Essential guide to: Marketing, Marketer, Market!

crap

noreply@blogger.com (Lee Boon Huee (Ryan)) — Thu, 23 Feb 2012 16:15:00 +0000

crap!!!!!!!!!!!!!!!!

rubbish

noreply@blogger.com (Lee Boon Huee (Ryan)) — Thu, 23 Feb 2012 16:06:00 +0000

rubbish

test

noreply@blogger.com (Lee Boon Huee (Ryan)) — Thu, 23 Feb 2012 15:57:00 +0000

testttt

Testing Post

noreply@blogger.com (Lee Boon Huee (Ryan)) — Thu, 23 Feb 2012 15:18:00 +0000

Testing Post.....

Marketing mix - Promotion - Physical advertising: The past, present and future of in-store and on-street advertising

noreply@blogger.com (Lee Boon Huee (Ryan)) — Fri, 20 May 2011 18:13:00 +0000

Advertising, in a nutshell, is an important aspect in promotional mix, as they are used as a main form of communication tool to inform, remind and persuade (IRP) the intended target audience to elicit action through the different stages of the product in their Product Life Cycle (PLC).

Advertising is very much related to Consumer Behavior, as the message that are specifically targeted will alter their consideration set and ultimately form a purchase. (see the Consumer Decision-Making Model)

There are many forms of advertising format and medium, but today our focus is on Physical Advertising. Physical Advertising is essentially 'hard copy' of advertising format you see on the streets, in the shop, on your cloths (print), newspaper and all the tangible advertising materials.The 3 prominent ones that you will hardly miss out on will be:

Billboard Advertising

Street Advertising

In-store Advertising

These form of advertising can be considered 'traditional' method of advertisements as they are the first form of advertising materials before the age of internet, or rather, the digital age. The advertisement works by finding the right spot where the intended target audience will frequent and put up something that will catch their attention and hope this will translate into action. It is hard to quantify the return of investment (ROI) and it is a one-way communication tool. But hey, no internet remember? The static physical advertisement can be seen from the picture in the 'billboard advertisement' and 'street' advertisement'.

The comes the present. in the late 20th century, the advent of Information Communication Technology (ICT) took off and looking forward into the 21th century now, the decreased cost of server space, the super internet speed and the ever increasing bandwidth allows for 'physical' advertisement material to 'come alive' and be digitalized to tap into the advantages of digital advertising. Look at the picture of the 'in-store advertising' now. The board can move, information can be disseminated in a flash, updated promotional efforts can be passed on to consumers. This mode of physical advertising allows for better interactivity, more catchy and can change information in a flash without having to print out a giant poster everytime something is changed. It has made physical advertising more effective, convenient and catchy. However, they still dont overcome the fundamental problems that traditional physical advertisement faced and we are STILL not maximizing the potential that we can harness from the internet and the powerful ICT.

IS IT TRUE THAT PHYSICAL ADVERTISING IS DECLINING AND LOSING RELEVANCE LIKE NEWSPAPER?

Wait, wait..Let's not be too pessimistic over things. The future is in our hands. We can extend life cycle for products, let alone a advertising medium. Hence......

THE FUTURE!
Digitalized 'physical' advertisements alone is not enough. We must tap into the power of the web and also use our imaginations to maximize the utilities for the medium.

First, lets talk about creativity. The current physical advertisements do not talk to you. Their function is information dissemination at best. There are no interactivity. Hence, we can tap into augmented realities platform like virtual world to get our inspirations. How about coming up with this latest Digitalized 'Augmented Reality' Physical Advertisements (its getting longer!) as follow from TopMan UK:

This augmented reality physical tool is not exactly an 'advertisement', but it can easily be one, you know, add some message into the tool (the potential for using it for marketing is limitless!!) or get people to sign up etc. The characteristics that are favorable for physical advertisement are dyadic communications, experiential co-creation/co-production of shopping decision making, engaging & immersive (characteristics that are derived from virtual world and interactive eMarketing tools). We can tap into the world of eMarketing into physical advertisement to give it an edge, as well as to stay relevant. Cool enough? not just yet.

Since we are talking about future, lets expand our horizon alittle more. You see, we use computers and internet everyday. It is almost like our food and water. We need it to survive. Our habits, consumption behaviors, usage patterns, social interactions, friends, your character, your families, extended bloodlines, your funny photos, your idrty little laundries etc etc are all transposed from real life to our second life, the internet. We can essentially find almost everything that is related or even ABOUT us online. As marketers, we know that, and we are tapping on all these information about you to qualify our potential consumers, target market/audience, market size, consumer behavior, PLC etc etc as part of our marketing strategy. Why do you think Facebook founder, Mark Zukerberg is worth Billions of dollars? Its nothing to do with the design of the website, its not about the size of the company. IT IS ALL ABOUT INFORMATION OF YOU AND ME. Information is knowledge, information is key. He who has information will reign (like Google and Facebook). Think Google Adsense and Facebook Marketing. They serve the relevant advertisement to you through information systems with information about you so that the advertisement is precise to your potential needs and expands the reach to the advertisement's relevant target audience.

So why not use these information we can find about you, linked it up with a digitalized billboard, have an advanced scanner to scan for the people's identity, and serve the advertisements that are most relevant to you like how Google and Facebook are doing using their Google Adwords/Adsense and Facebook Marketing respectively? The concept of eMarketing Marketspace is relevant here (using ICT to link up with equipments to information system as part of a system in its entirety)

This video will unlock our true potential for Physical Advertisement:

Physical Advertisements are now facing a process of renewal. Gone are the days where you just put up a billboard and expect a return. It is not only inefficient, but it is really a 'waste of physical space'. Why dont we use the concept of Google Adsense and Facebook Marketing by adding physical advertisement as an viable equipment with information system to form an eMarketing marketspace using similar concept to serve advertisement to people in the physical world? Think big. Its coming. You see it here first!!

Promotions Srategy - Product Placements

noreply@blogger.com (Lee Boon Huee (Ryan)) — Sat, 30 Apr 2011 11:05:00 +0000

Products placements in promotional strategies stems from placing their product brands or usages in a movie, play, show or any form of 'act' that were originally targeted to entertain and not on 'marketing purposes'. They can be performed by examples like showing off a brand deliberately by capturing the logo for afew seconds, showing off product usages and benefits, augment the products with the perception the 'act' has to positively associate those favorable characteristics to the brand, a particular brand of car used for a game like 'Fast & Furious' or 'Grand Theft Auto' and a host of many different forms of product placement. Using the word 'deliberate' is fair as most product placement cost money.. so yup...this is another avenue for promotional mix and the next time when you catch a 'innocent movies' or play computer games..... Please be noted that might actually be subconsciously forming brand perception in your mind. That's an Art of Marketing!

Product Placement in movies are the most commonly used platform, although Games and Virtual World (click to read about it in this blog) also adopts brand placement. The movie below 'The Greatest Movie Ever Sold' will exemplify how product placements work....And this is no ordinary movie. This movie will be a blatant approach of using product placements in ALL AREAS of production...Seems interesting...Enjoy the Trailer!

Consumer Behavior - Maslow's Hierarchy of Needs

noreply@blogger.com (Lee Boon Huee (Ryan)) — Sat, 30 Apr 2011 10:35:00 +0000

Maslow's Hierarchy of Needs

TBC

Consumer Behavior - Hofstede's Cultural Dimensions Theory

noreply@blogger.com (Lee Boon Huee (Ryan)) — Fri, 29 Apr 2011 16:02:00 +0000

The world is a big playground. Since the time of the Silk Road, different people from different cultures have traded with each other. With the advent of science and technology, we are now living in a more integrated society where organizations do business with each other that transcends geographical boundaries. We know this phenomenon as 'Globalization'. With changes in trades that happens on a global scale, cultural aspect remains one of the major variable that is still pegged with specific demographics at a particular 'physical space'.

One of the framework that is proven to be useful in analyzing your target market is the Hofstede's Cultural Dimensions Theory. He is an influential Dutch social psychologist and an anthropologist. He came out with this systematic framework to allow organization to assess and differentiate national cultures and organizational cultures within the nation boundary. Here is what he has to say about cultural aspects forces in play in the market:

'Culture is more often a source of conflict than of synergy. Cultural differences are a nisance at best and often a disaster' - Prof. Geert Hofstede, Emeritus Professor, Maastricht University

Hofstede's Cultural Dimensions Theory describes five dimensions of value propositions within a nation's Culture. They are:

Power Distance
- The degree of power inequality that exist in a culture. Distinguished by High PD or Low PD. High PD means that there are unequal distribution of power in the culture/systems. A low PD means that the power is shared equally.
Individualism vs. Collectivism
- The degree of strength of relationship/ties people have to one another in the community. Distinguished between Individualism and Collectivism.
Masculinity vs Feminity
- This refers to how much a society view and act on their values. Masculinity means that people are tough, assertive and strong (traits of a traditional men) and Feminity means that people are more sociable, caring and work together (traits of a traditional woman)
Uncertainty Avoidance
- This refers to the level of anxiety a member of a particular culture will behave in terms of uncertainty. It is distinguished by High UA and Low UA. High UA means that people will avoid ambiguous and being on uncertain terms. High UA is the opposite of High UA.
Long-term Orientation vs Short-term Orientation
- This refers to how much the society value and make decision in terms of the short- and long-term orientation. Long-term orientation means that people make long term plan and deem them important. Short-term orientation means that people are only looking to fulfil short-term goals and are usually self-oriented.

Example of the Australia's Cultural Dimension Graphs:

Cultural Dimension's Graph for Australia from http://www.geert-hofstede.com

This is a framework that is very practical and useful to organizations that conducts their business on a world-wide scale. They can use this framework to better understand their demographics at large, and indeed there are major differences in other culture's consumer behavior and attitude. The dimension will give us insights into the culture and understand the target market. This knowledge will be useful for developing strategies.

Place Strategy - Value Chain

noreply@blogger.com (Lee Boon Huee (Ryan)) — Fri, 29 Apr 2011 12:24:00 +0000

Value Chain of a Distribution Strategy

Marketing basics - Product Life Cycle (PLC)

noreply@blogger.com (Lee Boon Huee (Ryan)) — Fri, 29 Apr 2011 12:15:00 +0000

A conventional Product Life Cycle (PLC)

A Product Life Cycle (PLC) is a graphical representation of the phases that a product will generally go through (a proven concept) throughout their life span in the market. It can be used to analyza Products and Industry Maturity Stages.

Each stage of the PLC has a conventionally conforming similar characteristics as to the consumer behaviour, recommended marketing strategies through marketing mix, level of competitions etc. It is useful for organizations to understand where their product stands, and hence tailor a suitable effective strategy for the products. Tha market is dynamic, thus understanding the PLC will allow marketers to develop suitable strategies for each stage the products is in to good effect.

Please also note that not all products conform to the shape of the PLC shown above. PLC comes in various shapes and sizes, therefore it is vital to understand how a particular product conform to their PLC first before deciding the next step in strategy development. Any form of variables can drastically affect PLC.

Strategic Marketing - Michael Porter's competitive Advantage model

noreply@blogger.com (Lee Boon Huee (Ryan)) — Fri, 29 Apr 2011 11:55:00 +0000

Michael Porter's Competitive Advantage Model

Michael Porter's Competitive Advantage Model is a model proposed by Michael Porter of the Harvard Business School. This model will allow organizations to develop strategies within the identified industry to counter the competitive forces in the industry. The ultimate ideal state for an organization is to develop a sustainable competitive advantage to ensure long term success for the organization.

Marketing basics - Service Marketing Mix (7P)

noreply@blogger.com (Lee Boon Huee (Ryan)) — Thu, 28 Apr 2011 20:39:00 +0000

3 additional 'P's for Service Marketing

Marketing basics - Marketing Mix (4P)

noreply@blogger.com (Lee Boon Huee (Ryan)) — Thu, 28 Apr 2011 18:52:00 +0000

Marketing Mix (4P) is the fundamental of all marketing strategies tool. It is coined by Neil Borden in 1953. The mix consist of 4 main categorical variables that affects any marketing effort. Marketing managers will then look into these 4 categories to attempt to develop optimal solutions to each variables within each of the 4 main categories to create a sound marketing strategy. It must be noted that they are 'controllable' variables that marketers can actually manipulate and control by devising strategies or making decisions with good effect. Of course, like the dynamic nature of the market, Marketing Mix must be monitored consistently and alter if necessary. Elements of the marketing mix are as follow in order:

Product: Product refers to the end-product that customers receive; be it in tangible form (physical product) or intangible form (service, mp3 music, virtual goods etc). The common product decisions (variables) that should be considered will be: Branding, Features & benefits, warrenty, product support, R&D, products orientation, product differentiation etc.

Price: This category revolves around the price customer pays for the product. However, vital variables like transportation, mark-ups, strategic cost, operational cost, and a host pricing decision is involved in formulating the final price for customers. The common pricing decisions (variables) that should be considered will be: Pricing strategy (penetration, skimming, cost leadership etc), mark-ups, variant of pricing strategy like bundling pricing, retail pricing, premium pricing, Everyday Low Price tactics etc.

Place (Distribution): This category is about the path which products take to the final customers. It encompasses all tiers in the distribution channel where the products need to 'travel' through. The common place decisions (variables) that should be considered will be: Market coverage, inventory management, supply chain management, shelf space, logistics, value chain analysis etc.

Promotion: This category is a representation of all the communication touch-points that marketers can leverage on for its marketing purposes. This is usually the most 'creative' aspect of the entire marketing process. It is about delivering message and information to the target audience. The common promotions decisions (variables) that should be considered will be: Integrated Marketing Communications, eMarketing tools, target audience, different forms of marketing tools (PR, WOM, Advertising and promotion, personal selling etc.

The 4Ps forms the basis for all marketing strategies that are made up of essential variables. They must be all looked closely to create effective strategies. There are many strategies that can be utilized. Suffice to say, this introduction post will set you off. For more strategies, please visit all the relevant blog post of your choice for more information.

Consumer Behaviour - Diffusion of Innovation Curve

noreply@blogger.com (Lee Boon Huee (Ryan)) — Tue, 26 Apr 2011 22:02:00 +0000

TBC

Strategic Marketing - Ansoff Matrix

noreply@blogger.com (Lee Boon Huee (Ryan)) — Tue, 26 Apr 2011 21:52:00 +0000

Ansoff Matrix was created by H. Igor Ansoff, a Mathematician. This model is proven to be a very good tool to determine the growth opportunity model for organizations that are launching a product in the market of their choice. The matrix is as follows:

There are 2 dimensions in Ansoff Matrix:
One is the Market that the organization wishes to enter, the other one is the products that the organizations wishes to offer to customers in the prevailing market.

The 4 quadrant are as follow:
Market Penetration = An organization enters/penetrates a current market with a current products. The product is in the market already and therefore the most crucial thing to do is to penetrate (getting into) the target market to gain market share. Calculations of market share can be found here. The key here is to gain market share by developing strategies to do it. Examples might be price penetration, aggressive advertisement etc.

Market Development = An organization is entering a new market with their current portfolio of products. Company will try to compete for an established marketing share in the new market. The key decision making elements will include marketing mix to develop strategies.

Product Development = An organization is enters a current market with new product. The new products can be a form of product line extension, newly developed products or an Product Life Cycle extension products. Often, piggybacking on current products will introduce the new products into the market. Having said that, alot more other strategies can be implemented for this quadrant.

Diversification = An organization is venturing into a new market with a new product This is the most risky strategy as here are no experience curve and precise knowledge on the market. Therefore building primary demand will be important in this aspect for a start. Accordingly, there are 3 types of diversification: Concentric diversification, Horizontal diversification and conglomerate diversification.

- Concentric diversification means that the organization has similar technological knowledge with the new market, therefore can leverage the knowledge in the new market.
- Horizontal diversification means that the organization has no previous knowledge or similar technological and competencies as the market.
- Conglomerate diversification means that the company develops new products that is not similar to their own current products but has the potential for developing the new market.

Therefore, as we can see from the different characteristics of the quadrants, it is vital to understand where your product fit into the quadrant and use this information to devise new strategies to develop the market. For more of Ansoff Matrix, please visit their official website: www.ansoffmatrix.com

Strategic Marketing - BCG Matrix (Portfolio Analysis)

noreply@blogger.com (Lee Boon Huee (Ryan)) — Tue, 26 Apr 2011 19:35:00 +0000

Boston Consulting Group (BCG) Matrix was developed by BCG in the early 1970s. It remains to be one of the most commonly used matrix by businesses and students (doing project!) to analyse all the different businesses or product categories a company possess under their belt, all neatly sorted into an overall matrix for analyzing the performance of each business/products to get a macro view of the business on hand for the large organizations and to achieve the overall objectives of the organization.

In order to understand how to use BCG Matrix correctly, lets take a look at the axis. BCG Matrix places businesses/products in its matrix by the merit of Market Growth (x-axis) and Market Share (y-axis).

I would like to invite you to look beyond merely describing what cash cow is etc, but to get an idea of how organizations actually analyze and 'calculate' to get business/products into the matrix.

Market Share (y-axis)

Market Share is the % of the total market that is being serviced by your product category in terms of revenue or the volume of the ACTUAL observed market for a stipulated time period.

Equation - Market Share in unit volume = (unit volume sold by you) / (total unit sold in stipulated time period)

Market share are usually a forecast if you were to use it to gauge the share for the next working year, but you can also use it to calculate share from the previous year and use them as an estimate. The higher the share, the better, of course.

Market Growth Rate (x-axis)
Market growth rate used to assess the state and performance of a market, usually in terms of sales.

Equation - Market Growth Rate = (sales in year 2011 - sales in year 2010) / sales in year 2010

Market growth rate will tell you if the market is attractive enough to continue/discontinue in the product category.

Let's now look at the 4 quadrant respectively. A company's business.products can fall into any four categories in BCG Matrix in the form of : Stars, Question mark, Cash cows and Dog.

Stars
- Star category represents high growth and high market share
- High investments needed to maintain the share
- High cash flow outward movement in this category to maintain status
- Usually in the end of the 'Growth' Product Life Cycle stage
- Represents emerging and good business for the company, though they need alot of attention and priority

Cash Cow
- Represents low growth, high market share
- This is the best quadrant of the portfolio as the company basically enjoy the 'milk' of success
- This is where the revenue stream flows inwards
- Usually in the matured stage in Product Life Cycle

Dog
- Represents low growth, low market share
- No potential to be valuable to organization anymore
- Opportunity cost in the effort to maintain this business/products as they can channel effort to other place
- Usually in the declining stage in Product Life Cycle
- Line pruning or divested after awhile in real organizations

Question marks
- Represents high growth, low market share
- They are usually new product category or new products/business for the organization
- They have the potential, but it is not clear which direction will the business go next
- Usually requires huge investments
- Usually in the introduction stage in Product Life Cycle

Rationals for using BCG Matrix
Macro Perspective:
- Maximize the organization's use of money and investments to achieve desired ROI
- Allow a company to assess their multiple businesses on hand and manage the multiple businesses in portfolio
- Visuals on where the money is coming in and out; Resource allocation and fund movements.
- Achieve the entire organization objectives
Micro Perspectives:
- In the micro level, users usually look at where the business/products is in, and try to implement strategies to shift it around in the portfolio
- Ability to do simple calculations to see where the business/product lies in the BCG matrix
-Allow marketers to develop strategies for the business/product in the particular quadrants as they display similar characteristics in the quadrant

Conclusion
BCG matrix is used by large organizations with alot of different businesses and products in the marketplace. They can measure the growth rate and market share of each and put them all together in a table form(portfolio). It allows for clear understanding on how the company is performing, where each businesses lies in the matrix, and how to develop strategies to do something about them, in order to achieve the organization's overall goals and objectives.

For brand managers or small business owners, it is useful to gauge your market share and growth in relation to your market to see how your product is doing. When you get a sense of which quadrant you product is in, then develop necessary strategies to achieve your desired outcome.

Having said that, BCG Matrix is not without it's critics, but suffice to say this matrix is a good tool for portfolio analysis.

Pricing Strategy - Net Present Value (NPV)

noreply@blogger.com (Lee Boon Huee (Ryan)) — Tue, 26 Apr 2011 10:33:00 +0000

Net Present Value (NPV) is a time series of Cash Flow of both incoming and outgoing money. 'Net' Present Value is the sum of all Present Value. It is a typical method to calculate time-value of the money for the appraisal of long term projects. Equation: (1/(1+Discount rate)^year)) Discount rate = Firm's average cost in capital or capital needed for the project could return id invested on something else. (usually given in questions) NPV indicates to a company how much value that project is contributing to the company. When we get positive numbers for our NPV, it shows that the project is in the status of discounted cash INFLOW in the year ending as indicated when you calculate. Let's do an example. Supposed you are making a decision with regards to launching a product. Your finance department calculated 2 discount rate at 15 and 20% respectively. Under which scenario will you go ahead with the project? Discount rate @ 20%
Year	Cashflow	Discount Factor (1/(1+Discount rate)^year))	Discounted Cashflow
Year	Cashflow	Discount Factor (1/(1+Discount rate)^year))	Discounted Cashflow
0	-$17,500,000.00	1/(1.2)^0 = 1	-$17,500,000.00
1	$6,100,000.00	1/(1.2)^1 = 0.833	$5,081,300.000
2	$7,400,000.00	1/(1.2)^2 = 0.694	$5,135,600.000
3	$7,000,000.00	1/(1.2)^3 = 0.579	$4,053,000.000
4	$5,500,000.00	1/(1.2)^4 = 0.482	$2,651,000.000

		Net Present Value	-$579,100.00

Discount rate @ 15%
Year	Cashflow	Discount Factor (1/(1+Discount rate)^year))	Discounted Cashflow
Year	Cashflow	Discount Factor (1/(1+Discount rate)^year))	Discounted Cashflow
0	-$17,500,000.00	1/(1.15)^0 = 1	-$17,500,000.00
1	$6,100,000.00	1/(1.15)^1 = 0.870	$5,307,000.000
2	$7,400,000.00	1/(1.15)^2 = 0.756	$5,594,400.000
3	$7,000,000.00	1/(1.15)^3 = 0.658	$4,606,000.000
4	$5,500,000.00	1/(1.15)^4 = 0.572	$3,146,000.000

		Net Present Value	$1,153,400.00

Note: Any cash flow that is within the first 12 months will NOT be discounted.

Answer: Discount rate @ 15%

Therefore, NPV is a good indicator to gauge if the project is adding on to your existing portfolio of products. It also indicates the viability of your project. The money that is incoming as discounted, which accounts for time-value of money and it is a good indicator for decision making analysis. Think marketing is just theory? Think again :)

Marketing mix - Promotion - Scent Marketing (Yes you see it right)

noreply@blogger.com (Lee Boon Huee (Ryan)) — Tue, 26 Apr 2011 09:52:00 +0000

Marketing is a dynamic discipline and it is very much alive. There are easily thousands of variables presented in every marketing problems and there are many ways a marketer can formulate strategies to solve and manage the problems.

Through an advent in Science and technology, we are now well equipped with science to harness the capability to get into the consumer's subconscious minds and understand what ticks and why consumers buy. It is no longer a 'prediction' or a forecast on what will consumers like but marketers now have an edge through exploring the consumers wants and need through their cognitive thoughts within their minds.

One mode of this form of marketing tactic is Scent Marketing, which taps into the realm of human physiological and psychological state of being and elicit response from consumers. Below is a YouTube video which shows the emerging trend of this form of marketing:

The use of scent in marketing is prevalent in hotel and retail chains which accounts for the biggest spenders on research and usage of Scent. Scent delivery system is now seen as a marketing medium. Available in market are technologies that allows companies to dispense, embed and transmit smell in various place; not only in physical storefront, but in places as small as a product packaging as well.

To summarize the effects of Scent, they appear as the gaseous form in the air which are inhaled by humans. The scents are encoded with meanings and contained messages (for example: A brand or an experience). Scent will trigger those emotional and cognitive response sub-consciously which will bring about experiential emotions and elicit certain responses from the consumers, as proven by science. For an in-depth analysis behind the science of smell, please refer to Biophysicist Luca Turin's website for more information. He studies the science of smell and are the leading proponent of the theory of smell.

Recommended blog for Scent Marketing
One particular blog that follows this new form of marketing is Scent Marketing Blog

Service Marketing - Service Recovery & Strategies

noreply@blogger.com (Lee Boon Huee (Ryan)) — Tue, 26 Apr 2011 09:05:00 +0000

Concept: Service Recovery

In any given context of business services, service failure is inevitable as all services conforms to characteristic of service; Intangible, heterogeneity, Simultaneous production & consumption and perishablility. No two service encounters are precisely alike, hence increases discrepancy from each service encounters. A service failure is usually described as service performance that falls below customer’s expectations which will have adverse effects on their satisfaction level for service encounters. Therefore, a service recovery involves taking proactive and reactive actions by the service organization to get things right for the affected customers following a service failure. In order to conduct an effective service recovery from the perspective of organization, they must understand the implications of service recovery and take specific set of actions to conduct effective service recovery tactics and strategies.

Implications to Service Marketing

The implication for service recovery affects service organization in many folds. We can infer the first two implications from Lovelock et al. equation on customer satisfaction as follows:

Source: Lovelock, CH, Patterson, PG & Walker RH 2007, Services Marketing: An Asia-Pacific and Australian perspective, Pearson, NSW

Firstly, consumer research has shown that resolving a service failure effectively has strong impact on customer satisfaction level, loyalty, positive word-of-mouth and organization performance. Customers who have experienced initial service failures and then experienced high level of excellent service recovery will lead to more satisfaction and loyalty towards the service organization, labeling as a service recovery paradox effect. (Zeithaml, Bitner, and Gremler 2009)

Secondly, a well-designed, well-documented service recovery strategy will aid in the improvement effort for service output, which correlates to ‘Doing the job right the first time’ that contributes to the increased customer satisfaction and loyalty towards the organization. (Zeithaml, Bitner, and Gremler 2009)

Thirdly, should the service failure not be handled effectively or ignored, customers would be enraged as they are not served their due justice and become ‘irates’. These customers are more likely than others to engage in negative word-of-mouth and switch provider. They believe that complaining to the provider can provide social benefits and go through troubles to create blogs and stuffs on internet to share their frustrations with others. Research has found that customers who are dissatisfied will talk to about 18.5 people about it, damaging reputation in the process. The role of Justice in complaint-handling procedure is also not served as shown in the model adopted from S. Tax and S.W.Brown as follow:

Source: Tax, S and Brown, SW 2000, Handbook of Services Marketing and Management,, Sage Publication Inc

Lastly, service employees will also be affected and demoralized should the service failure keeps repeating themselves.

Service Recovery Strategies

When a service failure occurs, service recovery strategies will be needed to be implemented by service organizations. This long-term strategy will be embedded as part of organization’s overall service strategy. Service recovery is about the combination of a variety of strategies to solve the specific context of the problem. The proposed eight strategies by Zeithaml et al. are:

The first strategy is to make the service fail-safe by doing it right the first time. It avoids negativities of failures and it is the most important dimension of service quality. In order to achieve that, there must be a top management commitment and a positive firm culture of ‘zero defection’ and appreciate ‘relationship value of customers’ to uphold the standards of service without blindly adopting the Total Quality Management from the product perspective.

The second strategy is to encourage and track complaints. According to research, almost 50% of customers encountered problems by do not complain. This segment will have a higher chance of switching to competitor as organization has no control over it. Encouraging complaint is healthy and it will allow organization to learn. Tracking complaints will ensure no complaints are left out. Technology can be used to aid in handling of complaints.

The third strategy is to act quickly. Complaining customers want quick responses and do not want to be ping-pong around different employees, which will seem to be shirking responsibilities. Even when full resolution is likely to take longer, fast acknowledgement is required to appease them. There is positive correlation between fast service recovery with satisfaction and loyalty.

The fourth strategy is to provide adequate explanations. This allows customers to understand why the failure occurred. According to attribution theory, customer will understand and appreciate what is going on and they will be more forgiving. The content and the style of the delivery must be suitable to the affected customers subjectively

The fifth strategy is to treat customers fairly. They want justice in their complaint-handling process, which involves procedure (speed, convenience, follow-up etc), interaction (behavior of service representatives) and outcome. Therefore it is important that the process be handled properly to return them the justice they seek. Recent research indicates that justice considerations have a large impact on how customers evaluate firm’s recovery effort. Therefore, if they do not perceive themselves being just, they will rate the recovery badly even when it is perfectly done. (Tax and Brown 2000)

The sixth strategy is to cultivate relationship with customers. Long term relationship will allow customers to be more forgiving and open to the recovery process. Cultivation of strong relationship can provide an important buffer to service firms when failures occur. The biggest challenge would be to restore their confidence and trust again.

The seventh strategy is to learn from recovery experience. Organizations can learn through using tools to help evaluate experiences. They can use blueprinting, control charts, fishbone diagram (cause and effect diagram) to use those acquired knowledge in their recovery effort. The last strategy is to learn from lost customers through market research and get into the root cause analysis of why they left.

Reference:

- Lovelock, CH, Patterson, PG & Walker RH 2007, Services Marketing: An Asia-Pacific and Australian perspective, Pearson, NSW

- Tax, S and Brown, SW 2000, Handbook of Services Marketing and Management,, Sage Publication Inc.

- Zeithaml, VA, Bitner, MJ & Gremler, DD 2009, Services Marketing. 5^th ed, Mc-Graw Hill, New York

Marketing mix - Promotion - New trends in Media Advertising

noreply@blogger.com (Lee Boon Huee (Ryan)) — Tue, 26 Apr 2011 08:32:00 +0000

Below is an interesting info-graphics on how media has evolved over the past few years with the advent of advanced Information Communications Technologies. It based on multiple surveys conducted and condensed together to form the results which you are about to see below via Mashable, created by @lisawaananen.

Source: Mashable Infographics, created by @lisawaananen

As you can see from the statistics above, more and more marketing tools are use via the internet platform. Marketers are moving away from the one-way communications eMarketing tools like emails, newsletters to highly interactive mediums that allows for dyadic exchanges among all stakeholders that are a prevailing trend. Social media, interactive digital media, and ubiquitous Mobile Marketing is the order of the day.

For more information on the characteristics of a social media (Facebook), please click here to read my essay on the characteristics of social media and their marketing fit.

Consumer Behavior: Theory of Planned Behavior

noreply@blogger.com (Lee Boon Huee (Ryan)) — Mon, 25 Apr 2011 18:44:00 +0000

Pricing Strategy - Mark-up analysis and Break-Even Analysis

noreply@blogger.com (Lee Boon Huee (Ryan)) — Mon, 25 Apr 2011 17:47:00 +0000

Mark -up based on Selling Price
Dollar Mark-up = (Selling Price - Cost Price) / Selling Price
Percentage Mark-up = (Selling Price - Cost Price) / Selling Price x 100%

Example of calculations: Find (A) given Mark-up % and cost price

*EXAMPLE*	Manufacturing	Wholesale	Retailer
Selling Price	(A) = $1.00	(B) = $1.25	(C) = 2.50
Mark-up %	Given = 50%	Given = 20%	Given = 50%
Cost Price	$0.50	$1.00	$1.25

If we want to find (A), we need to use the Percentage Mark-up equation as follow:

Let x be selling price

Let 50% be 0.5

Step 1: (x – 0.50)/ x = 0.5

Step 2: (x -0.50) = 0.5x

Step 3: -0.50 = 0.5x –x

Step 4: -0.50 = -0.5x

Step 5: (-0.5/-0.5) = x

Finally: $1 = x

Selling Price is $1.00!

Same step for Wholesale (B) and retailer selling price (C)

Analysis of Mark-up Analysis:

Mark-up analysis is important for a few reasons. The first reason is to see the profits that each tier of channel partner is earning. The second reason is to manipulate the mark-up % for each tier to alter the price for the final consumers. The third reason is to calculate if the channel members are affecting the pricing strategy for the final consumers and decisions can be made as to removal of channel members after doing some serious calculations that will affect the pricing strategy.

Break-Even Analysis and forecast Market Share

Break-Even Units = Total Fixed Cost/ (Selling price of 1 unit - cost price of 1 unit)

Example: Total Fixed Cost = $550,000; Selling Price = $1; Cost Price = $0.25

Break-Even Units = 550,000/(1-0.25) = 733,333 units to break even.

In order to forecast Market Share, we would need to come out with Market Potential (In the other post). For example, the market potential is 1.5millions of units consumed per year.

Calculations of Marketing Potential: CU x Q x P (Consuming Units over a period of time x Quantity x Price (if you want dollar value, if not Quantity will suffice)

Market Share = Break-Even units/Market Potential x 100% = (733,333/1,500,000) x 100% = 48% (Ideally for break-even)

So do you think that the company should launch the product according to the statistics calculated? NO

Analysis of Break-even Analysis and forecast Market share:

Break-even analysis is important because the company must calculate the number of units to sell in order to at least break even with that price that they calculated. This allows company to see if the price they set is feasible and estimate the units to sell with view of the entire market potential (a real-time data over a period of 1 year) to see if its feasible. Do you think the example is feasible? Probably no. Therefore, they might re-consider their pricing. Don't get me wrong. Its not that simple. There are many other factor. But suffice to say, break-even is important in the initial phase to strategize for the products.

Marketing Definitions

noreply@blogger.com (Lee Boon Huee (Ryan)) — Mon, 25 Apr 2011 16:33:00 +0000

There is no single universal definition of Marketing. There are, in fact, many of them when you try to search it on the internet or marketing textbooks. Marketing definition is a functional application of marketing and all marketing theories and strategies stem from the fundamental meaning of the definition in their own context. After all, Marketing is a living discipline that has 1001 variations/variables for different business, process, sales, environmental context. Therefore, no single definition can soundly encompass all these different variations in different context of the marketing problem.

However, as we toil through countless definitions of the magic word 'Marketing', we can find commonalities in what the definitions are talking about. The 2 most common themes of 'marketing' definition are:

The first theme revolves around understanding and meeting consumer's needs. The definitions are:

'The management process identifying, anticipating and satisfying customer requirements profitably' - Chartered Institute Marketing (CIM) (2005)

'Marketing is the social process by which individuals and groups obtain what they need and wants through creating and exchanging products and value with others' - Dr. Philip Kotler

The 2nd theme revolves around an all-encompassing definition of making customer satisfaction of their needs in a more holistic way which is the focal point of all the business activities driven by the entire organization. The definitions are:

'The activity, set of institutions and processes for creating, communicating, delivering and exchanging offerings that have value for customers, clients, partners, and society at large' - American Marketing Associations (AMA) (2007)

'Marketing is not only much broader than selling, it is not a specialized activity at all. It encompasses the entire business. It is the whole business seen from the point of view of the final result, that is, from the customer's point of view. Concern and responsibilities for marketer must therefore permeate all areas of the enterprise' - Peter Drucker

My thoughts

All the definitions mentioned above resonates around the same points: organizational involvement, meeting customer's wants and needs, as well as meeting organizational goal. This is coherent with any business organizations where the main element consists of 3 important stakeholders: customers, staffs and shareholders, and that all the stakeholders must be satisfied.

However, i believe that most marketing definitions lack one vital aspect: the importance of having a sustainable business model by having continual profits. Customer satisfaction is not the main purpose of marketing. The purpose of marketing is to ensure the long term survival of business by the means of having sustainable, profitable revenue BY the satisfaction of the customers.

If i were to be asked to coin my own understanding of my marketing definition, it will go something like this:

'Marketing is an all-encompassing process which requires active participation from all stakeholders. The organization hierarchy must work closely with each other to identify needs, create products, communicate to audience, generate interest and elicit action to satisfy the customer's needs and wants in order to ensure long-term sustainability of the business profitably' - Ryan Lee

eMarketing - Social Media - Aligning Facebook with Marketing Theories

noreply@blogger.com (Lee Boon Huee (Ryan)) — Mon, 25 Apr 2011 14:38:00 +0000

This post will critically analyse FaceBook and assess its role as valuable marketing tool that is being integrated as part of business marketing strategy. This post will describe the principles and functions of Facebook, which forms the foundation for aligning Facebook with marketing theories to provide critical insights to the effectiveness of Facebook as a marketing tool and their impact on business and marketers.

Principals of Facebook

Principles of Facebook: Social networking service (SNS) is one of the main products that were derived from Information Communication Technologies (ICT) revolution. Facebook is a classified under SNS. Figure 1 shows the timeline of launch dates of major SNSs on the internet. Although Facebook is not new, it is strategically differentiated from its competitor through its platform and functions. Essentially, SNS is defined as an online service that allows individuals to construct a profile and build up their own network within their bounded system by linking up with users they share connections with. They are then able to view the lists of connections and the networks of other party’s network within their bounded system, therefore expanding their network possibilities. (Boyd & Ellison 2008) Critically, the principles of SNS are building and replicating the traditional social network, social relation and interconnectedness that human share with each other onto online platforms that amplify the potential of expanding networks.

Functions of Facebook: Facebook envisioned itself as a vast, public and multifaceted social network that function as a ‘social utility that helps people communicate more efficiently with their friends, family and co-worker’ and ‘facilitates the sharing of information through the social graph, mapping of real-world social connections’. (Facebook 2011) Facebook function much like an online social media portal (or hub) that allows users to share information, content and knowledge. Its platform provides immense number of uses to fulfil the objectives of different types of users. Statistics shows that there are over 900 million objects that people interact with (pages, groups, events and community pages) which are embedded in the functions of Facebook. (Facebook 2011) All applications are potential for creating and delivering messages that will assist marketing effort. In a nutshell, the critical applications are: Real-time updates of news feeds, wall post, groups, events, discussion, notes, pictures, videos, sharing of links to hypertext (Threatt 2009) which are vital for marketing efforts.

Facebook creates a medium that allows users to expand social network and fulfil communications objectives. As research shown, users are controlling the effects of their own networks. It is not a traditional method of company controlling the users; but it is the inverse relationship. (Cited from Holzner by Threatt 2009) Therefore users are required to input information, knowledge, content sharing etc to make Facebook work.

Alignment with Marketing

The core principle and the functions of Facebook discussed earlier will be used to align Facebook with marketing theories to provide critical insights to the effectiveness of Facebook as a marketing tool. The sequence is as follows: Marketing techniques/uses will be described, followed by augmenting it with marketing theories. The marketing techniques described are word-of-mouse (WOM), segmentation & brand community, ‘pull’ marketing, IMC and targeted advertising placement. The marketing theories that underpin each technique are Consumer Decision Making model (CDM), Defined Goals for Measured Advertising Results model (DAGMAR), Service Dominant Logic (SDL) and Hierarchy-of-Effects respectively.

The first marketing technique in Facebook is WOM marketing. The theories used will be CDM and DAGMAR. The Word-of-Mouse (WOM) illustrates how ‘word of mouth’ is translated onto the web with high speed information transmission with just a click of a mouse. (Threatt 2009) The use of viral marketing is the main strength of social networks as user is connected to each other to increase trustworthiness. (Gill-Or 2010) Viral growth occurs when a message is spread exponentially which has direct impact for a brand/company. Outbound Viral marketing can be tracked as well in Facebook by algorithm. Researches deduced that presence of many users influences the memory of people to social-related information (Gill-Or 2010) and third-person effect theory, which suggest that individuals tend to expect SNS to have a greater effect on others than on themselves, helps to conduct viral marketing in Facebook (Zhang & Daghtery 2009) where users generate/share content to create more effects in terms of viral marketing.

Consumer Decision making (CDM) model is 5 steps consumers take when deciding to buy a product. The 5 steps are: Problem recognition, information search, Evaluation of Alternatives, purchase, post purchase shown in Figure 2. Facebook is not only changing what we buy, but also changing the psychology of how we buy through the CDM. (Montoya 2011) It can be seen from a research on travelling package that when it comes to ‘search for information’ stage, 49% used website and 36% relied on consumer generated site like Facebook where users share content. Both websites and consumer-generated content are equally important in that stage. (Bronner & De Hoog 2008) Users then evaluate the alternatives on hand and move to ‘purchase’ stage. This is proven by a research that indicated WOM referrals have strong impact on new customer acquisition, with long term elasticity of sign up in the ‘purchase’ stage (Trusov et, al 2009) They will then have post-purchase evaluation, where Facebook again plays a role when users generate content about the product/services on the Facebook platform. Marketers should monitor the information on social network due to the viral effect. (Litvin et al 2008)

DAGMAR model was proposed by Russel H. Colley in 1961. It is a model that offered a sequence of steps which consumers take when looking at information or advertisement provided by marketers. They are: Awareness, Comprehension, Conviction, Action (ACCA). DAGMAR is a descendant of AIDA model and works like the Hierarchy of Effects model. The social media can be an avenue to progress the users up the steps to act. Users can be in different steps of the DAGMAR model. Therefore Facebook is an all-encompassing platform where marketers can accelerate learning, or assist users to move through the steps to take action through viral marketing in Facebook.

The second use of Facebook as a marketing tool is brand community and segmentation. Brand communities attracts new user to an organization, reinforce loyalty and helps marketer better understand consumers and potential uses of the product through dyadic interactions. (Threatt 2009) It allows for targeted communications which users can choose to engage with on their own term. In a way, Facebook allows for a ‘pull marketing’ approach than a ‘push’ marketing approach, which assist in user segmentation. (Montoya 2011) Consumers can choose the information they need. Demographic information can be collected by social networks, and it segments users with homogenous characteristics together, to allow marketers to target their adverts to a particular audience. (Quirke 2011) Facebook provide ‘an intricate web of audiences to filter through before delivering effective messages’. (Threatt 2009) As Kotler suggested, the 5 critical factors for segmentation are: Measurable, Relevant, Accessible, Distinguishable and Feasible. Facebook, as a ‘pull’ marketing model, is readily accessible and feasible. Marketers can then provide relevant and distinguishable message to the precise segments. Facebook, like any internet tool, has a lot of data and is measurable.

Service Dominant Logic (SDL), as proposed by Vargo and Lusch (2004), is a relatively new marketing theory where the emphasis is on the role of consumers changing from mere receivers of goods/service to a co-creator of value (Marandi et. al 2010) In this aspect, SNS provides a good platform for value co-creation. SDL emphasise on operant resources from the users as part of value creation. Users are embedded in the whole process of creating value in goods/services. Facebook are known as value constellations (Vargo & Lusch 2006). When users are segmented based on homogeneous needs through ‘pull’ marketing, they are ready to communicate with marketers. They have, in a sense, become a new source of competence for the organization. (Marandi et. al 2010)

The third use of Facebook as a marketing tool is targeted online advertising. Facebook made Microsoft its exclusive partner to serve banner advertising. (Facebook 2011) They also serve up advertisements on the sidebars, using the personal data of a profile page to target the type of advertisement to be served, which is similar to Google advertising.

Hierarchy of Effects model as proposed by Lavidge and Steiner (1961) works like DAGMAR model where consumer moves through a series of step from product awareness to actual purchase. This model can act as a conceptual tool to predict consumer behaviour (Chan et, al 2004) Facebook is perhaps a greater online advertising tools than Google Adwords because of the fact that the targeted advertisement towards Facebook users are more personal, rather than just simply a keywords that a person may randomly need for a short period of time. A research shows that when an individual’s product involvement increases, the level of attention to the banner advertisement also rises. (Chan et, al 2004)

Conclusion

Facebook brought immense opportunities for organizations in terms of marketing. As described in the alignment with marketing, Facebook affects how users make decisions about buying products (CDM), how they follow the sequence of steps when looking at information or advertisement provided by marketers (DAGMAR), How markets can segment the users and even group them into communities (Segmentation) to come together to co-create value for both organizations and users (SDL) and make users a competence for an organization in the process. Marketers can also use targeted advertising using the information provided by users and algorithms to target advertisements towards users (IMC & Hierarchy-of-effects model). This paper is just the tip of the iceberg as many theories and applications that has been discussed can be further elaborated to factor in other marketing theories. I strongly recommend organizations to use Facebook.

*This is an extract of my Essay. Please contact me for more information*

eMarketing - Virtual World - Virtual Brand Community

noreply@blogger.com (Lee Boon Huee (Ryan)) — Mon, 25 Apr 2011 14:24:00 +0000

Ah, the good old Community. Can you recall a place where you grew up with a lot of childhood friends and that playground you guys used to frequent? And that nasty Ice-cream man who would scold all the children? Happy days yea? Yup. That is exactly what community is all about.

Looking ahead, we often hear people/marketers/academics even Economists saying 'Welcome to the age of Socioeconomic!' If that doesn't ring any bell, think Facebook! We are now in an era that are socially interconnected in the densely spun web that connects everyone together. We have the power to develop meaningful relationships with businesses, and spread the good, bad and even the ugly about a business to everyone we know. People, not business, has once regain the bargaining power.

The crux of the Virtual Community is to leverage on internet power to recreate that special community that will have people coming together with similar interest to interact and generate meaningful relationships with the business. They will have the power to influence more people and exponentially grow with the business. Therefore it is worthy to invest some time to look into what is Virtual community and its function in Marketing:

I will talk about virtual community in 3 portions: on societal perspective of virtual community & Attributes of virtual community & my thoughts as follow:

Analysis of Virtual Community

Societal perception of virtual community:

In order to evaluate the usefulness of virtual community, we must first look into how society perceive and transit into the virtual community medium. According to social and philosophical literature with regards to virtual community, there are 3 forms of studies by theorists, but ultimately drew similar conclusions.

The first theorist, Howard Rheingold, sees virtual community as a separate entity as physical community in his book ‘The Virtual Community: Homestanding on the Electronic Frontier’. Users are ‘withdrawn’ from everyday Life to enter into a ‘strange’ world where new kind of relationship and mode of communication are entered into. Rheingold thinks internet is ‘a new space’. However, he acknowledges that virtual community is a progression which is a new platform where people come together.

The second theorist, Manuel Castells, sees the virtuality as a complementary factor in actual life. This means that technology serves as a complementary channel for users with similar goals and interest together using technology. He based his argument on the fact that the ubiquity dimension of technology allows the breaking of traditional proximity. Distance and geography are no longer a determining factor of community. The level of experience of virtual community is now seen as a level of reality, not removed from it. However, he argues the fact that virtual community only caters for ‘thin’ community, which mean that relationship among users are not strong, and that they are together only due to common interest. This is unlike physical community which has ‘thick’ relationship built on personal bonding and close relationship.

The third theorist, Craig Calhoun, sees internet as producing communities of similarities more than strengthening local networks of diverse people from all over the world in one platform. Virtual community does not necessarily create new social and political realities; but they strengthen already existing ones, linking people with similar taste.

No matter which theory people subscribe to, it can be seen that virtual community offers a ‘thin’ community in terms of building relationship based on common interest for users all over the world in a common platform. Virtual community can also be seen as a complimentary channels for community building effort, be it as a new platform, or augmenting what has already exist in real life. For more information about the 3 theorist above, they can be found in ‘Delanty, Gerard (2003), Community. New York: Routledge (pp. 167-185)

Attributes of a virtual community;

A community in definition is defined as virtual users coming together in a shared space with the concept of common interests and goals. According to the definition alone, it is a social community where people come together with a common purpose. The fundamental basis of the existence of communities allows businesses to tap into community to leverage it as a form of marketing technique. A study in 2004 shows that the fundamental of virtual community is a summary of the attributes of ‘5-Ps of virtual community’ (C.E Porter, 2004).

Purpose – Users in a specific community come together as they share similar interests, therefore their purpose of coming together is specific.

Place – Virtual Community have the ability to break the traditional spatial space-time continuum and creates a ‘place’ in the virtual medium to bring everyone from different geographical space and time together as a community in virtual medium.

Platform- The nature of virtual world allows for a platform that caters for free exchange of information and interactions among variables and does not impose any restrictions.

Population (Pattern of Communication) – This refers to the pattern of interaction among members of the community and their social ties.

Profit Model – The purpose of them coming together allows for profit generation. (C.E Porter, 2004).

Therefore, businesses can leverage on the benefits that community can provide, such as the following:

‘Increase sales, Positive word-of-mouse, A precise target market, increase traffic of people with common interest, building of brands, Better social presence and support’ (C.E. Porter, 2004). Therefore, a community will have the potential to leverage on social presence to achieve marketing effects. This is aligned with the eMarketing concept like viral marketing and also emails marketing when members receive email from the community administrator for marketing subject.

My thoughts

I totally agree with the conclusion i inferred from theorist. Virtual community is seen as a complimentary channels for community building effort, be it as a new platform, or augmenting what has already exist in real life. This can be further enhanced by Ray Oldenburg (1982) in his theory of ‘third place’. Virtual community provides an informal public place where communication and chats takes place with common interest and goals. It is all about breaking off the fundamental perception of community: Proximity, and bring people from all over the world a space to come together as one in the form of community.

Therefore, according to my research for major assignment, brand community has the highest potential for marketing. Community is arguably one of the best marketing techniques in Second Life as they made full use of what virtual medium can offer (their characteristics like active participation, immersive environment, richness of media etc), and it augments the characteristics by meeting both intrinsic and extrinsic factors of users in virtual medium. One of the main attribute would be sharing a cultural reference of their interest in a social group. This is aligned with the study done by Jennifer Martin, Vili Lehdonvirta and Constance Elise Porter as described in my research.

When business set up a brand community, users joined in the community as they see a shared common goal and interests. They ‘reach out to the community’ instead of the business reaching out to them. They can be seen as a ready market for businesses to exploit. The users are receptive to the offerings made by the businesses through active participation in a rich platform, immersing in a medium that they joined to satisfy their intrinsic needs, as well as meeting the extrinsic needs of social belonging to a community that share their goals and interest. Brand community technique can be seen as a central form of marketing technique in Virtual Island