Definitions of Department Store
•Department Store large retail store having a wide variety of merchandise organized into customer-based departments. A department store usually sells dry goods, household items, wearing apparel, furniture, furnishings, appliances, radios, and televisions, with combined sales exceeding $10 million.
•Department Store retail establishment that sells a wide variety of goods. These usually include ready-to-wear apparel and accessories, yard goods and household textiles, house wares, furniture, electrical appliances, and accessories. In addition to departments (supervised by managers and buyers) for the various categories of goods, there are departmental divisions to handle, for example, merchandising, advertising, service, accounting, and financial strategy.
History of Department Stores
American department stores
"In considering the social effects of the department store, one is inclined to attach the greatest importance to the contributions which they have made to the transformation in the way of life of the greatest strata of the population, a transformation which will remain the one great social fact of these last 100 years." -- Hrant Pasdermadjian, The Department Store, Its Origins, Evolution and Economics, 1954
The Big Stores
The three biggest department stores in the mid-1960s, both in sales volume and physical size, were Macy's, Hudson's, and Marshall Field, in that order. Hudson's, shown here, had 25 stories, 16 of them selling floors. Two of its four below-ground floors were basement stores, where 60 departments did up to 25% of the store's business.
At its peak in mid-century, Hudson's employed up to 12,000 employees and welcomed 100,000 shoppers a day. It had its own telephone exchange (CApitol), and the nation's third largest switchboard, exceeded only by the Pentagon and the Bell System itself.
Restaurant reviewer Duncan Hines loved Hudson's tea rooms. In the 1947 edition of Adventures in Good Eating he wrote: "This splendid department store has devoted the greater part of a floor to the tea rooms. The food is at all times very tempting and the service has that quality of quiet elegance which adds so much to the pleasure of dining. ... Don’t overlook the dining room on the mezzanine, if you happen to be in a bit of a hurry. Their chicken pie is outstanding."
Marshall Field, the man, was a dry goods wholesaler. He wasn't fond of retailing or of the idea of selling all kinds of merchandise under one roof. Like many other people he thought department stores were low class. Field never became really enthusiastic about his department store, said to be the brainchild of Harry Selfridge, its early manager, and later founder of Selfridge's in London. Selfridge made the store customer-friendly by improving its lighting, opening a tea room, and -- horrifying to Field -- installing a few bargain tables here and there.
Nevertheless, Field's remained conservative in many of its practices. For years it curtained its show windows on Sundays, refused to display women's underwear on manikins, and wouldn't let salesclerks wear makeup.
For decades the Marshall Field store wrestled with the John Wanamaker store in Philadelphia for the title of America's most prestigious large-scale, full-service department store.
Although the store did poorly during the Depression, by 1945 its business was booming. It had become an institution. Reeling from the shock of Pearl Harbor, a Chicago woman exclaimed, "Nothing is left any more – except, thank God, Marshall Field’s."
Types of Department Stores
Upscale Department Store
Characteristics of a typical upscale department store may include:
•Sale of brand name perfumes and beauty supplies, like Burberry, Calvin Klein or M•A•C at the main entrance, with specialists in cosmetics there to assist customers with applying and selecting makeup.
•General sale of name brand clothes above an average price level, such as Dior, Chanel, Versace, Lacoste, etc.
•When items are discounted, the price resembles that of an average priced item at a lower scale department store.
•Sale of small household appliances like blenders, or small electronic items such as portable radios.
•Specialized services or subset businesses such as personal shopping assistance, salons, restaurants, and/or travel agencies.
Mid-Range Department Store
Characteristics of a mid-range department store may include:
•Sale of cosmetics.
•Sale of some brand names, with greater emphasis on private label brands.
•Sale of accessories.
•Sale of some small household appliances.
•Sale of furniture in larger locations.
Comparison to Upscale Department Store
•Sale of cosmetics but generally not brand name. Fragrances and beauty supplies may be placed further into the interior of the store, without cosmetic specialists at the counters.
•Greater proportion of moderately-priced brand names.
•Accessories and purses aren't upscale brand names, with greater proportion of lesser-known or private label branded items.
Discount Department Store/Super-Store
•Sells cosmetics, generally not name brand.
•Generally doesn't sell name brands.
•Sells accessories, generally not name brand.
•Sells small household appliances.
•Sells toys, electronics and video games.
•Sells household necessities.
•The "super-store" variant usually sells food products and has a "one stop shop" vibe.
Comparison to Mid-Range Department Stores
•Sells fewer major brand names.
•Offers a wider variety of products.
•More likely to anchor a power centre than an indoor shopping mall.
Off-Price Retailer
•Most products are name-branded.
•Products may be over-runs, seconds, or last season's stock liquidated from department stores.
•Product mix typically emphasizes women's clothing and may include men's clothing, children's clothing, shoes, accessories, perfume, toys, house wares, or packaged gourmet food.
•Stores are most frequently located in power centre’s but may also appear in shopping malls.
Tuesday, September 29, 2009
Department Store
Definitions of Department Store
•Department Store large retail store having a wide variety of merchandise organized into customer-based departments. A department store usually sells dry goods, household items, wearing apparel, furniture, furnishings, appliances, radios, and televisions, with combined sales exceeding $10 million.
•Department Store retail establishment that sells a wide variety of goods. These usually include ready-to-wear apparel and accessories, yard goods and household textiles, house wares, furniture, electrical appliances, and accessories. In addition to departments (supervised by managers and buyers) for the various categories of goods, there are departmental divisions to handle, for example, merchandising, advertising, service, accounting, and financial strategy.
History of Department Stores
American department stores
"In considering the social effects of the department store, one is inclined to attach the greatest importance to the contributions which they have made to the transformation in the way of life of the greatest strata of the population, a transformation which will remain the one great social fact of these last 100 years." -- Hrant Pasdermadjian, The Department Store, Its Origins, Evolution and Economics, 1954
The Big Stores
The three biggest department stores in the mid-1960s, both in sales volume and physical size, were Macy's, Hudson's, and Marshall Field, in that order. Hudson's, shown here, had 25 stories, 16 of them selling floors. Two of its four below-ground floors were basement stores, where 60 departments did up to 25% of the store's business.
At its peak in mid-century, Hudson's employed up to 12,000 employees and welcomed 100,000 shoppers a day. It had its own telephone exchange (CApitol), and the nation's third largest switchboard, exceeded only by the Pentagon and the Bell System itself.
Restaurant reviewer Duncan Hines loved Hudson's tea rooms. In the 1947 edition of Adventures in Good Eating he wrote: "This splendid department store has devoted the greater part of a floor to the tea rooms. The food is at all times very tempting and the service has that quality of quiet elegance which adds so much to the pleasure of dining. ... Don’t overlook the dining room on the mezzanine, if you happen to be in a bit of a hurry. Their chicken pie is outstanding."
•Department Store large retail store having a wide variety of merchandise organized into customer-based departments. A department store usually sells dry goods, household items, wearing apparel, furniture, furnishings, appliances, radios, and televisions, with combined sales exceeding $10 million.
•Department Store retail establishment that sells a wide variety of goods. These usually include ready-to-wear apparel and accessories, yard goods and household textiles, house wares, furniture, electrical appliances, and accessories. In addition to departments (supervised by managers and buyers) for the various categories of goods, there are departmental divisions to handle, for example, merchandising, advertising, service, accounting, and financial strategy.
History of Department Stores
American department stores
"In considering the social effects of the department store, one is inclined to attach the greatest importance to the contributions which they have made to the transformation in the way of life of the greatest strata of the population, a transformation which will remain the one great social fact of these last 100 years." -- Hrant Pasdermadjian, The Department Store, Its Origins, Evolution and Economics, 1954
The Big Stores
The three biggest department stores in the mid-1960s, both in sales volume and physical size, were Macy's, Hudson's, and Marshall Field, in that order. Hudson's, shown here, had 25 stories, 16 of them selling floors. Two of its four below-ground floors were basement stores, where 60 departments did up to 25% of the store's business.
At its peak in mid-century, Hudson's employed up to 12,000 employees and welcomed 100,000 shoppers a day. It had its own telephone exchange (CApitol), and the nation's third largest switchboard, exceeded only by the Pentagon and the Bell System itself.
Restaurant reviewer Duncan Hines loved Hudson's tea rooms. In the 1947 edition of Adventures in Good Eating he wrote: "This splendid department store has devoted the greater part of a floor to the tea rooms. The food is at all times very tempting and the service has that quality of quiet elegance which adds so much to the pleasure of dining. ... Don’t overlook the dining room on the mezzanine, if you happen to be in a bit of a hurry. Their chicken pie is outstanding."
Monday, September 28, 2009
Shopping Mall
Classes of Shopping Mall
In many cases, regional and super-regional malls exist as parts of large superstructures which often also include office space, residential space, amusement parks and so forth. This trend can be seen in the construction and design of many modern supermalls such as Cevahir Mall in Turkey. The International Council of Shopping Centers’ 1999 definitions were not restricted to shopping centers in any particular country, but later editions were made specific to the U.S. with a separate set for Europe.
Regional malls
A Regional Mall is, per the International Council of Shopping Centers, in the United States, a shopping mall which is designed to service a larger area than a conventional shopping mall. As such, it is typically larger with 400,000 sq ft (37,000 m2) to 800,000 sq ft (74,000 m2) gross leasable area with at least two anchors and offers a wider selection of stores. Given their wider service area, these malls tend to have higher-end stores that need a larger area in order for their services to be profitable. Regional malls are also found as tourist attractions in vacation areas.
Super Regional Malls
A Super Regional Mall is, per the International Council of Shopping Centers, in the U.S. a shopping mall with over 800,000 sq ft (74,000 m2) of gross leasable area, and which serves as the dominant shopping venue for the region in which it is located.
Outlet Malls
An Outlet Mall (or outlet centre) is a type of shopping mall in which manufacturers sell their products directly to the public through their own stores. Other stores in outlet malls are operated by retailers selling returned goods and discontinued products, often at heavily reduced prices. Outlet stores were found as early as 1936, but the first multi-store outlet mall, Vanity Fair, located in Reading, PA didn't open until 1974. Belz Enterprises opened the first enclosed factory outlet mall in 1979, in Lakeland, TN, a suburb of Memphis
Component of a Shopping Mall
Shopping centers are buildings that contain multiple retail stores. The term generally applies to open-air complexes containing many buildings that adjoin pedestrian walkways. Enclosed shopping centers, in which all units are accessible under a single roof, are referred to as shopping malls. In the United Kingdom, they are known as retail parks or precincts.
The first shopping centers were the covered outdoor bazaars of ancient Europe. After World War II, suburban living in the United States led to the advent of the modern shopping center. As cities became crowded and dirty, people began to seek improved living conditions which resulted in the development of outdoor strip malls.
Fully enclosed shopping malls first appeared in the 1950s. The Northgate Mall built in Seattle, Washington, USA, and the Northland Shopping Center built near Detroit, Michigan, USA, were the first indoor malls. Constructed between 1950 and 1954, they were originally open-air shopping centers which were later enclosed.
Regional and super-regional malls are designed to service larger areas than traditional shopping centers. They are often part of larger superstructures which include residential and commercial office space. They serve as the primary shopping area for the region in which they are located.
Outlet malls are shopping centers in which goods are sold to the public directly from manufacturer stores. They also include shops selling discontinued and customer returned products at significantly lowered prices. The first outlet mall opened in Reading, Pennsylvania, USA, in 1974.
Food courts are common components of shopping malls. They feature vendors selling a variety of foods and a seating area. This area is generally an open plaza surrounded by the various vendors.
Large chain department stores are also a mainstay of many shopping malls. In the beginning, these anchor stores were financially necessary for the shopping centers to remain open. Today, they exist as a means of attracting traffic to the smaller stores found within malls. They are placed as far from one another as possible to maximize this traffic.
Shopping malls are typically owned by shopping property management firms. These firms specialize in the management and promotion of the shopping centers. Many own multiple properties and usually service one or more regional areas.
There has been some controversy surrounding modern shopping malls due to their displacement of traditional small businesses and main streets. Many modern consumers still prefer shopping centers with ample parking, entertainment, and private security over crowded downtown areas. This preference has led to the downfall of many "mom and pop" stores in local commercial centers
Top Five Largest Shopping Mall of the World
South China Mall
South China Mall is the largest mall in the world located in Dongguan, China. It contains around 1500 stores and is spread in more than 6 million square feet. Mall was opened in 2005 and since then it is facing the problem of not being occupied by enough sellers. The reason behind the mall being vacant is due to its suburban location that makes it difficult to approach. In 2009, South China Mall has been renamed to New South China Mall.
Golden Resources Mall
Golden Resource Mall is the second largest shopping mall of the world located in Beijing, China. Mall is also known as “Great Mall of China” and is spread across 7.3 million square feet and was the largest mall of the world till 2005. Mall receives more than 50,000 visitors everyday and the decrease in the number of shoppers is due to costly items of the mall that is not fit for most of the ordinary people.
SM City North EDSA
SM mall is one of the largest mall malls of the world located in Philippines. It is spread across 460,000 square meters of area and was opened in 1985 for public. Mall receives more than 4 million visitors during weekend and has a capacity of up to 6.5 million.
CentralWorld Mall
Central world mall is the largest shopping mall in Southeast Asia and contains office towers as well as hotel. It is spread across 500000 square meters. Earlier the mall was known as World Trade Center in 1990 and was taken over by Central Group in 2002. It is ideal for middle class as well as upper class customers in Bangkok, Thailand.
SM Mall of Asia
SM mall is located in Philippines and spread across 410 thousand square meters. Mall has the capacity of 4.2 million and has four buildings connected to each other. The parking space of the mall is divided into six stories and has a tram traveling around the mall with 20 people holding capacity
In many cases, regional and super-regional malls exist as parts of large superstructures which often also include office space, residential space, amusement parks and so forth. This trend can be seen in the construction and design of many modern supermalls such as Cevahir Mall in Turkey. The International Council of Shopping Centers’ 1999 definitions were not restricted to shopping centers in any particular country, but later editions were made specific to the U.S. with a separate set for Europe.
Regional malls
A Regional Mall is, per the International Council of Shopping Centers, in the United States, a shopping mall which is designed to service a larger area than a conventional shopping mall. As such, it is typically larger with 400,000 sq ft (37,000 m2) to 800,000 sq ft (74,000 m2) gross leasable area with at least two anchors and offers a wider selection of stores. Given their wider service area, these malls tend to have higher-end stores that need a larger area in order for their services to be profitable. Regional malls are also found as tourist attractions in vacation areas.
Super Regional Malls
A Super Regional Mall is, per the International Council of Shopping Centers, in the U.S. a shopping mall with over 800,000 sq ft (74,000 m2) of gross leasable area, and which serves as the dominant shopping venue for the region in which it is located.
Outlet Malls
An Outlet Mall (or outlet centre) is a type of shopping mall in which manufacturers sell their products directly to the public through their own stores. Other stores in outlet malls are operated by retailers selling returned goods and discontinued products, often at heavily reduced prices. Outlet stores were found as early as 1936, but the first multi-store outlet mall, Vanity Fair, located in Reading, PA didn't open until 1974. Belz Enterprises opened the first enclosed factory outlet mall in 1979, in Lakeland, TN, a suburb of Memphis
Component of a Shopping Mall
Shopping centers are buildings that contain multiple retail stores. The term generally applies to open-air complexes containing many buildings that adjoin pedestrian walkways. Enclosed shopping centers, in which all units are accessible under a single roof, are referred to as shopping malls. In the United Kingdom, they are known as retail parks or precincts.
The first shopping centers were the covered outdoor bazaars of ancient Europe. After World War II, suburban living in the United States led to the advent of the modern shopping center. As cities became crowded and dirty, people began to seek improved living conditions which resulted in the development of outdoor strip malls.
Fully enclosed shopping malls first appeared in the 1950s. The Northgate Mall built in Seattle, Washington, USA, and the Northland Shopping Center built near Detroit, Michigan, USA, were the first indoor malls. Constructed between 1950 and 1954, they were originally open-air shopping centers which were later enclosed.
Regional and super-regional malls are designed to service larger areas than traditional shopping centers. They are often part of larger superstructures which include residential and commercial office space. They serve as the primary shopping area for the region in which they are located.
Outlet malls are shopping centers in which goods are sold to the public directly from manufacturer stores. They also include shops selling discontinued and customer returned products at significantly lowered prices. The first outlet mall opened in Reading, Pennsylvania, USA, in 1974.
Food courts are common components of shopping malls. They feature vendors selling a variety of foods and a seating area. This area is generally an open plaza surrounded by the various vendors.
Large chain department stores are also a mainstay of many shopping malls. In the beginning, these anchor stores were financially necessary for the shopping centers to remain open. Today, they exist as a means of attracting traffic to the smaller stores found within malls. They are placed as far from one another as possible to maximize this traffic.
Shopping malls are typically owned by shopping property management firms. These firms specialize in the management and promotion of the shopping centers. Many own multiple properties and usually service one or more regional areas.
There has been some controversy surrounding modern shopping malls due to their displacement of traditional small businesses and main streets. Many modern consumers still prefer shopping centers with ample parking, entertainment, and private security over crowded downtown areas. This preference has led to the downfall of many "mom and pop" stores in local commercial centers
Top Five Largest Shopping Mall of the World
South China Mall
South China Mall is the largest mall in the world located in Dongguan, China. It contains around 1500 stores and is spread in more than 6 million square feet. Mall was opened in 2005 and since then it is facing the problem of not being occupied by enough sellers. The reason behind the mall being vacant is due to its suburban location that makes it difficult to approach. In 2009, South China Mall has been renamed to New South China Mall.
Golden Resources Mall
Golden Resource Mall is the second largest shopping mall of the world located in Beijing, China. Mall is also known as “Great Mall of China” and is spread across 7.3 million square feet and was the largest mall of the world till 2005. Mall receives more than 50,000 visitors everyday and the decrease in the number of shoppers is due to costly items of the mall that is not fit for most of the ordinary people.
SM City North EDSA
SM mall is one of the largest mall malls of the world located in Philippines. It is spread across 460,000 square meters of area and was opened in 1985 for public. Mall receives more than 4 million visitors during weekend and has a capacity of up to 6.5 million.
CentralWorld Mall
Central world mall is the largest shopping mall in Southeast Asia and contains office towers as well as hotel. It is spread across 500000 square meters. Earlier the mall was known as World Trade Center in 1990 and was taken over by Central Group in 2002. It is ideal for middle class as well as upper class customers in Bangkok, Thailand.
SM Mall of Asia
SM mall is located in Philippines and spread across 410 thousand square meters. Mall has the capacity of 4.2 million and has four buildings connected to each other. The parking space of the mall is divided into six stories and has a tram traveling around the mall with 20 people holding capacity
Retailing
What is Retailing?
The sale of goods or commodities in small quantities directly to consumers
Retailing is a distribution channel function where one organization buys products from supplying firms or manufactures the product themselves, and then sells these directly to consumers. A retailer is a reseller (i.e., obtains product from one party in order to sell to another) from which a consumer purchases products
Retail Pricing
The pricing technique used by most retailers is cost-plus pricing. This involves adding a markup amount (or percentage) to the retailer's cost. Another common technique is suggested retail pricing. This simply involves charging the amount suggested by the manufacturer and usually printed on the product by the manufacturer.
Retail Pricing Strategies
There are many outside influences that affect profitability and a retailer's bottom line. Setting the right price is a crucial step toward achieving that profit. Retailers are in business to make a profit, but figuring out what and how to price products may not come easily. Before we can determine which retail pricing strategy to use in setting the right price, we must know the costs associated with the products. Two key elements in factoring product cost is the cost of goods and the amount of operating expense.
The cost of goods includes the amount paid for the product, plus any shipping or handling expenses. The cost of operating the business, or operating expense, includes overhead, payroll, marketing and office supplies.
Regardless of the pricing strategy used, the retail price of the products should more than cover the cost of obtaining the goods plus the expenses related to operating the business. A retailer simply cannot succeed in business if they continue to sell their products below cost.
Now that we understand what our products actually cost, we should look at how our competition is pricing their products. Retailers will also need to examine their channels of distribution and research what the market is willing to pay.
Many pricing strategies exist and each is used based on particular a set of circumstances. Here are a few of the more popular pricing strategies to consider:
Mark-up Pricing
Markup on cost can be calculated by adding a pre-set (often industry standard) profit margin, or percentage, to the cost of the merchandise.
Markup on retail is determined by dividing the dollar markup by retail.
Be sure to keep the initial mark-up high enough to cover price reductions, discounts, shrinkage and other anticipated expenses, and still achieve a satisfactory profit. Retailers with a varied product selection can use different mark-ups on each product line.
Vendor Pricing
Manufacturer suggested retail price (MSRP) is a common strategy used by the smaller retail shops to avoid price wars and still maintain a decent profit. Some suppliers have minimum advertised prices but also suggest the retail pricing. By pricing products with the suggested retail prices supplied by the vendor, the retailer is out of the decision-making process. Another issue with using pre-set prices is that it doesn't allow a retailer to have an advantage over the competition.
Competitive Pricing
Consumers have many choices and are generally willing to shop around to receive the best price. Retailers considering a competitive pricing strategy will need to provide outstanding customer service to stand above the competition.
Pricing below competition simply means pricing products lower than the competitor's price. This strategy works well if the retailer negotiates the best prices, reduces costs and develops a marketing strategy to focus on price specials.
Prestige pricing, or pricing above competition, may be considered when location, exclusivity or unique customer service can justify higher prices. Retailers that stock high-quality merchandise that isn't available at any other location may be quite successful in pricing their products above competitors.
Psychological Pricing
Psychological pricing is used when prices are set to a certain level where the consumer perceives the price to be fair. The most common method is odd-pricing using figures that end in 5, 7 or 9. It is believed that consumers tend to round down a price of $9.95 to $9, rather than $10.
Other Pricing Strategies
Keystone pricing is not used as often as it once was. Doubling the cost paid for merchandise was once the rule of pricing products, but very few products these days allow a retailer to keystone the product price.
Multiple pricing is a method which involves selling more than one product for one price, such as three items for $1.00. Not only is this strategy great for markdowns or sales events, but retailers have noticed consumers tend to purchase in larger amounts where the multiple pricing strategy is used.
Discount pricing and price reductions are a natural part of retailing. Discounting can include coupons, rebates, seasonal prices and other promotional markdowns.
Merchandise priced below cost is referred to as loss leaders. Although retailers make no profit on these discounted items, the hope is consumers will purchase other products at higher margins during their visit to the store.
As you develop the best pricing model for your retail business, understand the ideal pricing strategy will depend on more than costs. It also depends on good pricing practices.
It is difficult to say which component of pricing is more important than another. Just keep in mind, the right product price is the price the consumer is willing to pay, while providing a profit to the retailer.
Important of Retailing
As the final link between consumers and manufacturers, retailers are a vital part of the business world. Retailers add value to products by making it easier for manufactures to sell and consumers to buy. It would be very costly and time consuming for you to locate, contact and make a purchase from the manufacturer every time you wanted to buy a candy bar, a sweater or a bar of soap. Similarly, it would be very costly for the manufactures of these products to locate and distribute them to consumers individually. By bringing multitudes of manufacturers and consumers together at a single point, retailers make it possible for products to be sold, and, consequently, business to be done.
Retailers also provide services that make it less risky and more fun to buy products. They have salespeople on hand who can answer questions, may offer credit, and display products so that consumers know what is available and can see it before buying. In addition, retailers may provide many extra services, from personal shopping to gift wrapping to delivery, that increase the value of products and services to consumers.
The Future of Retailing
Advances in technology, like the Internet, have helped make retailing an even more challenging and exciting field in recent years. The nature of the business and the way retailing is done are currently undergoing fundamental changes. However, retailing in some form will always be necessary. For example, even though the Internet is beginning to make it possible for manufacturers to sell directly to consumers, the very vastness of cyberspace will still make it very difficult for a consumer to purchase every product he or she uses directly. On-line retailers, like Amazon.com, bring together assortments of products for consumers to buy in the same way that bricks-and-mortar retailers do.
In addition, traditional retailers with physical stores will continue to be necessary. Of course, retailers who offer personal services, like hair styling, will need to have face-to-face interaction with the consumer. But even with products, consumers often want to see, touch and try them before they buy. Or, they may want products immediately and won't want to wait for them to be shipped. Also, and perhaps most importantly, in many cases the experience of visiting the retailer is an important part of the purchase. Everything that the retailer can do to make the shopping experience pleasurable and fun can help ensure that customers come back.
Kinds of retailers
A large shop is called a superstore or megastore. A shop with many different kinds of articles is called a department store.
Many shops are part of a chain: a number of similar shops with the same name selling the same products in different locations. The shops may be owned by one company, or there may be a franchising company that has franchising agreements with the shop owners
Some shops sell second-hand goods. Often the public can also sell goods to such shops. In other cases, especially in the case of a nonprofit shop, the public donates goods to the shop to be sold. In give-away shops goods can be taken for free.
The term retailer is also applied where a service provider services the needs of a large number of individuals, such as with telephone or electric power.
The sale of goods or commodities in small quantities directly to consumers
Retailing is a distribution channel function where one organization buys products from supplying firms or manufactures the product themselves, and then sells these directly to consumers. A retailer is a reseller (i.e., obtains product from one party in order to sell to another) from which a consumer purchases products
Retail Pricing
The pricing technique used by most retailers is cost-plus pricing. This involves adding a markup amount (or percentage) to the retailer's cost. Another common technique is suggested retail pricing. This simply involves charging the amount suggested by the manufacturer and usually printed on the product by the manufacturer.
Retail Pricing Strategies
There are many outside influences that affect profitability and a retailer's bottom line. Setting the right price is a crucial step toward achieving that profit. Retailers are in business to make a profit, but figuring out what and how to price products may not come easily. Before we can determine which retail pricing strategy to use in setting the right price, we must know the costs associated with the products. Two key elements in factoring product cost is the cost of goods and the amount of operating expense.
The cost of goods includes the amount paid for the product, plus any shipping or handling expenses. The cost of operating the business, or operating expense, includes overhead, payroll, marketing and office supplies.
Regardless of the pricing strategy used, the retail price of the products should more than cover the cost of obtaining the goods plus the expenses related to operating the business. A retailer simply cannot succeed in business if they continue to sell their products below cost.
Now that we understand what our products actually cost, we should look at how our competition is pricing their products. Retailers will also need to examine their channels of distribution and research what the market is willing to pay.
Many pricing strategies exist and each is used based on particular a set of circumstances. Here are a few of the more popular pricing strategies to consider:
Mark-up Pricing
Markup on cost can be calculated by adding a pre-set (often industry standard) profit margin, or percentage, to the cost of the merchandise.
Markup on retail is determined by dividing the dollar markup by retail.
Be sure to keep the initial mark-up high enough to cover price reductions, discounts, shrinkage and other anticipated expenses, and still achieve a satisfactory profit. Retailers with a varied product selection can use different mark-ups on each product line.
Vendor Pricing
Manufacturer suggested retail price (MSRP) is a common strategy used by the smaller retail shops to avoid price wars and still maintain a decent profit. Some suppliers have minimum advertised prices but also suggest the retail pricing. By pricing products with the suggested retail prices supplied by the vendor, the retailer is out of the decision-making process. Another issue with using pre-set prices is that it doesn't allow a retailer to have an advantage over the competition.
Competitive Pricing
Consumers have many choices and are generally willing to shop around to receive the best price. Retailers considering a competitive pricing strategy will need to provide outstanding customer service to stand above the competition.
Pricing below competition simply means pricing products lower than the competitor's price. This strategy works well if the retailer negotiates the best prices, reduces costs and develops a marketing strategy to focus on price specials.
Prestige pricing, or pricing above competition, may be considered when location, exclusivity or unique customer service can justify higher prices. Retailers that stock high-quality merchandise that isn't available at any other location may be quite successful in pricing their products above competitors.
Psychological Pricing
Psychological pricing is used when prices are set to a certain level where the consumer perceives the price to be fair. The most common method is odd-pricing using figures that end in 5, 7 or 9. It is believed that consumers tend to round down a price of $9.95 to $9, rather than $10.
Other Pricing Strategies
Keystone pricing is not used as often as it once was. Doubling the cost paid for merchandise was once the rule of pricing products, but very few products these days allow a retailer to keystone the product price.
Multiple pricing is a method which involves selling more than one product for one price, such as three items for $1.00. Not only is this strategy great for markdowns or sales events, but retailers have noticed consumers tend to purchase in larger amounts where the multiple pricing strategy is used.
Discount pricing and price reductions are a natural part of retailing. Discounting can include coupons, rebates, seasonal prices and other promotional markdowns.
Merchandise priced below cost is referred to as loss leaders. Although retailers make no profit on these discounted items, the hope is consumers will purchase other products at higher margins during their visit to the store.
As you develop the best pricing model for your retail business, understand the ideal pricing strategy will depend on more than costs. It also depends on good pricing practices.
It is difficult to say which component of pricing is more important than another. Just keep in mind, the right product price is the price the consumer is willing to pay, while providing a profit to the retailer.
Important of Retailing
As the final link between consumers and manufacturers, retailers are a vital part of the business world. Retailers add value to products by making it easier for manufactures to sell and consumers to buy. It would be very costly and time consuming for you to locate, contact and make a purchase from the manufacturer every time you wanted to buy a candy bar, a sweater or a bar of soap. Similarly, it would be very costly for the manufactures of these products to locate and distribute them to consumers individually. By bringing multitudes of manufacturers and consumers together at a single point, retailers make it possible for products to be sold, and, consequently, business to be done.
Retailers also provide services that make it less risky and more fun to buy products. They have salespeople on hand who can answer questions, may offer credit, and display products so that consumers know what is available and can see it before buying. In addition, retailers may provide many extra services, from personal shopping to gift wrapping to delivery, that increase the value of products and services to consumers.
The Future of Retailing
Advances in technology, like the Internet, have helped make retailing an even more challenging and exciting field in recent years. The nature of the business and the way retailing is done are currently undergoing fundamental changes. However, retailing in some form will always be necessary. For example, even though the Internet is beginning to make it possible for manufacturers to sell directly to consumers, the very vastness of cyberspace will still make it very difficult for a consumer to purchase every product he or she uses directly. On-line retailers, like Amazon.com, bring together assortments of products for consumers to buy in the same way that bricks-and-mortar retailers do.
In addition, traditional retailers with physical stores will continue to be necessary. Of course, retailers who offer personal services, like hair styling, will need to have face-to-face interaction with the consumer. But even with products, consumers often want to see, touch and try them before they buy. Or, they may want products immediately and won't want to wait for them to be shipped. Also, and perhaps most importantly, in many cases the experience of visiting the retailer is an important part of the purchase. Everything that the retailer can do to make the shopping experience pleasurable and fun can help ensure that customers come back.
Kinds of retailers
A large shop is called a superstore or megastore. A shop with many different kinds of articles is called a department store.
Many shops are part of a chain: a number of similar shops with the same name selling the same products in different locations. The shops may be owned by one company, or there may be a franchising company that has franchising agreements with the shop owners
Some shops sell second-hand goods. Often the public can also sell goods to such shops. In other cases, especially in the case of a nonprofit shop, the public donates goods to the shop to be sold. In give-away shops goods can be taken for free.
The term retailer is also applied where a service provider services the needs of a large number of individuals, such as with telephone or electric power.
Distribution Channel
Definitions
•A distribution channel is the method a company uses to get their products into the marketplace for consumer use. The traditional channel goes from supplier, manufacturer, distributor, wholesaler and retailer.
•Distribution Channel (also known as Channel of distribution or marketing channel) is Path or 'pipeline' through which goods and services flow in one direction (from vendor to the consumer), and the payments generated by them flow in the opposite direction (from consumer to the vendor). A distribution channel can be as short as being direct from the vendor to the consumer or may include several inter-connected (usually independent but mutually dependent) intermediaries such as wholesalers, distributors, agents, retailers. Each intermediary receives the item at one pricing point and moves it to the next higher pricing point until it reaches the final buyer.
Two types of distribution channels exist, indirect and direct, namely:
Indirect Channel
•The indirect channel is used by companies who do not sell their goods directly to consumers. Suppliers and manufacturers typically use indirect channels because they exist early in the supply chain Depending on the industry and product, direct distribution channels have become more prevalent due to the Internet.
Direct Channel
•A direct distribution channel is where a company sells their products direct to consumers. While direct channels were not popular many years ago, the Internet has greatly increased the use of direct channels. Additionally, companies needing to cut costs may use direct channels to avoid middlemen markups on their products.
Indirect Channel Methods
•Distributors, wholesalers and retailers are the primary indirect channels a company may use when selling their products in the marketplace. Companies choose the indirect channel best suited for their product to obtain the best market share; it also allows them to focus on producing their goods.
Direct Channel Methods
•Selling agents and Internet sales are two types of direct distribution channels. Selling agents work for the company and market their products directly to consumers through mail order, storefronts or other means. The Internet is an easy distribution channel because of the global availability to consumers
For instant:
Paper is available from a variety of paper suppliers, however, not all suppliers provide paper to the end user. The following diagram illustrates how the distribution channel works for purchasing paper stocks.
The Paper Mill sells larger volume orders direct to the Paper Retailer, Distributor, or Printer who then resell the product. The Paper Distributor handles full and partial carton orders, which are considered smaller orders, to fit the needs of the Paper Retailer or Printer when the End User places an order for paper that is not considered to be at a volume level that a Paper Mill will sell directly to the Printer or Retailer.
The newest entry to the paper distribution channel is the Paper Portal which enables Printers, Retailers, and Paper Mills to source paper needs to a wider network of potential buyers and sellers via the Web, regardless of whether they are Paper Retailers, Paper Distributors, Printers, or End Users. Buyers and sellers of paper access the portal and use it as a marketplace to locate paper, to negotiate pricing, and to complete the transaction of either buying or selling.
Distribution - channel strategy
The following table describes the factors that influence the choice of distribution channel by a business:
Influence Comments
Market factors An important market factor is "buyer behaviour"; how do buyer's want to purchase the product? Do they prefer to buy from retailers, locally, via mail order or perhaps over the Internet? Another important factor is buyer needs for product information, installation and servicing. Which channels are best served to provide the customer with the information they need before buying? Does the product need specific technical assistance either to install or service a product? Intermediaries are often best placed to provide servicing rather than the original producer - for example in the case of motor cars.
The willingness of channel intermediaries to market product is also a factor. Retailers in particular invest heavily in properties, shop fitting etc. They may decide not to support a particular product if it requires too much investment (e.g. training, display equipment, warehousing).
Another important factor is intermediary cost. Intermediaries typically charge a"mark-up" or "commission" for participating in the channel. This might be deemed unacceptably high for the ultimate producer business.
Producer factors A key question is whether the producer has the resources to perform the functions of the channel? For example a producer may not have the resources to recruit, train and equip a sales team. If so, the only option may be to use agents and/or other distributors.
Producers may also feel that they do not possess the customer-based skills to distribute their products. Many channel intermediaries focus heavily on the customer interface as a way of creating competitive advantage and cementing the relationship with their supplying producers.
Another factor is the extent to which producers want to maintain control over how, to whom and at what price a product is sold. If a manufacturer sells via a retailer, they effective lose control over the final consumer price, since the retailer sets the price and any relevant discounts or promotional offers. Similarly, there is no guarantee for a producer that their product/(s) are actually been stocked by the retailer. Direct distribution gives a producer much more control over these issues.
Product factors Large complex products are often supplied direct to customers (e.g. complex medical equipment sold to hospitals). By contrast perishable products (such as frozen food, meat, bread) require relatively short distribution channels - ideally suited to using intermediaries such as retailers.
Distribution Intensity
There are three broad options - intensive, selective and exclusive distribution:
Intensive distribution aims to provide saturation coverage of the market by using all available outlets. For many products, total sales are directly linked to the number of outlets used (e.g. cigarettes, beer). Intensive distribution is usually required where customers have a range of acceptable brands to chose from. In other words, if one brand is not available, a customer will simply choose another.
Selective distribution involves a producer using a limited number of outlets in a geographical area to sell products. An advantage of this approach is that the producer can choose the most appropriate or best-performing outlets and focus effort (e.g. training) on them. Selective distribution works best when consumers are prepared to "shop around" - in other words - they have a preference for a particular brand or price and will search out the outlets that supply.
Exclusive distribution is an extreme form of selective distribution in which only one wholesaler, retailer or distributor is used in a specific geographical area.
Distribution channels are the pathways that companies use to sell their products to end-users. B2B companies can sell through a single channel or through multiple channels that may include
Direct/sales team: One or more sales teams that you employ directly. You may use multiple teams that specialize in different products or customer segments.
Direct/internet: Selling through your own e-commerce website.
Direct/catalog: Selling through your own catalog.
Wholesaler/distributor: A company that buys products in bulk from many manufacturers and then re-sells smaller volumes to resellers or retailers.
Value-added reseller (VAR): A VAR works with end-users to provide custom solutions that may include multiple products and services from different manufacturers.
Consultant: A consultant develops relationships with companies and provides either specific or very broad services; they may recommend a manufacturer’s product or simply purchase it to deliver a solution for the customer.
Dealer: A company or person who buys inventory from either a manufacturer or distributor, then re-sells to an end-user.
Retail: Retailers sell directly to end-users via a physical store, website or catalog.
Sales agent/manufacturer’s rep: You can outsource your sales function to a company that sells different manufacturers’ products to a group of similar customers in a specific territory.
Distribution is one of the classic “4 Ps” of marketing (product, promotion, price, placement a.k.a. distribution). It’s a key element in your entire marketing strategy — it helps you expand your reach and grow revenue.
If they need personalized service, you can utilize a local dealer network or reseller program to provide that service.
If your users prefer to buy online, you can create an e-commerce website and fulfillment system and sell direct; you can also sell to another online retailer or a distributor to offer your product on their own sites.
You can build your own specialized sales team to prospect and close deals directly with customers.
Wholesalers, resellers, retailers, consultants and agents already have resources and relationships to quickly bring your product to market. If you sell through these groups instead of (or in addition to) selling direct, treat the entire channel as a group of customers – and they are, since they’re buying your product and re-selling it. Understand their needs and deliver strong marketing programs; you’ll maximize everyone’s revenue in the process.
Key concepts & steps
Before you begin
You can evaluate a new distribution channel or improve your channel marketing / management at any time. It’s especially important to think about distribution when you’re going after a new customer segment, releasing a new product, or looking for ways to aggressively grow your business.
Evaluate how your end-users need to buy
Your distribution strategy should deliver the information and service your prospects need. For each customer segment, consider
How and where they prefer to buy
Whether they need personalized education and training
Whether they need additional products or services to be used alongside yours
Whether your product needs to be customized or installed
Whether your product needs to be serviced
Match end-user needs to a distribution strategy
If your end-users need a great deal of information and service, your company can deliver it directly through a sales force. You can also build a channel of qualified resellers, consultants or resellers. The size of the market and your price will probably dictate which scenario is best.
If the buying process is fairly straightforward, you can sell direct via a website/catalog or perhaps through a wholesale/retail structure. You may also use an inbound telemarketing group or a field sales team.
If you need complete control over your product’s delivery and service, adding a channel probably isn’t right for you.
Identify natural partners
If you want to grow beyond the direct model, look for companies that have relationships with your end-users. If consultants, wholesalers or retailers already reach your customer base, they’re natural partners.
Build your channel
If you’re setting up a distribution channel with one or more partners, treat it as a sales process:
Approach the potential channel partner and “sell” the value of the partnership
Establish goals, service requirements and reporting requirements
Deliver inventory (if necessary) and sales/support materials
Train the partner
Run promotions and programs to support the partner and help them increase sales
Minimize pricing conflicts
If you use multiple channels, carefully map out the price for each step in your channel and include a fair profit for each type of partner. Then compare the price that the end-user will pay; if a customer can buy from one channel at a lower price than another, your partners will rightfully have concerns. Pricing conflict is common but it can jeopardize your entire strategy, so do your best to map out the price at each step and develop the best solution possible.
Drive revenue through the channel
Service your channel partners as you’d service your best customers and work with them to drive revenue. For example, provide them with marketing funds or materials to promote your products; run campaigns to generate leads and forward them to your partners
•A distribution channel is the method a company uses to get their products into the marketplace for consumer use. The traditional channel goes from supplier, manufacturer, distributor, wholesaler and retailer.
•Distribution Channel (also known as Channel of distribution or marketing channel) is Path or 'pipeline' through which goods and services flow in one direction (from vendor to the consumer), and the payments generated by them flow in the opposite direction (from consumer to the vendor). A distribution channel can be as short as being direct from the vendor to the consumer or may include several inter-connected (usually independent but mutually dependent) intermediaries such as wholesalers, distributors, agents, retailers. Each intermediary receives the item at one pricing point and moves it to the next higher pricing point until it reaches the final buyer.
Two types of distribution channels exist, indirect and direct, namely:
Indirect Channel
•The indirect channel is used by companies who do not sell their goods directly to consumers. Suppliers and manufacturers typically use indirect channels because they exist early in the supply chain Depending on the industry and product, direct distribution channels have become more prevalent due to the Internet.
Direct Channel
•A direct distribution channel is where a company sells their products direct to consumers. While direct channels were not popular many years ago, the Internet has greatly increased the use of direct channels. Additionally, companies needing to cut costs may use direct channels to avoid middlemen markups on their products.
Indirect Channel Methods
•Distributors, wholesalers and retailers are the primary indirect channels a company may use when selling their products in the marketplace. Companies choose the indirect channel best suited for their product to obtain the best market share; it also allows them to focus on producing their goods.
Direct Channel Methods
•Selling agents and Internet sales are two types of direct distribution channels. Selling agents work for the company and market their products directly to consumers through mail order, storefronts or other means. The Internet is an easy distribution channel because of the global availability to consumers
For instant:
Paper is available from a variety of paper suppliers, however, not all suppliers provide paper to the end user. The following diagram illustrates how the distribution channel works for purchasing paper stocks.
The Paper Mill sells larger volume orders direct to the Paper Retailer, Distributor, or Printer who then resell the product. The Paper Distributor handles full and partial carton orders, which are considered smaller orders, to fit the needs of the Paper Retailer or Printer when the End User places an order for paper that is not considered to be at a volume level that a Paper Mill will sell directly to the Printer or Retailer.
The newest entry to the paper distribution channel is the Paper Portal which enables Printers, Retailers, and Paper Mills to source paper needs to a wider network of potential buyers and sellers via the Web, regardless of whether they are Paper Retailers, Paper Distributors, Printers, or End Users. Buyers and sellers of paper access the portal and use it as a marketplace to locate paper, to negotiate pricing, and to complete the transaction of either buying or selling.
Distribution - channel strategy
The following table describes the factors that influence the choice of distribution channel by a business:
Influence Comments
Market factors An important market factor is "buyer behaviour"; how do buyer's want to purchase the product? Do they prefer to buy from retailers, locally, via mail order or perhaps over the Internet? Another important factor is buyer needs for product information, installation and servicing. Which channels are best served to provide the customer with the information they need before buying? Does the product need specific technical assistance either to install or service a product? Intermediaries are often best placed to provide servicing rather than the original producer - for example in the case of motor cars.
The willingness of channel intermediaries to market product is also a factor. Retailers in particular invest heavily in properties, shop fitting etc. They may decide not to support a particular product if it requires too much investment (e.g. training, display equipment, warehousing).
Another important factor is intermediary cost. Intermediaries typically charge a"mark-up" or "commission" for participating in the channel. This might be deemed unacceptably high for the ultimate producer business.
Producer factors A key question is whether the producer has the resources to perform the functions of the channel? For example a producer may not have the resources to recruit, train and equip a sales team. If so, the only option may be to use agents and/or other distributors.
Producers may also feel that they do not possess the customer-based skills to distribute their products. Many channel intermediaries focus heavily on the customer interface as a way of creating competitive advantage and cementing the relationship with their supplying producers.
Another factor is the extent to which producers want to maintain control over how, to whom and at what price a product is sold. If a manufacturer sells via a retailer, they effective lose control over the final consumer price, since the retailer sets the price and any relevant discounts or promotional offers. Similarly, there is no guarantee for a producer that their product/(s) are actually been stocked by the retailer. Direct distribution gives a producer much more control over these issues.
Product factors Large complex products are often supplied direct to customers (e.g. complex medical equipment sold to hospitals). By contrast perishable products (such as frozen food, meat, bread) require relatively short distribution channels - ideally suited to using intermediaries such as retailers.
Distribution Intensity
There are three broad options - intensive, selective and exclusive distribution:
Intensive distribution aims to provide saturation coverage of the market by using all available outlets. For many products, total sales are directly linked to the number of outlets used (e.g. cigarettes, beer). Intensive distribution is usually required where customers have a range of acceptable brands to chose from. In other words, if one brand is not available, a customer will simply choose another.
Selective distribution involves a producer using a limited number of outlets in a geographical area to sell products. An advantage of this approach is that the producer can choose the most appropriate or best-performing outlets and focus effort (e.g. training) on them. Selective distribution works best when consumers are prepared to "shop around" - in other words - they have a preference for a particular brand or price and will search out the outlets that supply.
Exclusive distribution is an extreme form of selective distribution in which only one wholesaler, retailer or distributor is used in a specific geographical area.
Distribution channels are the pathways that companies use to sell their products to end-users. B2B companies can sell through a single channel or through multiple channels that may include
Direct/sales team: One or more sales teams that you employ directly. You may use multiple teams that specialize in different products or customer segments.
Direct/internet: Selling through your own e-commerce website.
Direct/catalog: Selling through your own catalog.
Wholesaler/distributor: A company that buys products in bulk from many manufacturers and then re-sells smaller volumes to resellers or retailers.
Value-added reseller (VAR): A VAR works with end-users to provide custom solutions that may include multiple products and services from different manufacturers.
Consultant: A consultant develops relationships with companies and provides either specific or very broad services; they may recommend a manufacturer’s product or simply purchase it to deliver a solution for the customer.
Dealer: A company or person who buys inventory from either a manufacturer or distributor, then re-sells to an end-user.
Retail: Retailers sell directly to end-users via a physical store, website or catalog.
Sales agent/manufacturer’s rep: You can outsource your sales function to a company that sells different manufacturers’ products to a group of similar customers in a specific territory.
Distribution is one of the classic “4 Ps” of marketing (product, promotion, price, placement a.k.a. distribution). It’s a key element in your entire marketing strategy — it helps you expand your reach and grow revenue.
If they need personalized service, you can utilize a local dealer network or reseller program to provide that service.
If your users prefer to buy online, you can create an e-commerce website and fulfillment system and sell direct; you can also sell to another online retailer or a distributor to offer your product on their own sites.
You can build your own specialized sales team to prospect and close deals directly with customers.
Wholesalers, resellers, retailers, consultants and agents already have resources and relationships to quickly bring your product to market. If you sell through these groups instead of (or in addition to) selling direct, treat the entire channel as a group of customers – and they are, since they’re buying your product and re-selling it. Understand their needs and deliver strong marketing programs; you’ll maximize everyone’s revenue in the process.
Key concepts & steps
Before you begin
You can evaluate a new distribution channel or improve your channel marketing / management at any time. It’s especially important to think about distribution when you’re going after a new customer segment, releasing a new product, or looking for ways to aggressively grow your business.
Evaluate how your end-users need to buy
Your distribution strategy should deliver the information and service your prospects need. For each customer segment, consider
How and where they prefer to buy
Whether they need personalized education and training
Whether they need additional products or services to be used alongside yours
Whether your product needs to be customized or installed
Whether your product needs to be serviced
Match end-user needs to a distribution strategy
If your end-users need a great deal of information and service, your company can deliver it directly through a sales force. You can also build a channel of qualified resellers, consultants or resellers. The size of the market and your price will probably dictate which scenario is best.
If the buying process is fairly straightforward, you can sell direct via a website/catalog or perhaps through a wholesale/retail structure. You may also use an inbound telemarketing group or a field sales team.
If you need complete control over your product’s delivery and service, adding a channel probably isn’t right for you.
Identify natural partners
If you want to grow beyond the direct model, look for companies that have relationships with your end-users. If consultants, wholesalers or retailers already reach your customer base, they’re natural partners.
Build your channel
If you’re setting up a distribution channel with one or more partners, treat it as a sales process:
Approach the potential channel partner and “sell” the value of the partnership
Establish goals, service requirements and reporting requirements
Deliver inventory (if necessary) and sales/support materials
Train the partner
Run promotions and programs to support the partner and help them increase sales
Minimize pricing conflicts
If you use multiple channels, carefully map out the price for each step in your channel and include a fair profit for each type of partner. Then compare the price that the end-user will pay; if a customer can buy from one channel at a lower price than another, your partners will rightfully have concerns. Pricing conflict is common but it can jeopardize your entire strategy, so do your best to map out the price at each step and develop the best solution possible.
Drive revenue through the channel
Service your channel partners as you’d service your best customers and work with them to drive revenue. For example, provide them with marketing funds or materials to promote your products; run campaigns to generate leads and forward them to your partners
Cause Marketing
What is Cause Marketing?
•“A commercial activity by which businesses and charities or causes form a partnership with each other to market an image, product or service for mutual benefit.” Business in the Community, the leading British corporate social responsibility organization
•“A strategic positioning and marketing tool that links a company or brand to a relevant social cause or issue, for mutual benefit.”
Cause Marketing is Not:
•“Social marketing,” the use by nonprofit and public organizations of marketing techniques to impact societal behavior (e.g. stop smoking, don’t pollute, don’t use drugs, don’t drive drunk.)
Nor is it:
•“Corporate Philanthropy,” the giving (without expectation of direct corporate gain) of charitable financial and in-kind grants by companies or their corporate foundations.
History of Cause Marketing
One of the first "cause marketing" campaigns occurred in 1976 through a partnership between Marriott Corporation and the March of Dimes. Marriott’s objective was to generate highly cost-effective public relations and media coverage for the opening of their 200-acre family entertainment center, Marriott’s Great America in Santa Clara, CA. The March of Dimes' objective was to greatly increase fundraising while motivating the collection of pledges by the program’s deadline. The promotion was conducted simultaneously in 67 cities throughout the Western United States. It exceeded all goals to become the most successful promotion in the history of Chapters West of the March of Dimes, while providing hundreds of thousands of dollars in free publicity and stimulated the record-breaking opening of the Marriott entertainment complex.
The program was conceived and directed by Bruce Burtch, who went on to become a nationally-recognized catalyst for cause marketing programs. Indeed, Bruce is credited with coining the phrase, "Do Well by Doing Good", which was his answer to the CEO of a major corporate foundation when asked what his goal in life was...in 1977.
Another of the first examples of a "cause-related marketing" campaign was initiated in 1979 by Rosica, Mulhern & Associates for Famous Amos cookies . In this campaign, Wally Amos become the National Spokesperson for the Literacy Volunteers of America. According to the organization, Wally has alerted more people to the illiteracy problem than any other person in history. This strategic cause-marketing tie-in helped to tell the Famous Amos Cookie story while maintaining visibility and is responsible for many new and expanded literacy programs. This case study is now used in university classrooms nationwide as an example of successful "cause-related marketing".
The creation of the term "cause-related marketing" is attributed to American Express, and it was coined to describe efforts to support locally based charitable causes in a way that also promoted business. The term was then used to describe the marketing campaign led by American Express in 1983 for the Statue of Liberty Restoration project. A penny for each use of the American Express card, and a dollar for each new card issued was given to the Statue of Liberty renovation program. Over a four-month period, $2 million was raised for Lady Liberty, transaction activity jumped 28 percent and the concept that doing good was good for business, was born. The terms "cause-related marketing" and "cause marketing" continued to grow in usage since that time. In more recent years the term has come to describe a wider variety of marketing initiatives based on the cooperative efforts of business and charitable causes.
There are six business benefits to cause marketing:
1.Cause-related marketing can directly enhance sponsor sales and brand.
2.Cause-related marketing is respected and accepted business practice.
3.Cause-related marketing can heighten customer loyalty.
4.Cause-related marketing can boost a company's public image and helps distinguish it from the competition. I would add that it can also give corporate PR officers a new story to tell.
5.Cause-related marketing can help build employee morale and loyalty.
6.Cause-related marketing can improve employee productivity, skills and teamwork
Types of Cause marketing
Cause marketing can take on many forms, including:
•Product, service, or transaction specific
•Promotion of a common message
•Product licensing, endorsements, and certifications
•Local partnerships
•Employee service programs
CAUSE MARKETING TOOLS
There are 7P’s Cause Marketing Practises
Cause-marketing 7 P’s follow into three major categories: products, promotions, and programs
Products Cause-marketing products are sales driven and transactional based. This form of cause marketing is linked to sales of product and generates revenue and awareness for a non-profit and its cause. The products can be directly tied to a non-profit’s brand through a percentage of sales going to a cause or by facilitating giving at point of sale.
•Product Purchases: Doing Good by Buying Goods
•Purchase Plus: Facilitating Giving
•Products License: Using Non-profit logos, Brand Identities and Assets
Promotions Cause marketing issue promotions involve businesses supporting a non-profit cause by using their brand, marketing, and promotional resources to actively engage in raising awareness of a non-profit cause.
•Promotions: Co-branding through issue promotion and awareness
•Promotional Events: Co-branding for active engagement and awareness
Programs This area of cause-marketing practices is one of the deepest forms of support. A specific program or cause message aimed at having an impact on or changing behavior and attitude is the focus of this cause-marketing support.
•Program: Co-branding to create awareness and change attitudes through program collaborations
•Public/Social Marketing: Encourage attitude and behavioural change
•“A commercial activity by which businesses and charities or causes form a partnership with each other to market an image, product or service for mutual benefit.” Business in the Community, the leading British corporate social responsibility organization
•“A strategic positioning and marketing tool that links a company or brand to a relevant social cause or issue, for mutual benefit.”
Cause Marketing is Not:
•“Social marketing,” the use by nonprofit and public organizations of marketing techniques to impact societal behavior (e.g. stop smoking, don’t pollute, don’t use drugs, don’t drive drunk.)
Nor is it:
•“Corporate Philanthropy,” the giving (without expectation of direct corporate gain) of charitable financial and in-kind grants by companies or their corporate foundations.
History of Cause Marketing
One of the first "cause marketing" campaigns occurred in 1976 through a partnership between Marriott Corporation and the March of Dimes. Marriott’s objective was to generate highly cost-effective public relations and media coverage for the opening of their 200-acre family entertainment center, Marriott’s Great America in Santa Clara, CA. The March of Dimes' objective was to greatly increase fundraising while motivating the collection of pledges by the program’s deadline. The promotion was conducted simultaneously in 67 cities throughout the Western United States. It exceeded all goals to become the most successful promotion in the history of Chapters West of the March of Dimes, while providing hundreds of thousands of dollars in free publicity and stimulated the record-breaking opening of the Marriott entertainment complex.
The program was conceived and directed by Bruce Burtch, who went on to become a nationally-recognized catalyst for cause marketing programs. Indeed, Bruce is credited with coining the phrase, "Do Well by Doing Good", which was his answer to the CEO of a major corporate foundation when asked what his goal in life was...in 1977.
Another of the first examples of a "cause-related marketing" campaign was initiated in 1979 by Rosica, Mulhern & Associates for Famous Amos cookies . In this campaign, Wally Amos become the National Spokesperson for the Literacy Volunteers of America. According to the organization, Wally has alerted more people to the illiteracy problem than any other person in history. This strategic cause-marketing tie-in helped to tell the Famous Amos Cookie story while maintaining visibility and is responsible for many new and expanded literacy programs. This case study is now used in university classrooms nationwide as an example of successful "cause-related marketing".
The creation of the term "cause-related marketing" is attributed to American Express, and it was coined to describe efforts to support locally based charitable causes in a way that also promoted business. The term was then used to describe the marketing campaign led by American Express in 1983 for the Statue of Liberty Restoration project. A penny for each use of the American Express card, and a dollar for each new card issued was given to the Statue of Liberty renovation program. Over a four-month period, $2 million was raised for Lady Liberty, transaction activity jumped 28 percent and the concept that doing good was good for business, was born. The terms "cause-related marketing" and "cause marketing" continued to grow in usage since that time. In more recent years the term has come to describe a wider variety of marketing initiatives based on the cooperative efforts of business and charitable causes.
There are six business benefits to cause marketing:
1.Cause-related marketing can directly enhance sponsor sales and brand.
2.Cause-related marketing is respected and accepted business practice.
3.Cause-related marketing can heighten customer loyalty.
4.Cause-related marketing can boost a company's public image and helps distinguish it from the competition. I would add that it can also give corporate PR officers a new story to tell.
5.Cause-related marketing can help build employee morale and loyalty.
6.Cause-related marketing can improve employee productivity, skills and teamwork
Types of Cause marketing
Cause marketing can take on many forms, including:
•Product, service, or transaction specific
•Promotion of a common message
•Product licensing, endorsements, and certifications
•Local partnerships
•Employee service programs
CAUSE MARKETING TOOLS
There are 7P’s Cause Marketing Practises
Cause-marketing 7 P’s follow into three major categories: products, promotions, and programs
Products Cause-marketing products are sales driven and transactional based. This form of cause marketing is linked to sales of product and generates revenue and awareness for a non-profit and its cause. The products can be directly tied to a non-profit’s brand through a percentage of sales going to a cause or by facilitating giving at point of sale.
•Product Purchases: Doing Good by Buying Goods
•Purchase Plus: Facilitating Giving
•Products License: Using Non-profit logos, Brand Identities and Assets
Promotions Cause marketing issue promotions involve businesses supporting a non-profit cause by using their brand, marketing, and promotional resources to actively engage in raising awareness of a non-profit cause.
•Promotions: Co-branding through issue promotion and awareness
•Promotional Events: Co-branding for active engagement and awareness
Programs This area of cause-marketing practices is one of the deepest forms of support. A specific program or cause message aimed at having an impact on or changing behavior and attitude is the focus of this cause-marketing support.
•Program: Co-branding to create awareness and change attitudes through program collaborations
•Public/Social Marketing: Encourage attitude and behavioural change
Friday, September 25, 2009
Public Relations
What is Public Relations?
•Public Relations, then, can be thought of as the process that delivers your news to the people you want to reach through a broad, influential, and far-reaching news media community.
•On the other hand Public Relations is to shape and maintain the image of a company, organization or individual in the eyes of the client's various "publics." What is a "public" exactly? A public, in PR terms, is anyone who ever has or ever will form an opinion about the client.
•Public Relations is a form of communication that is primarily directed toward gaining public understanding and acceptance. It tends to deal with issues rather than specifically with products or services. Public relations uses publicity that does not necessitate payment in a wide variety of media and is often placed as news or items of public interest. Because public relations communications are placed in this manner, they offer a legitimacy that advertising does not have, since advertising is publicity that is paid for. The practice of PR is used to build rapport with the various publics a company, individual, or organization may have (i.e., employees, customers, stockholders, voters, competitors, or the general population). Publicity releases, employee-training seminars, and house organs are examples of instruments used in public relations. Financial public relations, a specialized branch of the profession, is concerned with corporate annual reports, stockholder communications, and the disclosure rules of the Securities and Exchange Commission.
Depending on the nature of the client's work, these publics could include clients, potential clients, voters, members of the local community, members of the media, students, parents of students, online fans groups, foreign citizen
Public Relations involve the cultivation of favorable relations for organizations and products with its key publics through the use of a variety of communications channels and tools. Traditionally, this meant public relations professionals would work with members of the news media to build a favorable image by publicizing the organization or product through stories in print and broadcast media. But today the role of public relations is much broader and includes:
•building awareness and a favorable image for a company or client within stories and articles found in relevant media outlets
•closely monitoring numerous media channels for public comment about a company and its products
•managing crises that threaten company or product image
•building goodwill among an organization’s target market through community, philanthropic and special programs and events
The main goal of a public relations department is to enhance a company’s reputation. Staff that work in public relations, or as it is commonly known, PR, are skilled publicists. They are able to present a company or individual to the world in the best light. The role of a public relations department can be seen as a reputation protector.
The business world of today is extremely competitive. Companies need to have an edge that makes them stand out from the crowd, something that makes them more appealing and interesting to both the public and the media. The public are the buyers of the product and the media are responsible for selling it.
Public relations provide a service for the company by helping to give the public and the media a better understanding of how the company works. Within a company, public relations can also come under the title of public information or customer relations. These departments assist customers if they have any problems with the company. They are usually the most helpful departments, as they exist to show the company at their best.
PR also helps the company to achieve its full potential. They provide feedback to the company from the public. This usually takes the form of research regarding what areas the public is most happy and unhappy with.
People often have the perception of public relations as a group of people who spin everything. Spin can mean to turn around a bad situation to the company’s advantage. It is true that part of the purpose of public relations is to show the company in a positive light no matter what. There are certain PR experts that a company can turn to for this particular skill.
The public often think of PR as a glamorous job. Public relations people seem to have been tarred with the image of constant partying and networking to find new contacts. The reality is usually long hours and hard work for anyone involved in public relations.
There are certain skills necessary to work in the world of PR. These include a very high level of communication skills, written and verbal. The PR person must also be very adept at multitasking and time management. He or she may also have some form of media background or training in order to understand how the media and advertising work. Organizational and planning skills are also important in public relations.
The PR worker must also be able to cope very well under pressure. He or she must have the ability to cope with a barrage of questions from the media and the public. If a company comes under critical attack, it is the PR department who must take control of the situation. They must effectively answer the criticism and turn it around in order to protect the company’s reputation.
A public relations worker usually has some form of relevant college qualification. Competition for jobs in PR is fierce. A talented public relations person has the opportunity to work up from a junior account executive to an account director in around five years. This is not a nine to five job; the hours are long and can be stressful. However, for successful PR workers, the pay is good and the perks may be even better
Steps in a Public Relations Campaign
Effective public relations require a knowledge, based on analysis and understanding, of all the factors that influence public attitudes toward the organization. While a specific public relations project or campaign may be undertaken proactively or reactively (to manage some sort of image crisis), the first basic step in either case involves analysis and research to identify all the relevant factors of the situation. In this first step, the organization gains an understanding of its various constituencies and the key factors that are influencing their perceptions of the organization.
In the second step, the organization establishes an overall policy with respect to the campaign. This involves defining goals and desired outcomes, as well as the constraints under which the campaign will operate. It is necessary to establish such policy guidelines in order to evaluate proposed strategies and tactics as well as the overall success of the campaign.
In step three, the organization outlines its strategies and tactics. Using its knowledge of the target audiences and its own established policies, the organization develops specific programs to achieve the desired objectives. Finally, step four involves actual communication with the targeted public. The organization then employs specific public relations techniques, such as press conferences or special events, to reach the intended audience.
In step five the organization receives feedback from its public. How have they reacted to the public relations campaign? Are there some unexpected developments? In the final step, the organization assesses the program and makes any necessary adjustments.
Public Relations for Small Businesses
Like other types of organizations, small businesses can benefit from public relations in terms of their relationships with customers, employees, investors, suppliers, or other interested members of the community. Since small business owners are the most visible representatives of their own companies, they frequently handle many of the public relations functions themselves. But experts caution small business owners against taking on this responsibility if they are unqualified, or if they are unable to give public relations the attention it deserves. In these cases, entrepreneurs may choose to hire a public relations specialist or contract with an outside agency.
In his book Public Relations for the Entrepreneur and the Growing Business, Norman R. Soderberg outlines the main qualifications for public relations professionals. An ideal candidate would be creative and enterprising, possess good communication skills and solid news judgment, have a thorough knowledge of the business, be sincere and considerate in dealing with people, and make a good impression as a representative for the company. Some of the skills required in public relations work include writing and editing, public speaking, graphic arts, public opinion polling, and advertising. The responsibilities of a public relations executive include interpreting public opinion, advising management, generating opportunities to increase public awareness and acceptance, disseminating good publicity, and evaluating the results of campaigns. In order to perform these duties effectively, the public relations professional must know what is going on in the business, which means that he or she requires access to management.
"Most companies need to seek outside help from a public relations agency at some point," Chad Kaydo wrote in Sales and Marketing Management. "Even if staff members handle most of your PR efforts, an independent firm can assist with a special project, or give occasional advice." There are a variety of reasons why a small business owner might decide to contract public relations work out to an external agency. For example, company personnel may be inexperienced in handling public relations; the company may be geographically distant from its main audiences; the company may not be able to afford to hire a full-time public relations executive with the needed skills; or the company may want the objective judgment of an outsider. A small business owner can locate reputable public relations firms through the Small Business Administration, the Public Relations Society of America, the trade press for their industry, or the recommendations of fellow business people or local news people. When choosing between several potential agencies, a small business owner should consider those that have experience in the industry, clients in similar industries, financial stability, and a compatible overall philosophy. Contracting with an outside firm can be costly—some charge their clients a monthly retainer, while others charge straight hourly rates for limited services.
While communication is the essence of public relations, an effective public relations campaign is based on action as well as words. Whether it is practiced formally or informally, public relations is an essential function for the survival of any organization. Small business owners cannot afford to neglect public relations. But lavish parties and gifts are not necessary—it is possible to vastly improve a small business's image within its community while also controlling public relations expenditures. Sponsoring a local softball team, speaking at a chamber of commerce meeting, and volunteering at a neighborhood clean-up are among the wide variety of public relations activities readily available to small businesses.
•Public Relations, then, can be thought of as the process that delivers your news to the people you want to reach through a broad, influential, and far-reaching news media community.
•On the other hand Public Relations is to shape and maintain the image of a company, organization or individual in the eyes of the client's various "publics." What is a "public" exactly? A public, in PR terms, is anyone who ever has or ever will form an opinion about the client.
•Public Relations is a form of communication that is primarily directed toward gaining public understanding and acceptance. It tends to deal with issues rather than specifically with products or services. Public relations uses publicity that does not necessitate payment in a wide variety of media and is often placed as news or items of public interest. Because public relations communications are placed in this manner, they offer a legitimacy that advertising does not have, since advertising is publicity that is paid for. The practice of PR is used to build rapport with the various publics a company, individual, or organization may have (i.e., employees, customers, stockholders, voters, competitors, or the general population). Publicity releases, employee-training seminars, and house organs are examples of instruments used in public relations. Financial public relations, a specialized branch of the profession, is concerned with corporate annual reports, stockholder communications, and the disclosure rules of the Securities and Exchange Commission.
Depending on the nature of the client's work, these publics could include clients, potential clients, voters, members of the local community, members of the media, students, parents of students, online fans groups, foreign citizen
Public Relations involve the cultivation of favorable relations for organizations and products with its key publics through the use of a variety of communications channels and tools. Traditionally, this meant public relations professionals would work with members of the news media to build a favorable image by publicizing the organization or product through stories in print and broadcast media. But today the role of public relations is much broader and includes:
•building awareness and a favorable image for a company or client within stories and articles found in relevant media outlets
•closely monitoring numerous media channels for public comment about a company and its products
•managing crises that threaten company or product image
•building goodwill among an organization’s target market through community, philanthropic and special programs and events
The main goal of a public relations department is to enhance a company’s reputation. Staff that work in public relations, or as it is commonly known, PR, are skilled publicists. They are able to present a company or individual to the world in the best light. The role of a public relations department can be seen as a reputation protector.
The business world of today is extremely competitive. Companies need to have an edge that makes them stand out from the crowd, something that makes them more appealing and interesting to both the public and the media. The public are the buyers of the product and the media are responsible for selling it.
Public relations provide a service for the company by helping to give the public and the media a better understanding of how the company works. Within a company, public relations can also come under the title of public information or customer relations. These departments assist customers if they have any problems with the company. They are usually the most helpful departments, as they exist to show the company at their best.
PR also helps the company to achieve its full potential. They provide feedback to the company from the public. This usually takes the form of research regarding what areas the public is most happy and unhappy with.
People often have the perception of public relations as a group of people who spin everything. Spin can mean to turn around a bad situation to the company’s advantage. It is true that part of the purpose of public relations is to show the company in a positive light no matter what. There are certain PR experts that a company can turn to for this particular skill.
The public often think of PR as a glamorous job. Public relations people seem to have been tarred with the image of constant partying and networking to find new contacts. The reality is usually long hours and hard work for anyone involved in public relations.
There are certain skills necessary to work in the world of PR. These include a very high level of communication skills, written and verbal. The PR person must also be very adept at multitasking and time management. He or she may also have some form of media background or training in order to understand how the media and advertising work. Organizational and planning skills are also important in public relations.
The PR worker must also be able to cope very well under pressure. He or she must have the ability to cope with a barrage of questions from the media and the public. If a company comes under critical attack, it is the PR department who must take control of the situation. They must effectively answer the criticism and turn it around in order to protect the company’s reputation.
A public relations worker usually has some form of relevant college qualification. Competition for jobs in PR is fierce. A talented public relations person has the opportunity to work up from a junior account executive to an account director in around five years. This is not a nine to five job; the hours are long and can be stressful. However, for successful PR workers, the pay is good and the perks may be even better
Steps in a Public Relations Campaign
Effective public relations require a knowledge, based on analysis and understanding, of all the factors that influence public attitudes toward the organization. While a specific public relations project or campaign may be undertaken proactively or reactively (to manage some sort of image crisis), the first basic step in either case involves analysis and research to identify all the relevant factors of the situation. In this first step, the organization gains an understanding of its various constituencies and the key factors that are influencing their perceptions of the organization.
In the second step, the organization establishes an overall policy with respect to the campaign. This involves defining goals and desired outcomes, as well as the constraints under which the campaign will operate. It is necessary to establish such policy guidelines in order to evaluate proposed strategies and tactics as well as the overall success of the campaign.
In step three, the organization outlines its strategies and tactics. Using its knowledge of the target audiences and its own established policies, the organization develops specific programs to achieve the desired objectives. Finally, step four involves actual communication with the targeted public. The organization then employs specific public relations techniques, such as press conferences or special events, to reach the intended audience.
In step five the organization receives feedback from its public. How have they reacted to the public relations campaign? Are there some unexpected developments? In the final step, the organization assesses the program and makes any necessary adjustments.
Public Relations for Small Businesses
Like other types of organizations, small businesses can benefit from public relations in terms of their relationships with customers, employees, investors, suppliers, or other interested members of the community. Since small business owners are the most visible representatives of their own companies, they frequently handle many of the public relations functions themselves. But experts caution small business owners against taking on this responsibility if they are unqualified, or if they are unable to give public relations the attention it deserves. In these cases, entrepreneurs may choose to hire a public relations specialist or contract with an outside agency.
In his book Public Relations for the Entrepreneur and the Growing Business, Norman R. Soderberg outlines the main qualifications for public relations professionals. An ideal candidate would be creative and enterprising, possess good communication skills and solid news judgment, have a thorough knowledge of the business, be sincere and considerate in dealing with people, and make a good impression as a representative for the company. Some of the skills required in public relations work include writing and editing, public speaking, graphic arts, public opinion polling, and advertising. The responsibilities of a public relations executive include interpreting public opinion, advising management, generating opportunities to increase public awareness and acceptance, disseminating good publicity, and evaluating the results of campaigns. In order to perform these duties effectively, the public relations professional must know what is going on in the business, which means that he or she requires access to management.
"Most companies need to seek outside help from a public relations agency at some point," Chad Kaydo wrote in Sales and Marketing Management. "Even if staff members handle most of your PR efforts, an independent firm can assist with a special project, or give occasional advice." There are a variety of reasons why a small business owner might decide to contract public relations work out to an external agency. For example, company personnel may be inexperienced in handling public relations; the company may be geographically distant from its main audiences; the company may not be able to afford to hire a full-time public relations executive with the needed skills; or the company may want the objective judgment of an outsider. A small business owner can locate reputable public relations firms through the Small Business Administration, the Public Relations Society of America, the trade press for their industry, or the recommendations of fellow business people or local news people. When choosing between several potential agencies, a small business owner should consider those that have experience in the industry, clients in similar industries, financial stability, and a compatible overall philosophy. Contracting with an outside firm can be costly—some charge their clients a monthly retainer, while others charge straight hourly rates for limited services.
While communication is the essence of public relations, an effective public relations campaign is based on action as well as words. Whether it is practiced formally or informally, public relations is an essential function for the survival of any organization. Small business owners cannot afford to neglect public relations. But lavish parties and gifts are not necessary—it is possible to vastly improve a small business's image within its community while also controlling public relations expenditures. Sponsoring a local softball team, speaking at a chamber of commerce meeting, and volunteering at a neighborhood clean-up are among the wide variety of public relations activities readily available to small businesses.
Undercover Marketing
Undercover Marketing is a subset of guerrilla marketing where consumers do not realize they are being marketed to. For example, a marketing company might pay an actor or socially adept person to use a certain product visibly and convincingly in locations where target consumers congregate. While there, the actor will also talk up their product to people they befriend in that location, even handing out samples if it is economically feasible. The actor will often be able to sell consumers on their product without those consumers even noticing it.
The goal of any undercover campaign is to generate buzz. Spontaneous word of mouth, or buzz, is free, can reach consumers isolated from all other media, and unlike conventional media, consumers tend to trust it. Marketers find it very hard to predict buzz let alone generate it on demand. However when it works, undercover marketing does exactly that: an ideal consumer from the example above will not only begin using that product themselves, but will also tell their friends about it, inciting a planned viral marketing campaign that looks spontaneous.
It is the consumer's sense that this recommendation was spontaneous and unsolicited, and the resulting feeling that "one good turn deserves another", that drives the buzz. So, the "bought and paid for" aspect of the transaction must remain hidden. Overall, the person doing the marketing must look and sound like peer of their target audience without any ulterior motive for endorsing the product—employees of the company cannot do undercover marketing, nor can celebrities (except possibly to other celebrities).
If marketers fail to hide their vested interest in selling a product, they run considerable risk of backlash. Cases where consumers have found out they have been manipulated into liking the product, they generally become angry at the marketer (and by association that product) over being misled. This indignation has led some to apply more derogatory names to undercover marketing, such as roach baiting, likening the products marketed this way to poison. In some cases, the amount of buzz generated by a failed campaign can exceed that of a successful one, only with the opposite of the desired result.
When targeting consumers known to be consistent Internet users, undercover marketers have taken a significant interest in leveraging Internet chat rooms and forums. In these settings, people tend to perceive everyone as peers, the semi-anonymity reduces the risk of being found out, and one marketer can personally influence a large number of people. During the dot com boom at the turn of the century, stock promoters frequently used chat rooms to create a buzz and drive up the price of a stock.
Whatever the risks, undercover marketing only requires a small investment for a large potential payoff. It remains a cheap and effective way of generating buzz, especially in markets such as Tobacco and alcohol where media-savvy target consumers have become increasingly resistant or inaccessible to other forms of advertising.
The goal of any undercover campaign is to generate buzz. Spontaneous word of mouth, or buzz, is free, can reach consumers isolated from all other media, and unlike conventional media, consumers tend to trust it. Marketers find it very hard to predict buzz let alone generate it on demand. However when it works, undercover marketing does exactly that: an ideal consumer from the example above will not only begin using that product themselves, but will also tell their friends about it, inciting a planned viral marketing campaign that looks spontaneous.
It is the consumer's sense that this recommendation was spontaneous and unsolicited, and the resulting feeling that "one good turn deserves another", that drives the buzz. So, the "bought and paid for" aspect of the transaction must remain hidden. Overall, the person doing the marketing must look and sound like peer of their target audience without any ulterior motive for endorsing the product—employees of the company cannot do undercover marketing, nor can celebrities (except possibly to other celebrities).
If marketers fail to hide their vested interest in selling a product, they run considerable risk of backlash. Cases where consumers have found out they have been manipulated into liking the product, they generally become angry at the marketer (and by association that product) over being misled. This indignation has led some to apply more derogatory names to undercover marketing, such as roach baiting, likening the products marketed this way to poison. In some cases, the amount of buzz generated by a failed campaign can exceed that of a successful one, only with the opposite of the desired result.
When targeting consumers known to be consistent Internet users, undercover marketers have taken a significant interest in leveraging Internet chat rooms and forums. In these settings, people tend to perceive everyone as peers, the semi-anonymity reduces the risk of being found out, and one marketer can personally influence a large number of people. During the dot com boom at the turn of the century, stock promoters frequently used chat rooms to create a buzz and drive up the price of a stock.
Whatever the risks, undercover marketing only requires a small investment for a large potential payoff. It remains a cheap and effective way of generating buzz, especially in markets such as Tobacco and alcohol where media-savvy target consumers have become increasingly resistant or inaccessible to other forms of advertising.
Wednesday, September 23, 2009
Brand Dilution
Viral marketing depends upon people not versed in your brand to do the "selling" for you. It is important to carefully craft a message that is strong enough to endure misinterpretations or make your communication brandless.
Association with Unknown Groups
Viral marketing's strength is its potential to spread exponentially from person to person. During this process, it is possible that your message could wind up in the hands of and passed on by someone you would rather not be associated with. The only way to partially counter this is to ahead of time define and limit what information you make available for your viral marketing.
Avoid making Purely Financial-based offer
The best viral campaigns work on the principle of value not greed. If you try to use money as an incentive there is a chance that 1) your offer will be spammed across the web and you'll be broke and left with the nightmare of figuring out who gets what; 2) your offer will be perceived as "too good to be true" and won't work at all.
Spam Threats
If done poorly, viral marketing can lead to large-scale spam issues. Consider a company that pays individuals to email their friends to convince them to buy one of its products. In this case, the individual who receives the email had only given the friend permission to send email of a personal nature. The one friend's receiving an unsolicited commercial email can weaken his or her relationship with the person who sent it. This can lead to the recipient of the email dropping a friend and becoming angry with the marketer for sending an unsolicited message. Flames may result, leading to damage to the advertiser's reputation. In some cases, individuals who want to earn more money simply go out and spam people. This can be problematic for your company image.
Association with Unknown Groups
Viral marketing's strength is its potential to spread exponentially from person to person. During this process, it is possible that your message could wind up in the hands of and passed on by someone you would rather not be associated with. The only way to partially counter this is to ahead of time define and limit what information you make available for your viral marketing.
Avoid making Purely Financial-based offer
The best viral campaigns work on the principle of value not greed. If you try to use money as an incentive there is a chance that 1) your offer will be spammed across the web and you'll be broke and left with the nightmare of figuring out who gets what; 2) your offer will be perceived as "too good to be true" and won't work at all.
Spam Threats
If done poorly, viral marketing can lead to large-scale spam issues. Consider a company that pays individuals to email their friends to convince them to buy one of its products. In this case, the individual who receives the email had only given the friend permission to send email of a personal nature. The one friend's receiving an unsolicited commercial email can weaken his or her relationship with the person who sent it. This can lead to the recipient of the email dropping a friend and becoming angry with the marketer for sending an unsolicited message. Flames may result, leading to damage to the advertiser's reputation. In some cases, individuals who want to earn more money simply go out and spam people. This can be problematic for your company image.
Viral Marketing
Definition
•A marketing tactic relying upon some aspect of the system to cause the promotion to propagate itself as initial targets pass the promotion onto others.
•Viral marketing is a way to promote a service or product exponentially. When effectively done one person will give it to several people who in turn will promote it to several other people. This is what makes viral marketing so effective. For instance, if A gave a book, and then B forwarded that book to 10 people, who in turn forwarded that book to 10 people. One hundred people have read that same book. Now if it is forwarded that same way just four more times ONE MILLION PEOPLE have now read that same book. By definition viral marketing gives the consumer something that they can use for free with the intent of gaining that customer to market other products and to create brand name awareness.
Off the Internet, viral marketing has been referred to as "word-of-mouth," "creating a buzz," "leveraging the media," "network marketing." But on the Internet, for better or worse, it's called "viral marketing." While others smarter than I have attempted to rename it, to somehow domesticate and tame it, I won't try. The term "viral marketing" has stuck.
The Classic Hotmail.com Example
The classic example of viral marketing is Hotmail.com, one of the first free Web-based e-mail services. The strategy is simple:
1.Give away free e-mail addresses and services,
2.Attach a simple tag at the bottom of every free message sent out: "Get your private, free email at http://www.hotmail.com" and,
3.Then stand back while people e-mail to their own network of friends and associates,
4.Who see the message,
5.Sign up for their own free e-mail service, and then
6.Propel the message still wider to their own ever-increasing circles of friends and associates.
Like tiny waves spreading ever farther from a single pebble dropped into a pond, a carefully designed viral marketing strategy ripples outward extremely rapidly.
Elements of a Viral Marketing Strategy
Accept this fact. Some viral marketing strategies work better than others, and few work as well as the simple Hotmail.com strategy. But below are the six basic elements you hope to include in your strategy. A viral marketing strategy need not contain ALL these elements, but the more elements it embraces, the more powerful the results are likely to be. An effective viral marketing strategy:
1.Gives away products or services
2.Provides for effortless transfer to others
3.Scales easily from small to very large
4.Exploits common motivations and behaviors
5.Utilizes existing communication networks
6.Takes advantage of others' resources
1. Gives Away Valuable Products or Services
"Free" is the most powerful word in a marketer's vocabulary. Most viral marketing programs give away valuable products or services to attract attention. Free e-mail services, free information, free "cool" buttons, free software programs that perform powerful functions but not as much as you get in the "pro" version. Wilson's Second Law of Web Marketing is "The Law of Giving and Selling"(http://www.wilsonweb.com/wmta/basic-principles.htm). "Cheap" or "inexpensive" may generate a wave of interest, but "free" will usually do it much faster. Viral marketers practice delayed gratification. They may not profit today, or tomorrow, but if they can generate a groundswell of interest from something free, they know they will profit "soon and for the rest of their lives" (with apologies to "Casablanca"). Patience, my friends. Free attracts eyeballs. Eyeballs then see other desirable things that you are selling, and, presto! You earn money. Eyeballs bring valuable e-mail addresses, advertising revenue, and e-commerce sales opportunities. Give away something, sell something.
2. Provides for Effortless Transfer to Others
Public health nurses offer sage advice at flu season: stay away from people who cough, wash your hands often, and don't touch your eyes, nose, or mouth. Viruses only spread when they're easy to transmit. The medium that carries your marketing message must be easy to transfer and replicate: e-mail, website, graphic, software download. Viral marketing works famously on the Internet because instant communication has become so easy and inexpensive. Digital format make copying simple. From a marketing standpoint, you must simplify your marketing message so it can be transmitted easily and without degradation. Short is better. The classic is: "Get your private, free email at http://www.hotmail.com." The message is compelling, compressed, and copied at the bottom of every free e-mail message.
3. Scales Easily from Small to very Large
To spread like wildfire the transmission method must be rapidly scalable from small to very large. The weakness of the Hotmail model is that a free e-mail service requires its own mail servers to transmit the message. If the strategy is wildly successful, mail servers must be added very quickly or the rapid growth will bog down and die. If the virus multiplies only to kill the host before spreading, nothing is accomplished. So long as you have planned ahead of time how you can add mail servers rapidly you're okay. You must build in scalability to your viral model.
4. Exploits Common Motivations and Behaviors
Clever viral marketing plans take advantage of common human motivations. What proliferated "Netscape Now" buttons in the early days of the Web? The desire to be cool. Greed drives people. So does the hunger to be popular, loved, and understood. The resulting urge to communicate produces millions of websites and billions of e-mail messages. Design a marketing strategy that builds on common motivations and behaviors for its transmission, and you have a winner.
5. Utilizes Existing Communication Networks
Most people are social. Nerdy, basement-dwelling computer science grad students are the exception. Social scientists tell us that each person has a network of 8 to 12 people in their close network of friends, family, and associates. A person's broader network may consist of scores, hundreds, or thousands of people, depending upon her position in society. A waitress, for example, may communicate regularly with hundreds of customers in a given week. Network marketers have long understood the power of these human networks, both the strong, close networks as well as the weaker networked relationships. People on the Internet develop networks of relationships, too. They collect e-mail addresses and favorite website URLs. Affiliate programs exploit such networks, as do permission e-mail lists. Learn to place your message into existing communications between people, and you rapidly multiply its dispersion.
6. Takes Advantage of others' Resources
The most creative viral marketing plans use others' resources to get the word out. Affiliate programs, for example, place text or graphic links on others' websites. Authors, who give away free articles, seek to position their articles on others' WebPages. A news release can be picked up by hundreds of periodicals and form the basis of articles seen by hundreds of thousands of readers. Now someone else's newsprint or webpage is relaying your marketing message. Someone else's resources are depleted rather than your own.
Advantages of Viral Marketing
The advantages of viral marketing service are high credibility, low costs, great reach, high efficiency and the opportunity to continuous promotion adjustments. The main reasons for the wide popularity of viral marketing are:
•Socializing and networking has now made very closer to the people. So relatives and friends are simply accessible over the net.
•Viral marketing is one of the cost-free methods for promoting a business transaction.
•The time and resources are easily available. In this type of marketing, one person contacting their friends or relatives. They contacted more and more people and the chain goes on. It generates revenue from advertisement.
In spite of the probable risks, viral marketing has the ability to draw the greatest potential audience at a convincingly low cost, raising the reach of your business.
Pitfalls of Viral Marketing
1.Brand Dilution
2.Association with unknown groups
3.Avoid making purely financial-based offer
4.Large-scale spam issues
•A marketing tactic relying upon some aspect of the system to cause the promotion to propagate itself as initial targets pass the promotion onto others.
•Viral marketing is a way to promote a service or product exponentially. When effectively done one person will give it to several people who in turn will promote it to several other people. This is what makes viral marketing so effective. For instance, if A gave a book, and then B forwarded that book to 10 people, who in turn forwarded that book to 10 people. One hundred people have read that same book. Now if it is forwarded that same way just four more times ONE MILLION PEOPLE have now read that same book. By definition viral marketing gives the consumer something that they can use for free with the intent of gaining that customer to market other products and to create brand name awareness.
Off the Internet, viral marketing has been referred to as "word-of-mouth," "creating a buzz," "leveraging the media," "network marketing." But on the Internet, for better or worse, it's called "viral marketing." While others smarter than I have attempted to rename it, to somehow domesticate and tame it, I won't try. The term "viral marketing" has stuck.
The Classic Hotmail.com Example
The classic example of viral marketing is Hotmail.com, one of the first free Web-based e-mail services. The strategy is simple:
1.Give away free e-mail addresses and services,
2.Attach a simple tag at the bottom of every free message sent out: "Get your private, free email at http://www.hotmail.com" and,
3.Then stand back while people e-mail to their own network of friends and associates,
4.Who see the message,
5.Sign up for their own free e-mail service, and then
6.Propel the message still wider to their own ever-increasing circles of friends and associates.
Like tiny waves spreading ever farther from a single pebble dropped into a pond, a carefully designed viral marketing strategy ripples outward extremely rapidly.
Elements of a Viral Marketing Strategy
Accept this fact. Some viral marketing strategies work better than others, and few work as well as the simple Hotmail.com strategy. But below are the six basic elements you hope to include in your strategy. A viral marketing strategy need not contain ALL these elements, but the more elements it embraces, the more powerful the results are likely to be. An effective viral marketing strategy:
1.Gives away products or services
2.Provides for effortless transfer to others
3.Scales easily from small to very large
4.Exploits common motivations and behaviors
5.Utilizes existing communication networks
6.Takes advantage of others' resources
1. Gives Away Valuable Products or Services
"Free" is the most powerful word in a marketer's vocabulary. Most viral marketing programs give away valuable products or services to attract attention. Free e-mail services, free information, free "cool" buttons, free software programs that perform powerful functions but not as much as you get in the "pro" version. Wilson's Second Law of Web Marketing is "The Law of Giving and Selling"(http://www.wilsonweb.com/wmta/basic-principles.htm). "Cheap" or "inexpensive" may generate a wave of interest, but "free" will usually do it much faster. Viral marketers practice delayed gratification. They may not profit today, or tomorrow, but if they can generate a groundswell of interest from something free, they know they will profit "soon and for the rest of their lives" (with apologies to "Casablanca"). Patience, my friends. Free attracts eyeballs. Eyeballs then see other desirable things that you are selling, and, presto! You earn money. Eyeballs bring valuable e-mail addresses, advertising revenue, and e-commerce sales opportunities. Give away something, sell something.
2. Provides for Effortless Transfer to Others
Public health nurses offer sage advice at flu season: stay away from people who cough, wash your hands often, and don't touch your eyes, nose, or mouth. Viruses only spread when they're easy to transmit. The medium that carries your marketing message must be easy to transfer and replicate: e-mail, website, graphic, software download. Viral marketing works famously on the Internet because instant communication has become so easy and inexpensive. Digital format make copying simple. From a marketing standpoint, you must simplify your marketing message so it can be transmitted easily and without degradation. Short is better. The classic is: "Get your private, free email at http://www.hotmail.com." The message is compelling, compressed, and copied at the bottom of every free e-mail message.
3. Scales Easily from Small to very Large
To spread like wildfire the transmission method must be rapidly scalable from small to very large. The weakness of the Hotmail model is that a free e-mail service requires its own mail servers to transmit the message. If the strategy is wildly successful, mail servers must be added very quickly or the rapid growth will bog down and die. If the virus multiplies only to kill the host before spreading, nothing is accomplished. So long as you have planned ahead of time how you can add mail servers rapidly you're okay. You must build in scalability to your viral model.
4. Exploits Common Motivations and Behaviors
Clever viral marketing plans take advantage of common human motivations. What proliferated "Netscape Now" buttons in the early days of the Web? The desire to be cool. Greed drives people. So does the hunger to be popular, loved, and understood. The resulting urge to communicate produces millions of websites and billions of e-mail messages. Design a marketing strategy that builds on common motivations and behaviors for its transmission, and you have a winner.
5. Utilizes Existing Communication Networks
Most people are social. Nerdy, basement-dwelling computer science grad students are the exception. Social scientists tell us that each person has a network of 8 to 12 people in their close network of friends, family, and associates. A person's broader network may consist of scores, hundreds, or thousands of people, depending upon her position in society. A waitress, for example, may communicate regularly with hundreds of customers in a given week. Network marketers have long understood the power of these human networks, both the strong, close networks as well as the weaker networked relationships. People on the Internet develop networks of relationships, too. They collect e-mail addresses and favorite website URLs. Affiliate programs exploit such networks, as do permission e-mail lists. Learn to place your message into existing communications between people, and you rapidly multiply its dispersion.
6. Takes Advantage of others' Resources
The most creative viral marketing plans use others' resources to get the word out. Affiliate programs, for example, place text or graphic links on others' websites. Authors, who give away free articles, seek to position their articles on others' WebPages. A news release can be picked up by hundreds of periodicals and form the basis of articles seen by hundreds of thousands of readers. Now someone else's newsprint or webpage is relaying your marketing message. Someone else's resources are depleted rather than your own.
Advantages of Viral Marketing
The advantages of viral marketing service are high credibility, low costs, great reach, high efficiency and the opportunity to continuous promotion adjustments. The main reasons for the wide popularity of viral marketing are:
•Socializing and networking has now made very closer to the people. So relatives and friends are simply accessible over the net.
•Viral marketing is one of the cost-free methods for promoting a business transaction.
•The time and resources are easily available. In this type of marketing, one person contacting their friends or relatives. They contacted more and more people and the chain goes on. It generates revenue from advertisement.
In spite of the probable risks, viral marketing has the ability to draw the greatest potential audience at a convincingly low cost, raising the reach of your business.
Pitfalls of Viral Marketing
1.Brand Dilution
2.Association with unknown groups
3.Avoid making purely financial-based offer
4.Large-scale spam issues
Word of Mouth Marketing
What is Word of Mouth Marketing?
Word of Mouth Marketing can be defined as any unpaid form of promotion in which satisfied customers tell other people, in either verbal or written form, how much they like a business, product or service. For word of mouth marketing to be successful, the satisfied customer needs to be perceived as honest and having no ulterior motives associated with the recommendation
Any time you've recommended a product to a friend, you've engaged in word of mouth advertising. Word of mouth advertising relies on personal recommendations to promote a product or service. Companies often rely heavily on word of mouth advertising to sell their product or service, because it produces good results at a very low cost.
Word of mouth is a pre-existing phenomenon that marketers are only now learning how to harness, amplify, and improve. Word of mouth marketing isn't about creating word of mouth -- it's learning how to make it work within a marketing objective.
Word of mouth can be encouraged and facilitated. Companies can work hard to make people happier, they can listen to consumers, they can make it easier for them to tell their friends, and they can make certain that influential individuals know about the good qualities of a product or service.
Companies value word of mouth advertising for several reasons. First of all, if you tell someone how much you like a business, that word of mouth endorsement doesn't cost the business any money. Magazine, television, radio and Internet ads can be expensive, but word of mouth advertising is usually free. The less money the business has to spend on advertising, the more profit they can make.
Word of mouth advertising is also valuable because it tends to produce good results. People are sometimes skeptical of standard advertising. Maybe the ad doesn't appeal to them personally, or they feel like the company is trying to trick them into buying a product that they don't want. A word of mouth testimonial from a friend can be trusted, and it's more likely to produce results.
Even more valuable are the word of mouth endorsements given by people who are presumed to be experts. Companies often offer free products or services to experts in an effort to gain free word of mouth advertising. Reviewers are sent products, or given early tickets to a movie for example, and the word of mouth advertising that is generated when they write a review more than pays for the expense to the company.
It is often said in business that any publicity is good publicity. That is because publicity is essentially word of mouth advertising. If someone hears something about a business, even if it's something bad, they will remember the name. They will likely be curious about the business because of the news. This is word of mouth advertising at work. Any time someone hears about a company and what they sell from a friend or from a news story, word of mouth advertising is helping the company become more familiar to people.
Word of mouth marketing empowers people to share their experiences. It's harnessing the voice of the customer for the good of the brand. And it's acknowledging that the unsatisfied customer is equally powerful.
Below are the five basic Steps for Word of Mouth Marketing to be a Success.
They are as follows:
1.Talkers
2.Topics
3.Tools
4.Taking Part
5.Track
Talkers are not your target customers; instead, they are the people that talk TO your buyers. By way of example, Ferrari’s talkers are not car owners, but 14-year old boys who read car magazines.
Topic is what everyone is buzzing about. This is not your tagline, your brand message or even the name of your store. Your topic should be portable, repeatable and emotional.
In Chicago, there's a deli called Perry's which is quite well known. For starters, Perry's sandwiches are enormous; they may in fact be bigger than the famous corned beef sandwich you find at Carnegie's Deli in New York. But that's not the only reason people talk up Perry's. The other buzz-worthy bit is that Perry will kick you out of his restaurant if your cell phone rings. He doesn't care if you're an MD or a Judge on an important trial - no phones - period. Inevitably when you're there some poor diner's phone will ring and the shenanigans that ensue are the epitome of buzz.
Tools enable people to easily share with others. Make it easy for friends to talk about you. That might creating a blog, or establishing a fan base on Facebook. It can be as simple as adding a Forward to a Friend button on your next email campaign.
Taking Part means to engage in the discussion. If you have a blog and someone comments on it, it's okay to post a thank you note. Has someone given your store a negative review on Yelp or a similar service? Chime in, apologize, or solicit more information. Being present means being visible.
Track we all know we need to Track our efforts. In other to take note if it working or not. When something you've done is in fact generating buzz so you can keep doing it!
Five Word of Mouth Marketing Strategies You Can Use For Your Website or Business
Here are some word-of-mouth marketing strategies you can use for your own website or business. All of them are D-I-Y and you don’t need to hire an expensive marketing firm to initiate them, although you should preferably have access to web designers and programmers, along with a basic budget for viral marketing.
1.Leverage Existing Social Networks. Online communities have a tightly knit group of users who can help to increase brand awareness for your product. Tap into these communities with tools or content targeting their specific sub-culture and you are likely to get a lot of attention.
These can include applications for platform-specific websites like Facebook, Firefox and Wordpress, which each have a large body of users. Content which examines mentions or analyzes mini-communities or sites within large overall niches will work as well.
2.Target the Influencers. Look for individuals who are trend-setters or authorities on a specific topic. They should preferably be individuals who have many personal connections or a large and loyal audience.
If these people spread your message, your website or product will very easily be disseminated within a targeted group of potential users.
Identify these influencers, build a relationship with them and market through their existing sphere of social influence. Examples of influencers include celebrities, power users on social websites like Digg and popular webmasters or bloggers with many loyal supporters (e.g. Ashley Qualls).
3.Exclusivity and Scarcity. Many websites or businesses launch virally through the private beta approach by offering a limited number of site invites. Some dangle the bait of limited edition products or temporal discounts. Combine this with influencer marketing and you’ll have an excellent method to disseminate brand awareness for new websites, products or services.
Exclusivity invites curiosity and scarce products generate consistent demand and conversation. Remember how people were incessantly asking for or writing about Gmail, Joost or Pownce invites a while ago?
4.Micro-Market. While online viral marketing leverages the interconnectedness of the web to spread unique content or user-supported promotional schemes, micro-marketing focuses on marketing to the individual by providing highly customizable products.
Nike and Puma’s Mongolian Buffet are examples of micro-marketing schemes which allow you to design and purchase your own unique sneaker online. Micro-marketing can be combined with scarcity and existing social networks to generate word-of-mouth exposure.
5.Industry Marketing. Instead of focusing directly on customers, focus on the people who can build your brand. Instead of seeking for thousands of views from a wide audience, make your mark within a niche community to build relationships and leverage-able connections.
Finally.
Get recommendations from others in the similar industry to be mentioned, promoted or included in an industry-specific ranking or recommendations list. This builds your overall brand within a specific niche, which in turns promotes your site to traditional media and buyers looking in from the outside.
Word of Mouth Marketing can be defined as any unpaid form of promotion in which satisfied customers tell other people, in either verbal or written form, how much they like a business, product or service. For word of mouth marketing to be successful, the satisfied customer needs to be perceived as honest and having no ulterior motives associated with the recommendation
Any time you've recommended a product to a friend, you've engaged in word of mouth advertising. Word of mouth advertising relies on personal recommendations to promote a product or service. Companies often rely heavily on word of mouth advertising to sell their product or service, because it produces good results at a very low cost.
Word of mouth is a pre-existing phenomenon that marketers are only now learning how to harness, amplify, and improve. Word of mouth marketing isn't about creating word of mouth -- it's learning how to make it work within a marketing objective.
Word of mouth can be encouraged and facilitated. Companies can work hard to make people happier, they can listen to consumers, they can make it easier for them to tell their friends, and they can make certain that influential individuals know about the good qualities of a product or service.
Companies value word of mouth advertising for several reasons. First of all, if you tell someone how much you like a business, that word of mouth endorsement doesn't cost the business any money. Magazine, television, radio and Internet ads can be expensive, but word of mouth advertising is usually free. The less money the business has to spend on advertising, the more profit they can make.
Word of mouth advertising is also valuable because it tends to produce good results. People are sometimes skeptical of standard advertising. Maybe the ad doesn't appeal to them personally, or they feel like the company is trying to trick them into buying a product that they don't want. A word of mouth testimonial from a friend can be trusted, and it's more likely to produce results.
Even more valuable are the word of mouth endorsements given by people who are presumed to be experts. Companies often offer free products or services to experts in an effort to gain free word of mouth advertising. Reviewers are sent products, or given early tickets to a movie for example, and the word of mouth advertising that is generated when they write a review more than pays for the expense to the company.
It is often said in business that any publicity is good publicity. That is because publicity is essentially word of mouth advertising. If someone hears something about a business, even if it's something bad, they will remember the name. They will likely be curious about the business because of the news. This is word of mouth advertising at work. Any time someone hears about a company and what they sell from a friend or from a news story, word of mouth advertising is helping the company become more familiar to people.
Word of mouth marketing empowers people to share their experiences. It's harnessing the voice of the customer for the good of the brand. And it's acknowledging that the unsatisfied customer is equally powerful.
Below are the five basic Steps for Word of Mouth Marketing to be a Success.
They are as follows:
1.Talkers
2.Topics
3.Tools
4.Taking Part
5.Track
Talkers are not your target customers; instead, they are the people that talk TO your buyers. By way of example, Ferrari’s talkers are not car owners, but 14-year old boys who read car magazines.
Topic is what everyone is buzzing about. This is not your tagline, your brand message or even the name of your store. Your topic should be portable, repeatable and emotional.
In Chicago, there's a deli called Perry's which is quite well known. For starters, Perry's sandwiches are enormous; they may in fact be bigger than the famous corned beef sandwich you find at Carnegie's Deli in New York. But that's not the only reason people talk up Perry's. The other buzz-worthy bit is that Perry will kick you out of his restaurant if your cell phone rings. He doesn't care if you're an MD or a Judge on an important trial - no phones - period. Inevitably when you're there some poor diner's phone will ring and the shenanigans that ensue are the epitome of buzz.
Tools enable people to easily share with others. Make it easy for friends to talk about you. That might creating a blog, or establishing a fan base on Facebook. It can be as simple as adding a Forward to a Friend button on your next email campaign.
Taking Part means to engage in the discussion. If you have a blog and someone comments on it, it's okay to post a thank you note. Has someone given your store a negative review on Yelp or a similar service? Chime in, apologize, or solicit more information. Being present means being visible.
Track we all know we need to Track our efforts. In other to take note if it working or not. When something you've done is in fact generating buzz so you can keep doing it!
Five Word of Mouth Marketing Strategies You Can Use For Your Website or Business
Here are some word-of-mouth marketing strategies you can use for your own website or business. All of them are D-I-Y and you don’t need to hire an expensive marketing firm to initiate them, although you should preferably have access to web designers and programmers, along with a basic budget for viral marketing.
1.Leverage Existing Social Networks. Online communities have a tightly knit group of users who can help to increase brand awareness for your product. Tap into these communities with tools or content targeting their specific sub-culture and you are likely to get a lot of attention.
These can include applications for platform-specific websites like Facebook, Firefox and Wordpress, which each have a large body of users. Content which examines mentions or analyzes mini-communities or sites within large overall niches will work as well.
2.Target the Influencers. Look for individuals who are trend-setters or authorities on a specific topic. They should preferably be individuals who have many personal connections or a large and loyal audience.
If these people spread your message, your website or product will very easily be disseminated within a targeted group of potential users.
Identify these influencers, build a relationship with them and market through their existing sphere of social influence. Examples of influencers include celebrities, power users on social websites like Digg and popular webmasters or bloggers with many loyal supporters (e.g. Ashley Qualls).
3.Exclusivity and Scarcity. Many websites or businesses launch virally through the private beta approach by offering a limited number of site invites. Some dangle the bait of limited edition products or temporal discounts. Combine this with influencer marketing and you’ll have an excellent method to disseminate brand awareness for new websites, products or services.
Exclusivity invites curiosity and scarce products generate consistent demand and conversation. Remember how people were incessantly asking for or writing about Gmail, Joost or Pownce invites a while ago?
4.Micro-Market. While online viral marketing leverages the interconnectedness of the web to spread unique content or user-supported promotional schemes, micro-marketing focuses on marketing to the individual by providing highly customizable products.
Nike and Puma’s Mongolian Buffet are examples of micro-marketing schemes which allow you to design and purchase your own unique sneaker online. Micro-marketing can be combined with scarcity and existing social networks to generate word-of-mouth exposure.
5.Industry Marketing. Instead of focusing directly on customers, focus on the people who can build your brand. Instead of seeking for thousands of views from a wide audience, make your mark within a niche community to build relationships and leverage-able connections.
Finally.
Get recommendations from others in the similar industry to be mentioned, promoted or included in an industry-specific ranking or recommendations list. This builds your overall brand within a specific niche, which in turns promotes your site to traditional media and buyers looking in from the outside.
Publicity
What is Publicity?
Definitions
•Publicity is an information that attracts attention to a company, product, person, or event.
•Publicity is a type of promotion that relies on public relations effect of a news story carried usually free by mass media. The main objective of publicity is not sales promotion, but creation of an image through editorial or 'independent source' commentary. While the publicist can control the content of the story, he or she may not have any control over it placement or interpretation by the media.
Who is a Publicist?
A Publicist is a person whose job is to generate and manage publicity for a public figure, especially a celebrity, a business, or for a work such as a book or film. Just like lawyers, most top level publicists work in private practice, handling multiple clients.
What Does a Publicist Do?
Essentially, the job of a publicist is to increase public interest in his client. However, the type of work a publicist does is dependent upon his client’s needs. For example, a publicist who represents a famous actor or actress may spend a large portion of his time doing “damage control” after an unflattering tabloid story appears about his client’s extramarital affair or recent stint in rehab. A publicist who represents an author may be responsible for arranging book tours, sending out review copies, or placing advertising in relevant publications in an attempt to boost reader interest in the book. If the publicist represents a trendy restaurant, he may be promoting the recent hiring of a famous chef and trying to get celebrity guests to be photographed dining at the establishment.
While some publicists work a traditional schedule, most find that regular weekend and evening work is necessary. Publicists are often expected to travel to attend meetings or deliver presentations about a client’s activities. Depending upon the industry, a publicist may essentially be on call around the clock. In addition, since publicists are typically considered salaried employees, there is no overtime pay given for this extra work.
Advantages and Disadvantages of Hiring a Publicist:
Advantages
•Publicists generally have a long list of contacts with news agencies, advertising firms, and others that you don't. This means better access to publicity channels. There are clearly advantages of working with someone who has a relationship with and who talks with the key reporter for your business several times a month, rather than having you try to cold call that person to pitch your story.
•A publicist does this sort of stuff all day long. Good ones know what works, what doesn't, and can probably find new and creative ideas that you never thought of.
•They have time to construct a publicity plan, and implement it. Presumably, you don't. They leave you the time to do the things you do best: run a business, market a business, or lay around on the beach...
•Chances are that the publicist you hire will have multiple clients. They will probably be able to cross-pollinate to get mass publicity for all. This can help you if your name is even remotely associated with other large, well-known, good companies.
•The good ones have mounds of examples and/or experience they can draw upon to generate new ideas to help your company get out of its PR comfort zone, to get you attention.
Disadvantages
•The first and most obvious disadvantage is the cost. Publicists can be very expensive.
•By having a publicist do the work, you don't develop the expertise that could have you doing the work yourself.
•A publicist has little to no inside knowledge of your company. That can present difficulties when your publicity run involves complex information. Making them an expert in your company will cost you, either directly through a billable hour charge or that cost will be embedded in a project's cost so that you won't see it, but it will cost you.
•The publicist gains all the benefits of the personal relationships with the media instead of you. This can be a problem if you decide to leave the publicist and work with the media directly at some future point.
•When the media has questions, who do you want them to call, you or the publicist? You can bet they will call the publicist.
•The quality range of publicists is amazingly diverse. It can be hard to determine how good of a publicist you have hired. A bad publicist is like a dead fish. They stink, badly!
•Some publicists really love to hold huge publicity events, which can cost tons of money and generate either huge amounts of publicity, or possibly, none at all. Just be careful that any agency you hire focuses on the basics first, turning to major splashy events only once the basics are in place.
•Lastly, the bigger the agency, the more likely it will be that you are assigned a low ranking publicist. That doesn't mean they are bad. It just means that they have not had the chances to prove themselves. You need to realize that even though you're paying for a big publicist name, you're actually working with a newbie whose ink on their diploma isn't even dry yet.
The key questions you should consider before hiring a Publicist are:
•What kind of relationships do you currently have with the media? If they're weak, that's a point in the publicist's favor.
•Are you spending as much time as you would like in the area of publicity? As you consider the way you actually use your time, is PR getting prioritized or not? If no, perhaps you need a professional working on it for you.
•How much PR success are you having right now? If little, there's another point in their favor.
Definitions
•Publicity is an information that attracts attention to a company, product, person, or event.
•Publicity is a type of promotion that relies on public relations effect of a news story carried usually free by mass media. The main objective of publicity is not sales promotion, but creation of an image through editorial or 'independent source' commentary. While the publicist can control the content of the story, he or she may not have any control over it placement or interpretation by the media.
Who is a Publicist?
A Publicist is a person whose job is to generate and manage publicity for a public figure, especially a celebrity, a business, or for a work such as a book or film. Just like lawyers, most top level publicists work in private practice, handling multiple clients.
What Does a Publicist Do?
Essentially, the job of a publicist is to increase public interest in his client. However, the type of work a publicist does is dependent upon his client’s needs. For example, a publicist who represents a famous actor or actress may spend a large portion of his time doing “damage control” after an unflattering tabloid story appears about his client’s extramarital affair or recent stint in rehab. A publicist who represents an author may be responsible for arranging book tours, sending out review copies, or placing advertising in relevant publications in an attempt to boost reader interest in the book. If the publicist represents a trendy restaurant, he may be promoting the recent hiring of a famous chef and trying to get celebrity guests to be photographed dining at the establishment.
While some publicists work a traditional schedule, most find that regular weekend and evening work is necessary. Publicists are often expected to travel to attend meetings or deliver presentations about a client’s activities. Depending upon the industry, a publicist may essentially be on call around the clock. In addition, since publicists are typically considered salaried employees, there is no overtime pay given for this extra work.
Advantages and Disadvantages of Hiring a Publicist:
Advantages
•Publicists generally have a long list of contacts with news agencies, advertising firms, and others that you don't. This means better access to publicity channels. There are clearly advantages of working with someone who has a relationship with and who talks with the key reporter for your business several times a month, rather than having you try to cold call that person to pitch your story.
•A publicist does this sort of stuff all day long. Good ones know what works, what doesn't, and can probably find new and creative ideas that you never thought of.
•They have time to construct a publicity plan, and implement it. Presumably, you don't. They leave you the time to do the things you do best: run a business, market a business, or lay around on the beach...
•Chances are that the publicist you hire will have multiple clients. They will probably be able to cross-pollinate to get mass publicity for all. This can help you if your name is even remotely associated with other large, well-known, good companies.
•The good ones have mounds of examples and/or experience they can draw upon to generate new ideas to help your company get out of its PR comfort zone, to get you attention.
Disadvantages
•The first and most obvious disadvantage is the cost. Publicists can be very expensive.
•By having a publicist do the work, you don't develop the expertise that could have you doing the work yourself.
•A publicist has little to no inside knowledge of your company. That can present difficulties when your publicity run involves complex information. Making them an expert in your company will cost you, either directly through a billable hour charge or that cost will be embedded in a project's cost so that you won't see it, but it will cost you.
•The publicist gains all the benefits of the personal relationships with the media instead of you. This can be a problem if you decide to leave the publicist and work with the media directly at some future point.
•When the media has questions, who do you want them to call, you or the publicist? You can bet they will call the publicist.
•The quality range of publicists is amazingly diverse. It can be hard to determine how good of a publicist you have hired. A bad publicist is like a dead fish. They stink, badly!
•Some publicists really love to hold huge publicity events, which can cost tons of money and generate either huge amounts of publicity, or possibly, none at all. Just be careful that any agency you hire focuses on the basics first, turning to major splashy events only once the basics are in place.
•Lastly, the bigger the agency, the more likely it will be that you are assigned a low ranking publicist. That doesn't mean they are bad. It just means that they have not had the chances to prove themselves. You need to realize that even though you're paying for a big publicist name, you're actually working with a newbie whose ink on their diploma isn't even dry yet.
The key questions you should consider before hiring a Publicist are:
•What kind of relationships do you currently have with the media? If they're weak, that's a point in the publicist's favor.
•Are you spending as much time as you would like in the area of publicity? As you consider the way you actually use your time, is PR getting prioritized or not? If no, perhaps you need a professional working on it for you.
•How much PR success are you having right now? If little, there's another point in their favor.
Monday, September 21, 2009
Product Churning
Product churning is the practice of selling more product than is beneficial to the consumer. An example is a stock broker who regularly buys and sells securities in your portfolio. You may or may not gain, but the broker certainly piles up commissions.
It has been claimed that "dollar cost averaging" is a form of product churn. In this strategy, an investor repeatedly buys small lots of a security as the price changes. In this way the overall cost is averaged down as prices fall. The effectiveness of this strategy is open to debate, but one thing is certain: it is a sure way of increasing brokerage commissions.
Another form of product churning is practiced by maintenance and service providers. By replacing worn-out parts with inferior quality parts, they are assured of a greater frequency of service requests.
A more sophisticated version of product churning is used in the razor and blades business model. This involves selling a basic product at a loss (or low profit margin), but receiving very high profit margins on associated products that are necessary for the basic product's continued usage. Example of this strategy include razors (and their blades), computer printers (and their ink cartridge refills), cell phones (and their usage time), and photography (and prints).
It has been claimed that "dollar cost averaging" is a form of product churn. In this strategy, an investor repeatedly buys small lots of a security as the price changes. In this way the overall cost is averaged down as prices fall. The effectiveness of this strategy is open to debate, but one thing is certain: it is a sure way of increasing brokerage commissions.
Another form of product churning is practiced by maintenance and service providers. By replacing worn-out parts with inferior quality parts, they are assured of a greater frequency of service requests.
A more sophisticated version of product churning is used in the razor and blades business model. This involves selling a basic product at a loss (or low profit margin), but receiving very high profit margins on associated products that are necessary for the basic product's continued usage. Example of this strategy include razors (and their blades), computer printers (and their ink cartridge refills), cell phones (and their usage time), and photography (and prints).
How to be Effective Selling over the Phone?
Telephone sales skills are the backbone of the telemarketing industry. Though relatively a new concept, this technique now dominates the market scene and is being increasingly adopted by new businesses.
What make the best telephone Sales Skills.
•Sharp communications skills are the key Communication skills are a vitally important part of telemarketing. A person making a cold call should be articulate and a good talker. He should also be able to deal with an adverse situation. A person involved in tele-calling obviously does not talk to the customer face-to-face. He instantly has to judge via the conversation, whether it is possible to close the deal with the customer. He also makes use of those telemarketing techniques that have been tested by the successful sales professionals.
•Understand the concept of a cold call. A typical cold call begins with an introduction of the seller to the buyer. He then should move on to introduce his company and its products. A good sales pitch requires a seller to be a good listener too. While being a patient listener, he should give the customer an equal chance to speak. This way he will come to know about the customer and his likes and dislikes. It is always advisable to move further in the conversation only after receiving a formal consent from the customer.
•Simplify everything for the customer, put the plan in simple words. The possibility might be that the customer has never heard of such a plan or product before. So if the seller confuses him in the beginning by talking about complex details, the customer will probably not understand what it is the salesperson is trying to put across to him. He will simply hang up.
•Try and read the mind of your customer. The seller should try to read the mind of the customer at various stages of the conversation. Your customer's time is important and so is yours. If it becomes clear to the seller in the middle of the conversation that this customer is not going to buy product, the seller can save his time there. This he can do by making the pitch short and asking for the final word from the customer. He can then invest this time in getting another deal with some prospective customer.
•You should know how to negotiate. The special technique needed is to negotiate over the phone with the customer. The customer will obviously want the best out of the deal. So make them know all the discounts and offers the product has in stock for them and then negotiate with them accordingly.
•Close the deal with care after the deal has been negotiated and the customer agrees to buy the product, it is important to finalise the deal with care. This is because many times a deal can be lost at the time of closing.
Thus, good telephone sales skills are required at every step of making telephone sales calls, and each step has a number of choices for how to deal with a particular situation for closing sales successfully.
Benefits of Selling Over the Phone
1. Connect with clients on a personal level and quickly find out what matters most to them
2. Understand and manage your own and your client's emotional state
3. More confidence in contacting prospects and clients
4. Acquire skills and techniques for successfully handling tough questions in a positive manner
5. Increase your awareness of the impact your behaviour has on other people
6. Win more business and improve profit
What make the best telephone Sales Skills.
•Sharp communications skills are the key Communication skills are a vitally important part of telemarketing. A person making a cold call should be articulate and a good talker. He should also be able to deal with an adverse situation. A person involved in tele-calling obviously does not talk to the customer face-to-face. He instantly has to judge via the conversation, whether it is possible to close the deal with the customer. He also makes use of those telemarketing techniques that have been tested by the successful sales professionals.
•Understand the concept of a cold call. A typical cold call begins with an introduction of the seller to the buyer. He then should move on to introduce his company and its products. A good sales pitch requires a seller to be a good listener too. While being a patient listener, he should give the customer an equal chance to speak. This way he will come to know about the customer and his likes and dislikes. It is always advisable to move further in the conversation only after receiving a formal consent from the customer.
•Simplify everything for the customer, put the plan in simple words. The possibility might be that the customer has never heard of such a plan or product before. So if the seller confuses him in the beginning by talking about complex details, the customer will probably not understand what it is the salesperson is trying to put across to him. He will simply hang up.
•Try and read the mind of your customer. The seller should try to read the mind of the customer at various stages of the conversation. Your customer's time is important and so is yours. If it becomes clear to the seller in the middle of the conversation that this customer is not going to buy product, the seller can save his time there. This he can do by making the pitch short and asking for the final word from the customer. He can then invest this time in getting another deal with some prospective customer.
•You should know how to negotiate. The special technique needed is to negotiate over the phone with the customer. The customer will obviously want the best out of the deal. So make them know all the discounts and offers the product has in stock for them and then negotiate with them accordingly.
•Close the deal with care after the deal has been negotiated and the customer agrees to buy the product, it is important to finalise the deal with care. This is because many times a deal can be lost at the time of closing.
Thus, good telephone sales skills are required at every step of making telephone sales calls, and each step has a number of choices for how to deal with a particular situation for closing sales successfully.
Benefits of Selling Over the Phone
1. Connect with clients on a personal level and quickly find out what matters most to them
2. Understand and manage your own and your client's emotional state
3. More confidence in contacting prospects and clients
4. Acquire skills and techniques for successfully handling tough questions in a positive manner
5. Increase your awareness of the impact your behaviour has on other people
6. Win more business and improve profit
Sunday, September 20, 2009
Negotiation
Negotiation is a dialogue intended to resolve disputes, to produce an agreement upon courses of action, to bargain for individual or collective advantage, or to craft outcomes to satisfy various interests. It is the primary method of alternative dispute resolution.
Negotiation occurs in business, non-profit organizations, government branches, legal proceedings, among nations and in personal situations such as marriage, divorce, parenting, and everyday life. The study of the subject is called negotiation theory. Professional negotiators are often specialized, such as union negotiators, leverage buyout negotiators, peace negotiators, hostage negotiators, or may work under other titles, such as diplomats, legislators or brokers
Rules and Principles for Sales Negotiation
Every salesperson understands the importance of the sales negotiating process. If done effectively, it can lead to closing big sales. Any slip in this process can scare the prospect away.
Before going further, we have to clearly outline the process. In a sales negotiating process, the participants are the buyer and the seller. They negotiate with each other over a particular service or a product to reach a mutually beneficial decision. In this process, both the parties will try for the best they can get out of the deal. Sales negotiations may occur at various points during the sales process. Such negotiations can make or break a deal.
Research says that a good sales negotiation can add almost 10 percent to the total sales revenue of an organization. A sales negotiation starts when both the seller and the customer are committed to the sale. A seller always starts with the highest price and the buyer usually tries to reduce the price to them. So, a negotiation is based on price compromises (negotiations). However, it is not true that the negotiations occur only over the cost of the product. They could occur over the entire sales process. For example delivery times..etc.
The closing of a sales process greatly depends on how well the various sales techniques such as negotiations are handled by the seller. There are certain tips for successful sales negotiations, which the seller can use to succeed in difficult situations. These are mentioned below.
•Never try and force the buyer to buy the product or the service. This can and will irritate the prospect. A good negotiator must always keep this aspect in his mind, no matter how important it is for him to close the deal.
•Never let the buyer know anything negative about the deal. The seller is required to sound positive till the end of the sales process, no matter whether the deal will work or not.
•In the beginning, never disclose to the buyer any type of concession schemes that the seller is carrying along with the sales proposal. If this is disclosed in the beginning of the negotiation process itself, then the buyer will always have a feeling that there is something more for him in the form of concessions.
•Give the buyer the fear of loss in case he is constantly demanding to cut down the prices. He should be given the fear of loss in such a way that he should feel that a further cut in the price will make him lose some features or facility provided by the product. This ways, they will demand less cut in price.
Keys of Sales Negotiation Skills
There are certain keys to learning sales negotiation skills. But before getting into the details of sales negotiating skills we must first understand what sales negotiation is and what skills does it require to generate successful sales.
Sales negotiation is an important aspect of a sales process. Wherein, active participation of both the buyer and the seller is required to carry out sales negotiation. Both the parties want to negotiate in a way that they can work out a mutually beneficial deal out of the negotiations. After being satisfied on terms and conditions, they end up signing a contract or bill of sale with each other.
A sales negotiation process can be defined as a formal event that occurs at different points of the sales process. Thus acquiring good sales negotiation skills becomes a necessity for salespeople. The better sales negotiation skills definitely lead to better business opportunities for the organization.
Sales negotiating skills are not only required to negotiate over the price of the product but the entire value proposition of the product. The skills require a lot of practice to end up negotiating successfully. A sales person with good negotiating skills can increase the trust of the customers in the company. In fact a properly carried out presentation of the product can help the buyer gain faith in what the seller is saying about the product
But then, the success of a negotiation depends on the pre-negotiation practice. Thus, it is required by the seller to learn these skills before he actually enters a sales process.
How many times have you heard?
1."You've got to drop your price by 10% or we will have no choice but to go with your competition."
2."You will have to make an exception to your policy if you want our business."
3."I know that you have good quality and service, but so do your competitors. What we need to focus on here is your pricing."
4."I agree that those special services you keep bringing up would be nice, but we simply don't have the funds to purchase them. Could you include them at no additional cost?"
Every time you hear statements like these, you're in the middle of a difficult sales negotiation. How you handle that negotiation will determine whether or not you close the sale and how profitable that sale will be. In order to give you a real edge every time,
Below are some key points
•Don't Believe Everything You See and Hear
Part of a good salesperson's skill is to learn to read people and situations very quickly. However, when it gets down to negotiating, you have to take everything you see and hear with a grain of salt. Buyers are good negotiators, and thus they are good actors. You may be the only person who has what she needs, but everything she does and says, from body language to the words she uses, will be designed to lead you to believe that unless she gets an extra 10% off, she's going with the competition. Be skeptical. Be suspicious. Test, probe, and see what happens.
•Don't Offer Your Bottom Line Early in the Negotiation
How many times have you been asked to "give me your best price"? Have you ever given your best price only to discover that the buyer still wanted more? You have to play the game. It's expected. If you could drop your price by 10%, start out with 0%, or 2%, or 4%. Leave yourself room to negotiate some more. Who knows - you may get it for a 2% reduction. You might have to go all the way to 10%, but often you won't. A little stubbornness pays big dividends.
•Get Something in Return for Your Added Value
What if you discover that the buyer wants to be able to track his expenditures for your products or services in a way that is far more detailed and complex than is standard for your industry? What if your account tracking system is set up in a way that you can provide that information at essentially no cost to you? Often the salesperson's overwhelming temptation is to jump in and say, "Oh, we can do that. That's no problem." Before you do, however, think about your options. You could throw it in as part of the package and try to build good will. Or you could take a deep breath and try something like, "That's a difficult problem that will require some effort on our part, but it's doable." In the second case, without committing, you've told the buyer it is possible. You may not be able to get him to pay extra for it but you may be able to use it as a bargaining chip in resisting price concessions. Which way you choose to go will depend on who your customer is and on the situation. However, you do have options.
•Sell and Negotiate Simultaneously
Think of selling and negotiating as two sides of the same coin. Sometimes one side is face up, and sometimes the other side, but they are always both there. This is particularly true in your earliest contacts with the buyer. The face the buyer sees is that of a salesperson demonstrating features and benefits. The hidden face is that of a negotiator probing and seeking out information that may be invaluable later should issues like price, terms, quality, delivery, etc. have to be negotiated.
•Be Patient
Finally, and most important, be patient. Sales is a high energy, fast moving business. Patience is one commodity that is in relatively short supply, but if you're impatient in a negotiation, you'll lose your shirt. If I'm negotiating with you and I know that you're impatient, I will hold out just a little longer, no matter how desperate I am to make a deal with you. As long as I know you're in a hurry, I'll wait. So be patient. Take the time that you need, don't rush to give in, don't show your anxiety, stay cool and don't panic. Negotiation is a process and a game. Use the process and play the game. And you'll be surprise at the difference that it makes!
Types of Sales Closing Techniques
Many inexperienced sales people think that a deal is over as soon as the customer makes a commitment to make a purchase of the product or service that the company offers to him. They don't realize how important is it to exactly close and cement the deal. Some sales person are so bad in closing the deal that they turn a positive customer into a negative one.
Closing is a critical stage in a sales deal. It involves skill and techniques to master properly.
Some of the sales closing techniques are as below:
•1-2-3 Closing Technique. A customer evaluates the benefits of the product in terms of cost of the product, quality of the product and the time of availability of the product. 1-2-3 closing technique accounts for all of these parameters at the time of closing so that the customer at the time of drawing conclusions is certain about what he is getting in terms of these parameters.
•Adjournment Closing Technique. This technique says not to close the deal now. It gives a chance to the customer to think over the deal. But such a technique should be employed only in the most adverse situations like if the customer is not able to decide now, he is a bit confused over what package to decide up on or the customer needs to decide over the number of packages he needs to buy. Such a technique should be employed only when the seller finds a possibility of a possible gain while devoting his time to the customer.
•Affordable Closing Technique. This technique is employed at the time when the customer has certain doubts about the product's price. Here the seller has to act really smart and make the customer understand that they are actually watching the price only from one angle but there is also another view on the deal that makes the price very much affordable to them. The seller over here can highlight the advantages over the price the customer has to pay for the product.
•Alternative Closing Technique This type of closing takes place when the customer is exactly in the right mood to buy the package or product and now he has to decide on just the number of options available with the package. For example the number of packages to buy, and what plan out of the two to buy etc. The salesperson gives the customer a choice of options, both of which lead to a commitment.
•Assumptive Closing Technique An assumptive close is made in a situation where the seller has a feeling that though the customer is tempted to purchase the product, but if still allow time for the customer to think it over, chances are that the customer will refuse the proposal. In such a situation the customer's mind is diverted by taking the topic to another more positive point, that can help close the deal, like when the customer wants the delivery, how many packages to go for, what plan to go for etc.
Similarly there are many more closing techniques that can be employed by the seller after carefully analyzing the situation and then smartly applying one of those closing techniques with the sole aim in mind to close the deal.
Negotiation occurs in business, non-profit organizations, government branches, legal proceedings, among nations and in personal situations such as marriage, divorce, parenting, and everyday life. The study of the subject is called negotiation theory. Professional negotiators are often specialized, such as union negotiators, leverage buyout negotiators, peace negotiators, hostage negotiators, or may work under other titles, such as diplomats, legislators or brokers
Rules and Principles for Sales Negotiation
Every salesperson understands the importance of the sales negotiating process. If done effectively, it can lead to closing big sales. Any slip in this process can scare the prospect away.
Before going further, we have to clearly outline the process. In a sales negotiating process, the participants are the buyer and the seller. They negotiate with each other over a particular service or a product to reach a mutually beneficial decision. In this process, both the parties will try for the best they can get out of the deal. Sales negotiations may occur at various points during the sales process. Such negotiations can make or break a deal.
Research says that a good sales negotiation can add almost 10 percent to the total sales revenue of an organization. A sales negotiation starts when both the seller and the customer are committed to the sale. A seller always starts with the highest price and the buyer usually tries to reduce the price to them. So, a negotiation is based on price compromises (negotiations). However, it is not true that the negotiations occur only over the cost of the product. They could occur over the entire sales process. For example delivery times..etc.
The closing of a sales process greatly depends on how well the various sales techniques such as negotiations are handled by the seller. There are certain tips for successful sales negotiations, which the seller can use to succeed in difficult situations. These are mentioned below.
•Never try and force the buyer to buy the product or the service. This can and will irritate the prospect. A good negotiator must always keep this aspect in his mind, no matter how important it is for him to close the deal.
•Never let the buyer know anything negative about the deal. The seller is required to sound positive till the end of the sales process, no matter whether the deal will work or not.
•In the beginning, never disclose to the buyer any type of concession schemes that the seller is carrying along with the sales proposal. If this is disclosed in the beginning of the negotiation process itself, then the buyer will always have a feeling that there is something more for him in the form of concessions.
•Give the buyer the fear of loss in case he is constantly demanding to cut down the prices. He should be given the fear of loss in such a way that he should feel that a further cut in the price will make him lose some features or facility provided by the product. This ways, they will demand less cut in price.
Keys of Sales Negotiation Skills
There are certain keys to learning sales negotiation skills. But before getting into the details of sales negotiating skills we must first understand what sales negotiation is and what skills does it require to generate successful sales.
Sales negotiation is an important aspect of a sales process. Wherein, active participation of both the buyer and the seller is required to carry out sales negotiation. Both the parties want to negotiate in a way that they can work out a mutually beneficial deal out of the negotiations. After being satisfied on terms and conditions, they end up signing a contract or bill of sale with each other.
A sales negotiation process can be defined as a formal event that occurs at different points of the sales process. Thus acquiring good sales negotiation skills becomes a necessity for salespeople. The better sales negotiation skills definitely lead to better business opportunities for the organization.
Sales negotiating skills are not only required to negotiate over the price of the product but the entire value proposition of the product. The skills require a lot of practice to end up negotiating successfully. A sales person with good negotiating skills can increase the trust of the customers in the company. In fact a properly carried out presentation of the product can help the buyer gain faith in what the seller is saying about the product
But then, the success of a negotiation depends on the pre-negotiation practice. Thus, it is required by the seller to learn these skills before he actually enters a sales process.
How many times have you heard?
1."You've got to drop your price by 10% or we will have no choice but to go with your competition."
2."You will have to make an exception to your policy if you want our business."
3."I know that you have good quality and service, but so do your competitors. What we need to focus on here is your pricing."
4."I agree that those special services you keep bringing up would be nice, but we simply don't have the funds to purchase them. Could you include them at no additional cost?"
Every time you hear statements like these, you're in the middle of a difficult sales negotiation. How you handle that negotiation will determine whether or not you close the sale and how profitable that sale will be. In order to give you a real edge every time,
Below are some key points
•Don't Believe Everything You See and Hear
Part of a good salesperson's skill is to learn to read people and situations very quickly. However, when it gets down to negotiating, you have to take everything you see and hear with a grain of salt. Buyers are good negotiators, and thus they are good actors. You may be the only person who has what she needs, but everything she does and says, from body language to the words she uses, will be designed to lead you to believe that unless she gets an extra 10% off, she's going with the competition. Be skeptical. Be suspicious. Test, probe, and see what happens.
•Don't Offer Your Bottom Line Early in the Negotiation
How many times have you been asked to "give me your best price"? Have you ever given your best price only to discover that the buyer still wanted more? You have to play the game. It's expected. If you could drop your price by 10%, start out with 0%, or 2%, or 4%. Leave yourself room to negotiate some more. Who knows - you may get it for a 2% reduction. You might have to go all the way to 10%, but often you won't. A little stubbornness pays big dividends.
•Get Something in Return for Your Added Value
What if you discover that the buyer wants to be able to track his expenditures for your products or services in a way that is far more detailed and complex than is standard for your industry? What if your account tracking system is set up in a way that you can provide that information at essentially no cost to you? Often the salesperson's overwhelming temptation is to jump in and say, "Oh, we can do that. That's no problem." Before you do, however, think about your options. You could throw it in as part of the package and try to build good will. Or you could take a deep breath and try something like, "That's a difficult problem that will require some effort on our part, but it's doable." In the second case, without committing, you've told the buyer it is possible. You may not be able to get him to pay extra for it but you may be able to use it as a bargaining chip in resisting price concessions. Which way you choose to go will depend on who your customer is and on the situation. However, you do have options.
•Sell and Negotiate Simultaneously
Think of selling and negotiating as two sides of the same coin. Sometimes one side is face up, and sometimes the other side, but they are always both there. This is particularly true in your earliest contacts with the buyer. The face the buyer sees is that of a salesperson demonstrating features and benefits. The hidden face is that of a negotiator probing and seeking out information that may be invaluable later should issues like price, terms, quality, delivery, etc. have to be negotiated.
•Be Patient
Finally, and most important, be patient. Sales is a high energy, fast moving business. Patience is one commodity that is in relatively short supply, but if you're impatient in a negotiation, you'll lose your shirt. If I'm negotiating with you and I know that you're impatient, I will hold out just a little longer, no matter how desperate I am to make a deal with you. As long as I know you're in a hurry, I'll wait. So be patient. Take the time that you need, don't rush to give in, don't show your anxiety, stay cool and don't panic. Negotiation is a process and a game. Use the process and play the game. And you'll be surprise at the difference that it makes!
Types of Sales Closing Techniques
Many inexperienced sales people think that a deal is over as soon as the customer makes a commitment to make a purchase of the product or service that the company offers to him. They don't realize how important is it to exactly close and cement the deal. Some sales person are so bad in closing the deal that they turn a positive customer into a negative one.
Closing is a critical stage in a sales deal. It involves skill and techniques to master properly.
Some of the sales closing techniques are as below:
•1-2-3 Closing Technique. A customer evaluates the benefits of the product in terms of cost of the product, quality of the product and the time of availability of the product. 1-2-3 closing technique accounts for all of these parameters at the time of closing so that the customer at the time of drawing conclusions is certain about what he is getting in terms of these parameters.
•Adjournment Closing Technique. This technique says not to close the deal now. It gives a chance to the customer to think over the deal. But such a technique should be employed only in the most adverse situations like if the customer is not able to decide now, he is a bit confused over what package to decide up on or the customer needs to decide over the number of packages he needs to buy. Such a technique should be employed only when the seller finds a possibility of a possible gain while devoting his time to the customer.
•Affordable Closing Technique. This technique is employed at the time when the customer has certain doubts about the product's price. Here the seller has to act really smart and make the customer understand that they are actually watching the price only from one angle but there is also another view on the deal that makes the price very much affordable to them. The seller over here can highlight the advantages over the price the customer has to pay for the product.
•Alternative Closing Technique This type of closing takes place when the customer is exactly in the right mood to buy the package or product and now he has to decide on just the number of options available with the package. For example the number of packages to buy, and what plan out of the two to buy etc. The salesperson gives the customer a choice of options, both of which lead to a commitment.
•Assumptive Closing Technique An assumptive close is made in a situation where the seller has a feeling that though the customer is tempted to purchase the product, but if still allow time for the customer to think it over, chances are that the customer will refuse the proposal. In such a situation the customer's mind is diverted by taking the topic to another more positive point, that can help close the deal, like when the customer wants the delivery, how many packages to go for, what plan to go for etc.
Similarly there are many more closing techniques that can be employed by the seller after carefully analyzing the situation and then smartly applying one of those closing techniques with the sole aim in mind to close the deal.
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