The document provides a marketing strategy report for Simpl, a pay later service provider in India. The objectives are to grow Total Purchase Value by 20% month-over-month for the next year. The strategy recommends focusing on credit offerings to target new merchant segments. It suggests repositioning the brand to emphasize credit while maintaining customer focus. The marketing mix includes enhancing the mobile app to offer credit and integrating offline merchants. Promotional activities, partnerships with influencers, and campus recruitment are also proposed.
1. Marketing Strategy | Shekhar Kanodia, Shashi Kulkarni, Sumanth, Sudheer, Sumedh, Deepak M
Marketing Management | PGPEM 2019
Group 5
Project Report – Marketing Strategy
PGPEM 2019 | Marketing Management
Company:Simpl
Skip paying again & again | Pay one bill instead
Objective
To grow the Total Purchase Value (TPV) by 20% on a Month over Month (MoM) basis
for the next one year.
Team Members:
Shekhar Kanodia
Sudheer Kumar
Shashikumar Kulkarni
Sumedh Kulkarni
Deepak M
Sumanth
3. Marketing Strategy | Shekhar Kanodia, Shashi Kulkarni, Sumanth, Sudheer, Sumedh, Deepak M
Marketing Management | PGPEM 2019
1. Introduction
Backed by Green Visor Capital and IA Ventures, Simpl was founded in 2015. By using a data-
driven and smartphone-based approach, Simpl operates with merchants to lessen the payment
flow to a single tap, consequently enhancing their product experience, and giving users a
payment mode that’s quicker and more convenient than wallets or cards. The user will have only
one bill to pay for transactions made across regularly used online merchants. It is already a well-
established pay later service provider with more than 60 merchants. Big basket, Zomato,
Grofers, Bookmyshow, Dunzo, QuickRide, Fasoos, Freshmenu, Rapido, Box8, Licious, Drivezy,
Meru, ChaiPoint are some of those merchants.
Figure 1: Different categories of payment options Figure 2: Level of competition
2. Situation Analysis
2.1 Context
The volume of digital payment transactions soared to nearly INR ₹245 crores (about US $33.5
million) in August 2018 as compared to almost ₹80 crores (around US $10 million) October 2016.
More people from smaller towns and cities use online payment modes toward goods and
services. Payment company executives say that card transactions in towns with populations of
up to one million have multiplied after demonetization, two years ago.
According to a report by Google and the Boston Consulting Group, the digital payments industry
in India is estimated to reach US $500 billion by 2020, contributing 15% to India’s GDP. The
report said non-cash payment methods including cheques, demand drafts, net-banking, credit
and debit cards, mobile wallets and UPI, will double to 40%.
It noted that online payments are convenient, and this is the most significant factor responsible
for the growth of digital transactions in the country. It is followed by the offers and discounts
available while using digital payment methods. As per the above report, 75% of Indian merchants
expect digital payment methods will accelerate future sales.
As per another report by livemint dated June 2019,
• India will witness the fastest growth in digital payments’ transaction value between 2019
and 2023, with a CAGR of 20.2%
• The research also noted that India’s share of the global transaction value of digital
payments is also set to rise from 1.56% to 2.02% in the next four years.
4. Marketing Strategy | Shekhar Kanodia, Shashi Kulkarni, Sumanth, Sudheer, Sumedh, Deepak M
Marketing Management | PGPEM 2019
2.2 Regulatory framework
• The buy now pay later credit system has rapidly changed, how we buy. The reforms will
reduce/eliminate the risk of consumers, including how consumers of those products,
being mis-sold products that don’t meet their needs and are not usable by them. Other
recommendations included that consumers have access to internal and external dispute
resolution frameworks. Many Economists highlighted important fundamental differences
between the buy now pay later sector and traditional credit methods and the need for a
different regulatory framework
• At a conference organised by the Payments Council of India (PCI), an umbrella body for
payment companies, digital payment players urged the RBI to act as an enabler and
facilitator of change, and not to burden fintech players by making too many changes in
the regulations. With too many changes, industry players said that they have deviated
from focusing on innovation to spending more time for compliance.
• Vishwas Patel, Chairman, Payments Council of India, said: “Digital payments industry in
India is an ever-growing industry, coming a long way from transactions via cheques to
new innovative payments instruments, such as pre-paid payment instruments and
payments banks, to mention a few. The government’s aim for greater financial inclusion
can be achieved with a supportive regulatory and policy framework, and the sector can
play an important role in achieving this goal and fulfil the government’s dream of
achieving billions of future transactions
3. Targeted Segment
3.1 Geographies
Currently, Simpl operates only in India. The main targeted customers are in urban India, primarily
Tier-1 and Tier-2 cities where people are well versed with electronic payments.
3.2 Demographics
• The users base includes youth (18-35 years), middle-aged (35-55 years) and old-aged
(above 55 years) people of urban India.
• As per UN State of the World Population report, 34% of India’s population is urban.
• 86% of India’s urban population is educated.
• The users can be from all economic classes as the services provided by the merchants
of Simpl are affordable by all economic classes.
3.3 Behavioral Factors
• The users are those who book for services or products from the merchants online instead
of buying out personally from the service providers or sellers for avoiding crowded
environment. For example, booking movie tickets via BookMyshow instead of buying
tickets from movie theatres directly.
• The users are working professionals who are busy and unable to buy from service
providers directly. For instance, ordering food from Zomato instead of buying directly
from a restaurant.
• The users are those who want to have hassle-free cash transactions.
5. Marketing Strategy | Shekhar Kanodia, Shashi Kulkarni, Sumanth, Sudheer, Sumedh, Deepak M
Marketing Management | PGPEM 2019
4. Market Needs – Value Proposition
4.1 Customers
4.1.1 Avoiding Transaction Failures
Both merchants (seller) and end-users (Buyers) are facing the issue of Payment Gateway
transaction failures. These failures discourage end-users as users could be in the midst of an
important transaction. E.g., IRCTC ticket booking. User may also end up changing their mind
about the buy and not re-trying the transaction(dropouts).
4.1.2 Credit without Credit Cards
Availing credit card is a lengthy and tedious process which involves the process of checking
eligibility and other verifications, and also Credit cards have minimum annual spends. There is a
need for small-time moneylenders allowing users to pay for services and products online without
spending their own money.
4.1.3 Secure but hassle-free transaction
When we buy online, we have to painstakingly enter all our details every time. Sadly, this
complicated verification method only provides us with the illusion of security. In actuality, the
possibilities of fraud go up every time we share information over the internet.
With Simpl, our payment details are never passed to the merchant. By drastically reducing the
number of times we give out our banking data online, we drastically reduce the risks of fraud.
4.2 Merchants
4.2.1 Greater cart conversion
As per a market study, approximately 25% of the transactions fail at the time of payment. By
using Simpl merchants have been achieving greater cart conversions.
4.2.2 Customer acquisition
As per the Business Head of Simpl, for merchants the customer acquisition and retention
increase by a significant number (could not be disclosed due to confidentiality issues). Also, the
cross-merchant offers would help customer retention for one merchant and new customer
acquisition for the other merchant.
4.2.3 Trusted relationship with customers – Khatta(Account)
Simpl has digitalized the traditional khatta approach that existed with the neighborhood shops
such as kirana(grocery). This creates goodwill for the merchants.
5. SWOT Analysis
5.1 Strengths
• Excellent team with Stanford graduate as a founder.
6. Marketing Strategy | Shekhar Kanodia, Shashi Kulkarni, Sumanth, Sudheer, Sumedh, Deepak M
Marketing Management | PGPEM 2019
• Demographic dividend of India can be reaped for digital payments.
• India has a relatively relaxed data related laws and regulations than Europe’s GDPR.
• The digital payments ecosystem is thriving.
5.2 Weaknesses
• Competition is tough and hence margins are low.
• Establish credibility among big competitors such as Paytm, PayU, Google Pay.
• Not enough data points to underwrite users.
• NBFCs are currently stressed and interest rates are relatively high.
5.3 Opportunities
• A growing digital payment Market.
• A growing e-commerce market will provide potential merchants.
• Untapped Tier-3 and Tier-4 markets.
• Developing ecosystem, hence future returns are expected to be in double/triple digits.
5.4 Threats
• Various emerging products such as UPI, GooglePay, AmazonPay.
• Low margins industry primarily due to a "cashback" driven culture.
• Adverse selection issues can results in high defaults.
• Unclear regulations on data protection, privacy and monetization.
6. Marketing Strategy
6.1 Focus on credit
Simpl already has a core competency in providing convenience to the customers, we are
recommending that Simpl starts focusing on increasing the credit limits for the customers also.
Figure 3: Perceptual map of credit vs convenience
6.2 Target new merchant segments
By enhancing the credit limits, there will be a whole new segment of merchants available for the
company. The expected MoM from these segments is as following:
7. Marketing Strategy | Shekhar Kanodia, Shashi Kulkarni, Sumanth, Sudheer, Sumedh, Deepak M
Marketing Management | PGPEM 2019
Segment MoM growth
Offline Merchants (Shoppers Stop, Chroma) 5-6%
Medium Ticket Merchants (Urban Ladder, Goibibo) 5-6%
Insurance Companies – Premium Payment 2-3%
Large Ticket Merchants (Byjus, Cult) 3-4%
Existing Merchants 7-8%
6.3 Reposition
For targeting the above segments of merchants, Simpl can reposition itself as a customer
oriented and credit focused company.
6.3.1 Brand Mantra
We are recommending “Customer Convenience Credit” as the new brand mantra. Customers
will remain the top priority followed by convenience to the customers, but credit will also play a
major role in driving the company’s business.
6.3.2 Brand Slogan
The brand slogan can be based on the value proposition of the company. We propose two
brand slogans to convey the experiential and functional needs served by the product.
• “You Deserve Them!” - Experiential value, you deserve convenience and credit!
• “Convenience bhi, credit bhi” – Functional value
6.3.2 Brand Bull’s Eye
Figure 4: Current Bull’s Eye Figure 5: Desired Bull’s Eye
8. Marketing Strategy | Shekhar Kanodia, Shashi Kulkarni, Sumanth, Sudheer, Sumedh, Deepak M
Marketing Management | PGPEM 2019
6.3.3 Brand Prism
Figure 6: Current Brand Prism Figure 7: Desired Brand Prism
6.3 Challenges
Considering the economic fluctuations happening in the country, the consumer credit behavior
will not be constant and predictive. Managing the predictive model could be a challenge in this
scenario. The core data driven analytical infrastructure has to continuously improve and evolve
to keep pace with the dynamic requirements.
Simpl is convincing the merchants about effective customer loyalty feature and here they need
to achieve expertise in B2B marketing also, because a few merchants are coming up with their
own postpaid payment gateway (Ex. Flipkart pay later).
The merchants have always demanded high underwriting and greater credit limits, hence Simpl
will face the challenges of enhancing the credit limit and also lowering the commissions while
onboarding the merchants who are doing well.
7. Marketing Mix
7.1 Product - Credit Mall
In order to achieve the business goal, the existing application has to be modified to include the
app in app model and offline merchants. PhonePe and Dunzo can be referred have successfully
implemented these models respectively. They can be benchmarked, and lessons can be learnt
from their implementations to build a robust product.
9. Marketing Strategy | Shekhar Kanodia, Shashi Kulkarni, Sumanth, Sudheer, Sumedh, Deepak M
Marketing Management | PGPEM 2019
Figure 8: Simpl Mobile Application
7.2 Promotions
In order to target the new segment of merchants and to create visibility among the customers,
promotional activities become important. Social Media marketing along with involvement of
Stand-up comedians on the lines of LazyPay marketing strategy may be adopted to capture the
young generation. The approach of rewarding good behavior such as timely payment, repeated
purchases etc. will not only help in building customer loyalty but would also generate direct
revenue for the customers. Similarly, the cross-merchant benefits such as offering Swiggy Super
or Dunzo cash would help in customer acquisition for new merchants and customer retention for
existing merchants.
Since Simpl is a data driven and technology-based company, they need quality engineers and
MBA professionals for expanding and maintaining the business. Recruitment from premier
institutes will build a brand for the company and eventually the employees hired from these
colleges would act as brand ambassadors for the new customers entering the market from these
institutes. Other than owning the day-zero tag, Simpl can also sponsor tech-fests in engineering
institutes and business conferences in b-schools to gain visibility, build credibility and create a
durable and long-lasting brand value.
The marketing budget attached in the financials sections have further details on the cashflows
to the various modes of marketing communications.
7.3 Distribution
As suggested earlier, offline merchants should be captured to increase the TPV. Places such as
corporate cafeteria, super-markets and shopping malls should be targeted to increase the
merchant base. Similarly, the app can be launched with vernacular support to capture the diverse
customers of different regional levels.
The section ‘Target new merchant segments’ under the Marketing Strategy covers additional
places where Simpl can provide it’s offerings.
7.4 Pricing
• Free Credit period to customer: Maximum 15 days
• Free loan to customer but charges on marketplace seller
• No price to establish credit terms
10. Marketing Strategy | Shekhar Kanodia, Shashi Kulkarni, Sumanth, Sudheer, Sumedh, Deepak M
Marketing Management | PGPEM 2019
• Revenue Maximization approach – Low pricing on MPS
• Penetration pricing even on MPS
• No discrimination in Credit days based on credit rating
• No documentation headache due to absence of price discrimination
7.5 Marketing Research
Customer survey conducted to arrive at the above marketing strategy
Figure 9: Results of market survey
Figure 10: Category wise Purchases on Simpl (1 month average) Figure 11: Age distribution of current users
8. Financials
8.1 Break Even Analysis
If we ignore the overhead costs such as rent, salaries, office expenses, the business is at BEP
(break-even point) level even with one customer. That is because Simpl is acting as an
intermediary concerning the transaction. Simpl acquires money from HNI/NBFC at a lower cost
and using the same to make payments to MPS immediately after deducting their service charges.
Simpl gets payment on 20th and 5th from customers and uses that money to pay NBFC/HNI.
The deducted money shall meet credit fault cases and Gross profit targets.
0 20 40 60 80 100 120
Has Simpl made your transactions hassle-free?
Would you start using Simpl if you get enhanced credit
limits?
Do you experience delay in "Refund" Process?
Would you like to shop without an OTP?
Would you like to Order first; And pay for it later?
Do you think Simpl is safer than cards and net banking?
Yes No Maybe
2
3
19
7
22
29
6
7
5
Others
Fashion
Groceries
Books
Movies/Tickets
Online Food Delivery
Taxi Services
Car Pooling
Music
11. Marketing Strategy | Shekhar Kanodia, Shashi Kulkarni, Sumanth, Sudheer, Sumedh, Deepak M
Marketing Management | PGPEM 2019
8.2 Sample model costing
As per the above model, on a borrowed money of amount 100, Simpl is making approximately
rupees 4 in a month. The money is further circulated and hence the returns are multiplied. Simpl
works on the model of circulating money to generate returns.
8.3 Profit and loss statement with expected figures ( Amt in Lakh Rs)
Since Simpl is a new startup, currently it is a loss-making company which believes in the power
of leveraging debt to generate income and the surplus income along with debt is again poured
into the business to expand the company. Clearly the growth in the income is faster than the
12. Marketing Strategy | Shekhar Kanodia, Shashi Kulkarni, Sumanth, Sudheer, Sumedh, Deepak M
Marketing Management | PGPEM 2019
growth of expenses which shows than soon Simpl which achieve break-even and eventually
become a profitable company.
8.4 Marketing Budget
Marketing Budget of Rs 11 Crore helps the entity to achieve its goal and move the entity towards
right direction. Intentionally, we have considered many methods of advertisement because,
these are initial years and we don’t know which mode will give more traction. After a year, we
will measure performance and plan accordingly. For now, we are not ready to miss any targeted
customer sub-group.
Amt in Lakh Rs
9. References
• https://getsimpl.com/merchants-we-support
• https://getsimpl.com/help/article/360023491374
• https://gadgets.ndtv.com/apps/features/how-simpl-is-bridging-the-gap-between-credit-and-
payments-1758940
• https://www.ncbi.nlm.nih.gov/pubmed/11815703
• https://en.wikipedia.org/wiki/Urbanisation_in_India
• https://www.thehinducentre.com/multimedia/archive/03188/Youth_in_India-201_3188240a.pdf
• https://economictimes.indiatimes.com/news/economy/indicators/literacy-rate-at-71-in-rural-india-
86-in-urban-survey/articleshow/47886609.cms
• https://www.livemint.com/technology/tech-news/virtual-credit-cards-buy-now-pay-later-for-
those-with-no-credit-lines-1562744813721.html
• https://www.opengovasia.com/the-digital-payment-revolution-in-india/
• https://www.livemint.com/politics/policy/digital-payments-to-more-than-double-to-135-2-bn-by-
2023-1560711978627.html
• https://www.thehindubusinessline.com/money-and-banking/payments-industry-seeks-stable-
regulatory-framework/article25182708.ece