Buzz marketing is a viral marketing technique that attempts to make each encounter with a consumer appear to be a unique, spontaneous personal exchange of information instead of a calculated marketing pitch choreographed by a professional advertiser. Historically, buzz marketing campaigns have been designed to be very theatrical in nature. The advertiser reveals information about the product or service to only a few “knowing” people in the target audience.
By purposely seeking out on-on-one conversations with those who heavily influence their peers, buzz marketers create a sophisticated word-of- mouth campaign where consumers are flattered to be included in the elite group of those “in the know” and willingly spread the word to their friends and colleagues. Although buzz marketing is not new, Internet technology has changed the way it’s being used. Buzz campaigns are now being initiated in chat rooms, where marketing representatives assume an identity appropriate to their target audience and pitch their product.
Personal Web logs (blogs) are another popular media for electronic buzz marketing campaigns; advertisers seek out authors of the “right kind of blog” and trade product or currency for promotion. Instant messaging (IM) applications are also being looked at as a vehicle for carrying out buzz marketing campaigns with either humans or IM bots doing the pitching. As with all buzz campaigns, the power of the IM model relies on the influence an individual has in an established small network — in this case, his buddy list.
As technology continues to facilitate the delivery of a electronic buzz marketing message easier, and software applications make message deliveries easier to quantify, some advertising experts predict that electronic buzz marketing techniques will become a standard component in all cross-media advertising campaigns. Others warn that abuse of this potentially powerful electronic marketing technique will be its downfall. WORD OF MOUTH MARKETING
Word-of-mouth marketing is a term used in the marketing and advertising industry to describe activities that companies undertake to generate personal recommendations as well as referrals for brand names, products and services. Word-of-mouth promotion is highly valued by advertisers. It is believed that this form of communication has valuable source credibility. Research points to individuals being more inclined to believe word-of-mouth promotion than more formal forms of promotion methods because the receiver of word-of-mouth referrals may believe that the communicator is unlikely to have an ulterior motive (ie. they are not receiving an incentive for their referrals. ) Also people tend to believe people who they know. In order to promote and manage word-of-mouth communications, marketers use publicity techniques as well as viral marketing methods to achieve desired behavioral response. A very successful word-of-mouth promotion creates buzz. Buzz generates a highly intense and interactive form of word-of-mouth referral that occurs both online and offline.
Successful word-of-mouth initiatives do not follow a strictly linear process with information flowing from one individual to another rather successful models leverage subgroup connectivity and relationships by pursuing a Reed’s Law hub approach to message distribution. A marketer has successfully created buzz when the interactions are so intense that the information moves in a matrix pattern rather than a linear one. The result is everyone is talking about or purchase the product or service. Examples •Gmail – Google did no marketing, they spent no money.
They created scarcity by giving out Gmail accounts only to a handful of “power users. ” Other users who aspired to be like these power users “lusted” for a Gmail account and this manifested itself in their bidding for Gmail invites on eBay. Demand was created by limited supply; the cachet of having a Gmail account caused the word of mouth, rather than any marketing activities by Google. •Chain e-mail about certain product/service can be considered as word of mouth marketing. •McDonald’s LincolnFry – a fake blog was discovered, and it generated lots of negative word of mouth and little participation. American Express’ billboard – a fake blog poster who told readers to check out a great Amex billboard was found to be an Ogilvy employee; this violation of trust resulted in massive negative word of mouth which spread around the world. Dumping Exporting goods at prices lower than the home-market prices. In price-to-price dumping, the exporter uses higher home-prices to supplement the reduced revenue from lower export prices. In price-cost dumping, the exporter is subsidized by the local government with duty drawbacks, cash incentives, etc.
Dumping is legal under GATT (now WTO) rulesunless its injurious effect on the importing country’s producers can be established. If injury is established, GATT rules allow imposition of anti-dumping duty equal to the difference between the exporter’s home-market price and the importer’s FOB price Dumping is the selling of exported goods in a foreign market below the price of the same goods in the home market. Claims of dumping have been made for agricultural products, automobiles, baby strollers, computer chips, glass, nylon yarn, paper, semiconductors, shoes, steel, television sets, transformers, vinyl, and wigs.
It is increasingly a problem as more developing countries join the ranks of exporter nations along with developed countries. Once a case of dumping has been substantiated, an aggrieved country may choose between legal and marketing responses to the situation. Legally, tariffs may be imposed to increase the price of the imported good to reflect appropriate cost bases. The volume of goods maybe restricted by agreement between the two countries. These actions often upset the domestic consumer by effectively raising the prices of the choices in the marketplace.
Developing a differential advantage is a more practical and ethical response to a dumping situation. By developing a differential advantage, the company effectively sets its products apart from those of the competitors. If the research focus has been on the needs of the consumer, the product should better satisfy a consumer need. The domestic manufacturer can then maintain higher price on the differentiated product and retain or gain market share. The domestic consumer is not likely to become enraged over a higher price as the consumer should perceive greater utility from the differentiated product.
By using this response the company has ethically dampened the effect of foreign competition and satisfied the customers’ needs. This paper provides a guide to strategists of the major conceptual contributions in the literature toward understanding ethical and legal aspects of dumping. Strategic recommendations for global marketers and public policy makers are also suggested. Price Ceilings ;amp; Price Floors Price Ceilings If the price ceiling is above the market price, then there is no direct effect. If the price ceiling is set below the market price, then a “shortage” is created; the quantity demanded will exceed the quantity supplied.
The shortage may be resolved in many ways. One way is “queuing”; people have to wait in line for the product, and only those willing to wait in line for the product will actually get it. Sellers might provide the product only to family and friends, or those willing to pay extra “under the table”. Another effect may be that sellers will lower the quality of the good sold. “Black markets” tend to be created by price ceilings. Price Floors When a “price floor” is set, a certain minimum amount must be paid for a good or service.
If the price floor is below a market price, no direct effect occurs. If the market price is lower than the price floor, then a surplus will be generated. Minimum wage laws are good examples of price floors. In many states, the U. S. minimum wage law has no effect, as market wage rates for low-skilled workers are above the U. S. minimum wage rate. In states where the minimum wage is above the market wage rate, the law will increase unemployment for low-skilled workers. Although some low-skilled workers will get higher pay, others will lose their jobs.
Customer Value ;amp; Satisfaction Customer Value “Is the bundle of benefits customer expect from a given product or service” Value delivery system includes all the experiences the customer will have on the way to obtaining ;amp; using the offering. Total Customer Value is the summation of: -Product Value -Services Value -Personnel Value -Image Value Value delivery system includes all the experiences the customer will have on the way to obtaining ;amp; using the offering. Customer perceived value is a useful framework that applies to many situations and yields rich insights.
Its implications are: * First, the seller must assess the total customer value and total customer cost associated with each competitor’s offer. * Second, the seller who is at a customer perceived value disadvantage has two alternatives: 1) To increase total customer value (by strengthening or augmenting the offer’s product, services, personnel, and image benefits). 2) To decrease total customer cost (by reducing price, simplifying the ordering, and delivery process, or absorbing some buyer risk by offering a warranty. Delivering High Customer Value
Loyalty is defined as “a deeply held commitment to rebuy or repatronize a preferred product or service in the future despite situational influences and marketing efforts having the potential to cause switching behavior. ” The key to generating high customer loyalty is to deliver high customer value. The value proposition consists of the whole cluster of benefits the company promises to deliver, it is more than the core positioning of the offering. Whether the promise is kept depends on the company’s ability to manage its value-delivery system.
Customer Satisfaction Satisfaction is a person’s feeling of pleasure or disappointment resulting from comparing a product’s perceived performance in relation to his or her’s expectations. Value Chain Michael E. Porter proposed the value chain as a tool for identifying ways to create more customer value It identifies nine strategically relevant activities that create value and cost in a specific business They include 5 primary activities ;amp; 4 support activities. Customer Lifetime Value ;amp; Customer equity Customer lifetime value
In marketing, customer lifetime value is a prediction of the net profit attributed to the entire future relationship with a customer. In today’s dynamic business world of changing face of customers is a challenge to reckon with. Companies are increasingly faced with the Herculean task of keeping track of their customers, maintaining consistency within the organization and satisfying needs so as to enjoy continued patronage. It’s requirement to build and maintain successful individual-level customer relationships in order to maximize profitability and ensure customer loyalty for future profitability.
Relationships with customers are not always secure. It is difficult to predict for how long the customer is going to stay with a firm in a non contractual setting. Firms have to adopt innovative customer relationship management strategies to manage customers and ensure higher profitability. Customer management strategies are aimed at addressing the needs of every customer and by developing a one-on-one relationship with them. Customer equity Customer equity is a result of customer relationship management. Customer equity is the total of discounted lifetime values of all of the firm’s customers.
In layman terms, the more loyal a customer, the more is the customer equity. Firms like McDonalds, Apple and Facebook have very high customer equity and that is why they have an amazing and sustainable competitive advantage. Customer Equity is made up of three components. Value Equity, Brand Equity and Relationship Equity. Value Equity – One of the common terms used in marketing is “Value for Money” also known as “VFM”. Thus Value equity is the customers assessment based on the offer, its price and its convenience. Thus if all the three match for the customer, the firm is said to have high value equity.
McDonalds is a fast food item, it is available in most places and its price is considerable highly reasonable. Thus it has high value equity because it is “value for money” product. Reebok and Adidas are available at select malls, they are perceived as the leaders in sports shoes and people are ready to go out of the way to get a Reebok and Adidas shoe. Thus even Reebok and Adidas have value equity. Value equity is especially important in Industrial markets mainly because B2B customers are highly aware of the convenience and pricing parameters for high cost products.
Brand Equity – A normal pizza might cost you around 100 rupees. But if the pizza is from Pizza hut, or a sandwich is from Subway, you will be ready to shell out more money without even looking at them. This is mainly because of your perception and this plays a crucial role in defining brand equity. Brand equity is the customer’s subjective and intangible assessment of the brand above and beyond its objectively perceived value. In essence, on the name of a brand, a customer might be ready to pay more value just because of his trust on the brand.
The drivers of brand equity are brand awareness, customer attitude and finally brand ethics and its perception by customers. The tools used in developing brand equity mainly include advertising, public relations and an overall holistic marketing approach. Brand equity is very important in the consumer market. Relationship Equity – Relationship equity is what makes a customer stay back with the preferred brand rather than shift to any other. However, True relationship equity comes when a customer is ready to stay with the brand ignoring loyalty programs, special recognition programs and all other programs.
An excellent example of a company with probably the highest relationship equity is Harley Davidson. Relationship equity comes to a firm which is good in maintaining personal relations and therefore the customer continues with the supplier our of habit or inertia. Thus these three equities together form the customer equity for an organization. Depending on the type of product it is in, as well as norms in its sector, the company varies in the type of equity it wants to harness most.