Building D2C brands through successful testing of the four Ps of marketing.

Although D2C, ecommerce, and digital are well-established buzzwords, we frequently underestimate the degree of change that the D2C industry has sparked. According to the conventional method, it would take years, and frequently a decade, to build name recognition and scale in the Indian market. Before they could even reach an annual revenue of INR 100 crore, companies like Lotus, Shoppers Stop, Revlon, Himalaya, and many others invested more than ten years in the process.

These brands undoubtedly control a sizable portion of their respective markets and enjoy customer trust, but the point is that D2C brands of today are able to reach this milestone much more quickly. Within three to five years of launch, many examples of direct-to-consumer (D2C) companies in the personal care, consumer electronics, apparel, etc., reach this 100-crore revenue milestone. Many D2C brands are currently outperforming traditional models in terms of capital utilisation in addition to how quickly income is generated. Let's examine how the traditional method and D2C vary in their strategies.

The D2C age

D2C companies are having more success in the digital space by experimenting with the 4 Ps of marketing with significantly lower investments in gathering consumer feedback, building up inventory, and creating sales channels. A D2C brand typically goes to market in 4-6 months as opposed to more than a year for traditional companies. Instead of spending crores, D2C retail could simply spend lakhs. Here is how these companies use A/B testing to implement the four Ps of marketing.

Product – Since the entire selling and brand positioning takes place on the brand's platform, it is easier to create more (virtual) variations of product names, concepts, product combos, description, content and product listings. All these can be modified as per consumer feedback and assessment of their interests almost on a real time basis.

Price - D2C companies can run limited period test runs where different prices are dynamically shown to different sets of people. They can then fix longer-term pricing strategy based on their conversion rates, average order values and actual purchase decisions. This is far better than a consumer survey done outside a buying environment and consumers asked to rate their intention to purchase (without actually putting any of their money into it).

Promotions - You can experiment with having a variety of consumer promotional offers, varying the size of discounts, and experimenting with various communication constructs, such as Get 20% off, Get 30% cashback in points, Buy 2 Get 1 Free, Buy worth Rs. 999 and get 2 products free, etc. There are countless possibilities, and D2C enables businesses to continuously experiment with each one. Companies can also choose a small percentage of website visitors to be shown the offer at a time, leaving the vast majority of visitors engaging with their D2C platform without any experimental discounts, in order to avoid discounting throughout the year. Additionally, businesses can test various ad copy variations to see which better appeals to consumers.

Place - There are many locations where you can look for and interact with customers. Customers could come to your website as a result of seeing a Google advertisement, or they could be on Facebook, Instagram, YouTube, or any other website that shows shopping advertisements. They might also be users of a network or website that offers affiliate marketing for your business, etc. All of these platforms will cater to various interests, resulting in a variety of conversion rates, acquisition costs, average order values, and repeat purchases. It is possible to create a precise knowledge of consumers who relate to the product and brand and better serve them by accurately evaluating these parameters.