the investor; as do design fundae(slide graphics etc). 
• Even on the retail banking side, financial products are sold more like FMCG items where hope/trust/brand ambassadors/anchors are deployed with impunity.
• Marketing research is needed to capture customer trends and preferences, so that payoffs can be created and sold accordingly. For example, if research shows that investors are becoming risk averse, they can be sold principal protected notes(a zero coupon bond+derivative combo).
• With intangible assets increasing making up the bulk of mcap, the corporate finance manager needs to appreciate the drivers and meaning of branding, human resources accounting etc. 
• Nowadays, corporate communication is integrated with marketing to present a single face of the company to external and internal audiences. Hence, the investor relations guy needs to understand those marketing/Corp Comm fundae to effectively get his point across.

Role of Distribution Channels in Value Creation

Earlier, it was proudly claimed that human capital was the non replicable asset. But now, with the free agent mentality firmly in place, it is 'real assets' which act as the entry barrier to competition. Even if competitors pay top dollar for the skilled/experienced employee, they may not have the deep pockets to pay superior margins to retailers for stocking the product/service in preference to the incubent. Competition laws intervene, and then the prospect of customer revolt at not getting his/her favorite product/service, would make even the strong hearted wilt. Investors/companies have both identified this trend and that is why

1. Network economics focuses on building that infrastructure first to obtain captive customers(though regulators may defeat it later by imposing open access) and dealers. 
2. Telecom companies are leveraging their vast dealer network(point of prescence) and payments expertise, to vye for mobile banking permits
3. Fertilizer showrooms are turning into FMCG godowns+All in 1 agricultural supermarkets, leveraging that fixed infrastructure in now desired locations(like DCM hariyali)
4. FMCG entry barriers are high because of the costs, time and issues in setting up distribution network-which would often overlap with the competition's incubent.
5. Insurance companies/Mutual funds are desperately trying to strike that golden mix between online and offline, as the regulators(SEBI for MF entry load, IRDA for ULIP commissions) are clamping down on commissions and imposing firmer entry conditions for the distributors. 
6. NPS(New pension scheme) despite being one of the best designed scheme in the globe, is not getting attention/subscribers because of demotivated distribution channels(banks/post offices etc)
7. Pharma is trying to secure its distribution chain to avoid the estimated 30% fake drugs in India.
8. Amul's strength is in its lakhs of dealers and milk collectors, who religiously supply milk daily. Besides the supply chain(milk), the distribution chain(showrooms, shops) is also efficient.

As marketing students know(and the above examples illustrate), distribution affects product design, success and company image. The company which cracks the puzzle, may take the ultimate prize of becoming the natural monopolist. So next time you analyze a company, pay attention to this aspect. B2B companies may not have so much issues, but B2C companies directly are impacted.