question bank solved(marketing management) (2)
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Long Answers:
1.Characteristics of an effective marketing mix:
The ideal marketing mix has come a long way from Henry Ford's beginnings,
when you could get any color Model T you wanted, as long as it was black.
The possible combinations of price, product, promotion and place have
exploded at an astounding, if not alarming, rate. With the blossoming of the
Internet, niche markets no longer have geographic bounds. Companies that
survive these perilous economic times may swing the pendulum back to a
more focused approach
Cohesiveness
Very few companies exhibit the idea of a cohesive marketing mix like Johnson &Johnson. Every part of the marketing mix speaks to the company's credo: "Put theneeds and well-being of the people we serve first." Former CEO Robert WoodJohnson crafted the credo in 1943 before anyone knew about "corporate socialresponsibility." That concept is evident in Johnson & Johnson's product qualitycontrol, its management development and employee benefits programs, its concernfor the communities where it has offices, its focus on sustainability and green plantimprovements, and even the specific wording of its advertising messages.Everything in the marketing mix points back to the core values.
Quality
In the 1970s, researchers began studying the relationship between quality andfinancial performance. They determined that higher quality affects financial
performance, allowing companies to charge a premium price and increase marketshare. A 2001 study, by Sheryl E. Kimes, Ph.D., professor at Cornell UniversitySchool of Hotel Administration, now shows a direct relationship between productquality, in the lodging industry, and an operation's financial performance.
Adaptability
Adaptability in the marketing mix means being able to change product attributes,distribution channels, pricing, marketing message or even your concept of what
business you are in. More than 250 Malta business leaders attended an invitation-only conference focused on tackling the importance of adapting to shifts in themarketplace. According to one of the conference sponsors, Gianni Zammit,
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director of Jugs@Malta, "If the economic crisis taught us one thing, it is that businesses have to be ready to change and adapt."
Clarity
Clarity means being true to yourself, authentic. Rapper and entertainment mogulJay-Z had this to say as part of the "Oprah Presents Master Class" television series,"A huge lesson for me was that if I was gonna be successful, I had to be successfulas myself." That same clarity of purpose, translated into every facet of themarketing mix, is a recipe for unbridled success.
Responsibility
A consequence of the global economy is the realization that we are all in thistogether. No one expressed the logic of that sentiment better than Carly Fiorina,former CEO of Hewlett-Packard. Speaking at the 2003 Business For SocialResponsibility Annual Conference in Los Angeles, she said, "...by getting directlyinvolved in sustainable development and education projects... we are actuallyinventing products that we never would have imagined otherwise. We are building
businesses, partners,customers and employees in the process."
2. Most important role of consumer in decision making?
An individual who purchases products and services from the market for his/her own persoconsumption is called as consumer.
To understand the complete process of consumer decision making, let us first go through
following example:Tim went to a nearby retail store to buy a laptop for himself. The store manager showed hthe latest models and after few rounds of negotiations, Tim immediately selected one for himself.
In the above example Tim is the consumer and the laptop is the product which Tim wante
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purchase for his end-use.
Why do you think Tim went to the nearby store to purchase a new laptop ?
The answer is very simple. Tim needed a laptop. In other words it was actually Tim‘s nee
buy a laptop which took him to the store.The Need to buy a laptop can be due to any of the following reasons:
His old laptop was giving him problems.
He wanted a new laptop to check his personal mails at home.
He wanted to gift a new laptop to his wife.
He needed a new laptop to start his own business.
The store manager showed Tim all the samples available with him and explained
him the features and specifications of each model. This is called information. Tim before buying the laptop checked few other options as well. The information cancome from various other sources such as newspaper, websites, magazines,advertisements, billboards etc.
This explains the consumer buying decision process.
A consumer goes through several stages before purchasing a product or
service.
NEED
↓ INFORMATION GATHERING/SEARCH
↓
EVALUATION OF ALTERNATIVES
↓
PURCHASE OF PRODUCT/SERVICE
↓
POST PURCHASE EVALUATION
1. Step 1 - Need is the most important factor which leads to buying of productsand services. Need infact is the catalyst which triggers the buying decision of individuals.
An individual who buys cold drink or a bottle of mineral water identifieshis/her need as thirst. However in such cases steps such as informationsearch and evaluation of alternatives are generally missing. These two steps
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are important when an individual purchases expensive products/servicessuch as laptop, cars, mobile phones and so on.
2. Step 2 - When an individual recognizes his need for a particular product/service he tries to gather as much information as he can.
An individual can acquire information through any of the following sources:
Personal Sources - He might discuss his need with his friends,family members, co workers and other acquaintances.
Commercial sources - Advertisements, sales people (in Tim‘s case
it was the store manager), Packaging of a particular product inmany cases prompt individuals to buy the same, Displays (Props,Mannequins etc)
Public sources - Newspaper, Radio, Magazine Experiential sources - Individual‘s own experience, prior handling
of a particular product (Tim would definitely purchase a Delllaptop again if he had already used one)
3. Step 3 - The next step is to evaluate the various alternatives available in themarket. An individual after gathering relevant information tries to choose the
best option available as per his need, taste and pocket.4. Step 4 - After going through all the above stages, customer finally purchases
the product.
5. Step 5 - The purchase of the product is followed by post purchase evaluation.Post purchase evaluation refers to a customer‘s analysis whether the productwas useful to him or not, whether the product fulfilled his need or not?
4.define marketing management?
Marketing management is a business discipline which is focused on the practical
application of marketing techniques and the management of a firm's marketing
resources and activities. Rapidly emerging forces of globalization have led firms to
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market beyond the borders of their home countries, making international
marketing highly significant and an integral part of a firm's marketing
strategy.[1] Marketing managers are often responsible for influencing the level,
timing, and composition of customer demand accepted definition of the term. In
part, this is because the role of a marketing manager can vary significantly basedon a business's size, corporate culture, and industry context. For example, in a large
consumer products company, the marketing manager may act as the overall general
manager of his or her assigned product.[2] To create an effective, cost-efficient
marketing management strategy, firms must possess a
detailed, objective understanding of their own business and the market in which
they operate.[3] In analyzing these issues, the discipline of marketing management
often overlaps with the related discipline of strategic planning.
5.} Exchange and transaction:
Exchange, which is the core concept of marketing, is the process of obtaining a desired product from someone by offering something in return.For exchange potential to exist, five conditions must be satisfied:
1. There are at least two parties.2. Each party has something that might be of value to the other party.3. Each party is capable of communication and delivery.
4. Each party is free to accept or reject the exchange offer.5. Each party believes it is appropriate or desirable to deal with the other party.Whether exchange actually takes place depends on whether the two partiescan agree on terms that will leave them both better off (or at least not worseoff) than before. Exchange is a value-creating process because it normallyleaves both parties better off.
A transaction involves several dimensions: at least two things of value,agreed-upon conditions, a time of agreement, and a place of agreement. A
legal system supports and enforces compliance on the part of thetransactions without a law of contracts, people would approach transactionswith some distrust, and everyone would lose.
6. Selling concept
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The Selling Concept proposes that customers, be individual or organizations
will not buy enough of the organization‘s products unless they are persuaded
to do so through selling effort. So organizations should undertake selling and
promotion of their products for marketing success. The consumers typically
are inert and they need to be goaded for buying by converting their inertneed in to a buying motive through persuasion and selling action.
This approach is applicable in the cases of unsought goods like life
insurance, vacuum cleaner, fire fighting equipments including fire
extinguishers. These industries are seen having a strong network of sales
force. This concept is applicable for the firms having over capacity in which
their goal is to sell what they produce than what the customer really wants.
In a modern marketing situation the buyer has a basket to choose from and
the customer is also fed with a high decibel of advertising. So often there is amisconception that marketing is all about selling. The problem with this
approach is that the customer will certainly buy the product after the
persuasion and if dissatisfied will not speak to others. In reality this does not
happen and companies pursuing this concept often fail in the business.
SELLING-
1 Emphasis is on the product
2 Company Manufactures the product first
3 Management is sales volume oriented4 Planning is short-run-oriented in terms of today‘s products and markets
5 Stresses needs of seller
6 Views business as a good producing process
7 Emphasis on staying with existing technology and reducing costs
8 Different departments work as in a highly separate water tight compartments
9 Cost determines Price
10 Selling views customer as a last link in business
MARKETING CONCEPTS- 1 Emphasis on consumer needs wants
2 Company first determines customers needs and wants and then decides out how
to deliver a product to satisfy these wants
3 Management is profit oriented
4 Planning is long-run-oriented in today‘s products and terms of new products,
tomorrow‘s markets and future growth
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5 Stresses needs and wants of buyers
6 Views business as consumer producing process sat¬isfying process
7 Emphasis on innovation on every existing technol¬ogy and reducing every
sphere, on providing better costs value to the customer by adopting a superior
technology8 All departments of the business integrated manner, the sole purpose being
generation of consumer satisfaction
9. Consumer determine price, price determines cost
10. Marketing views the customer last link in business as the very purpose of the
business
7. Integrated marketing communication and its components?
Integrated Marketing Communications (IMC) is an approach to brand
communications where the different modes work together to create a
seamless experience for the customer and are presented with a similar tone
and style that reinforces the brand‘s core message. Its goal is to make all
aspects of marketing communication such as advertising, sales promotion,
public relations direct marketing, online communications and social media
work together as a unified force, rather than permitting each to work in
isolation, which maximizes their cost effectiveness
Integrated marketing communications (IMC) is an approach to brandcommunications where the different modes work together to create a seamlessexperience for the customer and are presented with a similar tone and style thatreinforces the brand‘s core message. Its goal is to make all aspects of marketing
communication such as advertising, sales promotion, public relations directmarketing, online communications and social media work together as a unifiedforce, rather than permitting each to work in isolation, which maximizes their costeffectiveness.
IMC is becoming more significant in marketing practice because of the reducedcost effectiveness of mass media and media fragmentation. As consumers spendmore time online and on mobile devices all exposures of the brand need to tietogether so they are more likely to be remembered.
Increasingly the strategies of brands cannot be understood by looking solely attheir advertising. Instead they can be understood by seeing how all aspects of their
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communications ecosystem work together and in particular how communicationsare personalized for each customer and react in real time, as in a conversation.Brand strategies and their tactics can be viewed on theIntegrated Brands site.
IMC Components
The Foundation - is based on a strategic understanding of the product and
market. This includes changes in technology, buyer attitudes and behaviour and
anticipated moves by competitors.
The Corporate Culture - increasingly brands are seen as indivisible from the
vision, capabilities, personality and culture of the corporation.
The Brand Focus - is the logo, corporate identity, tagline, style and core
message of the brand.
Consumer Experience - includes the design of the product and its packaging,the product experience (for instance in a retail store) and service.
Communications Tools - includes all modes of advertising, direct
marketing and online communications including social media.
Promotional Tools - trade promotions; consumer promotions; personal selling,
database marketing, and customer relations management; public relations and
sponsorship programs.
Integration Tools - software that enables the tracking of customer behaviour
and campaign effectiveness. This includes customer relationship management
(CRM) software, web analytics, marketing automation and inbound marketing
software.
8.
Push and pull strategies used in promotional strategies?Promotion is an important part of any marketing strategy. You can have the
best product or service out there, but unless you promote it successfully, noone will know about it. There are three basic types of promotional strategies – a push strategy, a pull strategy or a combination of the two. In general, a push strategy is sales oriented, a pull strategy is marketing-oriented and a push-pull strategy is a combination of the two.
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Push StrategyA push promotional strategy works to create customer demand for your
product or service through promotion: for example, through discounts toretailers and trade promotions. Appealing package design and maintaining areputation for reliability, value or style are also used in push strategies. Oneexample of a push strategy is mobile phone sales, where manufacturers offer discounts on phones to encourage buyers to chose their phone. Push
promotional strategies also focus on selling directly to customers, for example, through point of sale displays and direct approaches to customers.Pull StrategyA pull promotional strategy uses advertising to build up customer demand for a product or service. For example, advertising children's toys on children'stelevision shows is a pull strategy. The children ask their parents for the toys,
the parents ask the retailers and the retailers the order the toys from themanufacturer. Other pull strategies include sales promotions, offeringdiscounts or two-for-one offers and building demand through social mediasites such as YouTube.Combination StrategiesSome companies use a combination of both push and pull strategies. For example, Texas-based textile producer Cotton Incorporated uses a push/pull
promotional strategy. They push to create customer demand throughconstantly developing new products and offering these products in stores; and
pull customers towards these products through advertising and promotiondeals. According to marketing expert Blair Entenmann, in an article he wrotefor his company MarketingHelp!, there is no single correct combination of
push and pull. The amount spent on each type of strategy will depend onfactors such as budget, the type of product, the target audience andcompetition.When To UsePush promotional strategies work well for lower cost items, or items wherecustomers may make a decision on the spot. New businesses use pushstrategies to develop retail markets for their products and to generate
exposure. Once a product is already in stores, a pull strategy createsadditional demand for the product. Pull strategies work well with highlyvisible brands, or where there is good brand awareness. This is usuallydeveloped through advertising.
10. Advertising and methods
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Advertising is a form of communication for marketing and used to encourageor persuade an audience (viewers, readers or listeners; sometimes a specific group)to continue or take some new action. Most commonly, the desired result is to driveconsumer behavior with respect to a commercial offering, although political andideological advertising is also common. The purpose of advertising may also be toreassure employees or shareholders that a company is viable or successful.Advertising messages are usually paid for by sponsors and viewed viavarious traditional media; including mass media suchas newspaper , magazines, television commercial, radio advertisement, outdoor advertising or direct mail; or new media such as blogs,websites or text messages.
Commercial advertisers often seek to generate increased consumption of their products or services through " branding," which involves the repetition of animage or product name in an effort to associate certain qualities with the brand inthe minds of consumers. Non-commercial advertisers who spend money toadvertise items other than a consumer product or service include political parties,interest groups, religious organizations and governmental agencies. Nonprofitorganizations may rely on free modes of persuasion, such as a public serviceannouncement (PSA).
Types of advertising
Virtually any medium can be used for advertising. Commercial advertising mediacan include wall paintings, billboards, street furniture components, printed flyersand rack cards, radio, cinema and television adverts, web banners, mobile
telephone screens, shopping carts, web popups, skywriting, bus stop benches, human billboards, magazines, newspapers, town criers, sides of buses, banners attached to or sides of airplanes ("logojets"), in-flightadvertisements on seatback tray tables or overhead storage bins, taxicab doors, roof mounts and passenger screens, musical stage shows, subway platforms and trains,elastic bands on disposable diapers, doors of bathroom stalls, stickers on apples insupermarkets, shopping cart handles(grabertising), the opening sectionof streaming audio and video, posters, and the backs of event tickets andsupermarket receipts. Any place an "identified" sponsor pays to deliver their message through a medium is advertising.
Television advertising / Music in advertising
The TV commercial is generally considered the most effective mass-market
advertising format, as is reflected by the high prices TV networks charge for
commercial airtime during popular TV events. The annual Super
Bowl football game in the United States is known as the most prominent
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advertising event on television. The average cost of a single thirty-second
TV spot during this game has reached US$3.5 million (as of 2012). The
majority of television commercials feature a song or jingle that listeners
soon relate to the product. Virtual advertisements may be inserted into
regular television programming through computer graphics. It is typicallyinserted into otherwise blank backdrops[18] or used to replace local billboards
that are not relevant to the remote broadcast audience.[19] More
controversially, virtual billboards may be inserted into the
background[20]where none exist in real-life. This technique is especially used
in televised sporting events.[21][22] Virtual product placement is also
possible.[23][24]
Infomercials
An infomercial is a long-format television commercial, typically fiveminutes or longer. The word "infomercial" is a portmanteau of the words
"information" & "commercial". The main objective in an infomercial is to
create an impulse purchase, so that the consumer sees the presentation and
then immediately buys the product through the advertised toll-free telephone
number or website. Infomercials describe, display, and often demonstrate
products and their features, and commonly have testimonials from
consumers and industry professionals.
Radio advertising
Radio advertising is a form of advertising via the medium of radio. Radioadvertisements are broadcast as radio waves to the air from a transmitter to
an antenna and a thus to a receiving device. Airtime is purchased from
a station or network in exchange for airing the commercials. While radio has
the limitation of being restricted to sound, proponents of radio advertising
often cite this as an advantage. Radio is an expanding medium that can be
found not only on air, but also online. According to Arbitron, radio has
approximately 241.6 million weekly listeners, or more than 93 percent of the
U.S. population.Online advertising
Online advertising is a form of promotion that uses the Internet and World
Wide Web for the expressed purpose of delivering marketing messages to
attract customers. Online ads are delivered by an ad server . Examples of
online advertising include contextual ads that appear on search engine
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results pages, banner ads, in text ads, Rich Media Ads, Social network
advertising, online classified advertising, advertising networks and e-mail
marketing, including e-mail spam.
Product placements
Covert advertising, also known as guerrilla advertising, is when a productor brand is embedded in entertainment and media. For example, in a film,
the main character can use an item or other of a definite brand, as in the
movie Minority Report , where Tom Cruise's character John Anderton owns
a phone with the Nokia logo clearly written in the top corner, or his watch
engraved with the Bulgari logo. Another example of advertising in film is
in I, Robot , where main character played by Will Smith mentions
his Converse shoes several times, calling them "classics," because the film is
set far in the future. I, Robot and Spaceballs also showcase futuristic carswith the Audi and Mercedes-Benz logos clearly displayed on the front of the
vehicles. Cadillac chose to advertise in the movie The Matrix Reloaded ,
which as a result contained many scenes in which Cadillac cars were used.
Similarly, product placement for Omega
Watches, Ford, VAIO, BMW and Aston Martin cars are featured in
recent James Bond films, most notably Casino Royale. In "Fantastic Four:
Rise of the Silver Surfer ", the main transport vehicle shows a
large Dodge logo on the front. Blade Runner includes some of the most
obvious product placement; the whole film stops to show a Coca-Cola billboard.
Press advertising
Press advertising describes advertising in a printed medium such as
a newspaper , magazine, or trade journal. This encompasses everything from
media with a very broad readership base, such as a major national newspaper
or magazine, to more narrowly targeted media such as local newspapers and
trade journals on very specialized topics. A form of press advertising
is classified advertising, which allows private individuals or companies to purchase a small, narrowly targeted ad for a low fee advertising a product or
service. Another form of press advertising is the Display Ad, which is a
larger ad (can include art) that typically run in an article section of a
newspaper.
Billboard advertising
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Billboards are large structures located in public places which display
advertisements to passing pedestrians and motorists. Most often, they are
located on main roads with a large amount of passing motor and pedestrian
traffic; however, they can be placed in any location with large amounts of
viewers, such as on mass transit vehicles and in stations, in shopping mallsor office buildings, and in stadiums.
Mobile billboard advertising
Mobile billboards are generally vehicle mounted billboards or digital
screens. These can be on dedicated vehicles built solely for carrying
advertisements along routes preselected by clients, they can also be specially
equipped cargo trucks or, in some cases, large banners strewn from planes.
The billboards are often lighted; some being backlit, and others employing
spotlights. Some billboard displays are static, while others change; for
example, continuously or periodically rotating among a set of
advertisements. Mobile displays are used for various situations in
metropolitan areas throughout the world, including: Target advertising, One-
day, and long-term campaigns, Conventions, Sporting events, Store
openings and similar promotional events, and Big advertisements from
smaller companies.
In-store advertising
In-store advertising is any advertisement placed in a retail store. It includes placement of a product in visible locations in a store, such as at eye level, at
the ends of aisles and near checkout counters (aka POP — Point Of Purchase
display), eye-catching displays promoting a specific product, and
advertisements in such places as shopping carts and in-store video displays.
Coffee cup advertising
Coffee cup advertising is any advertisement placed upon a coffee cup that is
distributed out of an office, café, or drive-through coffee shop. This form of
advertising was first popularized in Australia, and has begun growing in popularity in the United States, India, and parts of the Middle East.[citation
needed ]
Street advertising
This type of advertising first came to prominence in the UK by Street
Advertising Services to create outdoor advertising on street furniture and
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pavements. Working with products such as Reverse Graffiti, air dancer 's and
3D pavement advertising, the media became an affordable and effective tool
for getting brand messages out into public spaces.[citation needed ]
Sheltered Outdoor Advertising
This type of advertising opens the possibility of combining outdoor withindoor advertisement by placing large mobile, structures (tents) in public
places on temporary bases. The large outer advertising space exerts a strong
pull on the observer, the product is promoted indoor, where the creative
decor can intensify the impression.
Celebrity branding
This type of advertising focuses upon using celebrity power, fame, money,
popularity to gain recognition for their products and promote specific stores
or products. Advertisers often advertise their products, for example, whencelebrities share their favorite products or wear clothes by specific brands or
designers. Celebrities are often involved in advertising campaigns such as
television or print adverts to advertise specific or general products. The use
of celebrities to endorse a brand can have its downsides, however. One
mistake by a celebrity can be detrimental to the public relations of a brand.
For example, following his performance of eight gold medals at the 2008
Olympic Games in Beijing, China, swimmer Michael Phelps' contract with
Kellogg's was terminated, as Kellogg's did not want to associate with him
after he was photographed smoking marijuana. Celebrities such as BritneySpears have advertised for multiple products including Pepsi, Candies from
Kohl's, Twister, NASCAR, Toyota and many more.
9. Marketing research and its 3 basic research design?
Market research is any organized effort to gather informationabout markets or customers. It is a very important component of businessstrategy.[1]The term is commonly interchanged with marketing research; however, expert practitioners may wish to draw a distinction, inthat marketing research is concerned specifically about marketing processes,while market research is concerned specifically with markets.[2] Market research is a key factor to get advantage over competitors. Marketresearch provides important information to identify and analyze the marketneed, market size and competition.
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Market research, includes social and opinion research, [and] is the systematicgathering and interpretation of information about individuals or organizationsusing statistical and analytical methods and techniques of the applied socialsciences to gain insight or support decision making
Descriptive Market Research
The focus of descriptive research is to provide an accurate description for something that is occurring. For example, what age group is buying a particular brand, a product‘s market share within a certain industry, how many competitors a
company faces, etc. This type of research is by far the most popular form of marketresearch. It is used extensively when the research purpose is to explain, monitor and test hypotheses, and can also be used to a lesser extent to help make
predictions and for discovery.
Marketers routinely conduct basic descriptive research using informal means. For instance, the head of marketing for a clothing company may email a retailer to seehow the products are selling. But informal descriptive research, while widelyundertaken, often fails to meet the tests of research validity and reliability and,consequently, the information should not be used as an important component inmarketing decisions. Rather, to be useful, descriptive research must be conductedin a way that adheres to a strict set of research requirements to capture relevantresults. This often means that care must be taken to develop a structured research
plan. Under most circumstances this requires researchers have a good grasp of
research methods including knowledge of data analysis.
Exploratory Market Research
The exploratory approach attempts to discover general information about a topicthat is not well understood by the marketer. For instance, a marketer has heardnews reports about a new Internet technology that is helping competitors but themarketer is not familiar with the technology and needs to do research to learn
more. When gaining insight (i.e., discovery) on an issue is the primary goal,exploratory research is used.
The basic difference between exploratory and descriptive research is the researchdesign. Exploratory research follows a format that is less structured and moreflexible than descriptive research. This approach works well when the marketer doesn‘t have an understanding of the topic or the topic is new and it is hard to
pinpoint the research direction. The downside, however, is that results may not be
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as useful in aiding a marketing decision. So why use this method? In addition tooffering the marketer basic information on a topic, exploratory research may also
provide direction for a more formal research effort. For instance, exploratoryresearch may indicate who the key decision makers are in a particular market thusenabling a more structured descriptive study targeted to this group.
Causal Market Research
In this form of research the marketer tries to determine if the manipulation of onevariable, called the independent variable, affects another variable, called thedependent variable. In essence, the marketer is conducting an experiment. To beeffective the design of causal research is highly structured and controlled so thatother factors do not affect those being studied.
Marketers use this approach primarily for purposes of prediction and to testhypotheses, though it can also be used to a lesser extent for discovery andexplanatory purposes. In marketing, causal research is used for many types of research including testing marketing scenarios, such as what might happen to product sales if changes are made to a product‘s design or if advertising is
changed. If causal research is performed well marketers may be able to use resultsfor forecasting what might happen if the changes are made.
10. Methods of pricing strategy with examples?
As we said earlier, there is no "one right way" to calculate your pricing. Onceyou've considered the various factors involved and determined your objectives for your pricing strategy, now you need some way to crunch the actual numbers. Hereare four ways to calculate prices: Cost-plus pricing - Set the price at your production cost, including both cost of
goods and fixed costs at your current volume, plus a certain profit margin. For example, your widgets cost $20 in raw materials and production costs, and atcurrent sales volume (or anticipated initial sales volume), your fixed costs come
to $30 per unit. Your total cost is $50 per unit. You decide that you want tooperate at a 20% markup, so you add $10 (20% x $50) to the cost and come upwith a price of $60 per unit. So long as you have your costs calculated correctlyand have accurately predicted your sales volume, you will always be operating ata profit.
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Target return pricing - Set your price to achieve a target return-on-investment(ROI). For example, let's use the same situation as above, and assume that youhave $10,000 invested in the company. Your expected sales volume is 1,000units in the first year. You want to recoup all your investment in the first year, soyou need to make $10,000 profit on 1,000 units, or $10 profit per unit, givingyou again a price of $60 per unit.
Value-based pricing - Price your product based on the value it creates for thecustomer. This is usually the most profitable form of pricing, if you can achieveit. The most extreme variation on this is "pay for performance" pricing for services, in which you charge on a variable scale according to the results youachieve. Let's say that your widget above saves the typical customer $1,000 ayear in, say, energy costs. In that case, $60 seems like a bargain - maybeeven too cheap. If your product reliably produced that kind of cost savings, you
could easily charge $200, $300 or more for it, and customers would gladly payit, since they would get their money back in a matter of months. However, thereis one more major factor that must be considered.
Psychological pricing - Ultimately, you must take into consideration theconsumer's perception of your price, figuring things like:
Positioning - If you want to be the "low-cost leader", you must be pricedlower than your competition. If you want to signal high quality, you should
probably be priced higher than most of your competition.
Popular price points - There are certain "price points" (specific prices) atwhich people become much more willing to buy a certain type of product. For example, "under $100" is a popular price point. "Enough under $20 to beunder $20 with sales tax" is another popular price point, because it's "one bill"that people commonly carry. Meals under $5 are still a popular price point, asare entree or snack items under $1 (notice how many fast-food places have a$0.99 "value menu"). Dropping your price to a popular price point mightmean a lower margin, but more than enough increase in sales to offset it.
Fair pricing - Sometimes it simply doesn't matter what the value of the product is, even if you don't have any direct competition. There is simply alimit to what consumers perceive as "fair". If it's obvious that your productonly cost $20 to manufacture, even if it delivered $10,000 in value, you'd havea hard time charging two or three thousand dollars for it -- people would just
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feel like they were being gouged. A little market testing will help youdetermine the maximum price consumers will perceive as fair.
11. Uppmarketing marketing system?
12. Relationship marketing :
Relationship marketing was first defined as a form of marketing developedfrom direct response marketing campaigns which emphasizes customer retention and satisfaction, rather than a dominant focus on salestransactions.[citation needed ] As a practice, relationship marketing differs from other forms of marketing in
that it recognizes the long term value of customer relationships and extendscommunication beyond intrusive advertising and sales promotionalmessages.
[citation needed ] With the growth of the internet and mobile platforms, relationship marketinghas continued to evolve and move forward as technology opens morecollaborative and social communication channels. This includes tools for managing relationships with customers that goes beyond simple demographicand customer service data. Relationship marketing extends to includeinbound marketing efforts, (a combination of search optimization and
strategic content), PR, social media and application development.Relationship marketing is a broadly recognized, widely-implemented strategyfor managing and nurturing a company‘s interactions with clients and sales
prospects.[citation needed ] It also involves using technology to organize,
synchronize business processes, (principally sales and marketing activities),and most importantly, automate those marketing and communicationactivities on concrete marketing sequences that could run in autopilot, (alsoknown as marketing sequences). The overall goals are to find, attract and winnew clients, nurture and retain those the company already has, entice former clients back into the fold, and reduce the costs of marketing and client
service. [1] Once simply a label for a category of software tools, today, itgenerally denotes a company-wide business strategy embracing all client-facing departments and even beyond. When an implementation is effective,
people, processes, and technology work in synergy to increase profitability,and reduce operational costs.[citation needed ]
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13. Market orientation’s impact on business?
Does Market Orientation Improve Business Performance? Lengthy Debate, Mixed Findings. The role of market orientation in improving business performance has been the subject of intense debate for more thanthree decades. Only recently, however, have researchers empiricallyinvestigated the relationship between market orientation and business
performance. Their findings provide mixed support for the long-held proposition that a business's performance is positively related to its marketorientation.Even the positive findings must be viewed with skepticism because allstudies to date have used cross-sectional databases, which cannot control for
potentially unobservable, firm-specific effects. Panel data analysis-the pooling of time series and cross-sectional information-allows researchers totest and control for these effects. Resolution of the issue is critical for
managers, who must weigh the benefits of being market oriented against thecosts of developing a market-oriented business culture. A Different Approach. This paper reports the results of a panel data analysisinvestigating the effect of market orientation on two drivers of business
performance: sales growth and return on investment. Our study illuminatesthe issue for managers and researchers in two respects: in addition to
providing insights into the relationship between market orientation and business performance, it examines the effectiveness of panel data analysis inevaluating this relationship.Our research sample consisted of 35 SBUs in a Fortune 500 forest productscompany. In 1987 and 1991, we asked the top management team of eachSBU to respond to a questionnaire dealing with the unit's market structure,environment, culture, policies, strategies, and performance in its principalmarket segments. The questionnaire generated self-reported measures of market orientation, sales growth, ROI, and customer retention. Usingeconometric techniques designed to control for unobserved business unit-specific factors, we found that market orientation and customer retention aresignificantly related to sales growth but not to ROI. Managerial Implications. In theory, market orientation should affect both
ROI and sales growth. Our results suggest that our measure of marketorientation taps behaviors in businesses that have a greater impact on salesgrowth than on ROI. Nonetheless, our findings indicate that the market-oriented behaviors measured in this study are related to business
performance: the positive effect of market orientation on sales growth willincrease profits as long as ROI is greater than the cost of capital. Weencourage managers to foster a market orientation in their organizations,
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while paying close attention to the selection of target markets and theallocation of effort among competing opportunities to maximize the potentialfor sales growth and profitability. Future Research Challenges. The positive relationship we found betweenmarket orientation and sales growth reinforces the conclusions of previousresearch. The absence of a significant relationship between marketorientation and ROI provides a challenge for future research. Analysis of more firms, for more years, with shorter intervals between observationswould strengthen our understanding of the impact of market orientation onROI. In addition, emphasis should be placed on measuring behaviors in firmsthat more directly affect rate of return. Given the limitations of ROI as ameasure of rate of return, future research should employ a different
performance measure. It would be useful, for example, to link marketorientation to stock return.
As our study shows, panel data analysis gives researchers the opportunity totest and isolate firm-specific factors influencing the market orientation-ROIrelationship, thus yielding a truer picture of the relationship across all firms.It remains for future research to support managers seeking to realize the
benefits of a market orientation by providing additional insights into itseffects on performance and by developing more accurate measures of the
behaviors in firms that underlie a market orientation.
14. Effectiveness of serving customers for business survival?
Customer service is the overall activity of identifying and satisfying establishingcustomer needs.the Harvard Business Review reports that if you can prevent 5% of your customersfrom leaving you, you can increase your bottom line profit by 25 – 95%.In pursuance of a good customer service a business will get involved in activitiesthat enhance its effectiveness this include;Provision of excelling training for customer service personnel. Monitoring of customer service personnel to ensure that quality service is given to every
customer. Use of customer service satisfaction surveys and Making sure thatcustomer‘s needs are met. By practicing appropriate and excellent customer services a business will manageto meet its primary goal in the most effective manner possible. 4
Provide Good Customer Service
How Businesses Can Provide Users with a Satisfying Experience
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As in any type of business, providing excellent customer service online isessential. Creating satisfied customers is they key to succeeding in any business. Itis equally, if not more important to keep customers satisfied when dealing withthem online as it is when dealing with the customer in person.
When dealing with customers online, there are several factors that a business mustuse to keep their customers satisfied.
Provide customers with direct instructions. Customers do not like websites that cause them confusion and difficulty inordering. Websites that provide excplicit instructions enable customers to shop inease without any errors or confusion. If a website is selling a specific product, it isimportant to notify customers with specific details about the product, and how to
place an order. Information on how the customer can pay for their orders, how the
product will be shipped, and how the customer can track their orders are all beneficial for a company to provide.
If the website is providing a service, customers should be shown how to use theservice, and what the service entails.
Pay attention to customer’s questions and concerns
It is important for customers to know that they can contact a business if need be.Making sure that an e-mail address or telephone number is provided to customersgives a business more credibility.
It is also beneficial for an online business to provide a frequently asked questions page. This is an efficient way for a business to provide answers to any questionscustomers may have. It can be a large time saver, as many questions customersmay have are commonly linked to one another and may already be answered on the
page.
Customers usually find businesses who respond quickly to their questions or concerns to be quite impressive. A recent study found that 42 percent of retailssites take five days or longer to respond to customers. The more efficient a
business is in responding to customers questions, the greater the customer satisfaction will be.
Always ask for customer feedback Asking customers their opinions on how they can be better served allows
businesses to improve on their customer service. Taking into considerationcustomers suggestions makes room for improvement that may be much needed,
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and provides customers with the satisfaction of knowing that they are beinglistened to.
Pay Attention to returning customers
The more you know about your customers, the better you can service them. Payingattention to customer details allows businesses to connect with their customers on amore personal level.
Giving customers the option of receiving e-mail notices, and sending personalizede-mails can be a nice touch to creating a satisfied customer. Sending updates andspecial occasion offers, as well as notices regarding new products that may interestcustomers makes customers feel important and helps them realize that the businesscares about them.
Customers who are satisfied before, during and after the sale are customers thatwill return to a website. Effective customer service is important to the success of any business.
What Does It Take To Convince Your Customers To Buy?
You build the perfect website, run your marketing campaigns, watch the traffic toyour website, but get no sales. Why?
Did you research your potential customers first? Do you know what they really
need? Do you know what it takes to convince them? Is your website customized properly for them?
Considerable psychological and sociological factors influence customer behavior.Explanations which make perfect sense to you may have no impact on your
potential customers. It takes research and experience to understand web users,know what they need, and know when they buy. This information may be criticalto your business because it may mean the difference between loss or profitability.Sometimes, even changing the wording of a paragraph can increase your conversion rate by 25% or more. This means that you will get 25% more sales
from the same website traffic.
If you are having trouble converting your website visitors into buyers, or if you arelaunching a new website and want to optimize it for maximum sales, Webnox canhelp you analyze the behavior of your website's users. We will work ondetermining the best approach to convince your users to buy.
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Some of the areas we research and analyze include:
the types (demographics) of users visiting your website, and their various needs current users versus ideal users reasons why users are not buying what it takes to motivate users buy your products and/or services alternative options for your users user preferences
15. Marketing myopia:
Marketing myopia is a term used in marketing as well as the title of animportant marketing paper written by Theodore Levitt.[1][2] This paper was
first published in 1960 in the Harvard Business Review , a journal of which hewas an editor. Marketing Myopia refers to "focusing on products rather thancustomers."The Myopic culture, Levitt postulated, would pave the way for a business tofail, due to the short-sighted mindset and illusion that a firm is in a so-called'growth industry'. This belief leads to complacency and a loss of sight of whatcustomers want.Some commentators have suggested that its publication marked the
beginning of the modern marketing movement. Its theme is that the vision of
most organizations is too constricted by a narrow understanding of what business they are in. It exhorted CEOs to re-examine their corporate vision;and redefine their markets in terms of wider perspectives. It was successful inits impact because it was, as with all of Levitt's work, essentially practicaland pragmatic. Organizations found that they had been missing opportunitieswhich were plain to see once they adopted the wider view. The paper wasinfluential. The oil companies (which represented one of his main examplesin the paper) redefined their business as energy rather than just petroleum. Bycontrast, when the Royal Dutch Shell embarked upon an investment programin nuclear power , it failed to demonstrate a more circumspect regard for their
industry.One reason that short sightedness is so common is that people feel that theycannot accurately predict the future. While this is a legitimate concern, it isalso possible to use a whole range of business prediction techniques currentlyavailable to estimate future circumstances as best as possible.There is a greater scope of opportunities as the industry changes. It trainsmanagers to look beyond their current business activities and think "outside
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the box". George Steiner (1979) is one of many in a long line of admirerswho cite Levitt's famous example on transportation. If a buggy whipmanufacturer in 1910 defined its business as the "transportation starter
business," they might have been able to make the creative leap necessary tomove into the automobile business when technological change demandedit.[3] People who focus on marketing strategy, various predictive techniques, andthe customer's lifetime value can rise above myopia to a certain extent. Thiscan entail the use of long-term profit objectives (sometimes at the risk of sacrificing short term objectives).
Fine example of market myopia
Who sells the largest number of cameras in India?
Your guess is likely to be Sony, Canon or Nikon. Answer is none of the above. Thewinner is Nokia whose main line of business in India is not cameras but cell
phones.
Reason being cameras bundled with cellphones are outselling stand alone cameras. Now, what prevents the cellphone from replacing the camera outright? Nothing atall. One can only hope the Sonys and Canons are taking note.
Try this. Who is the biggest in music business in India? You think it is HMV Sa-Re-Ga-Ma? Sorry. The answer is Airtel. By selling caller tunes (that play for 30
seconds) Airtel makes more than what music companies make by selling musicalbums (that run for hours).Incidentally Airtel is not in music business. It is the mobile service provider withthe largest subscriber base in India. That sort of competitor is difficult to detect,even more difficult to beat (by the time you have identified him he has alreadygone past you). But if you imagine that Nokia and Bharti (Airtel's parent) are
breathing easy you can't be farther from truth.
Nokia confessed that they all but missed the smartphone bus. They admit that
Apple's Iphone and Google's Android can make life difficult in future. But younever thought Google was a mobile company, did you? If these illustrations meananything, there is a bigger game unfolding. It is not so much about mobile or musicor camera or emails?
The "Mahabharat" (the great Indian epic battle) is about "what is tomorrow's personal digital device"? Will it be a souped up mobile or a palmtop with a
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telephone? All these are little wars that add up to that big battle. Hiding behind allthese wars is a gem of a question – "who is my competitor?"
Once in a while, to intrigue my students I toss a question at them. It says "WhatApple did to Sony, Sony did to Kodak, explain?" The smart ones get the answer almost immediately. Sony defined its market as audio (music from the walkman).They never expected an IT company like Apple to encroach into their audiodomain. Come to think of it, is it really surprising? Apple as a computer maker has
both audio and video capabilities. So what made Sony think he won't compete on pure audio? "Elementary Watson". So also Kodak defined its business as filmcameras, Sony defines its businesses as "digital."
In digital camera the two markets perfectly meshed. Kodak was torn betweengoing digital and sacrificing money on camera film or staying with films and
getting left behind in digital technology. Left undecided it lost in both. It had to. Itdid not ask the question "who is my competitor for tomorrow?" The same was truefor IBM whose mainframe revenue prevented it from seeing the PC. The same wastrue of Bill Gates who declared "internet is a fad!" and then turned around to
bundle the browser with windows to bury Netscape. The point is not who is today'scompetitor. Today's competitor is obvious. Tomorrow's is not.
In 2008, who was the toughest competitor to British Airways in India? Singaporeairlines? Better still, Indian airlines? Maybe, but there are better answers. There arecompetitors that can hurt all these airlines and others not mentioned. The answer isvideoconferencing and telepresence services of HP and Cisco. Travel dropped dueto recession. Senior IT executives in India and abroad were compelled by their head quarters to use videoconferencing to shrink travel budget. So much so, thatthe mad scramble for American visas from Indian techies was nowhere in sight in2008. (India has a quota of something like 65,000 visas to the U.S. They weregoing a-begging. Blame it on recession!). So far so good. But to think that theairlines will be back in business post recession is something I would not bet on. Inshort term yes. In long term a resounding no. Remember, if there is one placewhere Newton's law of gravity is applicable besides physics it is in electronic
hardware. Between 1977 and 1991 the prices of the now dead VCR (parent of Blue-Ray disc player) crashed to one-third of its original level in India. PC's pricedropped from hundreds of thousands of rupees to tens of thousands. If this trendrepeats then telepresence prices will also crash. Imagine the fate of airlines then.As it is not many are making money. Then it will surely be RIP!
India has two passions. Films and cricket. The two markets were distinctly
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different. So were the icons. The cricket gods were Sachin and Sehwag. The filmigods were the Khans (Aamir Khan, Shah Rukh Khan and the other Khans whofollowed suit). That was, when cricket was fundamentally test cricket or at best 50over cricket. Then came IPL and the two markets collapsed into one. IPL broughtcricket down to 20 overs. Suddenly an IPL match was reduced to the length of a 3hour movie. Cricket became film's competitor. On the eve of IPL matches moviehalls ran empty. Desperate multiplex owners requisitioned the rights for screeningIPL matches at movie halls to hang on to the audience. If IPL were to become themainstay of cricket, as it is likely to be, films have to sequence their releases so asnot clash with IPL matches. As far as the audience is concerned both are what inIndia are called 3 hour "tamasha" (entertainment).Cricket season might push filmsout of the market.
Look at the products that vanished from India in the last 20 years. When did you
last see a black and white movie? When did you last use a fountain pen? When didyou last type on a typewriter? The answer for all the above is "I don't remember!"For some time there was a mild substitute for the typewriter called electronictypewriter that had limited memory. Then came the computer and mowed them all.Today most technologically challenged guys like me use the computer as anupgraded typewriter. Typewriters per se are nowhere to be seen.
One last illustration. 20 years back what were Indians using to wake them up in themorning? The answer is "alarm clock." The alarm clock was a monster made of mechanical springs. It had to be physically keyed every day to keep it running. Itmade so much noise by way of alarm, that it woke you up and the rest of thecolony. Then came quartz clocks which were sleeker. They were much more gentlethough still quaintly called "alarms." What do we use today for waking up in themorning? Cellphone! An entire industry of clocks disappeared without warningthanks to cell phones. Big watch companies like Titan were the losers. You never know in which bush your competitor is hiding!
On a lighter vein, who are the competitors for authors? Joke spewing machines?(Steve Wozniak, the co-founder of Apple, himself a Pole, tagged a Polish joke
telling machine to a telephone much to the mirth of Silicon Valley). Or will thecompetition be story telling robots? Future is scary! The boss of an IT companyonce said something interesting about the animal called competition. He said"Have breakfast …or…. be breakfast"! That sums it up rather neat
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16. Difference between market research and MIS
Marketing Research is an intriguing area of Marketing. It is an amalgamation of the objective approach of statistics, the subjective approach of anthropology andthe psychological aspect of marketing. It is an ambrosial fusion or art andscience.An ideal market analyst has a strong passion for marketing along withsharp mathematical aptitude.However, like most management domains, there are certain technical terms (or jargons) that confuse people… a lot!!!
For instance, Market Research and Marketing Research- these are separate termswith different applications. We will deal with them later.First, let us begin bydifferentiating between Marketing Intelligence and Marketing Research.
I know going through definitions can be boring. However to understandthedifference between marketing research and marketing intelligence, you shouldhave a brief idea about these terms.
What is Marketing Research?
Marketing Research is basically an activity that aims to collect specificinformation. This information is the basis for formulation of Marketing Strategy.This Marketing Strategy is the ground on which the Marketing Plan isdevised.Therefore, if we consider the sequence of processes, then we will get the
following:o Marketing Researcho Marketing Strategy Formulationo Marketing Plan Formulation
What is Marketing I ntell igence?
Marketing Intelligence can be considered as a perpetual process which aims tocollect mainly competitive intelligence. It is an activity to constantly enrich
theMarketing Information System of an organisation.Any information that pertains to the industry or operational environment of thefirm is collected by the intelligence team.The Difference
The fundamental difference between Market Research and Marketing Research isin terms of time. Marketing Research is a project based activity with certain
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deadline or time constraint. Whereas, Marketing Intelligence is an ongoing job. Inother words, the scope of Marketing Intelligence is wider compared to MarketingResearch.Secondly, the information collected by the marketing intelligence team is notmeant for immediate action. However, the entire marketing research system has
been devised for action oriented information collection.Generally, Marketing Research activity is outsourced while an in-house team ismaintained for Marketing Intelligence.Marketing Research is directed by a research objective. The focus of the researchis a variable generally related to the target consumers. For example, a logisticsfirm may conduct research to analyse the demand of integrated consignmentinformation system amongst truck drivers. Here, the consumers are truck driversand the variable is information demand.Marketing Intelligence on the other hand is not directed by project specific or
variable specific objective. The sole aim for creation of in-house research cell is tokeep a lookout for possible threats or opportunities.Thus, Marketing Intelligence is a more proactive function than MarketingResearch.
17. Methods of exploratory research?Exploratory research methods:
The quickest and the cheapest way to formulate a hypothesis in exploratoryresearch is by using any of the four methods:
Literature search
Experience survey
Focus group
Analysis of selected casesLiterature Search
This refers to ―referring to a literature to develop a new hypothesis‖. The literaturereferred are – trade journals, professional journals, market research finding publications, statistical publications etc Example: Suppose a problem is ―Why are
sales down?‖ This can quickly be analyzed with the help of published data whichshould indicate ―whether the problem is an ―industry problem‖ or a ―firm
problem‖. Three possi bilities exist to formulate the hypothesis.
The company‘s market share has declined but industry‘s figures are normal.
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The industry is declining and hence the company‘s market share is also declining.
The industry‘s share is going up but the company‘s shar e is declining.If we accept the situation that our company‘s sales are down despite the market
showing an upward trend, then we need to analyse the marketing mix variables.
Example 1: A TV manufacturing company feels that its market share is decliningwhereas the overall television industry is doing very well.Example 2: Due to a trade embargo imposed by a country, textiles exports aredown and hence sales of a company making garment for exports is on the decline.The above information may be used to pinpoint the reason for declining sales.Experience Survey In experience surveys, it is desirable to talk to persons who are well informed inthe area being investigated. These people may be company executives or personsoutside the organisation. Here, no questionnaire is required. The approach adoptedin an experience survey should be highly unstructured, so that the respondent cangive divergent views. Since the idea of using experience survey is to undertake
problem formulation, and not conclusion, probability sample need not be used.Those who cannot speak freely should be excluded from the sample.Examples :1) A group of housewives may be approached for their choice for a ―ready to cook product‖. 2) A publisher might want to find out the reason for poor circulation of newspaper introduced recently. He might meet (a) Newspaper sellers (b) Public reading room(c) General public (d) Business community; etc.
These are experienced persons whose knowledge researcher can use.Focus Group Another widely used technique in exploratory research is the focus group. In afocus group, a small number of individuals are brought together to study and talk about some topic of interest. The discussion is co-ordinated by a moderator. Thegroup usually is of 8-12 persons. While selecting these persons, care has to betaken to see that they should have a common background and have similar experiences in buying. This is required because there should not be a conflictamong the group members on the common issues that are being discussed. Duringthe discussion, future buying attitudes, present buying opinion etc., are gathered.Most of the companies conducting the focus groups, first screen the candidates todetermine who will compose the particular group. Firms also take care to avoidgroups, in which some of the participants have their friends and relatives, becausethis leads to a biased discussion. Normally, a number of such groups areconstituted and the final conclusion of various groups are taken for formulating thehypothesis. Therefore, a key factor in focus group is to have similar groups.
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Normally there are 4-5 groups. Some of them may even have 6-8 groups. Theguiding criteria is to see whether the latter groups are generating additional ideas or repeating the same with respect to the subject under study. When this shows adiminishing return from the group, the discussions stopped. The typical focusgroup lasts for 1-30 hours to 2 hours. The moderator under the focus group has akey role. His job is to guide the group to proceed in the right direction.Analysis of selected cases Analysing a selected case sometimes gives an insight into the problem which is
being researched. Case histories of companies which have undergone a similar situation may be available. These case studies are well suited to carry outexploratory research. However, the result of investigation of case histories arcalways considered suggestive, rather than conclusive. In case of preference to―ready to eat food‖, many case histories may be available in the form of previousstudies made by competitors. We must carefully examine the already published
case studies with regard to other variables such as price, advertisement, changes inthe taste, etc.
18. Distinguish between qualitative and quantitative methods of MR
Quantitative research is concerned with measurement of a market and
includes the calculation of market size, the size of market segments,
brand shares, purchase frequencies, awareness measures of brands,
distribution levels etc. Such quantitative data is required to some level of
accuracy (though not in all cases to very high levels) and the methods
used must be capable of achieving this.
Qualitative information is rather harder to define but the emphasis is on
'understanding' rather than simple measurement – Advert A is recalled better than Advert B (quantitative information), but how does A work as an advertand why is it more effective than B? Much qualitative research is concernedwith empathizing with the customer and establishing the meanings he or sheattaches to products, brands and other marketing objects. Another focus ismotivation. For example, why does one product rather than another meet
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customer needs and what are these needs that are being met? Qualitativeresearch is conducted amongst a sample but in this case usually a small onesince there is no attempt to extrapolate to the total population. In the case of attitudes to brands, for example, qualitative research may determine that thereis a specific view held about the brand whereas quantitative research wouldtell us what proportion holds that view.Quantitative and qualitative research is often complementary and in aresearch design both may feature. The qualitative element frequently takes
place at the front end of the study exploring values that need measuring in thesubsequent quantitative phase. The ―qual‖ research may offer a diagnostic
understanding of what is wrong, while the ―quant‖ research provides hard
data across different respondent groups that can lead to specificrecommendations with measures that can be used as controls to determine theeffectiveness of actions.
19. Descriptive market research:
Descriptive Market Research
The focus of descriptive research is to provide an accurate description for something that is occurring. For example, what age group is buying a particular brand, a product‘s market share within a certain industry, how many competitors a
company faces, etc. This type of research is by far the most popular form of marketresearch. It is used extensively when the research purpose is to explain, monitor
and test hypotheses, and can also be used to a lesser extent to help make predictions and for discovery.
Marketers routinely conduct basic descriptive research using informal means. For instance, the head of marketing for a clothing company may email a retailer to seehow the products are selling. But informal descriptive research, while widelyundertaken, often fails to meet the tests of research validity and reliability and,consequently, the information should not be used as an important component inmarketing decisions. Rather, to be useful, descriptive research must be conductedin a way that adheres to a strict set of research requirements to capture relevant
results. This often means that care must be taken to develop a structured research plan. Under most circumstances this requires researchers have a good grasp of research methods including knowledge of data analysis.
20. Refer question 19.
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21. Buying role? Role of customers in industrial buying:
The five main buying roles. That sounds a bit strange, doesn‘t it?
What it illustrates, though, is that in many cases more than one person will beinvolved in the process of purchasing the product you are trying to sell. In somecases one person may embody all five of these roles, but in others you may have todeal with 2, 3, or maybe even all 5 different people.
Are you prepared to appeal to that many different mindsets?
The five main buying roles are as follows:
1. The Initiator – the person who decides to start the buying process.2. The Influencer – the person who tries to convince others they need the product.3. The Decider – the person who makes the final decision to purchase.4. The Buyer – the person who is going to write you the check.5. The User – the person who ends up using your product, whether he had a say in
the buying process or not.If you‘re smart you‘ll find out who all of these people are well in advance and
prepare a presentation that can be tailored to all of their interests at the same time.If you‘re lucky you will only have to deal with one person, but in the event that
more than one person needs to be in on the decisio you‘ll need to be ready to
answer all of their questions and objections.
Are you prepared?
Individual in a business, government agency, or association who makes purchasedecisions regarding services, raw materials, product components, or finishedgoods; also called organizational buyer. Industrial buyers are more, but not solely,motivated in their buying decisions by profit objectives than by personal objectivesand require different marketing strategies than consumer buyers. See also business-to-business advertising; industrial advertising; industrial consumer ; industrialgoods.
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22. Should a company serve all its loyal customers?
Loyalty Myth: Loyal Customers Are Less Expensive to Service than
Nonloyal Customers
The fallacy that loyal customers are less expensive to service tha nonloyal
customers has its origins in the manufacturing environment At its foundationare two seminal findings that dramatically influenced' the strategy and tacticsof manufacturers around the world. The first is commonly referred to as theexperience curve (also called the learning curve), originally popularized bythe Boston Consulting Group. In essence, the theory behind the experience curve states that the costs of complex products and services will decline approximately 20 to 30 percentwith each doubling of accumulated experience. Experience curve strategieshave been integrated into the strategies of companies since the 1960s.The other source of this myth rests in the quality movement of the 1980s and1990s. Manufacturers found that improving quality produced greater costsavings than the costs of improving operations. In essence, improved qualitycreated operating efficiencies that lowered manufacturing costs.Both the experience curve and the operating efficiencies of quality haveconsistently proven true in the manufacturing environment. As a result, itwould appear intuitive that they should likewise hold true in the serviceenvironment. It is important to remember that the customer retention andcustomer loyalty movement — initially, at least — revolved around services,which is why Reichheld and Sasser's seminal Harvard Business Review
article was entitled "Zero Defections: Quality Comes to Services."Reichheld argues that customer loyalty translates into cost savings for companies, stating that "your operating costs to serve them [loyal customers]decline" over time. The reason: "As the company gains experience with itscustomers, it can serve them more efficiently." Given the results thatmanufacturers experienced through learning efficiencies and qualityimprovement, Reichheld's assertions sound not only plausible but probable.But the separation between appearing probable and occurring is all too oftena chasm. In none of the companies Reinartz and Kumar tracked were loyalcustomers consistently less expensive to manage than short-term customers.The only correlation they could find was in the high-tech service sector, andhere loyal customers were more ex¬pensive to serve.While a company may know more about its loyal customers, loyal customersknow the firm better as well. As a result, they may be more demanding of thecompany through better knowledge of the inner workings of the system. Thisallows them to seek recourse for what they believe to be inadequate
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treatment, and they are more likely to get perks from the relationship, whichcost money to administer and fulfill.
We end discussion of this myth with a statement made by a senior officer of a largeairline when he was presenting to officers of the firm. In particular, he wasdiscussing the complaints of flight attendants regarding the airline's high-mileagefrequent-flier customers. He noted that the crew complained of these passengers
being difficult and demanding. His reply: "Yes, but they're ours."
LOYALTY MYTH : Customer Satisfaction Brings Customer Loyalty Without a doubt, customer satisfaction and customer loyalty are linked. Butthe linkage is not straightforward and it isn't linear. Clearly, dissatisfiedcustomers are more likely to defect than are satisfied customers. The problemwith the customer satisfaction-customer loyalty link, however, is that most
firms do not have a sufficient groundswell of dissatisfied customers to makethem notice the severe impact of dissatisfaction. If they did, they would not be in business for long.Most companies have customers who are moderately satisfied. For almost all
business enterprises worldwide, greater than 85 percent of their customerswould be classified as satisfied. As a result, satisfaction (the absence of dissatisfaction) is typically not a point of competitive differentiation.With regard to the relationship between satisfaction and loyalty, we need tothink of satisfaction as falling into one of three general categories:dissatisfied, merely satisfied, and delighted. It is not until customers achieve
this upper level of satisfaction, delight, that satisfaction meaningfullyinfluences customer loyalty.Even when satisfaction reaches delight levels, however, it is important toremember that several additional factors influence customers' levels of loyalty:• Costs of switching (time, money, effort, etc.). • A strong predisposition to switch service providers or brands (i.e., somecustomers enjoy variety seeking).• Competitive actions (for example, discounts, coupons, promotions).
While customer delight may be a necessary requirement for customer loyalty,it does not guarantee customer loyalty.
23. Relationship Customer loyalty and profit?
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Customers are becoming ever more demanding, and in most markets they havemore options to choose from than ever before. At the same time perceived'switching barriers', the inconveniences of changing supplier, are being reduced. Agood illustration of the effect of these changes is in the financial market, where thegrowth of internet and telephone banking has presented consumers with a breadthof new alternatives at the same time as measures are being taken to ease traditionalswitching barriers such as the transfer of standing orders and direct debits.
Different markets show very different customer loyalty profiles. The LeadershipFactor's experience has shown that, for example, in some manufacturing sectorscustomers may have very little choice over which supplier to use. This can lead tocomplacency, and the feeling that customer loyalty is irrelevant since they have nooption but to come back. Such reasoning is flawed on two counts. 1) Customer loyalty goes beyond mere retention to a range of attitudes and behaviours,
something which will be covered in more detail later. 2) Customers do come back when they have no other choice, but they will be vulnerable if any competitor arrives on the scene. Companies that are in a virtual monopoly situation can bevulnerable to this way of thinking.
The difference between markets is due to a combination of factors - the amount of competition, the sophistication of the customers and the perceived switching
barriers. If all competitors were equally easy to use then we would expect analmost perfect correlation between customer satisfaction and loyalty. Fig.1 showsthe relationship between satisfaction and loyalty for one Leadership Factor client.
Figure 1
Why does customer loyalty matter? What is meant by customer loyalty? It is a phrase that can be used to embrace a
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range of customer attitudes and behaviours. On most of The Leadership Factor'ssurveys customer loyalty is measured in two ways: loyalty behaviour is gauged bya measure of retention, or intention to buy again; loyalty attitudes aretermed commitment.
Why should you worry about customer retention?
Customer lifetime value. This phrase relates to a very simple concept.Every interaction you have with a customer should be done on the basis thattheir value to you is the total of all the purchases they will ever make, notthat one sale. For example your most valuable customers are probably notthose who make the biggest purchases, they're the ones who come back again and again. This way of thinking also allows you to consider marketingapproaches that don't require you to make back the cost of acquiring a
customer in a single sale. The cost of acquisition. It has been demonstrated that it is up to 20 times
more expensive to acquire a new customer than it is to keep an existing one.A traditional sales approach can be likened to pouring new customers into a
bucket with a hole in the bottom - the weaker your levels of customer retention the larger the hole.
Why should you worry about customer commitment?
Committed customers have been shown to demonstrate a number of beneficial behaviours, for example committed customers tend to:
o Come to you. One of the key benefits of establishing a good level of customer loyalty is that you don't have to sell to them, they will cometo you when they need a product or service, and they may even comeon spec to see if you have new products.
o Buy more often. Loyal customers come back more and more often,since they enjoy the service they receive from you. If customers findthemselves forced to use you against their will they will come as littleas possible.
o Try new products. If customers are happy with what they've boughtfrom you before, they will be more willing to try new products.Perhaps they will even trust you to suggest products suitable for them.
o Recommend you. Another key benefit - loyal customers can becomeyour most effective marketing tool (far more trustworthy thansalesmen in the eyes of other customers) and they're free.
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o Buy only from you. A strong relationship of trust can mean thatcustomers will prefer you even if it is more difficult or more costly touse you than a competitor.
o Look only at you. The holy grail of customer loyalty - customers atthis stage trust you to provide a good product/service at a reasonablecost, and will not go to the trouble of shopping around before buying.
The key to these is the establishment of trust based on good service,reputation and image. To illustrate how this works, imagine that you have
just started dealing with a supplier. To begin with you probably check everyinvoice carefully, but after a while (if they've all been correct) you'll tend toassume that the invoice will be accurate. Eventually you may not even
bother checking the invoice unless something catches your eye. Of course,the moment something goes wrong you go back to checking every item.
Similarly if someone else tells you of a problem your trust in the supplier would be damaged.
Why should you monitor customer satisfaction? Any breach of this trust can seriously damage the relationship you've built.Which is why it is so essential to monitor customer satisfaction, and correctany problem areas. Where a complaints system can allow you to see whysome customers (those few who bother to complain) are unhappy, acustomer satisfaction measurement (CSM) programme allows you toactively identify specific problem areas based on statistically sound
information and correct them.
It will also enable you to prioritise improvement based on an understandingof what the 'key drivers' of satisfaction are, the areas that will have thegreatest impact in improving customers' overall perception of you. Once aCSM programme has been established it can be monitored and fed back tocustomers over time, informing them of actions you are taking and sending astrong message about your commitment to customer service.
Building customer loyalty As an illustration of how the process of building loyalty can work, Fig. 2shows for one consumer client the percentage of customers that requestedquotes from other companies, split by whether they had used out client before or not. It shows that this company‘s strong performance means that
past customers are less likely to shop around than others. The company is building a very loyal customer base.
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Figure 2.
Another question (Fig. 3) shows the value of a loyal customer base to thisclient - their reputation influenced 44% of their customers to use them, 23%were repeat users and 14% chose this supplier based on a recommendation.
Figure 3.
What makes up customer loyalty? Surveys have consistently shown very strong correlations between customer satisfaction and loyalty. Our work, and that of other agencies, suggests thatcustomer loyalty is driven by a combination of customer perceptions such assatisfaction, image and perceived value, and is further subject to somethingcalled ‗loyalty personality‘. Loyalty personality refers to innate differences
in the way customers form their opinions. Commonly these differences can be predicted by a number of geo-demographic factors, such as age, gender,
occupation and location.
Figure 4 shows how customer satisfaction and loyalty vary by age. It isimportant to note that the shape of the lines is different - satisfaction
personality is not the same as loyalty personality, though they are usuallysimilar. In both cases scores tend to get higher with age.
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Figure 4.
Common loyalty personality divisions might include:
o Innovators/risk averse. Some people will always be on the lookoutfor the latest product or trend, and will tend to try something just
because it's new. If you're not making the most up-to-date product youmay have to resign yourself to losing these customers, however goodyour service is. Rest assured, though, that they're no more likely toremain loyal to your competitors, and tend to be less profitable in thelong term than customers who need a reason for switching. Customerswho moved to telephone banking when it first came out fall into this
category - how many of them are still using telephone bankingaccounts, and how many have moved on to internet banking? Howmuch money did they make for the telephone bank?
o Level of involvement. Some markets are more 'high involvement'than others, reflecting the importance to customers of making the right
purchasing decision. Beyond market-wide trends, however, the mostsignificant difference is in how involved your customers feel withyou.
o Perception of switching barriers. Switching barriers are the perceived obstacles to changing supplier. The key word here is'perceived'. For instance, how difficult is it really to change bank?Probably not nearly as hard as most people think, but it's in theinterests of the big high-street banks to maintain this impression.
One message that is often missed is that it can be okay to write off customers. There are some customers that cannot be kept loyal, just as there
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are some that cannot be kept happy. Increasingly the concept of 'firing'customers is growing in currency, and it is a valuable idea. The importantthing is to make sure you focus on keeping the right customers. The mostdamaging customer is one who takes up your resources but doesn't yieldcommensurate gains. Worst of all they may be damaging you by criticisingyour performance. These 'terrorists' are customers that you are better off without since they're losing you business and you're probably making a losson them anyway.
Concrete advantages At the end of the day, what's in it for you? You've surveyed your customers'levels of satisfaction and loyalty, you‘ve focused improvement on the
drivers of satisfaction and loyalty and seen these soar as a result, and you'vefired your terrorists. What difference will it have made? The honest answer
is that we can't be sure. We believe that for almost every organisationimproving customer satisfaction will improve customer loyalty, which willin turn improve profit. But we can't prove this is the case for everyorganisation, and we can‘t predict by how much. To predict what animprovement in satisfaction will mean to you in terms of loyalty and profityou have to model the relationships between these items.
Only a small number of companies at the cutting edge of customer researchhave managed to model the links between satisfaction, loyalty and profit.The perception seems to be that the process is very complex and requires
enormous amounts of data, which is far from the case. Of course the moredata is available the more reliable and precise a model will be, but thechances are you could make a start with existing financial data.
In simple terms the modelling of a relationship is no more complex thandrawing a line of best fit on a scatter diagram. Looking back to Fig. 1 it isobvious that as satisfaction goes up so does loyalty. Getting at the specificsof this relationship and understanding how reliable the equation is requiressome statistical knowledge, however, and unless you have a statistical
background it is probably best to let an outside agency do the work for you.Such an agency should also be able to employ more advanced techniquessuch as Structural Equation Modelling and Latent Class Regression, whichare only available through specialist software.
As a final thought for those that are still unconvinced about the concrete benefits of making your customers satisfied and loyal consider this: markets are becoming
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more and more competitive, and consumers are getting more demanding. If you'reexperiencing high customer turnover, but your competitors are locking incustomers by targeting loyalty, you're soon going to run out of prospects to pour inat the top of the bucket.
24. Marketing mix and its components:
The marketing mix is a business tool used in marketing products. The marketingmix is often crucial when determining a product or brand's unique selling point (theunique quality that differentiates a product from its competitors), and is oftensynonymous with the four Ps: price, product , promotion, and place;
The marketer, E. Jerome McCarthy, proposed a four Ps classification in 1960,which has since been used by marketers throughout the world.
[1]
Product - A product is seen as an item that satisfies what a consumer needs or wants. It is a tangible good or an intangible service. Intangible products areservice based like the tourism industry, the hotel industry and the financialindustry. Tangible products are those that have an independent physicalexistence. Typical examples of mass-produced, tangible objects are themotor car and the disposable razor . A less obvious but ubiquitous mass producedservice is a computer operating system.[1]
Every product is subject to a life-cycle including a growth phase followed by
a maturity phase and finally an eventual period of decline as sales falls.Marketers must do careful research on how long the life cycle of the product
they are marketing is likely to be and focus their attention on different
challenges that arise as the product moves through each stage.[1]
The marketer must also consider the product mix. Marketers can expand the
current product mix by increasing a certain product line's depth or by
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increasing the number of product lines. Marketers should consider how to
position the product, how to exploit the brand, how to exploit the company's
resources and how to configure the product mix so that each product
complements the other. The marketer must also consider product
development strategies.[1]
Price – The price is the amount a customer pays for the product. The price is very important as it determines the company's profit and hence,survival. Adjusting the price has a profound impact on the marketingstrategy, and depending on the price elasticity of the product, often itwill affect the demand and sales as well. The marketer should set a pricethat complements the other elements of the marketing mix.[1]
When setting a price, the marketer must be aware of the customer perceived
value for the product. Three basic pricing strategies are: marketskimming pricing, market penetration pricing and neutral pricing. The
'reference value' (where the consumer refers to the prices of competing
products) and the 'differential value' (the consumer's view of this product's
attributes versus the attributes of other products) must be taken into
account.[1]
Promotion - represents all of the methods of communication that amarketer may use to provide information to different parties about
the product. Promotion comprises elements suchas:advertising, public relations, personal selling and sales promotion.[1]
Advertising covers any communication that is paid for, from cinema
commercials, radio and Internet advertisements through print media and
billboards. Public relations is where the communication is not directly paid
for and includes press releases, sponsorship deals, exhibitions, conferences,
seminars or trade fairs and events. Word-of-mouth is any apparently
informal communication about the product by ordinary individuals, satisfied
customers or people specifically engaged to create word of mouthmomentum. Sales staff often plays an important role in word of mouth and
public relations (see 'product' above).[1]
Place - refers to providing the product at a place which isconvenient for consumers to access. Place is synonymouswith distribution. Various strategies such as intensive distribution,
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selective distribution, exclusive distribution and franchising can be used by the marketer to complement the other aspects of themarketing mix.[1][3]
The 'seven Ps' refers to the already mentioned four Ps, plus 'physical
evidence', 'people', and 'process'. 'Physical evidence' refers toelements within the store -- the store front, the uniforms employeeswear, signboards, etc. 'People' refers to the employees of theorganisation with whom customers come into contact with. 'Process'refers to the processes and systems within the organization thataffects its marketing process.[4] These later three factors are not citednearly as often as the first four outlined in depth above.
25. Refer question 18.
26. E- marketing concept:
more like electronic marketing , selling on line , over mobile phones etc , likemarketing via adverts etc in magazines and papers. but in a different medium, I mean you get sales E Mails I expect like we all do ,, well someone has to
design them and send them to you ,, most sites you visit have some form of advertising attached ,, even yahoo home page for example . its very much anup and coming career ,, digital or E marketing
27. Significance of targeting segmentation and positioning in company’smarket strategy
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1 Segmentation defi ned
The essence of the marketing concept is the idea of placing customer needs at thecentre of the organization‘s decision-making. The need to adopt this approachstems from a number of factors, including increased competition, better-informedand-educated customers and, most importantly, changing patterns of demand.Primarily it is this change in patterns of demand that has given rise to the need tosegment markets. This stems from the fact that higher standards of living and atrend towards individualism has meant that consumers are now more able toexercise their choice in the market place.
Market segmentation can be defined as the process of breaking down the totalmarket for a product or service into distinct sub-groups or segments where eachsegment may conceivably represent a separate target market to be reached with a
distinctive marketing mix. Segmentation and the subsequent strategies of targetingand positioning start by recognizing that increasingly, within the totaldemand/market for a product, specific tastes, needs and demand may differ. It
breaks down the total market for a product or service into individual clusters of customers, or segments. Here, customers who share similar demand preferencesare grouped together within each segment.
Effective segmentation is achieved when customers sharing similar patterns of demand are grouped together and where each group or segment differs in the
pattern of demand from other segments in the market. In most markets, be they
consumer or industrial, some kind of segmentation can be accomplished on this basis.
2 Targeted marketing efforts
Most companies realise that they cannot effectively serve all the segments in amarket, and must instead target their marketing efforts. For example, in developinga new car, the manufacturing firm will have to make a decision on many issues,such as should it be a two-, four-, or five-seater model, with a 1000, 2000 or
3000cc engine? Should it have leather, fabric or vinyl seats? The over-riding factor when deciding these issues is customer demand. Some customers (segments) maywant a five-seater 2000cc model with leather upholstery, while others may prefer afour-seater with a 1000cc engine and fabric seats. A solution would be tocompromise and produce a four-seater 1500cc model with leather seats and fabrictrim. Clearly, such a model would go some way to meeting the requirements of
both groups of buyers, but there is a danger that because the needs of neither
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market segment are precisely met, most potential customers would purchase fromother suppliers who could cater for their specific requirements. Ironically, one of the biggest post-war car failures was the much heralded and much hyped AmericanFord Edsel car. This is a car that was produced following extensive marketingresearch, the results of which were aggregated, and the end product was a car thatsatisfied the true needs of very few buyers making it the most spectacular flop inmodern motoring history.
Target marketing is thus defined as the identification of the market segments thatare identified as being the most likely purchasers of a company‘s products.
Specifically, the advantages of target marketing are:
1. Marketing opportunities and unfilled ‗gaps‘ in a market may be more
accurately appraised and identified. Such gaps can be real (e.g. sweet,strong, harsh or mild) or they can be illusionary in terms of the way peoplewant to view the product (e.g. happy, aloof, silly or moody). In the case of the former, product attributes can fulfil these criteria whereas for the latter these attributes might well have to be implanted in the minds of customersthrough an appropriate advertising message.
2. Market and product appeals through manipulation of the marketing mix can be more delicately tuned to the needs of the potential customer.
3. Marketing effort can be concentrated on the market segment(s) which offer the greatest potential for the company to achieve its goals - be they goals to
maximise profit potential or to secure the best long-term position for the product or any other appropriate goal.
3 Effective segmentation
Theoretically, the base(s) used for segmentation should lead to segments that are:
1. Measurable/identifiable Here, the base(s) used should preferably lead toease of identification in terms of who is in each segment. It should also becapable of measurement in terms of the potential customers in each segment.
2. Accessible Here, the base(s) used should ideally lead to the company beingable to reach selected market targets with their individual marketing efforts.
3. Meaningful The base(s) used must lead to segments which have different preferences or needs and show clear variations in market behaviour andresponse to individually designed marketing mixes.
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4. Substantial The base(s) used should lead to segments which are sufficientlylarge to be economically and practically worthwhile serving as discretemarket targets with a distinctive marketing mix.
The third criterion is particularly important for effective segmentation, as it is anessential prerequisite when attempting to identify and select market targets.
In segmentation, targeting and positioning, a company must identify distinctsubsets of customers in the total market for a product where any subset mighteventually be selected as a market target, and for which a distinctive marketingmix will be developed. The following represents the sequential steps in conductinga segmentation, targeting and positioning exercise for any given product market.
1. Select base(s) for segmentation and identify appropriate market segments.
2.
Evaluate and appraise the market segments resulting from the first step.3. Select an overall market targeting strategy.4. Select specific target segments.5. Develop a product positioning strategy for each target segment.6. Develop an appropriate marketing mix for each chosen target segment in
order to support the product positioning strategy.
4 Segmentation bases in consumer product markets
Geographic segmentation consists of dividing a country into regions that
normally represent an individual sales person‘s territory. In bigger companies,these larger regions are then broken down into areas with individual regionalmanager controlling salespeople in distinct areas. In international marketing,different countries may be deemed to constitute different market segments.
Demographic segmentation consists of a wide variety of bases for subdividingmarkets, and each of these is now discussed:
Age is a good segmentation variable for such items as clothes where thefashion-conscious young are more susceptible to regular changes in style
and older segments are perhaps more concerned with such factors as qualityand comfort.
Sex is a strong segment in terms of goods that are specifically targetedtowards males or females and again an obvious example is clothing. Here,fashion is a powerful element when purchasing, and a whole industrysurrounds this criterion.
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Income as a segmentation base is more popular in certain countries like theUSA than others who regard such matters very privately.
Social class is possibly the single most used variable for research purposes.It is universally used. The National Readership Survey divides everybodyinto the following categories as shown in Figure 1:
1. Upper middle class (higher managerial, administrative or professional)which comprises about 3 per cent of the population
2. Middle class (intermediate managerial, administrative or professional) whichcomprises approximately 10 per cent of the population
3. 1. Lower middle class (supervisory, clerical, junior administrative or
professional) containing around 25 per cent of the population2. Skilled working clsass (skilled manual workers) who comprise around
30 per cent of the population.4. Working class (semi- and unskilled manual workers) or around 27 per cent
of the population5. Lowest levels of subsistence (state pensioners with no other income,
widows, casual and lowest grade earners) who form the remaining 5 per cent, or thereabouts, of the population.
Figure 1 Social class and grade structure
Education is often related to social class, because, as a generalisation, the
better educated tend to get the better jobs. It is generally acknowledged thata person‘s media habits are related to education. Accordingly, newspapers
design to aim their news and newspaper content towards the upper or lower ends of the social spectrum, and encourage advertisers to target their advertising appropriately, depending upon whether an advertiser‘s product
has an up-market or down-market appeal. In fact they publicise their readership profile of the percentage of ABC1, etc groups that actually readtheir newspapers or magazines and this information is ascertained throughindependent auditors. This is done principally to alert advertising agencies
who will place their clients‘ advertising according to the social classestowards at whom their products are targeted. Nationality or ethnic background now constitutes a growing and distinctive
segment for potential target marketing. Food products, clothing and hair care products are obvious examples of products that fit into this segmentationvariable.
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Political is perhaps a less obvious segmentation base. An individual‘s
political leanings might well influence the way he or she behaves in terms of purchases made. Such purchases are of course reflected in the types of newspaper and other media that is read, and this, in turn, containsadvertising which is aimed at people who read such media, so politicalleanings might be more significant than it initially seems.
Family size will have an effect on the amount or size of purchases, so this iscertainly a meaningful segmentation variable.
Family life cycle is a logical follow on to the above and this will tend todetermine the purchase of many consumer durable products. This is basedon the notion that consumers pass through a series of quite distinct phases intheir lives, each phase giving rise to different purchasing patterns and needs.For example, an unmarried person living at home will probably have verydifferent purchasing patterns from someone of the same age who has left
home and is recently married. Wells and Gubar have put forward what isnow an internationally recognised classification system in relation to lifecycle and these stages are shown in Figure 2:
Bachelor stage - young single people not living with parents (which gave rise tothe category of ‗YUPPIES‘ or ‗young, upwardly-mobile persons‘)
Newly marrieds - no children (sometimes referred to as ‗DINKIES‘ meaning‗double income - no kids‘)
Full nest I - with the youngest child being under six years of age (sometimesreferred to as ‗ORCHIDS‘ meaning ‗one recent child, heavily in debt)
Full nest II - is where the youngest child is six or over
Full nest III - is an older married couple with dependent children living at home
Empty nest I - with no children living at home, but the family head is in work (sometimes referred to as ‗WOOPIES‘ meaning ‗well off older persons‘)
Empty nest II - where the family head is retired
Solitary survivor in work
Solitary survivor retired (unkindly referred to as ‗COCOON‘ meaning ‗cheap oldchild-minder, operating on nothing‘)
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Figure 2 Family life cycle segmentation base
SAGACITY is a refinement of the family life cycle grouping system. This isa system that believes that people have different behavioural patterns andaspirations as they proceed through life. Four main stages of life cycle aredefined as:
Dependent (mainly under 24 living at home)
Pre-family (under 35s who have established their own household, butwithout children)
Family (couples under 65 with one or more children in the household)
Late (adults whose children have left home or who are over 35 and childless)
Income groups are then defined as being in categories: ‗better off‘ and‗worse off‘
Occupation groups are defined as white (collar) - or the A, B and C1 socialgroups and blue (collar) - or the C2, D and E social groups
The system works as shown in Figure 3:
Life cycle Dependent Pre-family Family Late
Income Better off Worse off Better off Worse off
Occupatio
n
Whit
e
Blu
e
Whit
e
Blu
e
Whit
e
Blu
e
Whit
e
Blu
e
Whit
e
Blu
e
Whit
eBlue
Approx % 7 7 5 5 11.5 10.5 2.5 7.5 10 7.5 9
18
adult
s
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UK (NB Because of rounding, total figure does not add to 100%)
Source: Research Services Limited
Figure 3 Sagacity Life Cycle Groupings
Type of neighbourhood and dwelling (ACORN) is a relatively new segmentation base. Its underlying philosophy the fact that the type of dwelling and area a personlives in is a good predictor of likely purchasing behaviour including the types of
products and brands which might be purchased. This classification analyses homes,rather than individuals, as a basis for segmentation. It is termed the ACORNsystem (A Classification of Residential Neighbourhoods). The source of this is the10-yearly population census that is undertaken during every year ending with one -
the next being due in 2001. The system was developed by Richard Webber for Consolidated Analysis Centres Incorporated (CACI). It breaks down the census of population into various categories of homes as shown in Figure 4.
Acorn Group Type of dwelling Approx % UK population Group
A Agricultural areas 3
B Modern family housing, higher incomes 18
C Older housing of intermediate status 17
D Poor quality older terraced housing 4
E Better-off council estates 13
F Less well-off council estates 9
G Poorest council estates 7
H Multi-racial areas 4
I High status non-family areas 4
J Affluent suburban housing 16
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K Better-off retirement areas 4
U Unclassified 1
(Source CACI)
Figure 4 ACORN Classification system
These ACORN classifications are further sub-divided into yet smaller groupings.For instance, Group C which refers to ‗Older housing of intermediate status, is
broken down into:
C8 Mixed owner-occupied and council estates
C9 Small town centres and flats above shops
C10 Villages with non-farm employment
C11 Older private shousing skilled workers
Mosaic system This system is an extension of the ACORN system exceptthat this is based upon individual postal codes (or zip codes). Each postal
code in the UK consists of up to seven letters and figures. An individual postal code represents approximately ten dwellings and each of these groupsof dwellings is given an individual Mosaic categorisation, of which there are58 categories. The idea of ‗mosaic‘ comes f rom the notion that if a differentcolour was ascribed to each category and superimposed on a map of the UK the resulting pattern would resemble a mosaic. The full Mosaic listing is notreproduced here, but by way of illustration some of these are described
below:
M1 High status retirement areas with many single pensioners1.0% of
population
M15 Lower income older terraced housing1.5% of
population
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M25 Smart inner city plats, company lets, very few children1.5% of
population
M33Council estates, often Scottish flats, with worst
overcrowding
1.3% of
population
M46 Post 1981 housing in areas of highest income and status0.2% of
population
M50 Newly built private estates, factory workers, young
families
3.3% of
population
M57 Hamlets and scattered farms0.7% of
population
Taken together, the demographic bases described constitute the most popular basesfor segmentation in consumer product markets, since they are often associated withdifferences in consumer demand. As such, they are meaningful to advertisers. For instance, occupation and social class are linked because of the way that occupationis used to define social class. It is, therefore, relatively easy to reach the differentsocial classes through their different media and shopping habits, although
boundaries between the purchasing power of different classes become blurred
when, for example, skilled manual workers are able to earn higher incomes thantheir counterparts in lower or intermediate management.
Direct or behavioural segmentation appeals to marketing people as it takescustomer purchasing behaviour as the starting point for segmentation. Such basesinclude:
Usage status when a distinction might be made between say ‗light‘,‗medium‘ and ‗heavy‘ users.
Brand loyalty status where customers can be divided into a number of
groups according to their loyalty, or their propensity to repurchase the brandagain. Status categories are:
Hard core loyals who purchase the same brand every time
Soft core loyals who have divided loyalties between two or more brands and purchase any of these on a random basis
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Shifting loyals who are sometimes called ‗brand switchers‘ in that they buy
one brand, and stay with it for a certain period, and then purchase another brand and stay with it for a certain period. They may then return to theoriginal brand
Switchers who show no particular preference or loyalty to one particular brand, so their purchasing pattern cannot be clearly determined.
Benefits sought is a segmentation base that determines the principalexpectation(s) that a purchaser is seeking from the product. For instance, inthe case of an automobile oil, purchasers might be looking for cheapness, awell known brand, its viscosity or its engine protection reputation.
Occasions for purchase also falls under this category. An example hererelates to the purchase of holidays.
Lifestyle or psychographic segmentation is based on the idea that individualshave characteristic patterns of living that may be reflected in the products and
brands which they purchase. The advertising agency, Young & Rubican, has comeup with a classification system called ‗Four Cs‘ where ‗C‘ stands for consumers.These categories are:
Mainstreamers or the largest group who do not want to ‗stand out from the crowd‘.
They are the biggest segment (over 40 per cent of the population) and tend to purchase branded products over supermarket brands.
Reformers are people who tend to be creative and caring, many doing charitablework. They are largely responsible for the purchase of supermarket brands.
Aspirers are usually younger people who are ambitious and keen to ‗get on‘ at all
costs. Their purchases tend to reflect the latest models and designs.
Succeeders are those who have ‗made it‘ and do not see the need for statussymbols that aspirers seek. They like to be in control of what they are doing andthis includes their purchases where they generally have very clear and firm ideas of
what they see as a good product and what they see as being a less useful product.
5 Segmentation bases in industr ial product markets
Segmenting an industrial product market introduces a number of additional bases,uses similar bases and also precludes some of the ones more frequently used for consumer product markets. Such bases are:
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Type of application/end use e.g. adhesives for home, office and industrialuse
Geographical e.g. North, South, East and West regions or by country Benefits sought Closely related to the above, but in terms of what the
product actually does for the buying company e.g. detergents for generalcleaning or detergents that are actually used in the production process
Type of customer e.g. banks or insurance companies or people who purchase for public authorities
Product/technology e.g. fibres for the carpet industry or the clothingindustry
Customer size e.g. larger customers might receive different ‗treatment‘ to
smaller customers and this is called ‗key account selling‘ whereby the sales
manager deals directly with major accounts Usage rate e.g. light users or heavy users; regular or sporadic users Loyalty of customer e.g. regular purchasers of the company‘s products and
sporadic purchasers. The treatment accorded to loyal customers might differ to that given to occasional customers
Purchasing procedures e.g. centralized versus decentralized purchasing(which can affect the buyer/seller relationship); the extent to which
purchasing is carried out by tightly defined, or more flexible, specificationswhich allows the seller more latitude in terms of making suggestions, theextent to which purchasing is by tender (i.e. by some kind of closed biddingsystem) or by open negotiation
Situational factors considers the tactical role of the purchasingcircumstances. In some purchasing situations it requires a more detailedknowledge of the customer whereas in others the buyer/seller relationship iskept strictly to commercial matters
Personal characteristics relate to the people who make purchasingdecisions
As with consumer markets, industrial market segmentation may be on an indirect(associative) or a direct (behavioural) basis. A variety of bases may be also be usedin conjunction with each other in order to obtain successively smaller sub-
segments of the market. The essential criteria given earlier for bases of consumer market segmentation - being identifiable, accessible, substantial and, mostimportant, meaningful - are equally applicable to bases for industrial marketsegmentation. A ‗nested‘ approach has been suggested on the basis of a hierarchyfrom the broad to the specific (See Figure 5).
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DEMOGRAPHICS
OPERATING VARIABLES
PURCHASING APPROACH
SITUATIONAL
PERSONAL CHARACTERISTICS
Figure 5 A nested approach to segmentation in industrial markets
At the centre we have people who actually make buying decisions and their personalities must be considered. Then come situational factors that look at thetactical role of the purchasing situation. This demands customer knowledge.Purchasing approaches examines customer purchasing practices (e.g. who actuallymakes buying decisions, or the decision making unit). Operating variables allow amore exact pinpointing of potential and existing customers within the finalcategory that is demographic variables, or the broad description of the segmentsrelated to customer needs and patterns of usage.
6 Effective segmentation
Once market segments have been identified, the marketer‘s task is to assess these
various market segments. This appraisal should be in relation to sales and profit potential, or in the case of a non-profit organization, their ability to add toorganisational aims. This means that each segment should be viewed in terms of itsoverall size, projected rate of growth, actual and potential competition, nature of competitive strategies and customer needs. Companies that decide to follow aconcentrated or a differentiated targeting strategy must decide which of thesegments in the market they wish to serve. Such a decision to select specific target
markets must be based on some of the factors outlined earlier, including resources,competition, segment potential and company objectives.
There are four characteristics that make a market segment particularly attractive:
1. It has sufficient current profit and sales potential to meet the organisation‘s
aims and objectives
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2. Competition in the segment is not too intense3. There is good potential for future growth4. The segment has some previously unidentified requirements that the
company has recognised and is now in a position to serve especially well
7 Product positi oning
A company has to develop a positioning strategy for each segment it chooses toserve. This relates to the task of ensuring that a particular company‘s products
occupy a planned for place in chosen target markets, pertinent to opposingcompetition in the marketplace. The notion of product/brand positioning isapplicable to both industrial and consumer markets, and the key aspects of thisapproach are based upon the following suppositions.
1. All products and brands have both objective attributes (e.g. sweet/sour;dark/light; fast/slow) and subjective attributes (e.g. modern/unfashionable;happy/sad; youthful/elderly).
2. Potential purchasers might think about one or more of these attributes whendeliberating which product and/or brand to purchase.
3. That potential customers have their own thoughts about how the variouscompeting products or brands rate for each of these particular attributes. Inother words, the positioning of the brand along the parameters of theseattributes (eg ‗entertaining‘ on the one hand to ‗mundane‘ at the other extreme) takes place in the mind of the customer.
Once this is done, it is possible to establish important attributes in choosing between different brands or products, together with the customer‘s perception of the position of competitors‘ products in relation to these characteristics, and thenestablish the most advantageous position for the company within this particular segment of the market.
The final step in the appraisal of segmentation, targeting and positioning isdeveloping appropriate marketing mixes. This involves the design of marketing
programmes that will support the chosen positional strategy in the selected targetmarkets. The company must therefore determine the ‗4 Ps‘ of its marketing mix,
i.e. what price, product, distribution (place) and promotional strategies will benecessary to achieve the desired position in the market.
There are four acknowledged strategic options for target marketing:
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1. Undifferentiated marketing where there is one single marketing mix for every potential customer in the market.
2. Differentiated marketing where there are many marketing mixes for differentsegments of the market.
3. Concentrated marketing which has a single marketing mix for a segment of the total market.
4. Custom marketing which attempts to satisf y each individual customer‘srequirements with a separate marketing mix.
8 Summary
We can now appreciate how marketing begins to work. Having defined the purposeof segmentation we have looked at the obvious and the less obvious bases for segmentation in both consumer and industrial markets. We have also ascertained
that used well, the techniques and concepts described in this chapter can contributesignificantly to overall company marketing success. Market segmentation,targeting and positioning decisions are thus more strategic than they are tactical.
Segmentation variables should be examined in detail, especially new segments.These should then be authenticated in terms of viability and potential profit.
Targeting investigates specific segments in terms of how they should beapproached.
Positioning relates to how the product is perceived in the minds of consumers anda suitable marketing mix should then be designed.
28. CRM and usefulness?
Customer relationship management (CRM) is a widely implemented model for managing a company‘s interactions with customers, clients, and sales prospects. Itinvolves using technology to organize, automate, and synchronize business
processes — principally sales activities, but also those for marketing, customer service, and technical support.[1] The overall goals are to find, attract, and win newclients, nurture and retain those the company already has, entice former clients toreturn, and reduce the costs of marketing and client service.[2] Customer relationship management describes a company-wide business strategy includingcustomer-interface departments as well as other departments.[3] Measuring andvaluing customer relationships is critical to implementing this strategy.[4]
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A Customer Relationship Management system may be chosen because it is thoughtto provide the following advantages:[citation needed ]
Quality and efficiency
Decrease in overall costs
Increase Profitability
Short notes:
1. Exchange and transaction:
Exchange and Transaction:
Exchange, which is the core concept of marketing, is the process of obtaining a desired product from someone by offering something in return.For exchange potential to exist, five conditions must be satisfied:
1. There are at least two parties.2. Each party has something that might be of value to the other party.
3. Each party is capable of communication and delivery.4. Each party is free to accept or reject the exchange offer.5. Each party believes it is appropriate or desirable to deal with the other
party.Whether exchange actually takes place depends on whether the two partiescan agree on terms that will leave them both better off (or at least not worseoff) than before. Exchange is a value-creating process because it normallyleaves both parties better off.
A transaction involves several dimensions: at least two things of value,agreed-upon conditions, a time of agreement, and a place of agreement. Alegal system supports and enforces compliance on the part of thetransactions without a law of contracts, people would approach transactionswith some distrust, and everyone would lose.
2. Hypermarket:
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Introduction
The hypermarket has grown as a popular grocery format, providing a one-stopshopping destination. However emerging consumer trends, along with stricter legislation on expansion, is prompting superstore retailers to adapt the format in
the form of innovative instore services, development of click and collect anddownsized stores, resulting in an entirely new large format grocery store concept.Features and benefits
Uncover range assortments and complementary instore services that can be used toattract shoppers and revive sales in large format stores.
Identify a variety of new ways to reinvigorate the layout of your hypermarket or supermarket by uncovering how other retailers have managed to do it.
Adapt the hypermarket size according to trends surrounding urbanization andhousehold sizes by accessing demographic data covering global markets.
Develop innovative multi-channel strategies and consider alternative store formats by identifying the strategies of your competitors.
Highlights
Auchan's Chronodrive click and collect model in France allows customers to order products online and collect them at a suitable time from the Chronodrivewarehouse. The service saves customers time as well as money on delivery costs.More importantly, the service is a cost effective way of boosting Auchan's revenueand extending its customer base.
Carrefour is consolidating its non-food offer to focus on the best performingcategories, which will help it to boost store profitability. The health and beautysales area has been extented by a substantial 40% with the addition of complementary services, such as a hairdressing unit, while the home departmenthas been cut by 15%.Just over three quarters of the 1,327 Kmart stores in the US have a pharmacyinstore, acting as a complementary service to its health and beauty department. The
pharmacies include a seasonal walk-in clinic at the majority of Kmart sites, such asduring the flu season, with trained nurses to administer vaccinations.
3. Multi-dimensional scaling:
Multidimensional scaling (MDS) can be considered to be an alternative
to factor analysis. In general, the goal of the analysis is to detect
meaningful underlying dimensions that allow the researcher to explain
observed similarities or dissimilarities between the investigated objects.
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In factor analysis, the similarities between objects (e.g. variables) are
expressed in the correlation matrix. With MDS one may analyse any
kind of similarity or dissimilarity matrix, in addition to correlation
matrices.
This outcome is visualised in a 2 dimensional map, which gives theresearcher an immediate feel of how differentiating the questions were.Questions which are clustered together did get very similar scores by allrespondents. This can be very useful when optimising a questionnaire or todifferentiate consumers based on the most distinct questions.Even though there are similarities in the type of research questions to whichMDS and factor analysis can be applied, they are fundamentally differentmethods. Factor analysis requires that the underlying data is distributed asmultivariate normal, and that the relationships are linear. MDS imposes nosuch restrictions. Just as long as the rank-ordering similarities in the matrix
are meaningful, MDS can be used.In terms of resultant differences, factor analysis tends to extract more factors(dimensions) than MDS; as a result, MDS often yields more readily,interpretable solutions. Most importantly, however, MDS can be applied toany kind of similarities, while factor analysis requires us to first compute acorrelation matrix. MDS can be based on subjects' direct assessment of similarities between stimuli, while factor analysis requires subjects to ratethose stimuli on some list of attributes (for which the factor analysis is
performed).
In summary, MDS methods are applicable to a wide variety of researchdesigns.
4. Viral marketing:
Viral marketing, viral advertising, or marketing
buzz are buzzwords referring to marketing techniques that use pre-existing social networks and other technologies to produce increases in brandawareness or to achieve other marketing objectives (such as product sales)
through self-replicating viral processes, analogous to the spreadof viruses or computer viruses (cf. internet memes and memetics). It can bedelivered by word of mouth or enhanced by the network effects of the Internet and mobile networks.[1] Viral marketing may take the formof video clips, interactive Flash games, advergames, ebooks, brandablesoftware, images, text messages, email messages, or web pages. The mostcommon utilized transmission vehicles for viral messages include: pass-
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along based, incentive based, trendy based, and undercover based. However,the creative nature of viral marketing enables "endless amount of potentialforms and vehicles the messages can utilize for transmission" includingmobile devices.The ultimate goal of marketers interested in creating successful viralmarketing programs is to create viral messages that appeal to individualswith high social networking potential (SNP) and that have a high probabilityof being presented and spread by these individuals and their competitors intheir communications with others in a short period of time.The term "VRL marketing" has also been used pejoratively to refer to stealthmarketing campaigns — the unscrupulous use of astroturfing onlinecombined with undermarket advertising in shopping centers to create theimpression of spontaneous word of mouth enthusiasm.
6. Product life cycle:
The concept of product life cycle (PLC) concerns the life of a product in themarket with respect to business/commercial costs and sales measures. The productlife cycle proceeds through multiple phases, involves many professionaldisciplines, and requires many skills, tools and processes. PLC management makesthe following three assumptions:[citation needed ]
Products have a limited life and thus every product has life cycle.
Product sales pass through distinct stages, each posing different challenges,opportunities, and problems to the seller.
Products require different marketing, financing, manufacturing, purchasing, andhuman resource strategies in each life cycle stage.
Characteristics of PLC stages
The four main stages of a product's life cycle and the accompanying characteristicsare:[citation needed ]
Stage Characteristics
1. Market
introduction stage
1. costs are very high2. slow sales volumes to start
3. little or no competition
4. demand has to be created
5. customers have to be prompted to try the product
6. makes no money at this stage
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2. Growth stage
1. costs reduced due to economies of scale
2. sales volume increases significantly
3. profitability begins to rise
4. public awareness increases
5. competition begins to increase with a few new players
in establishing market
6. increased competition leads to price decreases
3. Maturity stage
1. costs are lowered as a result of production volumes
increasing and experience curve effects
2. sales volume peaks and market saturation is reached
3. increase in competitors entering the market
4. prices tend to drop due to the proliferation of competing products
5. brand differentiation and feature diversification is
emphasized to maintain or increase market share
6. Industrial profits go down
4. Saturation and
decline stage
1. costs become counter-optimal
2. sales volume decline
3. prices, profitability diminish
4. profit becomes more a challenge of production/distribution efficiency than increased
sales
7. Family life cycle:
External Influences - Family Life Cycle (FLC)
Family life cycle is defined as what type of family the target market consumer isin. DINKS are ―double income no kids‖ and SINKS are ―single income no kids‖.
Marketers love to target the DINKS and SINKS because they have lots of discretionary income and no children to spend it on, so they spend their extramoney on themselves, their house, their pets and vacations.
Stages of the Family Life Cycle (FLC)
Young and single
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Engaged couples
DINKS (Double Income No Kids)
SINKS (Single Income No Kids)
Married with children: Babies, Toddlers, Elementary School Age (5-7), Tweens (8-12), Teens (13-17), Older
Single parents
Empty nester
Boomerang Kids (adult children who have moved back in with their parents)
Extended parents (grandparents raising their grandchildren)
Blended Families (stepchildren)
Cougar and Silver Fox
Recently divorced
Same-sex singles/couples
Retired - Wealthy or Medicare dependent
The engaged couples and the recently divorced spend money on similar products,although for different reasons. Engaged couples are buying products to begin a lifetogether and the recently divorced are buying products that they already had andnow need to replace. Extended parents are grandparents taking care of their grandchildren. Same sex couples and singles are grouped together whether theyhave children or not, because of their lifestyle and interests. An empty nester issomeone whose children are now grown adults and have moved out of the house.Boomerang kids are adult children who are living with their parents.
8. Sales promotion:
Sales promotion is one of the seven aspects of the promotional mix. (Theother six parts of the promotional mix are advertising, personal selling,directmarketing, publicity/ public relations, corporate image and exhibitions.)Media and non-media marketing communication are employed for a pre-determined, limited time to increase consumer demand, stimulate marketdemand or improve product availability. Examples
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include contests,coupons, freebies, loss leaders, point of purchase displays, premiums, prizes, product samples, and rebates Sales promotions can be directed at either the customer , sales staff,or distribution channel members (such as retailers). Sales promotionstargeted at the consumer are called consumer sales promotions. Sales
promotions targeted at retailers and wholesale are called trade sales
promotions. Some sale promotions, particularly ones with unusual methods,are considered gimmicks by many.
Sales promotion includes several communications activities that attempt to provide added value or incentives to consumers, wholesalers, retailers, or other organizational customers to stimulate immediate sales. These efforts canattempt to stimulate product interest, trial, or purchase. Examples of devicesused in sales promotion include coupons, samples, premiums, point-of-purchase(POP) displays, contests, rebates, and sweepstakes.[1]
9. Brand equity:
Brand equity is a phrase used in the marketing industry to try to describethe value of having a well-known brand name, based on the idea that theowner of a well-known brand name can generate more money from products
with that brand name than from products with a less well known name, asconsumers believe that a product with a well-known name is better than
products with less well known names.[1][2][3][4] Another word for "brandequity" is "brand value".Some marketing researchers have concluded that brands are one of the mostvaluable assets a company has,[5] as brand equity is one of the factors whichcan increase the financial value of a brand to the brand owner, although notthe only one.[6] Elements that can be included in the valuation of brandequity include (but not limited to): changing market share, profit margins,consumer recognition of logos and other visual elements, brandlanguage associations made by consumers, consumers' perceptions of qualityand other relevant brand values.Consumers' knowledge about a brand also governs how manufacturers andadvertisers market the brand.[7][8] Brand equity is createdthrough strategic investments in communicationchannelsand market education and appreciates through economic
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growth in profit margins, market share, prestige value, andcritical associations[disambiguation needed ]. Generally,these strategicinvestments appreciate over time to deliver a return oninvestment. This is directly related to marketing ROI. Brand equity can alsoappreciate without strategic direction. A Stockholm Universitystudy in 2011documents the case of Jerusalem's city brand.[9] Thecity organically developed a brand, which experienced tremendous brandequity appreciation over the course of centuries through non-strategicactivities. A booming tourism industry in Jerusalem has been themost evident indicator of a strong ROI. Brand equity is strategically crucial, but famously difficult to quantify.Many experts have developed tools to analyze this asset, but there is nouniversally accepted way to measure it. As one of the serial challenges thatmarketing professionals and academics find with the concept of brand
equity, the disconnect between quantitative and qualitative equity values isdifficult to reconcile. Quantitative brand equity includes numerical valuessuch as profit margins and market share, but fails to capture qualitativeelements such as prestige and associations of interest. Overall, mostmarketing practitioners take a more qualitative approach to brand equity
because of this challenge. In a survey of nearly 200 senior marketingmanagers, only 26 percent responded that they found the "brand equity"metric very useful.[10]
10. Family brand:
Family branding is a marketing strategy that involves selling severalrelated products under one brand name. Family branding is also knownasumbrella branding. It contrasts with individual product branding, in whicheach product in a portfolio is given a unique brand name and identity.There are often economies of scope associated with family branding sinceseveral products can be efficiently promoted with a single advertisement or campaign. Family branding facilitates new product introductions by evokinga familiar brand name, which can lead to trial purchase, product acceptance,or other advantages.Family branding imposes on the brand owner a greater burden to maintainconsistent quality. If the quality of one product in the brand family iscompromised, it could impact on the reputation of all the others. For thisreason family branding is generally limited to product lines that consist of
products of similar quality.
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11. Steps for new product development:
The stages
1. Idea Generation is often called the "fuzzy front end" of the NPD process
Ideas for new products can be obtained from basic research using
a SWOT analysis (Strengths, Weaknesses, Opportunities & Threats).
Market and consumer trends, company's R&Ddepartment, competitors,
focus groups, employees, salespeople, corporate spies, trade shows, or
ethnographic discovery methods (searching for user patterns and habits)
may also be used to get an insight into new product lines or product
features. Lots of ideas are being generated about the new product. Out of these
ideas many ideas are being implemented. The ideas use to generate in
many forms and their generating places are also various. Many reasons
are responsible for generation of an idea.
Idea Generation or Brainstorming of new product, service, or store
concepts - idea generation techniques can begin when you have done
your OPPORTUNITY ANALYSIS to support your ideas in the Idea
Screening Phase (shown in the next development step).2. Idea Screening
The object is to eliminate unsound concepts prior to devoting resources
to them.
The screeners should ask several questions:
Will the customer in the target market benefit from the product?
What is the size and growth forecasts of the market segment / target
market?
What is the current or expected competitive pressure for the product
idea?
What are the industry sales and market trends the product idea is
based on?
Is it technically feasible to manufacture the product?
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Will the product be profitable when manufactured and delivered to
the customer at the target price?
3. Concept Development and Testing
Develop the marketing and engineering details
Investigate intellectual property issues and search patent databases
Who is the target market and who is the decision maker in the
purchasing process?
What product features must the product incorporate?
What benefits will the product provide?
How will consumers react to the product?
How will the product be produced most cost effectively?
Prove feasibility through virtual computer aided rendering and rapid
prototyping What will it cost to produce it?
Testing the Concept by asking a number of prospective customers what
they think of the idea - usually via Choice Modelling.
4. Business Analysis
Estimate likely selling price based upon competition and customer
feedback
Estimate sales volume based upon size of market and such tools as
the Fourt-Woodlock equation Estimate profitability and break-even point
5. Beta Testing and Market Testing
Produce a physical prototype or mock-up
Test the product (and its packaging) in typical usage situations
Conduct focus group customer interviews or introduce at trade show
Make adjustments where necessary
Produce an initial run of the product and sell it in a test market area to
determine customer acceptance6. Technical Implementation
New program initiation
Finalize Quality management system
Resource estimation
Requirement publication
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Publish technical communications such as data sheets
Engineering operations planning
Department scheduling
Supplier collaboration
Logistics plan
Resource plan publication
Program review and monitoring
Contingencies - what-if planning
7. Commercialization (often considered post-NPD)
Launch the product
Produce and place advertisements and other promotions
Fill the distribution pipeline with product
Critical path analysis is most useful at this stage
8. New Product Pricing
Impact of new product on the entire product portfolio
Value Analysis (internal & external)
Competition and alternative competitive technologies
Differing value segments (price, value and need)
Product Costs (fixed & variable)
Forecast of unit volumes, revenue, and profit
These steps may be iterated as needed. Some steps may be eliminated. To reducethe time that the NPD process takes, many companies are completing several stepsat the same time (referred to as concurrent engineering or time to market). Mostindustry leaders see new product development as a proactive process whereresources are allocated to identify market changes and seize upon new productopportunities before they occur (in contrast to a reactive strategy in which nothingis done until problems occur or the competitor introduces an innovation). Manyindustry leaders see new product development as an ongoing process (referred toas continuous development ) in which the entire organization is always looking for
opportunities.For the more innovative products indicated on the diagram above, great amounts of uncertainty and change may exist which makes it difficult or impossible to plan thecomplete project before starting it. In this case, a more flexible approach may beadvisable.
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Because the NPD process typically requires both engineering and marketingexpertise, cross-functional teams are a common way of organizing projects. Theteam is responsible for all aspects of the project, from initial idea generation tofinal commercialization, and they usually report to senior management (often to avice president or Program Manager). In those industries where products aretechnically complex, development research is typically expensive and product lifecycles are relatively short, strategic alliances among several organizations helps tospread the costs, provide access to a wider skill set and speeds up the overall
process.
Also, notice that because both engineering and marketing expertise are usuallycritical to the process, choosing an appropriate blend of the two is important.Observe (for example, by looking at the See also or References sections below)that this article is slanted more toward the marketing side. For more of anengineering slant, see the Ulrich and Eppinger, Ullman references below.[1][2]
People respond to new products in different ways. The adoption of a newtechnology can be analyzed using a variety of diffusion theories such asthe Diffusion of Innovations theory.
A new product pricing process is important to reduce risk and increase confidencein the pricing and marketing decisions to be made. Bernstein and Macias describean integrated process that breaks down the complex task of new product pricinginto manageable elements.[3]
The Path to Developing Successful New Products[4] points out three key
processes that can play critical role in product development: Talk to the customer; Nurture a project culture; Keep it focused.
12. Brand Loyalty:
The American Marketing Association defines brand loyalty as:
1. "The situation in which a consumer generally buys the same manufacturer-originated product or service repeatedly over time rather than buying frommultiple suppliers within the category" (sales promotion definition).
2. "The degree to which a consumer consistently purchases the same brandwithin a product class" (consumer behavior definition).[1]
In a survey of nearly 200 senior marketing managers, 69 percent responded thatthey found the "loyalty" metric very useful.
[2]
Brand loyalty, in marketing, consists of a consumer 's commitment to
repurchase or otherwise continue using the brand and can be demonstrated
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by repeated buying of a product or service, or other positive behaviors such
as word of mouth advocacy.[3]
13. Niche market and mass marketing:A niche market
[1] is the subset of the market on which a specific product is
focusing. A niche market is often thought to be a subset of the market a particular product is focusing on. According to Philip Kotler in his book Marketing Management , "A niche is a more narrowly definedcustomer group seeking a distinctive mix of benefits. Marketers usuallyidentify niches by dividing a segment into subsegments."[2] As a specializedarena of supply and demand, it is often argued that niche markets are anattractive opportunity to small businesses wishing to compete against larger
competitors that have comparatively economies of scale. However, nichesare often the byproduct of deliberate influences on demand, meaning thatniches do not simply exist but are created. A company or organizationstepping into the niche market first identifies the needs or wants of the targetconsumer that may or may not be addressed by other firms, and thendevelops and delivers goods or services accordingly to satisfy these needs.While many may mistake an entry into the niche market with the blue oceanstrategy, where new players step into a previously unexplored or very lessexplored market consisting of very few competitors, what actually needs to
be noted is that a niche market consists of a small number of players not
because the scope is unexplored, but because the number of consumers of that particular product is limited to a considerably smaller scale.
Nevertheless, the final product quality (low or high) is not dependent on the price elasticity of demand; it is associated more with the specific needs thatthe product is aimed at satisfying and, in some cases, aspectsof brand recognition (e.g., prestige, practicability, money saving,expensiveness, planet environment conscience,[clarification needed ] power, &c.).
Mass marketing is a market coverage strategy in which a firm decides to ignoremarket segment differences and appeal the whole market with one offer or onestrategy.
[1] It is the type of marketing (or attempting to sell through persuasion) of a
product to a wide audience. The idea is to broadcast a message that will reach thelargest number of people possible. Traditionally mass marketing has focused onradio, television and newspapers as the medium used to reach this broad audience.By reaching the largest audience possible exposure to the product is maximized. In
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theory this would directly correlate with a larger number of sales or buy in to the product.
Mass marketing is the opposite to Niche marketing as it focuses on high sales and
low prices. Mass Marketing aims to provide products and services that will appeal
to the whole market. Niche marketing targets a very specific segment of market for example specialized services or goods with few or no competitors.[2]
14. Value pricing:
Value pricing is defined by offering your product at a fair and reasonable
price that makes sense to the purchasing customer.
as the name itself suggest price of the product/ service is set according to
value perceived by the customer.
Value is subjective. Value is a benefit but a benefit is not necessarily of value to all customers. For example, a vendor offers free installation and free
updates for his software. Customer-A considers "free installation" as
"value"' because he has no technical knowledge and this will save him time
and effort. Customer-B rates the free installation as "nice to have" but the
drawcard or "value" is the free updates that will save him money in the long
run. Customers do not assign value to the same benefits.
15. Price skimming and market penetration price
Price skimming is a pricing strategy in which a marketer sets a relativelyhigh price for a product or service at first, then lowers the price over time. It is atemporal version of price discrimination/yield management. It allows the firm torecover its sunk costs quickly before competition steps in and lowersthe market price.
Price skimming is sometimes referred to as riding down the demand curve. Theobjective of a price skimming strategy is to capture the consumer surplus. If this isdone successfully, then theoretically no customer will pay less for the product than
the maximum they are willing to pay. In practice, it is almost impossible for a firmto capture all of this surplus.
Price skimming is a product pricing strategy by which a firm charges thehighest initial price that customers will pay. As the demand of the firstcustomers is satisfied, the firm lowers the price to attract another, more price-sensitive segment.
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Therefore, the skimming strategy gets its name from skimming successive layersof "cream," or customer segments, as prices are lowered over time.
Penetration pricing is the pricing technique of setting a relatively low initial entry price, often lower than the eventual market price, to attract new customers. The
strategy works on the expectation that customers will switch to thenew brand because of the lower price. Penetration pricing is most commonlyassociated with a marketing objective of increasing market share or sales volume,rather than to make profit in the short term.
The advantages of penetration pricing to the firm are:
It can result in fast diffusion and adoption. This can achieve high market penetration rates quickly. This can take the competition by surprise, not givingthem time to react.
It can create goodwill among the early adopters segment. This can create moretrade through word of mouth.
It creates cost control and cost reduction pressures from the start, leading togreater efficiency.
It discourages the entry of competitors. Low prices act as a barrier to entry(see Porter's 5-forces analysis).
It can create high stock turnover throughout the distribution channel. This cancreate critically important enthusiasm and support in the channel.
It can be based on marginal cost pricing, which is economically efficient.
The main disadvantage with penetration pricing is that it establishes long term price expectations for the product, and image preconceptions for the brand andcompany. This makes it difficult to eventually raise prices. Some commentatorsclaim that penetration pricing attracts only the switchers (bargain hunters), and thatthey will switch away as soon as the price rises. There is much controversy over whether it is better to raise prices gradually over a period of years (so thatconsumers don‘t notice), or employ a single large price increase. A common
solution to this problem is to set the initial price at the long term market price, butinclude an initial discount coupon (see sales promotion). In this way, the
perceived price points remain high even though the actual selling price is low.
Another potential disadvantage is that the low profit margins may not besustainable long enough for the strategy to be effective.
Price Penetration is most appropriate where:
Product demand is highly price elastic.
Substantial economies of scale are available.
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The product is suitable for a mass market (i.e. enough demand).
The product will face stiff competition soon after introduction.
There is not enough demand amongst consumers to make price skimming work.
In industries where standardization is important. The product that achieves high
market penetration often becomes the industry standard (e.g. MicrosoftWindows) and other products, whatever their merits, become marginalized.Standards carry heavy momentum.
A variant of the price penetration strategy is the bait and hook model (also calledthe razor and blades business model), where a starter product is sold at a very low
price but requires more expensive replacements (such as refills) which are sold at ahigher price. This is an almost universal tactic in the desktop printer business, with
printers selling in the US for as little as $100 including two ink cartridges (oftenhalf-full), which themselves cost around $30 each to replace. Thus the companymakes more money from the cartridges than it does for the printer itself.
Taken to the extreme, penetration pricing becomes predatory pricing, when a firminitially sells a product or service at unsustainably low prices to eliminatecompetition and establish a monopoly. In most countries, predatory pricingis illegal, although it can be difficult to differentiate illegal predatory pricing fromlegal penetration pricing.
14. Channel members:
TypeofChannelMembersChannel activities may be carried out by the marketer or the marketer may seekspecialistorganizations to assist with certain functions. We can classify specialistorganizations into two
broad categories: resellers and specialty service firms. ResellersThese organizations, also known within some industries as intermediaries,distributors or dealers, generally purchase or take ownership of products from themarketing company with theintention of selling to others. If a marketer utilizesmultiple resellers within its distributionchannel strategy the collection of resellers istermed a Reseller Network. These organizationscan be classified into several sub-categories including:
• Retailers – Organizations that sell products directly to final consumers. • Wholesalers – Organizations that purchase products from suppliers, such asmanufacturers or other wholesalers, and in turn sell these to other resellers,such as retailers or other wholesalers. •
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Industrial Distributors – Firms that work mainly in the business-to-businessmarket selling products obtained from industrial suppliers. SpecialtySer viceFirmsThese are organizations that provide additional services to help with the exchange of products
but generally do not purchase the product (i.e., do not take ownership of the product): • Agents and Brokers – Organizations that mainly work to bring suppliers andbuyers together inexchange for a fee. • Distribution Service Firms – Offer services aiding in the movement of products such asassistance with transportation, storage, and order processing. • Others – This category includes firms that provide additional services to aid inthe distribution
process such as insurance companies and firms offeringtransportation routing assistance.
16. Retailing and types:
Retail is the sale of goods and services from individuals or businesses tothe end-user . Retailers are part of an integrated system called the supplychain. A retailer purchases goods or productsin large quantitiesfrom manufacturers directly or through a wholesaler , and then sells smaller quantities to the consumer for a profit. Retailing can be done in either fixedlocations or online. Retailing includes subordinated services, such asdelivery. The term "retailer" is also applied where a service provider
services the needs of a large number of individuals, such as a public utility, like electric power . Shops may be on residential streets, streets with few or no houses or ina shopping mall. Shopping streets may be for pedestrians only. Sometimes ashopping street has a partial or full roof to protect customersfrom precipitation. Online retailing, a type of electronic commerce usedfor business-to-consumer (B2C) transactions and mail order , are forms of non-shop retailing.Shopping generally refers to the act of buying products. Sometimes this isdone to obtain necessities such as food and clothing; sometimes it is done as
a recreational activity. Recreational shopping often involves windowshopping (just looking, not buying) and browsing and does not always resultin a purchase.
A marketplace is a location where goods and services are exchanged. Thetraditional market square is a city square where traders set up stalls and buyers
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browse the merchandise. This kind of market is very old, and countless suchmarkets are still in operation around the whole world.
In some parts of the world, the retail business is still dominated by small family-run stores, but this market is increasingly being taken over by large retail chains.
Retail is usually classified by type of products as follows:
Food products
Hard goods or durable goods ("hardline retailers") - appliances, electronics,furniture, sporting goods, etc. Goods that do not quickly wear out and provideutility over time.
Soft goods or consumables - clothing, apparel, and other fabrics. Goods that areconsumed after one use or have a limited period (typically under three years) inwhich you may use them.
There are the following types of retailers by marketing strategy:
Department stores - very large stores offering a huge assortment of "soft" and"hard goods; often bear a resemblance to a collection of specialty stores. Aretailer of such store carries variety of categories and has broad assortment ataverage price. They offer considerable customer service.
Discount stores - tend to offer a wide array of products and services, but theycompete mainly on price offers extensive assortment of merchandise ataffordable and cut-rate prices. Normally retailers sell less fashion-oriented
brands.
Warehouse stores - warehouses that offer low-cost, often high-quantity goods piled on pallets or steel shelves; warehouse clubs charge a membership fee;
Variety stores - these offer extremely low-cost goods, with limited selection;
Demographic - retailers that aim at one particular segment (e.g., high-endretailers focusing on wealthy individuals).
Mom-And-Pop : is a retail outlet that is owned and operated by individuals. Therange of products are very selective and few in numbers. These stores are seenin local community often are family-run businesses. The square feet area of thestore depends on the store holder.
Specialty stores: A typical speciality store gives attention to a particular category and provides high level of service to the customers. A pet store thatspecializes in selling dog food would be regarded as a specialty store. However,
branded stores also come under this format. For example if a customer visits aReebok or Gap store then they find just Reebok and Gap products in therespective stores.
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General store - a rural store that supplies the main needs for the localcommunity;
Convenience stores: is essentially found in residential areas. They providelimited amount of merchandise at more than average prices with a speedy
checkout. This store is ideal for emergency and immediate purchases. Hypermarkets: provides variety and huge volumes of exclusive merchandise at
low margins. The operating cost is comparatively less than other retail formats.
Supermarkets: is a self service store consisting mainly of grocery and limited products on non food items. They may adopt a Hi-Lo or an EDLP strategy for pricing. The supermarkets can be anywhere between 20,000 and 40,000 squarefeet (3,700 m2). Example: SPAR supermarket.
Malls: has a range of retail shops at a single outlet. They endow with products,food and entertainment under a roof.
Category killers or Category Specialist: By supplying wide assortment in asingle category for lower prices a retailer can "kill" that category for other retailers. For few categories, such as electronics, the products are displayed atthe centre of the store and sales person will be available to address customer queries and give suggestions when required. Other retail format stores areforced to reduce the prices if a category specialist retail store is present in thevicinity.
E-tailers: The customer can shop and order through internet and themerchandise are dropped at the customer's doorstep. Here the retailers use dropshipping technique. They accept the payment for the product but the customer
receives the product directly from the manufacturer or a wholesaler. Thisformat is ideal for customers who do not want to travel to retail stores and areinterested in home shopping. However it is important for the customer to bewary about defective products and non secure credit card transaction. Example:Amazon, Pennyful and eBay.
Vending Machines: This is an automated piece of equipment whereincustomers can drop the money in the machine and acquire the products.
Some stores take a no frills approach, while others are "mid-range" or "high end",depending on what income level they target.
Other types of retail store include:
Automated Retail stores are self service, robotic kiosks located in airports,malls and grocery stores. The stores accept credit cards and are usually open24/7. Examples include ZoomShopsand Redbox.
Big-box stores encompass larger department, discount, general merchandise,and warehouse stores.
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Convenience store - a small store often with extended hours, stocking everydayor roadside items;
General store - a store which sells most goods needed, typically in a rural area;
Retailers can opt for a format as each provides different retail mix to its customers
based on their customer demographics, lifestyle and purchase behaviour. A goodformat will lend a hand to display products well and entice the target customers tospawn sales.
17. Direct marketing, tele arketing and catalog marketing
I}Direct marketing is a channel-agnostic form of advertising that allows businesses and nonprofits to communicate straight to the customer, withadvertising techniques such as mobile messaging, email, interactive consumer
websites, online display ads, fliers, catalog distribution, promotional letters, andoutdoor advertising.
Direct marketing messages emphasize a focus on the customer, data, andaccountability. Characteristics that distinguish direct marketing are:
1. Marketing messages are addressed directly to customers. Direct marketingrelies on being able to address the members of a target market.Addressability comes in a variety of forms including email addresses,mobile phone numbers, Web browser cookies, fax numbers and UnitedStates and international postal addresses.
2. Direct marketing seeks to drive a specific "call to action." For example, anadvertisement may ask the prospect to call a free phone number or click ona link to a website.
3. Direct marketing emphasizes trackable, measurable responses fromcustomers — regardless of medium.
Direct marketing is practiced by businesses of all sizes — from the smallest start-up to the leaders on the Fortune 500. A well-executed direct advertising campaigncan prove a positive return on investment by showing how many potentialcustomers responded to a clear call-to-action. General advertising eschews calls-for-action in favor of messages that try to build prospects‘ emotional awareness or
engagement with a brand. Even well-designed general advertisements rarely can prove their impact on the organization‘s bottom line.
II}Telemarketing (sometimes known as inside sales,[1] or telesales in the UK andIreland) is a method of direct marketing in which a salesperson solicits
prospective customers to buy products or services, either over the phone or through
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a subsequent face to face or Web conferencing appointment scheduled during thecall.
Telemarketing can also include recorded sales pitches programmed to be playedover the phone via automatic dialing. Telemarketing has come under fire in recent
years, being viewed as an annoyance by many.III}Merchandising of products through catalog sales. Formerly the domain
of huge general merchandise retailers, such as Sears, Roebuck & Company
or Spiegel, catalog marketing has become a field with thousands of specialty
books. Both consumers and businesses can buy just about anything they
need from a catalog. Leading categories include women's apparel, home,
gifts and collectibles, electronics, and men's apparel. In 1997, over 14 billion
catalogs were mailed in the United States. Catalog marketers spent about
$11 billion in 1998 to generate over $87 billion in sales. Consumer salesrepresent about 61% of the total. In 1998, the catalog marketing industry
employed over 455,000 people. Many catalog marketers are exploring
channels other than mail to reach their customers. Catalogs can be found at
book stores, magazine stands, specialty shops, and trade shows, and on the
Internet. The major source of growth for the catalog marketing industry is
expected to come from the Internet where experienced catalog marketers as
well as traditional retailers are experimenting with on-line catalogs.
18. Automatic vending:
A vending machine is a machine which dispenses items such as snacks,
beverages, alcohol, cigarettes, lottery tickets, cologne, consumer products
and even gold and gems to customers automatically, after the customer
inserts currency or credit into the machine.
Unethical practices in marketing:
Do you engage in Unethical Marketing Practices? Many people come online
with hopes of making it big, they think the internet is a place to get rich
quick and they often don‘t know that it takes hard work to make money
online.
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Many people engage in a lot of unethical marketing practices unknown to
them; this post will be talking about 5 unethical marketing practices you
must not practice.
1. Don‘t Try to Force Your Customers into Buying
Many marketers will release a product and all they will be trying to do is to
force their readers into buying. They are the ones with the sales page
shouting above everything and that is where you will see them saying ‗if you
don‘t buy this then you will remain in poverty forever‖ or ―if you don‘t buy
this then you will never make money online‖ etc.
There is no need to try to force your readers into buying your product. It is
always good to let them know the importance of your product and what they
will gain if they buy, it is also okay to let them know what they will lose if
they don‘t buy your product - but it is very dangerous cursing them or
telling them they are foolish because they are not buying from you, so there
is no point in forcing them to buy.
2. Don‘t Try to Sell Crap
Ever think about this? A marketer went to create an ebook in 2 hours and hewent out claiming his ebook is the best while trying to sell it at $77? This is
not going to work out and it will only backfire.
It is very important not to try to sell just any product but to make sure you
are selling your best. If you put in your best into products, your efforts will
surely be rewarded because your customers will end up happy and there will
also be a viral marketing effect, which means more sales for you.
You don‘t need to sell for the sake of selling because people aren‘t picking
money as stones – they are working hard for their money and they must be
rewarded for this, so you must make sure you give them the best you can.
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3. Avoid Not Having a Good Customer Support
Another unethical marketing practice many people engage in is not having
customer support. People are paying for your service and they will definitely
need your help, why not make this help available to them?
It is very important to make sure you have a good customer support that will
always attend to customers not only fast but in a polite manner. Don‘t try to
put people off by not having any customer support or by having a rude
customer support because this will only make things worse.
Another great advantage of having a good customer support is that it will
help you gain more customers. There are many people who will not buy
your products if you are not having a good customer support, so it is very
important to have one.
4. Always Over Deliver – Never Under Deliver
Another thing you should try to avoid is under delivering. It is very
important to surprise your customers by giving them more than you
promised them than not simply giving them what you promised them.
Many marketers will tell their customers they will give them a lot of things
so that they could make a lot of sales – the customer will get there only to be
disappointed because the marketer could not meet up with his promises. It is
very important not to under deliver because this will leave your customers in
a dejected and disappointed state and will also cause more trouble for you.
The best thing to do is over deliver i.e. give more than you promised.
5. Don‘t Give Customers Something Different – This Will Only Worsen The
Situation
Another thing many marketers do is that they give customers something
different than what they said they would be giving the. You wouldn‘t love to
be given an apple when you requested an orange.
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It is very important to make sure you give your customers exactly what you
said you will be giving them. Don‘t try to impress them by giving them
something else, they know why they are paying for your product and it is
exactly what you told them that you will be giving them that you should give
them.
Trying to market your product the wrong way is not good for your business
on the long-term and the end result is that it might backfire. Follow the
above tips to take your business to the next level.
19. Demographics and psychographics:
Demographics:
Marketers typically combine several variables to define a demographic
profile. A demographic profile (often shortened to "a demographic")
provides enough information about the typical member of this group to
create a mental picture of this hypothetical aggregate. For example, a
marketer might speak of the single, female, middle-class, age 18 to 24,
college educated demographic.
Marketing researchers typically have two objectives in this regard: first to
determine what segments or subgroups exist in the overall population; and
secondly to create a clear and complete picture of the characteristics of a
typical member of each of these segments. Once these profiles are
constructed, they can be used to develop a marketing
strategy and marketing plan. The five types of demographics in marketing
are age, gender, income level, race and ethnicity.
Basically, Brandwise and other marketing firms help clients develop atarget audience demographic in order to be able to reach them through,
advertising, direct mail, trade show exhibiting, web promotions, email
marketing, etc.
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This is an important step in targeting and segmenting your audience. A
well defined strategic demographic of your customers and prospects is
half the battle in new client conversion.
Psychographics:
Psychographics marketing may be a concept that you are not fully aware of, but it is an essential part of marketing. Psychographics marketing involvesdividing potential customers into groups, according to their psychologicalcharacteristics. This sounds incredibly complicated, but it is actually arelatively simple concept once you understand it.
Most marketing involves certain demographics, which refers to factors suchas the age, location, marital status, ethnicity and religion of the person in
question. Psychographics goes beyond this to ask questions of the lifestyles, behavior and attitude of the person in question to build up a more detailed picture of who they are. These tend to be directly related to consumerism,and the type of products that people prefer to buy based on their lifestylechoices.
20. Consumer behavior and importance:
Consumers can be categorized as an individual consumer and organizational/industconsumers. Understanding their behaviour and buying pattern is important in ultimsurvival of companies in the market place.Consumer behaviour consists of activities/process followed in making any buydecision of goods as well as a service. In recent time service (holiday, travel, etc.)decisions are forming large part of consumer behaviour.One thing needs to be highlighted here is that consumer behaviour does not end wit
purchase of goods or service, but also post purchase activities are included in consu behaviour.
Consumer behaviour and consumption behaviour are two different conceptsdeveloped and cannot be used as a substitute. Consumer behaviour deals with the
process of an individual or organization in coming to the purchase decision,whereas consumption behaviour is a study focus on consuming unit or service.
Furthermore, there is a difference between consumer behaviour and buying behaviour. Consumer behaviour as highlighted before talks about process and
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actions taken by the final or end users where as buyer behaviour looks atintermediate users (who add value to goods and service) and final users.
Understanding of the consumer behaviour begins with study of the consumer buying process. Consumer buying process is five step activities. The starting
with need recognition, which leads to information search, once information isobtained from different sources next step, is the evaluation and intent where inconsumer evaluates various parameters of the product or service. The next step infive-step activity is the purchase decision where in intent is converted into anactual purchase of the good or the service. The final step ispost-purchase
reaction where in customer if she is satisfied with goods or services recommendsto other prospective customers or repeat the purchase. If the customer is not happywith purchase, a bad word of mouth follows, and she looks for alternative productor service.
Three factors are identified as determinants to consumer behaviour namelyeconomic determinants, psychological determinant and sociological
determinant. Economic Determinants are personal income (individual‘s
purchasing power), family income (total purchasing power of the family), thefuture income expectations (expected increase or decrease in availability of disposable income), availability of liquid asset (asset, which can be converted tocash), consumer market credit (if market conditions are good credit easilyavailable) and social class (effluent class, upper-middle class, middle class, etc.).
In compare the industrial buying process is much more formal process done
according to pre-defined policy and norms. The key features of organization buying are it‘s a formal and standardized process, it is done in large quantities and
may be done at periodic intervals of time, and decision-making process usuallyinvolves more than one individual.
As there are determinants for consumer behaviour, similar industrial buying behaviour has its own set of determinants, which are overall objectives of theorganization, technological capabilities of the organization which consist of information systems and network capabilities and finally organization structure,