tag:blogger.com,1999:blog-20716509162719312932024-03-13T10:47:27.955-07:00Modern Approach to Marketing ManagementThe term marketing has changed and evolved over a period of time, today marketing is based around providing continual benefits to the customer, these benefits will be provided and a transactional exchange will take place.
The Chartered Institute of Marketing define marketing as 'The management process responsible for identifying, anticipating and satisfying customer requirements profitably'.
Join me as we take a look at the modern approach to Marketing Management.Prince Oluwabamidele http://www.blogger.com/profile/11493338625119821611noreply@blogger.comBlogger92125tag:blogger.com,1999:blog-2071650916271931293.post-88800198267470873352014-08-14T21:22:00.002-07:002014-08-18T22:10:57.532-07:00Attributes of a Salesperson <div dir="ltr" style="text-align: left;" trbidi="on">
Sales as been seen as the life line of every company dealing with products and services. Management of these company now draw more emphases on how to increase sales in other to generate the company profit.<br />
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Therefore it’s the only thing that pays," according to Grant Cardone, sales expert and author of Sell or Be Sold: How to Get Your Way in Business and in Life.
"If you're not going to be great in sales, go get another career, because it's too hard to do if you're not going to succeed," Cardone adds. "Great salespeople are literally the engine of every economy in the world."
Questions are asked why are some salespeople unable to hook a buyer as masterfully as they seal a deal?. And why do many salespeople struggle to do both?<br />
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Basically this fall into two words: “Personal constraints” Personal constraints are those things that limit us as individuals – that hold us back.
So what does a great salesperson looks like? While this varies across industries and even across salespeople in the same organization, the following are the most common traits:
Below are some of the attributes of a Great Salesperson<br />
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1.A good salesperson don't think in terms of sales but rather in terms of building a business. Great sales people are building a business, not just trying to make a sale. When you think beyond a sale, you're going to get other people's attention much more easily. They're going to be more interested in what you have to say. You want something that's going to survive beyond one sale.
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjNPIyBju5BH0IhNfnmTp4xYtiwA4tB8tq6I92uWauF5lc2R-ByjZVj2C3xulkJ2BfyfWOdtWidRTvDt2lLNcdeVqUsCJ_MI7nW9y6rkQdmO_uYM37gO7MvRIXL_ydc6LKn3RmDqkmOo6o/s1600/Sales3.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjNPIyBju5BH0IhNfnmTp4xYtiwA4tB8tq6I92uWauF5lc2R-ByjZVj2C3xulkJ2BfyfWOdtWidRTvDt2lLNcdeVqUsCJ_MI7nW9y6rkQdmO_uYM37gO7MvRIXL_ydc6LKn3RmDqkmOo6o/s320/Sales3.jpg" /></a></div>
2.A good salesperson are disciplined – Procrastination is non-existent for successful salespeople, who possess tremendous follow-through and are not easily swayed from their tasks or goals. They are good at organizing, planning, and prioritizing, and have a “do it now” mentality.<br />
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3.A good salesperson don't rush--A study was done about physical demonstrations of confidence and power some time ago. The external view of two people moving was observed by a cross-section of people and questions were asked about which one had greater confidence, was paid more, and had a position of greater authority. They both wore similar attire, and were of the same body shape and age. The only distinguishing characteristic was the speed in which they performed their actions. The one who looked rushed always scored lower. An appearance of confidence in part comes from an appearance of control.<br />
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4.A good salesperson is always positive – Successful salespeople see the glass as half full. They have positive attitudes and are able to turn negatives into positives in any sales situation. They learn from defeat to better improve their chances of success.<br />
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5.A good salesperson don't see failed sales attempts as failures but as investments in the process. If you don't close a business deal, don't think of it as a failed attempt. You should know that some attempts pay while others don't, but they're all investments in the business.
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgGNFCZFu_kUj5SuHSm_xi-vYMMxYIYVW4wnRscBPOD8MvnxylH_SxChoRptokuEvTSYLf8iHrq1ax_WtRgg1cOs9vES5SmnF7uzPCjKFBNh769C0Y8-VN3PmzQHs_ePcTDnAC6y65rRQ8/s1600/Sales2.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgGNFCZFu_kUj5SuHSm_xi-vYMMxYIYVW4wnRscBPOD8MvnxylH_SxChoRptokuEvTSYLf8iHrq1ax_WtRgg1cOs9vES5SmnF7uzPCjKFBNh769C0Y8-VN3PmzQHs_ePcTDnAC6y65rRQ8/s320/Sales2.png" /></a></div>
6.A good salesperson invest in his/her education, development and personal motivation, knowing that these are the tools of a sales professional. You need to continue to invest in your game, much like a professional ballplayer is always practicing.<br />
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7.A good salesperson is always confident – Rejection is commonplace in sales. Salespeople hear the word "no" all the time. Successful salespeople have the confidence to take "no" as a challenge, not as personal rejection.<br />
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8.A good salesperson adapt to situation – Successful salespeople understand that change is sometimes necessary and are able to quickly adapt and to change what doesn't work.<br />
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9.A good salesperson ask great questions--This has been written about by me and many others. The data confirms that the higher-performing sales representatives ask more questions--often more than twice as many--and their questions are more focused on implications than on data. Put another way, they ask questions about what something means rather than just what it is.<br />
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10.A good salesperson surround himself with overachievers and have little time for those who don't create opportunities. These people are sometimes viewed as being uninterested in others, but the truth is that they're just not interested in low production. They don't want to waste time with people who can't get anything done.
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11.A good salesperson is hardworking – Successful salespeople have a good work ethic and do what it takes to get the job done. They also are willing to roll up their sleeves and work long hours to reach and surpass their goals.
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12.A good salesperson is willing to invest in networking, building community and relationships, knowing for sure that the difference between a contact and a contract is the "R" that stands for "Relationship." Invest in your community.<br />
Don't look at it as an expense since you need to develop these relationships. So, go ahead and join the country club, participate in community development and give money to people that needs it. In other words, be involved as much as you can.
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<div class="blogger-post-footer">“The level of your success is not measure by the fatness of your bank account, but rather it is measured by the level of your knowledge”. Oluwabamidele</div>Prince Oluwabamidele http://www.blogger.com/profile/11493338625119821611noreply@blogger.com0tag:blogger.com,1999:blog-2071650916271931293.post-53895414991462452052011-08-11T17:36:00.000-07:002011-08-11T17:36:57.509-07:00The Concept and Component of Marketing Information System (MKIS)A marketing information system (MKIS) is defined a set of procedures and methods designed to generate, analyze, disseminate, and store anticipated marketing decision information on a regular, continuous basis. An information system can be used operationally, managerially, and strategically for several aspects of marketing.<br />
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A Marketing Information System can also be defined as 'a system in which marketing data is formally gathered, stored, analysed and distributed to managers in accordance with their informational needs on a regular basis' <br />
A marketing information system can be used operationally, managerially, and strategically for several aspects of marketing.<br />
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As we all know that no marketing activity can be carried out in isolation, know when we say it doesn’t work in isolation that means there are various forces could be external or internal, controllable or uncontrollable which are working on it. Thus to know which forces are acting on it and its impact the marketer needs to gathering the data through its own resources which in terms of marketing we can say he is trying to gather the market information or form a marketing information system. This collection of information is a continuous process that gathers data from a variety of sources synthesizes it and sends it to those responsible for meeting the market places needs. The effectiveness of marketing decision is proved if it has a strong information system offering the firm a Competitive advantage. <br />
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<b>Locating data and developing information</b><br />
The information needed by marketing managers comes from various sources which includes: - internal company records, marketing intelligence and marketing research. The information analysis system then processes this information to make it more useful for managers.<br />
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<b>Internal Records</b><br />
These are information gathered from sources within the company to evaluate marketing performances and to detect marketing problems and opportunities. Most marketing managers use internal records and reports regularly, especially for making day-to-day planning, implementation and control decisions. Internal records information consists of information gathered from sources within the company to evaluate marketing performance and to detect marketing problems and opportunities.<br />
Information from internal records is usually quicker and cheaper to get than information from other sources, but it also presents some problems. Because internal information was for other purposes, it may be incomplete or in the wrong form for making marketing decisions. For example, accounting department sales and cost data used for preparing financial statements need adapting for use in evaluating product, sales force or channel performance.<br />
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Marketing Intelligence<br />
The total information needs of the marketing department can be specified and satisfied via a marketing intelligence network. The marketing intelligence system determines the intelligence needed, collects it by searching the environment and delivers it to marketing managers who need it. Marketing intelligence comes from many sources. Much intelligence is from the company's personnel - executives, engineers and scientists, purchasing agents and the sales force. But company people are often busy and fail to pass on important information. The company must 'sell' its people on their importance as intelligence gatherers, train them to spot new developments and urge them to report intelligence hack to the company. <br />
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The company must also persuade suppliers, resellers and customers to pass along important intelligence. Some information on competitor’s conies from what they say about themselves in annual reports, speeches, press releases and advertisements. The company can also learn about competitors from what others say about them in business publications and at trade shows. Or the company can watch what competitors do - buying and analyzing competitors' products, monitoring their sales and checking for new patents. Companies also buy intelligence information from outside suppliers.<br />
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<b>Marketing research systems</b><br />
Marketing research is a proactive search for information. That is, the enterprise which commissions these studies does so to solve a perceived marketing problem. In many cases, data is collected in a purposeful way to address a well-defined problem (or a problem which can be defined and solved within the course of the study). The other form of marketing research centers not on a specific marketing problem but is an attempt to continuously monitor the marketing environment. These monitoring or tracking exercises are continuous marketing research studies, often involving panels of farmers, consumers or distributors from which the same data is collected at regular intervals. Whilst the ad hoc study and continuous marketing research differs in the orientation, yet they are both proactive.<br />
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Marketing Information should not be approached in an infrequent manner. If research is done this way, a firm could face these risks:<br />
1.Opportunities may be missed.<br />
2.There may be a lack of awareness of environmental changes and competitors’ actions.<br />
3.Data collection may be difficult to analyze over several time periods.<br />
4.Marketing plans and decisions may not be properly reviewed.<br />
5.Data collection may be disjointed.<br />
6.Previous studies may not be stored in an easy to use format.<br />
7.Time lags may result if a new study is required.<br />
8.Actions may be reactionary rather than anticipatory.<br />
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<b>Advantages of Marketing Information System</b><br />
1. Organized data collection.<br />
2. A broad perspective.<br />
3. The storage of important data.<br />
4. An avoidance of crises.<br />
5. Coordinated marketing plans.<br />
6. Speed in obtaining sufficient information to make decisions.<br />
7. Data amassed and kept over several time periods.<br />
8. The ability to do a cost-benefit analysis.<br />
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The disadvantages of a Marketing information system are high initial time and labor costs and the complexity of setting up an information system. Marketers often complain that they lack enough marketing information or the right kind, or have too much of the wrong kind. The solution is an effective marketing information system.<br />
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<b>The marketing information systems and its subsystems</b> <br />
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Marketing information systems are intended to support management decision making. Management has five distinct functions and each requires support from an MIS. These are: planning, organising, coordinating, decisions and controlling<br />
Information systems have to be designed to meet the way in which managers tend to work. Research suggests that a manager continually addresses a large variety of tasks and is able to spend relatively brief periods on each of these. Given the nature of the work, managers tend to rely upon information that is timely and verbal even if this is likely to be less accurate then more formal and complex information systems.<br />
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Managers play at least three separate roles: interpersonal, informational and decisional. MIS, in electronic form or otherwise, can support these roles in varying degrees. MIS has less to contribute in the case of a manager's informational role than for the other two.<br />
Three levels of decision making can be distinguished from one another: strategic, control (or tactical) and operational. Again, MIS has to support each level. Strategic decisions are characteristically one-off situations. Strategic decisions have implications for changing the structure of an organisation and therefore the MIS must provide information which is precise and accurate. Control decisions deal with broad policy issues and operational decisions concern the management of the organisation's marketing mix.<br />
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A marketing information system has four components: the internal reporting system, the marketing research systems, the marketing intelligence system and marketing models. Internal reports include orders received, inventory records and sales invoices. Marketing research takes the form of purposeful studies either ad hoc or continuous. By contrast, marketing intelligence is less specific in its purposes, is chiefly carried out in an informal manner and by managers themselves rather than by professional marketing researchers<br />
<div class="blogger-post-footer">“The level of your success is not measure by the fatness of your bank account, but rather it is measured by the level of your knowledge”. Oluwabamidele</div>Prince Oluwabamidele http://www.blogger.com/profile/11493338625119821611noreply@blogger.com0tag:blogger.com,1999:blog-2071650916271931293.post-2015449823683719082011-01-03T23:44:00.000-08:002011-01-03T23:44:44.650-08:00Search Engine MarketingSearch engine marketing as it sometimes refer as “SEM” is often used to describe acts associated with researching, submitting and positioning a Web site within search engines to achieve maximum exposure of a particular web site. SEM includes things such as search engine optimization, paid listings and other search-engine related services and functions that will increase exposure and traffic to your Web site.<br />
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<b>Search Engine Marketing Guide</b><br />
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There is a lot involved when it comes to search engine marketing. Sometimes, it can be a bit overwhelming, even for those with a great deal of experience. But never the less by taking it one step at a time, it is not hard to learn. And once learned, search engine marketing can provide an effective method of driving highly targeted visitors to your web site<br />
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Below are the following steps to search engine marketing<br />
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•Keywords & Search Terms: - The first step is to learn about the search terms that your target audience is using when using search engines. These search terms are the keywords and key phrase that will be used to market your web site. <br />
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Search terms refer to the words and phrases that people type into the search forms of search engines, eg digital camera, Keywords and key phrases on the other hand are the words on you have on your site that match these search terms. <br />
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Search engines spiders and search engines users look at the keywords and key phrases on your website in order to index it. Therefore you keywords and key phrase should be well structured to really reflect the information you are sending to your audience, Before you do any type of search engine marketing, you have to understand your target audience and know the search terms they are using. Once you know the search terms being used, these can be included in the content of your Web site as keywords and key phrases. This would be a very terrible mistake if it is otherwise.<br />
•Search engine optimization: - in a simple word, SEO is the process of optimizing one's website to get better results in search engines.<br />
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Having a good search engine optimization is very basic. The design and content of a good search engine has to be optimized because the parameters that make a web page or web site friendly for search-engine and for viewers may be different. Therefore, an optimized solution has to be obtained for best results. SEO is more of a process than a single action and it takes time and an intelligent to achieve best result.<br />
A successful search engine optimization campaign will usually contain these essential components:<br />
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Content: - This is what drives search engine rankings, content is what brings users to your site, and content, when sprinkled appropriately with keyword phrases, will feed search engine spiders. Rinse, repeat. This is very important search engine optimization.<br />
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Simple Site Design. Sites that are successful in the search engine results have this in common-they are all simply designed, with a minimum of bandwidth hogging graphics, slowly loading animations or other such frippery, and are easy to navigate. Simple, clean designs are what search engine spiders and search engine users like, because it enables them to get to what they're looking for; which is - you guessed it - content.<br />
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Well-written Meta tags. Meta tags-keyword, description, and title- are important, but they won't make or break your site. Meta tags are merely part of the overall success strategy. They need to be written with compelling, keyword phrase-heavy content that will make the user click through from the search results page.<br />
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<b>•Search engine submission: -“SES”</b> is the act of submitting specific URLs to popular search engines like Google, MSN and Yahoo! to ensure the web page gets spidered and indexed. While Search Engine Submission is often seen as a way to promote a web site, it generally is not necessary. Because the major search engines like Google, Yahoo, and MSN use crawlers, bots, and spiders that eventually would find all by themselves most web sites on the Internet.<br />
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<b>Ways to submit a website</b><br />
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There are basically three ways to get your site listed in a search engine:<br />
Submit your site directly to the search engine using a free submit form.<br />
Let the search engine find your site through links to your site from other sites such as directories.<br />
Pay the search engine to index your site.<br />
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<b>•Link popularity: </b>- refer to the number of incoming links that you have to your site from other sites. These links can be from directories, articles, or web sites. The more links you have pointing to your site, the better.<br />
The number and quality of links that you have pointing to your site are a factor that many search engines consider when determining the rank or your site and individual pages of your site. Also, the more incoming links you have, the greater the traffic to your site<br />
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<b>How to get a link popularity</b><br />
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Submit your site to web directories; directory links are great. They'll have your keywords in the link text & description, on a page with a topic relevant to yours. People browsing through the directory can find your site as well.<br />
Sites in your field; when you find a website similar to yours (even a competitor!), or on a related topic, consider asking them for a link. Don't forget informational sites, professional organizations, & forums.<br />
Forums & Emails; put a link to your website in your signature if you participate in online discussions (if it's permitted). Every post you make will give you a link (albeit one that may not carry a lot of weight).<br />
It will happen naturally; Once your site offers something of value, people will begin to link to it because they want to. And, some of these links will be from relevant sites and one other ways is by asking your visitors to link to you by including a "link to us" page that provides link code & some graphics. <br />
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<b>Checking Your Link Popularity</b><br />
After creating link popularity, it is advisable to check your link popularity. This can be done through Marketleap, they provide a tool called the Link Popularity Check. It is a great way to periodically check the number of incoming links to your site.<br />
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•Paid inclusion: -A search engine marketing model in which a Web site pays a fee to a search engine that then guarantees that the Web site will be displayed in the returned search results for specifically named search terms. It is also often called PFI (Pay for Inclusion) or PPI (Pay Per Inclusion).<br />
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Paid inclusion, for some search engines, also means that the search engine’s spiders will crawl their sites more often than non-paid sites. Different search engines treat paid inclusion results differently; some indicate the paid inclusion results as advertisements while others display them as results alongside non-paid search results. This option is becoming more popular with both site owners and search engines. Site owners that want to get indexed quickly like it because they don't have to wait for the search engines to find their sites naturally through incoming links and listings in directories. Search engines like it because it is a way to increase revenue by charging the site owners for this service. If you have the budget and you don't want to wait, this is a good option.<br />
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•Pay Per Click Search Engines: -Pay Per Click (PPC) is an Internet advertising model used on websites, in which advertisers pay their host only when their ad is clicked. With search engines, advertisers typically bid on keyword phrases relevant to their target market, in which advertisers pay their host only when their ad is clicked<div class="blogger-post-footer">“The level of your success is not measure by the fatness of your bank account, but rather it is measured by the level of your knowledge”. Oluwabamidele</div>Prince Oluwabamidele http://www.blogger.com/profile/11493338625119821611noreply@blogger.com0tag:blogger.com,1999:blog-2071650916271931293.post-37907189792296156812010-08-26T22:57:00.000-07:002010-08-26T22:57:40.069-07:00Guide to Affiliate marketing<b>Definition of Affiliate marketing:</b><br />
<b>Affiliate marketing</b> is a revenue sharing partnership between a web merchant and one or more affiliates. The affiliate is paid a commission for referring clicks, leads or most often sales to the merchant.<br />
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<b>Affiliate Marketing</b> is a revenue sharing venture between a website owner and an online merchant. The website owner will place advertisements on his websites to either help sell the merchant's products or to send potential customers to the merchant's website, all in exchange for a share of the profits.<br />
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<b>Affiliated companies</b> are companies which are related to each other in some way. There are a number of ways in which companies can be related, ranging from formal arrangements, like interlocking directorates, to simply working in the same industry. Affiliated companies may work together on projects, provide special services for customers of their affiliates, and engage in other business activities in association with the companies they are related to<br />
Being an affiliate marketer you won’t have to worry about creating your own product, e-commerce, product delivery, or even customer support since it is the merchant’s responsibility.<br />
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<b>Qualities to possess to succeed in affiliate marketing</b><br />
<b>1. Affiliate Marketing Needs You To Be Patient</b><br />
Too many Internet marketers lose out because they become impatient. You need to have a strong desire to succeed in affiliate marketing.<br />
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2. <b>Affiliate Marketing Requires Hard Work</b><br />
Starting out in affiliate marketing requires your time, dedication and hard work. I remember my sleepless nights, working shifts at my workplace and coming back home to continue on my sites. If you're just starting out, forget what the gurus tell you about working 2 hours per day the watching the money flow in.<br />
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<b>3. Affiliate Marketing Needs You To Be Creative</b><br />
The real key to being successful with affiliate marketing is to develop a good content based website and weave your affiliate links into all your content. You have to provide your prospects with good, quality content to keep them coming back to your site.<br />
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<b>Ways to earn money through affiliate marketing</b><br />
<b>Pay Per Click —</b> Every time a potential customer leaves the affiliate website by "clicking" on the link leading to the merchant's website, a certain amount of money is deposited in the affiliate's account. This amount can be pennies or dollars depending on the product and amount of the commission.<br />
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<b>Pay Per Sale —</b> Every time a sale is made as a result of advertising on the affiliate's website, a percentage, or commission, is deposited into the affiliate's account.<br />
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<b>Pay Per Lead </b>— Every time a potential client registers at the merchant's website as a result of the advertisement on the affiliate's account, a previously determined amount is deposited into the affiliate's account.<br />
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For many website owners, this is a great way to earn some extra money without actually having to "do" anything. All it involves is placing an ad on the affiliate's website. There's no selling or promotion of any kind. The affiliate can just sit back and wait for the profits to roll in.<br />
The affiliate has to do thorough research on the merchant before agreeing to affiliation. To not do so can mean ending up with a merchant who refuses to pay commission fees or packs up his business and moves on without informing any of his affiliates. This is rare, however, and most merchants and affiliates have a pleasant and profitable business arrangement.<br />
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It's important to choose wisely. In some cases, an ad can be placed on an affiliate's website for months before a potential customer "clicks" or purchases something. If the commission is only pennies, this can lead to a frustrating relationship. Both the affiliate and the merchant are well advised to ensure the relationship will be mutually beneficial.<br />
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<b>Becoming an Affiliate Marketer</b><br />
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As an affiliate marketer first thing you need to do is to go to a site like Commission Junction and sign up. Once you sign up, you can browse what kind of products they offer that you can promote, this is very important. Once you find something there to promote, you can add the code to your site. Try as much as possible to pick something that will be compatible with your website. Like, if your website is about early childhood education, you find an affiliate program that has do with things related to early childhood programm.<br />
Your main goal as an affiliate marketer is to bring traffic to your partner merchant. By "traffic", we mean a number of people visiting a certain website.<br />
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There is no standard in traffic counts. Each merchant has their own desired traffic figures. As an affiliate marketer, always remember to pattern your strategies to your partner's objectives.<br />
To generate your merchant's aspired number of traffic, develop contents in your website based on your market's interests and your merchant's profile. To do this, understand how your partner's business operates and understand what your consumers' behaviour are when online.<br />
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Get an affiliate program you want to promote, make a free website, write an article about what you are promoting and submit it. Back link your site on forums that are on the same subject as your website.<br />
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You need to make sure your affiliate link or banner is somewhere that will get people to notice it and make them want to click on it. This up to you/ try different location until you find one that works for you.<br />
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Once you have that set up the code on your website, you will have to promote the page to get people on the site. That is somewhat easy to do. The best and easy way to do it is to post in forums that is similar to your site and have you site in the signature. You can also write articles on sites with your link in the resource portion of the article.<br />
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Now you might be saying, "what if I don't have a website?" Well, that's fine also, just make a blog about a subject that you know about and go to Commission Junction to find an affiliate product to promote it.<br />
<br />
Also if you don't want to start a blog, you can also use a signature in a forum if you post in the right forums. But that's sometimes is frowned upon. I have seen people do that before though. I'm not sure how much money you can make doing it this way, but you can always try it if that is what you want to do and you should start seeing some kind of money coming in. It will not make you rich but it will put smiles on your face. <br />
<br />
While affiliate marketing can be incredibly lucrative it is important to know that affiliate marketing is not easy money. Most people who try it make very little as it relies upon numerous factors including:<br />
<br />
traffic (high traffic helps a lot)<br />
finding relevant products<br />
finding quality products<br />
building trust with your readers<br />
having a readership who is in a ‘buying mood’<br />
you being able to write good sales copy (and more)<br />
<br />
However, as they always say there are two sides to a coin, the affiliate marketing program also has its advantages and disadvantages.<br />
<br />
<b>Advantages of Affiliate Marketing</b><br />
<br />
•Affiliate marketing boosts sales and opens up new marketing channels.<br />
•Merchants only have to pay their affiliates when a lead has been generated or there has been a sale, which is cost effective marketing.<br />
•An affiliate marketer can still maintain his present work or business and have the affiliate marketing income to supplement his financial position. With a laptop and an internet connection, anybody can work almost anywhere even while enjoying a vacation.<br />
•For clients, they do not have to drive all the way to the merchant's store or retailer to physically buy the product or engage the services of a service provider.<br />
•Marketing allows smaller companies the chance to expose their products on websites that already have a great number of people looking at them. Affiliate sites also benefit from this type of marketing because they receive a commission for every sale they make for their website.<br />
•It does not require a sizeable investment on the part of the affiliate.<br />
<br />
<b>Disadvantages of Affiliate Marketing</b><br />
Having gone through the advantages of affiliate marketing, it also comes with a few disadvantages.<br />
•The greatest one of all is that a lot of people get into this game with completely wrong expectations, unfortunately, it's not like you can simply create a small website and start earning raking in huge commissions over night. Even though affiliates generally have to deal with fewer issues than product creators, it's still a complex business that requires many different skills.<br />
•There are link hijackers that hijack the affiliate link and then get paid the commission that the affiliate is suppose to be getting paid.<br />
•Dishonest merchants can close down their program without telling the affiliate and without paying them their commission. <br />
•Affiliates may mislead or falsify advertising in order to get the sales commission. The affiliate may make promises regarding the product which are completely wrong or exaggerated. If this happens the merchant will usually receive complaints and potentially lose customers<br />
•Merchants could promise high commissions to get new affiliates and then lower the commission rate a couple of weeks after getting the new affiliates.<br />
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Lastly, No matter what the disadvantages of affiliate marketing are, it still one of the best forms of marketing available online today and is a great way for you to make money. As a vendor, you should definitely have an affiliate program for your products, as it really is the best risk-free marketing to be had. As an affiliate, you simply need to have realistic expectations and be willing to put in the work necessary to really see good results. If you are looking for a way to make extra money and help others market their business, affiliate marketing is right for you.<br />
<br />
<a imageanchor="1" target="_blank" href="http://www.amazon.com/Affiliate-Programs-Peoples-Products-ebook/dp/B001GXQ5PY?ie=UTF8&tag=modernap-20&link_code=bil&camp=213689&creative=392969"><img alt="Affiliate Programs: How to Make Money Online with Other People's Products" src="http://ws.amazon.com/widgets/q?MarketPlace=US&ServiceVersion=20070822&ID=AsinImage&WS=1&Format=_SL160_&ASIN=B001GXQ5PY&tag=modernap-20" /></a><img src="http://www.assoc-amazon.com/e/ir?t=modernap-20&l=bil&camp=213689&creative=392969&o=1&a=B001GXQ5PY" width="1" height="1" border="0" alt="" style="border:none !important; margin:0px !important; padding: 0px !important" /><br />
<a imageanchor="1" target="_blank" href="http://www.amazon.com/Affiliate-Millions-Fortune-Search-Marketing/dp/0470100346?ie=UTF8&tag=modernap-20&link_code=bil&camp=213689&creative=392969"><img alt="Affiliate Millions: Make a Fortune using Search Marketing on Google and Beyond" src="http://ws.amazon.com/widgets/q?MarketPlace=US&ServiceVersion=20070822&ID=AsinImage&WS=1&Format=_SL160_&ASIN=0470100346&tag=modernap-20" /></a><img src="http://www.assoc-amazon.com/e/ir?t=modernap-20&l=bil&camp=213689&creative=392969&o=1&a=0470100346" width="1" height="1" border="0" alt="" style="border:none !important; margin:0px !important; padding: 0px !important" /><br />
<a imageanchor="1" target="_blank" href="http://www.amazon.com/Practical-Guide-Affiliate-Marketing-Reference/dp/0979192706?ie=UTF8&tag=modernap-20&link_code=bil&camp=213689&creative=392969"><img alt="A Practical Guide to Affiliate Marketing: Quick Reference for Affiliate Managers & Merchants" src="http://ws.amazon.com/widgets/q?MarketPlace=US&ServiceVersion=20070822&ID=AsinImage&WS=1&Format=_SL160_&ASIN=0979192706&tag=modernap-20" /></a><img src="http://www.assoc-amazon.com/e/ir?t=modernap-20&l=bil&camp=213689&creative=392969&o=1&a=0979192706" width="1" height="1" border="0" alt="" style="border:none !important; margin:0px !important; padding: 0px !important" /><div class="blogger-post-footer">“The level of your success is not measure by the fatness of your bank account, but rather it is measured by the level of your knowledge”. Oluwabamidele</div>Prince Oluwabamidele http://www.blogger.com/profile/11493338625119821611noreply@blogger.com0tag:blogger.com,1999:blog-2071650916271931293.post-23128354177497435932010-07-21T20:06:00.000-07:002010-07-21T20:06:53.983-07:00Digital Marketing In Today’s Challenging MarketBefore digital marketing came along, professionals had to rely on print, radio and television advertising to reach customers. All of these channels are essentially one-directional modes of communication, requiring clever thinking to generate a response and ensure customer engagement. With the advent of mobile telephones, the Internet and other forms of interactive communication; professional marketers can today enter into a two way dialogue with the customer.<br />
<br />
When it comes to marketing, digital marketing is one of the most effective and cost into account in comparison to all other media. Digital marketing includes advertising or marketing strategy to use in advertising on mobile, Internet and other electronic media or digital. His importance to the advertising community is growing day by day, led many people to take their digital marketing profession.<br />
<br />
<b>What is Digital Marketing?</b><br />
<br />
“The use of digital technology and processes in the development, distribution, and promotion of products and services”.<br />
<br />
“Is the practice of promoting products and services using database-driven online distribution channels to reach consumers in a timely, relevant, personal and cost-effective manner”.<br />
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<br />
<b>What are Digital Marketing Media?</b><br />
<br />
The digital marketing sector uses many different digital marketing media channels, such as:<br />
Cell phone Short Message Service (SMS) – text messages<br />
Really Simple Syndication (RSS) feeds<br />
Podcasts<br />
Voice Broadcast<br />
Video E-mails<br />
Banner ads on affiliate websites<br />
Outdoor digital displays<br />
Websites<br />
Blogs<br />
<br />
<br />
<b>Strategies for Digital Marketing</b><br />
There are two basic digital marketing strategies used by current and potential customers. These two types of digital marketing are called the “Push” and the “Pull.” Their methodology for providing information to customers works as follows:<br />
<br />
<b>Pull digital marketing – </b>the customer seeks information about products and/or services by visiting the company’s sources of information searching for the specific product or service information. They are basically requesting to view this specific content. These are typically located in websites, blogs, streaming audio and video sources. Customers have found related information on other websites or been directed to the company’s sources by a referring website to find the information.<br />
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<b>Push digital marketing </b>– customers are provided information by receiving or viewing advertisements digitally, such as: SMS, RSS, cell phone calls, etc., as subscribers of the latest product and service information provided by the company.<br />
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<b>Advantage of Pull </b><br />
<br />
Pull has no restrictions on file size, no opt-in requirements, and low technology requirements for the company.<br />
Since requests are inherently opt-in, the size of content is generally unlimited.<br />
No advanced technology required to send static content, only to store/display it.<br />
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<b>Disadvantage of Pull</b> <br />
<br />
Marketing required, little tracking of visitors and no personalization to keep the visitors coming back.<br />
Considerable marketing effort required for users to find the message/content.<br />
Some types of marketing content may be blocked in mixed content scenarios (i.e.: Flash blockers)<br />
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<br />
<b>Advantages of Push</b><br />
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Personalization of messages, high conversation rate, and detailed tracking of customer choices.<br />
Faster delivery - push technologies can deliver content immediately as it becomes available.<br />
Consistent delivery - some push platforms have single content types, making it difficult for the user to block content by type.<br />
Better targeting - since push technology usually justifies subscription, more specific marketing data may be collected during registration, which allows for better targeting and more personalization.<br />
Better data - marketing data can be correlated to each request for content, allowing marketers to see information such as user name as well as demographic and psychographic data.<br />
<br />
<b><br />
Disadvantages of Push</b><br />
<br />
Requires Can Spam Act 2003 compliance, most customers must opt-in, can be blocked, simply opt-out, and requires delivery technology.<br />
<b>Smaller audience </b>- push technology not implemented on common platforms generally need client and/or server software before content can be created, distributed, and/or viewed.<br />
<b>Higher cost -</b> less popular platforms may have higher implementation costs.<br />
<b>Lesser discoverability </b>- smaller audiences mean fewer views mean less visibility in search engines.<br />
<br />
<b><br />
Important of Digital Marketing<br />
</b><br />
In today’s business world, businesses have numerous opportunities to reach their potential customers through 3G-enabled mobile phones and DTH connectivity. With large groups of consumers hooked up to the internet or other digital mediums, digital marketing solutions have an edge over conventional marketing techniques.<br />
<br />
If a business is to participate in a digital marketing campaign it is important to figure out the right campaign that will appeal to the target audience.<br />
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When it comes to the selection of the right digital marketing medium, the internet stands out as the cheapest and most effective option. Online video advertising, blog and forum postings, e-mail and RSS feeds are just a selection of advertising tools that have stemmed from the internet and its ability to reach to a wide, global customer base with speed and minimal cost compared to traditional marketing techniques.<br />
<br />
The internet and mobile telephone technologies have revolutionized the marketing industry; providing the means to track consumer interests and obtain an inexpensive link direct to the customer. <br />
A click on a website can capture customer details and ask key questions to assist with market profiling. The voluntary provision of email or mobile telephone contact details allows the marketing professionals to 'get in front of' the customer without breaching privacy regulations. The more closely consumers become connected to digital technologies, the greater the power of the information channel for marketing professionals. With mobile telephones and other electronic devices kept on the person, the rate of 'hits' is likely to be far higher than the scattergun approach of traditional media.<br />
Digital marketing helps your company increase its exposure to consumers who are actively seeking your product or service, making it much more effective than other forms of advertising.<br />
<br />
<br />
<b>Marketing Solutions</b><br />
<br />
Digital marketing solutions include the use of multiple channels of delivery, along with the use of both Push and Pull digital marketing techniques. Both of these are used to deliver messages and information about products and services to customers, along with any others who submit inquiries.<br />
<br />
<b><br />
Conclusion<br />
</b><br />
With many companies going into social networking now as a form of marketing strategies; Social networking media do not necessarily increase leads, nor do they populate a company's prospect database. But they do give organizations the opportunity to share information in a one-to-many format authenticated by consumer and peer reports. It give customers the ability to research companies more thoroughly, read peer reviews, and develop a comprehensive business profile before they ever make a purchase.<br />
<br />
Digital marketing campaigns have yielded greater conversion rates for affiliates than e-marketing strategy alone, because it is not restricted to the Internet. It may seem to be hard to believe, however, there are many people in world today who do not have access to a computer or have access to the Internet. Although almost everyone has a cell phone, MP3 player, iPod, and views outdoor digital displays.<div class="blogger-post-footer">“The level of your success is not measure by the fatness of your bank account, but rather it is measured by the level of your knowledge”. Oluwabamidele</div>Prince Oluwabamidele http://www.blogger.com/profile/11493338625119821611noreply@blogger.com0tag:blogger.com,1999:blog-2071650916271931293.post-41494518307677351502010-06-05T00:26:00.000-07:002010-06-05T00:26:00.824-07:00Developing Your Brand StrategyDeveloping a brand strategy can be one of the most difficult steps in the marketing plan process. It's often the element that causes most businesses the biggest challenge, but it's a vital step in creating the company identity. <br />
<br />
Your brand identity will be repeatedly communicated, in multiple ways with frequency and consistency throughout the life of your business. To begin the development of your brands strategy you must have an understanding of these four marketing components: -<br />
<br />
Primary Target Customer and/or Client Competition Product and Service Mix Unique Selling Proposition By identifying these components of your marketing plan you have created the basis for crafting your brand strategy. An effective branding process will create a unique identity that differentiates you from the competition. That is why it's often deemed as the heart of a competitive strategy. Determining Your Brand’s Objectives your brand should be comprised of the company personality, image, core competencies and characteristics. The impressions that you make as well as the words people will use to describe your company to others, are the basic framework of your brand. With a strong brand you build credibility, have more influence on your market, and motivate customers and clients to purchase from you. If done correctly your company will be looked at as a leader not a follower. <br />
<br />
Some of the questions to ask yourself when determine your brand objectives are as follows. <br />
•What do you want others to know and say about your products or services? <br />
•What is it that you want your brand to do for your company? <br />
Your objectives may include the following:- <br />
•Being recognized by receiving a specific award <br />
•Picking up a certain number of choice projects <br />
•Gaining a specific number of new clients in the next year <br />
<br />
Positioning your company as an industry leader in the next couple of months by defining your objectives you are able to draw up a plan on how to achieve these objectives. For instance your objective is to position your company as the best in the industry. In doing these here are some of the things you could do: <br />
Have members of your team speak at Trade Shows •<br />
Write and publish articles magazine, newspapers e.t.c <br />
Schedule lectures at professional gatherings within the industry Once you’ve determined your objectives the next stage is to build and develop your brand strategy by listing out how, when and what you are going to do to accomplish and meet these brand objectives. Use the questions above to determine your brand objectives. List each objective and map out how you plan to accomplish and succeed in meeting those objectives. Don’t stop there! Once you’ve finished take the time to list out what you can do at every point in time to meet that objective. Be specific and schedule those action items in your business agenda. <br />
<br />
The objectives that a good brand will achieve include: <br />
Delivers the message clearly <br />
Confirms your credibility <br />
Connects your target prospects emotionally <br />
Motivates the buyer <br />
<br />
Concretes User Loyalty Important of Branding to Marketing Strategies To succeed in branding you must understand that needs and wants of your customers and prospects. You do this by integrating your brand strategies through your company at every point of public contact. Your brand resides within the hearts and minds of customers, clients and prospects. It is the sum total of their experiences and perceptions, some of which you can influence and some that you cannot. A strong brand is invaluable as the battle for customers intensifies day by day. It’s important to spend time investing in researching, defining and building your brand.<br />
<br />
your entire brand is the source of a promise to your consumer. It’s a foundational piece in your marketing communication and one you do not want to be without. <br />
<br />
<b>The Elements of your Brand</b> <br />
Branding your business is very much like a game. There are important elements of your brand that translate into the world of competition. You have an objective – to make sales; a playing field - your marketplace; opponents - competitors in your market; strategies –your marketing approach; specific plays - your marketing tactics; and a winner - the company that makes the most sales. This game is constantly being played at every market for every product or service. Just think of the titanic battles you see everyday --- Coke vs. Pepsi, Microsoft vs. Apple, or Google vs. Yahoo, GM vs. Toyota. Each of these companies is competing with variety of strategies and tactics in hopes of defeating their rivals and dominates the market. They battle each other using offensive and defensive plays in hopes gaining the best position in the mind of the prospects. They aggressively execute their brand marketing plans and seek to advance their influence on the market until they score by reaching the coveted sale. Scoring a sale is the ultimate objective in the branding game. As a small business this must be the focus of all of your branding efforts. <br />
<br />
Your cannot afford the time and money that is required to do the glamorous, image advertising like buying the naming rights for a stadium or airing a thirty second Super Bowl ad. Your branding must achieve results and sales are the only desirable outcome. The brand game consists of several necessary key elements that define the character of your brand. It’s important to use these elements in combination to appeal to your target market. <br />
<br />
Pricing – this represents value; a higher price may imply higher quality, and lower prices may suggest decreased value. <br />
Distribution – how available your offering is; limited distribution of a product or service may imply exclusivity and consumers may be willing to pay more. <br />
Quality – this influences satisfaction; higher quality translates into more satisfied customers who return again to purchase your offerings. <br />
Presence – how prominent you are in the marketplace; a high-profile market presence will lead to brand awareness and opportunities to sell. <br />
Reputation – the market’s opinion of your brand character; this is built over time and difficult to alter once established. <br />
Image – the perceptions of your brand by buyers; this is closely related to your quality and reputation in the marketplace. Like reputation, image is difficult to change once established. <br />
Benefits – the affect your product or service has on the consumer; positive benefits are crucial to the product offering and to brand image and reputation. <br />
Positioning – your differentiation from the competition, this is established by the sum total of all of your branding strategy. <br />
Preference – the consumers predisposition to buy your product or service; this is the foundation for building customer loyalty. <br />
Customer commitment – the ultimate result of your branding strategy; loyalty is built through relationships and close consumer contact. <br />
<a target="_blank" href="http://www.amazon.com/22-Immutable-Laws-Branding/dp/0060007737?ie=UTF8&tag=widgetsamazon-20&link_code=btl&camp=213689&creative=392969">The 22 Immutable Laws of Branding</a><img src="http://www.assoc-amazon.com/e/ir?t=widgetsamazon-20&l=btl&camp=213689&creative=392969&o=1&a=0060007737" width="1" height="1" border="0" alt="" style="border:none !important; margin:0px !important; padding: 0px !important" /><a target="_blank" href="http://www.amazon.com/Kellogg-Branding-Marketing-Faculty-Management/dp/0471690163?ie=UTF8&tag=widgetsamazon-20&link_code=btl&camp=213689&creative=392969">Kellogg on Branding: The Marketing Faculty of The Kellogg School of Management</a><img src="http://www.assoc-amazon.com/e/ir?t=widgetsamazon-20&l=btl&camp=213689&creative=392969&o=1&a=0471690163" width="1" height="1" border="0" alt="" style="border:none !important; margin:0px !important; padding: 0px !important" /><a target="_blank" href="http://www.amazon.com/Designing-Brand-Identity-Essential-Branding/dp/0470401427?ie=UTF8&tag=widgetsamazon-20&link_code=btl&camp=213689&creative=392969">Designing Brand Identity: An Essential Guide for the Whole Branding Team</a><img src="http://www.assoc-amazon.com/e/ir?t=widgetsamazon-20&l=btl&camp=213689&creative=392969&o=1&a=0470401427" width="1" height="1" border="0" alt="" style="border:none !important; margin:0px !important; padding: 0px !important" /><a target="_blank" href="http://www.amazon.com/Branding-Faith-Churches-Nonprofits-Culture/dp/0830745637?ie=UTF8&tag=widgetsamazon-20&link_code=btl&camp=213689&creative=392969">Branding Faith: Why Some Churches and Nonprofits Impact Culture and Others Don't</a><img src="http://www.assoc-amazon.com/e/ir?t=widgetsamazon-20&l=btl&camp=213689&creative=392969&o=1&a=0830745637" width="1" height="1" border="0" alt="" style="border:none !important; margin:0px !important; padding: 0px !important" /><a target="_blank" href="http://www.amazon.com/Best-Practice-Cases-Branding-3rd/dp/013188865X?ie=UTF8&tag=widgetsamazon-20&link_code=btl&camp=213689&creative=392969">Best Practice Cases in Branding (3rd Edition)</a><img src="http://www.assoc-amazon.com/e/ir?t=widgetsamazon-20&l=btl&camp=213689&creative=392969&o=1&a=013188865X" width="1" height="1" border="0" alt="" style="border:none !important; margin:0px !important; padding: 0px !important" /><br />
In conclusion, these entire element costs no dime. They are attitudes and approaches that convey who you are. Yet, unlike image advertising, they are substantial, solid core values you must project in everything that you do.<div class="blogger-post-footer">“The level of your success is not measure by the fatness of your bank account, but rather it is measured by the level of your knowledge”. Oluwabamidele</div>Prince Oluwabamidele http://www.blogger.com/profile/11493338625119821611noreply@blogger.com0tag:blogger.com,1999:blog-2071650916271931293.post-44963962896016435442010-05-27T23:49:00.001-07:002010-05-27T23:52:05.558-07:00E- Marketing in 21st CenturyEmail marketing has become important in today’s business world. Its undeniable benefits continue to gain adepts in every level of commerce, industry and service. <br /><br /><span style="font-weight:bold;">What is Email Marketing?</span><br /><br />Email marketing is the advertisement of a product, service, or brand through electronic mail. Email marketing can be used to improve the relationship between a business and its customers or to gain new customers. In order to gain the email addresses of potential customers, businesses must either pay a fee to an email broker, use a subscription service, or rely on referrals from existing customers. Many companies, of course, use a combination of these methods.<br /><br /><span style="font-weight:bold;">What is Bulk Email Marketing?</span><br /><br />Bulk email marketing refers to a form of marketing that involves sending the same, or nearly identical, message to multiple email recipients. This type of campaign requires special software that takes each individual email address from a pre-existing list, and distributes a single message to each one. The number of recipients can range from hundreds to thousands, depending on campaign objectives.<br />Email marketing is easy to setup, affordable, vigorous and highly effective and targeted. Email is faster, by far less expensive and more compelling than the standard marketing tools, such as direct mail or print advertising. Email marketing is available to all. It is direct, it demands less time and resources and the results are instantly manifested.<br /><br />It is well known now in the business world that selling to existing customers is several times less expensive than getting a new one, and that profitability us hinged upon loyal customers and repeat business.<br /><br />Human beings have not changed much at their core, despite all the new resources that pile up to make our daily lives and businesses more productive, effective, fun and relaxed. When we find a good merchant or a good service provider that offer what we need, we like to establish and carry a personal relationship with them. And when we are satisfied with the performance of a product or service and we do have a good relationship with the merchant, we keep going back to that particular source every time we have the need to. We also refer our acquaintances to their care and call them my butcher, my lawyer, my child’s day care, my accountant, my doctor…<br /><br />So, at the end of the day, creating and sustaining good business is nothing but creating and sustaining good relationships. And good relationships are nourished via frequent, positive communication.<br />Email is the best tool available for this in our busy times.<br /><br />Studies show that it takes several contacts –six to seven, on average– before you actually turn a prospect into a customer, and that the more personal the contact, the better. But standard business communication tools –direct mail, telemarketing and print, radio and television advertisements– are not only expensive and time-consuming, but also often perceived by the public as invasive nuisances.<br /><br />Who doesn’t dread going to the mailbox on ‘junk-mail day’? Or picking up the phone when the caller ID shows a 1-800 number or ‘unknown caller’? Or even picking up the newspaper from the doorstep on Sundays, for heaven’s sake? How long did it take for you to figure out –and fume over– the fact that the young, perky voice on the other end of the line talking to you so casually was some satellite dish company’s computer? <br /><br />If doing good business is mostly about earning the good will of the public in the first place, standard marketing communication doesn’t do business a much lasting service in today’s world.<br /><br />Let try to remember how small business dealt with their customers in the past, we will easily grasp the value of permission-based email marketing. In the past, small business owners would build relationships with their customers in the neighborhood through personal interaction. In the course of this interaction, they learned their customer’s names, their birth dates and anniversaries, their place of origin, the names of their spouses and children, their individual preferences and interests. They would remember this information and bring it up opportunely, always keeping in touch with their customers –appropriately called ‘patrons’ then– in an intimate, familial way.<br /><br />The greater mobility, the more busy lifestyles of our time and new technologies have rendered a more expanded and impersonal world. The way we do business, the way we communicate and the way we socialize may have changed, but our core need to be individualized, to be recognized in the crowd, to be valued for ourselves, remains the same.<br /><br />It is in this world that permission-based email marketing can provide you with a larger, more loyal, more intimate circle of patrons –and do so in a faster, more direct and less expensive way than is possible with more traditional and impersonal marketing tools. <br /><br />Permission-based email marketing is affordable, renders a response rate up to five times greater than standard marketing and has a positive impact on the receivers’ perception of a company. A fraction of a cent per email takes a tight marketing budget a long ways into attaining your goals of winning new customers, boosting customer loyalty and fostering repeat business. But even if you favor a mix of flyers, print ads, newsletter sponsorship and Web banners in your strategy to obtain new business and retain customers, throwing the fast, affordable, direct and highly effective permission-based email marketing into that mix will only maximize the power of your investment.<br /><br />One of the advantages of email marketing is that it is expeditious. As soon as you have time-sensitive information to communicate to your client list, for example, or the minute you are ready to launch a particular campaign, you can wrap it up in an email message and immediately send it out directly to everyone on your list. And you will be able to see results right away –because with permission-based email marketing your patrons are actually looking forward to your messages.<br /><br />Email can be used to distribute newsletters, create brand awareness, promote preferred customer specials, advertise sales, announce new services and/or products, send/birthday/anniversary/holiday greetings, invite to events, educate your customers, and more… really fast. And what is best: it allows for that instant, consistent, one-on-one, two-way communication that will certainly benefit your business<br /><br />With email marketing, you can easily assess the number of emails sent, the number of emails opened and who opened them; the number of unsubscribers; the number of bounce-backs (both hard and soft), and the click through rates (including which links were more effective and who clicked through).<br /><br />This information is invaluable to gauge the overall effectiveness of your campaigns and to design and launch future campaigns that are highly effective and targeted to very specific individuals and/or groups of individuals.<br />One of the disadvantages to email marketing is something called spam. Spam is the word for both a tinned meat and email that is sent out to a huge number of people with little discretion. Spam is the email marketing version of carpet bombing. In fact, most email services include spam filters that weed out such emails from the general inboxes of their customers.<br />However, there is still concern in regards to SPAM (unsolicited commercial email) filters that are in use by ISPs (Internet Service Providers). These tools are being developed and used to protect the privacy and security of recipients from unlawful ‘marketers’ and other Internet crooks. The filters, however, are yet imperfect and sometimes weed out perfectly legitimate, permission-based messages (‘false positives’), which are then not delivered to the recipient, are usually ‘bounced’ back to the sender or simply deleted by the ISP –and can render a perfectly legitimate sender ‘blacklisted’.<br /><br /><span style="font-weight:bold;">Different Types of Email Marketing Campaign?</span><br />An email marketing campaign is one of the oldest forms of Internet marketing. While more advanced methods have come along, it can still be very effective provided the right approach and tools are utilized. There are many different types of email marketing campaigns that be launched by those who want to use the electronic mail system to reach their audience. <br /><br />An opt-in email marketing campaign involves distributing mail to a list of subscribers that have agreed to receive it from a particular company. Though mainly leveraged by ecommerce stores, it can prove beneficial to almost any online business. With opt-in email marketing, a business can keep its customers up to date on the latest products or services, as well as special offers and discounts. Several marketers attest that the most difficult aspect of such a campaign is composing a quality list of subscribers.<br /><br />Bulk email also represents a type of email marketing campaign commonly used to promote online businesses. Often facilitated through an email blast service or specialize software, bulk email typically involves simultaneously sending messages to a large mailing list of subscribers. This is generally an affordable way to reach a vast number of potential customers, but there are some notable disadvantages. There is a very fine line between a legitimate bulk email campaign and spam. Identifying this, and staying on the right side of it, is what usually enables marketers to achieve positive results.<br /><br />Newsletter marketing is often viewed as one of the most effective of all email marketing campaigns. This is primarily because someone who subscribed for a newsletter is more likely to read it, whereas a message distributed through another type of email marketing may get deleted without the recipient even opening it. Newsletters offer the ability to combine various techniques into a single package, allowing a business to drive its marketing message home, whether it involves promoting products and services, or simply keeping customers updated on the latest company news.<br />An email marketing campaign can make a great first step for the business that wishes to encourage dialogue with its audience, or deliver a message to the market. All campaigns, however, must obtain the maximum email delivery and high open rates, which basically means that the intended recipients are both receiving and reading the mail. Many successful email marketers agree that this best way to ensure a successful campaign.<br /><br /><br />In conclusion, one of the great things of the Internet is that whether we are big or small, whether we have a huge marketing budget or a very tight one, what will determine our success is our ability to reach out to our existing and potential customers; our ability to establish and nurture a trusting and close relationship with them; our ability to single out our individual customers from the crowd; our ability to pinpoint and satisfy their most particular needs and wants; and the quality of the products and services we provide.<div class="blogger-post-footer">“The level of your success is not measure by the fatness of your bank account, but rather it is measured by the level of your knowledge”. Oluwabamidele</div>Prince Oluwabamidele http://www.blogger.com/profile/11493338625119821611noreply@blogger.com0tag:blogger.com,1999:blog-2071650916271931293.post-62461162047440326102010-03-04T01:18:00.000-08:002010-03-04T01:24:09.444-08:00Important of Email Marketing to Every BusinessEmail marketing has become important in today’s business world. Its undeniable benefits continue to gain adepts in every level of commerce, industry and service. Email marketing is easy to setup, affordable, vigorous and highly effective and targeted. Email is faster, by far less expensive and more compelling than the standard marketing tools, such as direct mail or print advertising. Email marketing is available to all. It is direct, it demands less time and resources and the results are instantly manifested.<br /><br />It is well known now in the business world that selling to existing customers is several times less expensive than getting a new one, and that profitability us hinged upon loyal customers and repeat business.<br />Human beings have not changed much at their core, despite all the new resources that pile up to make our daily lives and businesses more productive, effective, fun and relaxed. When we find a good merchant or a good service provider that offer what we need, we like to establish and carry a personal relationship with them. And when we are satisfied with the performance of a product or service and we do have a good relationship with the merchant, we keep going back to that particular source every time we have the need to. We also refer our acquaintances to their care and call them my butcher, my lawyer, my child’s day care, my accountant, my doctor…<br /><br />So, at the end of the day, creating and sustaining good business is nothing but creating and sustaining good relationships. And good relationships are nourished via frequent, positive communication.<br />Email is the best tool available for this in our busy times.<br /><br />Studies show that it takes several contacts –six to seven, on average– before you actually turn a prospect into a customer, and that the more personal the contact, the better. But standard business communication tools –direct mail, telemarketing and print, radio and television advertisements– are not only expensive and time-consuming, but also often perceived by the public as invasive nuisances.<br /><br />Who doesn’t dread going to the mailbox on ‘junk-mail day’? Or picking up the phone when the caller ID shows a 1-800 number or ‘unknown caller’? Or even picking up the newspaper from the doorstep on Sundays, for heaven’s sake? How long did it take for you to figure out –and fume over– the fact that the young, perky voice on the other end of the line talking to you so casually was some satellite dish company’s computer? <br /><br />If doing good business is mostly about earning the good will of the public in the first place, standard marketing communication doesn’t do business a much lasting service in today’s world.<br /><br />Let try to remember how small business dealt with their customers in the past, we will easily grasp the value of permission-based email marketing. In the past, small business owners would build relationships with their customers in the neighborhood through personal interaction. In the course of this interaction, they learned their customer’s names, their birth dates and anniversaries, their place of origin, the names of their spouses and children, their individual preferences and interests. They would remember this information and bring it up opportunely, always keeping in touch with their customers –appropriately called ‘patrons’ then– in an intimate, familial way.<br /><br />The greater mobility, the more busy lifestyles of our time and new technologies have rendered a more expanded and impersonal world. The way we do business, the way we communicate and the way we socialize may have changed, but our core need to be individualized, to be recognized in the crowd, to be valued for ourselves, remains the same.<br /><br />It is in this world that permission-based email marketing can provide you with a larger, more loyal, more intimate circle of patrons –and do so in a faster, more direct and less expensive way than is possible with more traditional and impersonal marketing tools. For a pinch of a cent.<br /><br />Permission-based email marketing is affordable, renders a response rate up to five times greater than standard marketing and has a positive impact on the receivers’ perception of a company. A fraction of a cent per email takes a tight marketing budget a long ways into attaining your goals of winning new customers, boosting customer loyalty and fostering repeat business. But even if you favor a mix of flyers, print ads, newsletter sponsorship and Web banners in your strategy to obtain new business and retain customers, throwing the fast, affordable, direct and highly effective permission-based email marketing into that mix will only maximize the power of your investment.<br /><br />One of the advantages of email marketing is that it is expeditious. As soon as you have time-sensitive information to communicate to your client list, for example, or the minute you are ready to launch a particular campaign, you can wrap it up in an email message and immediately send it out directly to everyone on your list. And you will be able to see results right away –because with permission-based email marketing your patrons are actually looking forward to your messages.<br /><br />Email can be used to distribute newsletters, create brand awareness, promote preferred customer specials, advertise sales, announce new services and/or products, send/birthday/anniversary/holiday greetings, invite to events, educate your customers, and more… really fast. And what is best: it allows for that instant, consistent, one-on-one, two-way communication that will certainly benefit your business<br /><br />With email marketing, you can easily assess the number of emails sent, the number of emails opened and who opened them; the number of unsubscribers; the number of bounce-backs (both hard and soft), and the click through rates (including which links were more effective and who clicked through).<br />This information is invaluable to gauge the overall effectiveness of your campaigns and to design and launch future campaigns that are highly effective and targeted to very specific individuals and/or groups of individuals.<br />Is it all good?<br /><br />Basically, yes. However, there is still concern in regards to SPAM (unsolicited commercial email) filters<br />that are in use by ISPs (Internet Service Providers). These tools are being developed and used to protect the privacy and security of recipients from unlawful ‘marketers’ and other Internet crooks. The filters, however, are yet imperfect and sometimes weed out perfectly legitimate, permission-based messages (‘false positives’), which are then not delivered to the recipient, are usually ‘bounced’ back to the sender or simply deleted by the ISP –and can render a perfectly legitimate sender ‘blacklisted’.<br /><br />Legitimate email marketers are ‘CAN-SPAM compliant’, a certification that the merchant is doing legitimate business with legal products or services and in a permission-based mode.<br /><br />One of the great things of the Internet is that whether we are big or small, whether we have a huge marketing budget or a very tight one, what will determine our success is our ability to reach out to our existing and potential customers; our ability to establish and nurture a trusting and close relationship with them; our ability to single out our individual customers from the crowd; our ability to pinpoint and satisfy their most particular needs and wants; and the quality of the products and services we provide.<br /><br />See you next time!!!<div class="blogger-post-footer">“The level of your success is not measure by the fatness of your bank account, but rather it is measured by the level of your knowledge”. Oluwabamidele</div>Prince Oluwabamidele http://www.blogger.com/profile/11493338625119821611noreply@blogger.com0tag:blogger.com,1999:blog-2071650916271931293.post-64860826489149331362010-02-02T15:28:00.000-08:002010-02-02T15:36:14.065-08:00Pricing Strategy an important tool for your internet businessBuying a product from your mini mart, you will easily come across so many divest products with similarities from different brand, Yet each has a different price, and each product has a different price strategy. These are marketing decisions, pure and simple. The 4 Ps of Marketing are elements of the marketing mix that you can control. Price is one of the key elements in a winning marketing mix.<br />Doing business on the internet without having a pricing strategy is a doom, sometime, it may seem pretty simple on the surface; your company's pricing strategy can easily mean the difference between thriving and going bankrupt. A lot of factors are involved.<br />One of the first questions you need to answer are as follows: - <br />1.What are your site visitors like? <br />2.Are they bargain hunters? <br />3.Or do they look for excellence in customer service? <br />4.Or shop for products based on their prestige value? <br />5.Another important question is what does it cost you to purchase (or produce) and market this product or service? <br />Your price will have to be above your costs -- most of the time. Here are the various pricing objectives you'll want to consider.<br /><br /><span style="font-weight:bold;">Pricing Objectives</span><br />Two main pricing objectives stand out:<br /><br />•<span style="font-weight:bold;">To maximize short-term profits.</span> Here you try to squeeze as much money out of sales of the product as possible, even though fewer customers may make a purchase. Your strategy may be to charge premium prices for website design services. You end up with less customers, but then dealing with a lot of customers multiplies your problems. And you can make more profit off each customer. Or you may need to maximize profits in order to satisfy an impatient boss or investor.<br /><span style="font-weight:bold;">•To gain marketshare. </span>The other main strategy is to price your service lower to gain marketshare. You may want to maximize the number of subscribers to your online Internet access business, even though you don't make as much on each customer. But you know that later you'll be able to sell these subscribers other services such as web hosting, e-commerce, website design, DSL, and a host of others once they get comfortable with you. You don't make as much early, but you plan to make money later with "back end" sales.<br /><br />Most importantly are these two above listed objectives, although two others objectives may be considered which includes: -<br /><span style="font-weight:bold;">•To survive.</span> Survival is a worthy goal. Sometimes companies lower prices so they can generate enough revenue to survive short term. But this isn't a very good long-term strategy. There's an old joke about the businessman who said he was losing money on every sale, but he expected to make it up in volume. Good luck. Sometimes it's better to call it quits before you lose even more.<br /><span style="font-weight:bold;">•To help society. </span>You might keep the price lower than "what the market will bear" in order to make essential products available to the consumers who would otherwise be priced out of the market. Altruism has its place. You don't have to make as much money as possible, unless making money is your only goal. For example, I really want to keep my consulting services priced within reach of small businesses. I long to see small businesses thrive; that's part of what makes me tick. But I also want to charge better-funded companies a more appropriate fee for the more extensive services I render them. The way I do this is to offer a standard product or service, and an economy service at a lower price, but with clear limitations. <br /><br /><span style="font-weight:bold;">Customer Demand</span><br />Consumer Demand is a crucial factor. Demand is driven by consumer tastes, consumer income, and the availability of other products at a different price. For example, if a competitor begins to sell 10 packs of iris chocolates at a lower price than yours, the demand for yours will decrease. Professional pricing consultants construct demand curves to determine absolute demand. An Educational center recently reduced the fees for admitting a new student into the school, for a duration of the first week, it was discovered just how much lowering the fees by 20 dollars, increments would increase the total number of registration by plotting registration figures on a demand curve. <br />Of course, commodities, well known products that are pretty much the same as every other similar product, are strongly affected by demand as well as supply. Take crude oil, for example. If it's abundant, prices drop. If it's in short supply, though, and customer demand remains constant, the price goes up. You could always sell beans or corn or pork bellies on your website. But the price would be constantly changing. You need a great product that you have more control over. Producing your own product, or getting exclusive marketing rights, of course, is best if you can do it.<br /><br />But having a great and exclusive product is only half the battle. Making the customer aware of its existence and its value is the other, and that's the role of marketing. You can increase demand by advertising and careful pricing.<br /><br /><span style="font-weight:bold;">Estimating Revenue</span><br />Once you've established consumer demand, you need to estimate revenue. It'll help to master a few technical terms:<br />Total Revenue is the unit price multiplied by the quantity sold.<br />Average revenue is the average price the product sold for. This is still pretty simple. Now buckle your seat belts.<br />Price elasticity of demand is another concept. Think how much stretch a rubber band has in it. "Elastic demand" is when a small decrease in the price of Styrofoam cups produces a big increase in sales. "Inelastic demand" is when a small decrease in the price of cups makes only a tiny difference in sales.<br />Fixed cost comprises the fairly stable overhead costs of running the company, such as lease on the building, management salaries, insurance, and a Picasso print on the wall of your office.<br />Variable cost is the direct cost of production and marketing. This will vary with the number of goods produced and sold, such as labor and materials used in manufacturing. It costs you more for widget makers and widget glue when you produce more widgets.<br />Total cost is the sum of the fixed cost and the variable cost.<br />Break-even analysis is pretty straightforward. You determine the level of sales needed to cover the total costs and break even. Any sales after that start to accrue profits.<br />Determining the maximum profit point is a vital goal in pricing. This takes some research and then some mathematical analysis and graphing. <br /><br /><span style="font-weight:bold;">Pricing Approaches</span><br />Of course, pricing isn't just scientific. It has a lot to do with your particular niche on the Internet, and how you've determined you can best succeed. Below are some demand-oriented approaches to pricing:<br /><span style="font-weight:bold;">1.Skimming pricing: - </span>When you are offering a new or innovative product you can initially charge a high price, since the "early adopters" aren't very price sensitive. Then you lower prices to "skim" off the next layer of buyers, etc. Eventually, the price will drop as the product matures and competitors offer lower prices.<br /><span style="font-weight:bold;">2.Penetration pricing: -</span> You set a low initial price in order to penetrate quickly into the mass market. A low initial price discourages competitors from entering the market, and is the best approach when many segments of the market are price sensitive. Amazon.com, for example, offers a discount price and may lose money on the first sale, but this way they gain more customers who will purchase products later at a lower marketing cost (since it costs much less to attract them back for the second or third sale if they are happy with their first purchase experience).<br /><span style="font-weight:bold;">3.Prestige pricing: -</span> Cheap products are not taken seriously by some buyers unless they are priced at a particular level. For example, you can sometimes find clothing of the same quality brand at Nordstrom as you do at the Men's Warehouse. But because it is priced higher, Nordstrom's clientele believes it to be of higher quality.<br /><span style="font-weight:bold;">4.Odd-even pricing</span> takes advantage of human psychology that feels like $499.95 is less than $500. Studies of price points by direct marketers have found that products sell best at certain price points, such as $197, $297, $397, compared to other prices slightly higher or lower. Strange, we humans!<br /><span style="font-weight:bold;">5.Demand-backward pricing</span> is sometimes used by manufacturers. First, they determine the price consumers are willing to pay for a product using an approach such as Make Your Price Sell! (http://sales.sitesell.com/myps) automates. Then they work backward through the standard markups taken by retailers and wholesalers to come up with the price they can charge wholesalers for the product.<br /><span style="font-weight:bold;">6.Bundle pricing</span> is offering two or more products together in a single package price. This can offer savings to both the buyer and to the seller, who saves the cost of marketing both products separately. And the customer is willing to pay more because he perceives that he is getting a lot more, even though the cost to the seller may not really be that much more.<br /><br /><span style="font-weight:bold;">There are other cost-oriented approaches to pricing, this includes; </span><br />•Standard mark-up pricing: - Typically a manufacturer marks his price up 15% over his costs, a wholesaler 20% over his costs, and a retailer 40% over his costs. The retailer gets a larger markup based on the idea that, since he is closest to the end user, he is required to spend more services and individual attention meeting the buyer's needs.<br />•Cost-plus pricing adds a small percentage to the retailer's costs -- and "cost plus 5%" sounds so modest in ads for new cars! Ah! If only it were that simple.<br />•Experience curve pricing assumes that it costs a company less to produce a product or provide a service over time, since learning will make them more efficient.<br /><br />Then there are competition-oriented approaches to pricing that you'll recognize:<br />•Customary pricing is where the product "traditionally" sells for a certain price. Candy bars of a certain weight all cost a predictable amount -- unless you purchase them in an airport shop.<br />•Above-, at-, or below-market pricing. Certain stores advertise "low cost" or "discount" pricing. Others price at the market, while others deliberately price above-the-market at premium prices to attract prestige buyers.<br />•Loss-leader pricing works on the basis of losing money on certain very low priced advertised products to get customers in the door who will buy other products at the same time.<br />•Flexible-price policies offer the same product to customers at different negotiated prices. Cars, for example, are typically sold at negotiated prices. Many B2B sales depend on negotiated contracts.<br /><br />Once you have determined the list or quoted price you can make some special adjustments which includes;<br />Quantity discounts; encourage customers to buy larger quantities, and thus cut marketing costs.<br />Seasonal discounts; encourage buyers to stock inventory earlier than their normal demand would require. This enables the manufacturer to smooth out manufacturing peaks and troughs for more efficient production.<br />Rebates, such as $40 off Microsoft FrontPage 2000, are usually offered by the manufacturer, but sometimes a retail store will offer its own rebate. Rebates make marketing sense, since they strongly motivate sales, but often less than 50% of the buyers will remember to collect the receipt, proof-of-purchase, and rebate form, fill it out, and mail it prior to the expiration date. And, of course, the rebate is often subtracted from the list price of the item, which still has considerable profit built in. Rebate marketing is less than half as expensive to the marketer as the price cut would seem to indicate.<br />Trade discounts are offered by manufacturers to distributors or resellers in their distribution chain. For example, a manufacturer may quote list price of $1000 less 30/10/5, meaning 30% off the list price to the retailer, an additional 10% off the $1000 to the wholesaler, and an additional 5% off the $1000 to the jobber. This pricing will be expected if you have an online B2B store.<br />Cash discounts are sometimes offered for the costs saved from not having to extend credit and bill the buyer on an open account. This mainly affects B2B sales rather than retail.<br />Allowances may be permitted for trade-ins (not too many trade-in cars shipped by modem though) or by a manufacturer for promotional advertising that a retailer undertakes.<br />Geographic adjustments involve FOB (freight on board) pricing at the point of shipping.<br /><br /><span style="font-weight:bold;">Regulations on pricing</span><br />We need to note that there are various governmental regulations on pricing. If you sell outside your own country (and having a global marketplace is the beauty of the Internet!), you'll need to familiarize yourself with laws in other countries in other to get going. In most countries for example, conspiring with other firms to set prices for a product is called price fixing and is illegal. Price discrimination -- different prices to different buyers of the same goods or services is tricky. For instant in the US deceptive pricing is outlawed by the Federal Trade Commission. Predatory pricing that is, charging a very low price with the purpose of driving competitors out of business, is also illegal in the US under the Sherman Act and the Federal Trade Commission Act, but is hard to prove.<br /><br /><span style="font-weight:bold;">Lastly, </span>you need to think through and then adopt a very deliberate price strategy for your business; will you sell what are essentially commodities and be the low price leader? Or the service leader? Will you deliberately price low in order to penetrate the market quickly and establish first-mover advantage? Or will you price high to skim off the early adopters at a premium profit? Will you bundle several products in order to make a greater profit? Will you round off to the nearest dollar or use an odd price approach? Do you have a new or exclusive product that you can study scientifically for the best price?<br /><br />Most online businesses only guess at prices -- and most will be out of business in a few years as a direct result. The best online businesses are very deliberate about pricing, do their homework, and make changes quickly when necessary. Do your very best with pricing, After all, pricing is the only one of the 4 Ps of Marketing that brings revenue in rather than sending it out.<br /><br /><span style="font-weight:bold;">See you next time!!!!</span><div class="blogger-post-footer">“The level of your success is not measure by the fatness of your bank account, but rather it is measured by the level of your knowledge”. Oluwabamidele</div>Prince Oluwabamidele http://www.blogger.com/profile/11493338625119821611noreply@blogger.com0tag:blogger.com,1999:blog-2071650916271931293.post-80904719610438805772010-01-18T14:49:00.000-08:002010-01-18T15:01:16.932-08:00THINGS TO NOTE WHEN CHOOSING THE RIGHT MERCHANT ACCOUNT PROVIDEREvery business owner aim to succeed in their respective businesses, they want to increase their sales and make more money.<br />The best way to do this is to offer your customers the ability to pay for merchandise with their credit cards or debit cards. Whether you operate your business in a physical location or online-only, allowing customers the option of credit card payment is logical. You will increase sales because of the convenience of the payment options you offer. The vast majority of shoppers, online and in person, prefer to pay with their credit cards. Opening a merchant account is the way to give your customers more payment options. But it is important that you find out as much as you can about merchant accounts and merchant account providers. <br /><br />First and foremost let look at the word “Merchant”<br /><span style="font-weight:bold;">What is a merchant account?</span><br />A merchant account is an account that enables merchants to accept credit card payments. Any merchant who wants to take credit card orders must establish a merchant account. A merchant account can be obtained through a bank, credit card Company, or the direct payment processor. Keep in mind that banks are not merchant providers; they use third parties to set up merchant accounts. Once you are set up with a merchant account you will have the ability to<br />accept all forms of payments including credit cards, debit cards and electronic checks.<br /><br />A merchant account is set up through a bank or an online merchant account provider for a retail or online organization in order to accept credit cards as payment from customers. A merchant account is not a bank account. The merchant account provider's job is to place the money you earn from credit card sales into your bank account. It used to be that merchant accounts were only offered by banks and providers to retail businesses that were located in a physical location. But with online shopping gaining popularity over the past several years, merchant account providers have started providing accounts to online business owners as well. Even though most banks still do not provide online merchant accounts due to the constant concern over credit card fraud, there are an increasing amount of online merchant account providers that offer services especially to those merchants that market their products online. Because of the high number of merchant account providers out there, it is important that you research all aspects of them, what services they provide, and especially the costs they impose, so that you don’t lose precious profits. <br /><br />When looking into merchant accounts and providers, be aware that there are two types payment processing that they will offer. These are manual and real-time processing. Manual processing requires that the credit card number be delivered through a phone transaction, fax transaction, or an online order form. The order is processed manually by contacting the payment processing company (through an Internet connection) to verify the credit card number, or by using a point of sale machine to swipe the card at the time of purchase. This type of processing is more secure, less costly, and ideal for a low-volume merchant in a physical store location. Real-time processing is perfect for web-based merchants because the credit card is immediately processed at the time an order is placed. Pending verification and approval of the credit card, the customer receives notification (via e-mail) that his or her order is accepted and fund transfer is approved. This is the less secure of the two processing options. <br /><br /><span style="font-weight:bold;">5 Essential Factors<span style="font-style:italic;"></span></span><br />Starting to accept credit cards and debits cards at your business can be a challenging task. The Card Processing Industry is highly competitive, with many companies offering a broad range of services it is important for any business considering Merchant Services to understand these important factors; Benefits, Equipment Costs, Rates, Types of Processing and Terms of the Agreement e.t.c.<br /><br /><span style="font-weight:bold;">1. The many ways a merchant account will benefit your business.<br />•Boost Sales</span><br />Most everyone pays with credit or debit cards. Our society is all about convenience. If you make it easy for your customers to pay they will appreciate it. Most all businesses find an immediate increase in sales after they start accepting credit cards.<br /><span style="font-weight:bold;">•Receive Immediate Payment</span><br />Rather than waiting for weeks or months to receive payment, funds will be deposited directly into your account in a matter of days. Money goes directly into the checking account of your choice.<br /><span style="font-weight:bold;">•Reduce Staff Overhead</span><br />In receiving payment via credit card your business forgoes excessive time spent in sending overdue notices and making awkward phone calls to request payment.<br /><span style="font-weight:bold;">•Avoid Non‐Payment</span><br />Many business owners are reluctant to pay a small percentage of profits to credit card processing companies, however, most find that the service quickly pays for itself in avoiding loss from non‐payment.<br /><span style="font-weight:bold;">•Expanded Customer Base</span><br />The modern consumer expects to be able to pay via credit card and is often without cash, check, or other means of payment. Credit Card processing is a convenience for your customers and a professional foot forward for your company<br /><span style="font-weight:bold;">•Go Virtual</span><br />Business has moved online. With the Internet, small and large businesses alike can have a global customer base. However, credit card processing is a requirement for effective ecommerce.<br /><span style="font-weight:bold;">•Auto Charge Your Clients</span><br />For customers or clients on a revolving payment schedule it is usually easier for them and for your business to simply auto charges their credit cards each cycle.<br /><br /><span style="font-weight:bold;">2. Equipment Costs<br />•Buy</span><br />When you buy equipment you have complete control over the machine, but you are stuck with equipment that you have to maintain and update yourself. This also raises the start up costs tremendously.<br /><span style="font-weight:bold;">Expensive Start Up</span><br />Buying equipment can be expensive. Terminals can cost up to $1,000. If you are looking for low start up costs this will not be the right option for you.<br /><span style="font-weight:bold;">Training</span><br />You want to make sure that training of some form is included with your purchase. A quick introduction to using the advanced features of your terminal can help you get your money's worth.<br /><span style="font-weight:bold;">Keeping Up With Technology</span><br />You don’t want to get stuck with an out‐dated machine. Technology is constantly changing and you want to keep up‐to‐date with the changes. You want to make sure the machine is compliant and can be used with the processor of your choice.<br /><br /><span style="font-weight:bold;">•Lease</span><br />A lease payment will often cost you far more than purchasing your equipment outright. You could be paying more than the machine is worth and usually you have to enter into some sort of contract. Make sure to read the entire contract.<br /><span style="font-weight:bold;">No Replace or Repair</span><br />Most leasing companies specifically state that they have no responsibility to replace or repair your equipment should something go wrong. Many merchants enter into lease agreements thinking that they can get a warranty or service from the leasing company, and this is rarely true.<br /><span style="font-weight:bold;">Hidden Fees</span><br />You should be especially aware of agreements that give the lease company authority to debit your account for additional fees for insurance at their discretion.<br /><span style="font-weight:bold;">Know the Agreement</span><br />Many merchants lose track of their agreements over time and continue to pay monthly lease installments long after the lease term has expired. Don’t assume that your sales person will notify you at the end of your lease term. The lease company will continue to charge you, or even worse, renew your lease for another 48 to 60 month term. Be sure and send notice of intent to cancel or buyout at least 60 days prior to your lease expiration.<br /><span style="font-weight:bold;">Locked In</span><br />Can I use this equipment with any processor? Some terminals are proprietary to a specific processor or network. You could end up paying thousands of dollars for a terminal that you cannot use with any other processor should you choose to change providers. Remember, changing processors has nothing to do with that third party lease. Even if you buy new equipment, you will still be responsible for the lease terms in your agreement. Be sure and ask<br />lots of questions when considering leasing options.<br /><span style="font-weight:bold;">•Free</span><br />This is probably the best option for you and your business. If a company is offering free equipment you can take advantage of the low start up fees, new equipment and training that is often offered with a high quality merchant account processor.<br /><span style="font-weight:bold;">Low start up</span><br />This can be a great option if you are looking to get set up to accept cards with no expensive upfront cost. You won’t have to worry about a chunk of money that is associated with buying a machine and you won’t have a monthly fee for leasing the machine.<br /><span style="font-weight:bold;">You don’t own the machine</span><br />This is similar to the cell phone industry if you sign up for the service you receive a new phone at no extra cost. Usually the company will still own the machine if you want to cancel your contract. Even with a termination fee you will still save money by taking advantage of the free use of the machine.<br /><span style="font-weight:bold;">New Equipment</span><br />With a quality processor you will have the most up‐to‐date equipment and they will make sure that it is compliant with of the latest upgrades. This can save time and money in the long run.<br /><br /><span style="font-weight:bold;">3. Rates & Common Fees</span><br />There are many different rates to consider when you are talking about credit card processing. If a processor offers you one flat rate you should look deeper into the actual contract to make sure you fully understand what the processor is charging. Make sure you have clear communication with your merchant account processor about fees and ongoing costs. Some typical fees include the following.<br /><span style="font-weight:bold;">•Set up Fee:</span> A onetime fee for starting a merchant account.<br /><span style="font-weight:bold;">•Statement Fee:</span> A fixed monthly fee that virtually all processors charge for your monthly statement<br />Provided to show how much processing you did in the previous month.<br /><span style="font-weight:bold;">•Transaction Fees</span>: Fee the merchant has to pay per transaction.<br /><span style="font-weight:bold;">•Discount Rate:</span> Flat percentage charged for every transaction<br />•<span style="font-weight:bold;">Pin Based Debit:</span> PIN Debit is a transaction in which the customer uses a debit card and enters in their PIN<br />Number. This functions essentially as an ATM transaction and the merchant pays a per item fee and PIN Network Fees for each transaction.<br /><span style="font-weight:bold;">•Qualified Rate:</span> The rate a merchant pays on a swiped transaction conducted face‐to‐face with a signature where the full contents of the magnetic stripe were read. Usually includes all consumer credit cards (and debit cards if a separate category for swiped Debit is not set up in the billing). These are the lowest risk transactions so they carry the lowest discount rates.<br /><span style="font-weight:bold;">•Mid Qualified Rate:</span> A higher rate than Qualified which is charged to merchants for processing a hand‐keyed transaction from consumers (and sometime rewards cards also cleared as a midqualified).<br />There can be a mid‐qualified rate for credit, debit, rewards cards, and more.<br />Primarily these are consumer cards which are hand‐keyed and meet all other requirements of Interchange.<br /><span style="font-weight:bold;">•Non‐Qualified Rate:</span> The highest rates charged to merchants. The transactions are typically swiped or keyed for business or corporate cards. Additionally, Visa transactions where a consumer cards are hand‐keyed without AVS will Downgrade to Non‐Qualified.<br /><span style="font-weight:bold;">•Termination Fees:</span> If you terminate your contract early this is the fee you are charged to get out of your contract.<br /><span style="font-weight:bold;">•Monthly Minimum</span>: The minimum amount the processor needs to have in fees. As long as your credit card processing meets or exceeds the minimum amount then you will not be charged. If your monthly fees are less than the minimum then you will be charged the difference.<br />Get it documented.<br /><br />All of the above fees should be disclosed in writing at your request. Once you have a basic understanding of all the associated fees, you will have the knowledge necessary to obtain the best deal possible. Unfortunately, business owners often research only the difference in percentage rates. This is meaningless if the savings disappear in higher fees hidden elsewhere.<br />Every account is different and you need to speak with a knowledgeable sales person who can set your business up with the proper processing solution.<br /><br /><span style="font-weight:bold;">4. Find the Right Processing Solution for Your Business</span><br />Getting set up with the proper processing solution is very important. This alone can save you money by having the best rates for the types of cards your business accepts and through how you will be accepting the card.<br />Retail Solutions<br />For most retail businesses, including stores, hotels, restaurants, etc., the most suitable option for credit card processing is a simple landline terminal. This traditional point of sale system is set up phone line or IP. For face to face transactions, this is the best option for your business.<br />Wireless Solutions<br />If your business is mobile, and being tied to a storefront or landline is not an option, then wireless solutions may be what you need. The wireless terminal can process credit and debit cards wherever there is an available cell phone signal.<br />Internet Solutions<br />The fastest growing segment within the credit card processing industry is in online transactions. There are many different types of online gateways that will help your business begin accepting credit cards via the internet. Through web access and a secure website, you will be able to manually process credit card transactions from orders received offline, issue credits, void transactions, and view your online list of transactions, from any internet connection in the<br />world.<br /><br /><span style="font-weight:bold;">5. Terms of Agreement</span><br />Every merchant account provider is going to require some type of contract. This is going to be a very important factor in choosing a merchant account provider. You want to make sure you read the entire contract including all of the fine print to make sure you understand the entire offer.<br /><span style="font-weight:bold;">Ask for the offer in writing</span><br />You need to have a copy of the agreement before you start a merchant. If you speak to someone on the phone ask them to email or fax you the application to make sure you have all the information.<br /><span style="font-weight:bold;">Rate Disclosure</span><br />Make sure all of the rates are disclosed in the contract. Be very cautious when the rates are not listed, because you may run into some hidden fees.<br /><span style="font-weight:bold;">Termination Policy</span><br />How long does the contract last? How much is the termination fee? Some companies offer a trial period and most all companies have a termination fee, similar to cell phone contracts.<br /><span style="font-weight:bold;">Sales Representative</span><br />Can your sales representative explain the contract? You want to make sure you are dealing with an experienced representative; this alone can save you money. Ask relevant questions to make sure they are helpful and can set your account up properly.<br /><br /><span style="font-weight:bold;">Lastly</span><br />When you are ready to accept credit and debit cards and you are researching merchant account providers, make sure you keep all of the following factors in mind. <br />More than likely, you will have a long relationship with your merchant account provider. Therefore, you should have the utmost trust and confidence in them. Your provider should offer various services that will give you options in making your business transactions run smoothly. They should be able to accommodate several brands of credit cards (Visa, MasterCard, Discover, American Express, etc.), in addition to providing other payment alternatives, such as PayPal. They should have a record of impeccable service and reliability. They should also be first-rate customer service providers. Any problems should be handled discreetly and quickly. Despite the seeming necessity of having a merchant account provider, it can make or break your business with its fees and service. That is why it is important to know the ins and outs of a merchant account provider, and to choose one carefully<div class="blogger-post-footer">“The level of your success is not measure by the fatness of your bank account, but rather it is measured by the level of your knowledge”. Oluwabamidele</div>Prince Oluwabamidele http://www.blogger.com/profile/11493338625119821611noreply@blogger.com0tag:blogger.com,1999:blog-2071650916271931293.post-72965477303222733492010-01-03T00:55:00.000-08:002010-01-03T01:00:38.521-08:00Pricing Strategy a tool to position your company ahead of othersTaken a glance back to the last issue of the of Marketing Canada journal, summer 2009, vol 5, issue 3, I deal on the topic, “How Effective and Efficient is your Pricing Strategies” Today we will be going forward to see what pricing strategy can do to your business; how much should you charge for your products and services. <br />Pricing as be said over time as one of the most difficult, yet important part of a company strategies , issues you must face as a company is how much to charge for your products and services. Basically there is no one single right way to determine your pricing strategy, but there are some reasonable guidelines one need to follow in arriving at a pricing decision.<br />Let take a look at the definition of pricing again to have a clearer view of the topic.<br />What is pricing? Pricing is a method adopted by a firm to set its selling price. It usually depends on the firm's average costs, and on the customer's perceived value of the product in comparison to his or her perceived value of the competing products. <br /><br />What is pricing Strategies? Price planning that takes into view factors such as a firm's overall marketing objectives, consumer demand, product attributes, competitors’ pricing, and market and economic trends.<br />The pricing strategy of your business can ultimately determine your fate. As a business owner you can ensure profitability and longevity by paying close attention to your pricing strategy.<br /><br />Before we go further, let quickly look at some factors the company need to consider:<br /><br /><span style="font-weight:bold;">Positioning - </span>How are you positioning your product in the market? Is pricing going to be a key part of that positioning? If you're running a discount store, you're always going to be trying to keep your prices as low as possible (or at least lower than your competitors). On the other hand, if you're positioning your product as an exclusive luxury product, a price that's too low may actually hurt your image. The pricing has to be consistent with the positioning. People really do hold strongly to the idea that you get what you pay for.<br /> <br /><span style="font-weight:bold;">Demand Curve -</span> How will your pricing affect demand? You're going to have to do some basic market research to find this out, even if it's informal. Get 20 people to answer a simple questionnaire, asking them, "Would you buy this product/service at Price X? Price Y? Price Z?" For a larger venture, you'll want to do something more formal, of course -- perhaps hire a market research firm. But even a sole practitioner can chart a basic curve that says that at Price X, X' percentage will buy, at Price Y, Y' will buy, and at Price Z, Z' will buy.<br /> <br /><span style="font-weight:bold;">Cost -</span> Calculate the fixed and variable costs associated with your product or service. How much is the "cost of goods", i.e., a cost associated with each item sold or service delivered, and how much is "fixed overhead", i.e., it doesn't change unless your company changes dramatically in size? Remember that your gross margin (price minus cost of goods) has to amply cover your fixed overhead in order for you to turn a profit. Many entrepreneurs under-estimate this and it gets them into trouble.<br /> <br /><span style="font-weight:bold;">Environmental factors -</span> Are there any legal or other constraints on pricing? For example, in some cities, towing fees from auto accidents are set at a fixed price by law. Or for doctors, insurance companies and Medicare will only reimburse a certain price. Also, what possible actions might your competitors take? Will too low a price from you trigger a price war? Find out what external factors may affect your pricing.<br /><br />What next the company needs to do is to determine the pricing objectives. That is the aim of your pricing?<br /><br /><span style="font-weight:bold;">Short-term profit maximization -</span> While this sounds great, it may not actually be the optimal approach for long-term profits. This approach is common in companies that are bootstrapping, as cash flow is the overriding consideration. It's also common among smaller companies hoping to attract venture funding by demonstrating profitability as soon as possible.<br /> <br /><span style="font-weight:bold;">Short-term revenue maximization -</span> This approach seeks to maximize long-term profits by increasing market share and lowering costs through economy of scale. For a well-funded company, or a newly public company, revenues are considered more important than profits in building investor confidence. Higher revenues at a slim profit, or even a loss, show that the company is building market share and will likely reach profitability. Amazon.com, for example, posted record-breaking revenues for several years before ever showing a profit, and its market capitalization reflected the high investor confidence those revenues generated.<br /> <br /><span style="font-weight:bold;">Maximize quantity -</span> There are a couple of possible reasons to choose the strategy. It may be to focus on reducing long-term costs by achieving economies of scale. This approach might be used by a company well-funded by its founders and other "close" investors. Or it may be to maximize market penetration - particularly appropriate when you expect to have a lot repeat customers. The plan may be to increase profits by reducing costs, or to upsell existing customers on higher-profit products down the road.<br /> <br /><span style="font-weight:bold;">Maximize profit margin -</span> This strategy is most appropriate when the number of sales is either expected to be very low or sporadic and unpredictable. Examples include custom jewelry, art, hand-made automobiles and other luxury items.<br /> <br /><span style="font-weight:bold;">Differentiation </span>- At one extreme, being the low-cost leader is a form of differentiation from the competition. At the other end, a high price signals high quality and/or a high level of service. Some people really do order lobster just because it's the most expensive thing on the menu.<br /> <br /><span style="font-weight:bold;">Survival -</span> In certain situations, such as a price war, market decline or market saturation, you must temporarily set a price that will cover costs and allow you to continue operations.<br /><br />Note: it is important after having the information so needed and clear what we are trying to achieve, then we take a look at the pricing methods to help us achieve our real numbers.<br />Below are the Pricing Methods to consider<br /><br />As mention earlier, there is no "one right way" to calculate your pricing. Once you've considered the various factors involved and determined your objectives for your pricing strategy, now you need some way to crunch the actual numbers. Here are four ways to calculate prices:<br /><br /><span style="font-weight:bold;">Cost-plus pricing -</span> Set the price at your production cost, including both cost of goods and fixed costs at your current volume, plus a certain profit margin. For example, your widgets cost $20 in raw materials and production costs, and at current sales volume (or anticipated initial sales volume), your fixed costs come to $30 per unit. Your total cost is $50 per unit. You decide that you want to operate at a 20% markup, so you add $10 (20% x $50) to the cost and come up with a price of $60 per unit. So long as you have your costs calculated correctly and have accurately predicted your sales volume, you will always be operating at a profit.<br /> <br /><span style="font-weight:bold;">Target return pricing -</span> Set your price to achieve a target return-on-investment (ROI). For example, let's use the same situation as above, and assume that you have $10,000 invested in the company. Your expected sales volume is 1,000 units in the first year. You want to recoup all your investment in the first year, so you need to make $10,000 profit on 1,000 units, or $10 profit per unit, giving you again a price of $60 per unit.<br /> <br /><span style="font-weight:bold;">Value-based pricing -</span> Price your product based on the value it creates for the customer. This is usually the most profitable form of pricing, if you can achieve it. The most extreme variation on this is "pay for performance" pricing for services, in which you charge on a variable scale according to the results you achieve. Let's say that your widget above saves the typical customer $1,000 a year in, say, energy costs. In that case, $60 seems like a bargain - maybe even too cheap. If your product reliably produced that kind of cost savings, you could easily charge $200, $300 or more for it, and customers would gladly pay it, since they would get their money back in a matter of months. However, there is one more major factor that must be considered.<br /> <br /><span style="font-weight:bold;">Psychological pricing -</span> Ultimately, you must take into consideration the consumer's perception of your price, figuring things like:<br /> <br /><span style="font-weight:bold;">Positioning -</span> If you want to be the "low-cost leader", you must be priced lower than your competition. If you want to signal high quality, you should probably be priced higher than most of your competition.<br /><span style="font-weight:bold;">Popular price points -</span> There are certain "price points" (specific prices) at which people become much more willing to buy a certain type of product. For example, "under $100" is a popular price point. "Enough under $20 to be under $20 with sales tax" is another popular price point, because it's "one bill" that people commonly carry. Meals under $5 are still a popular price point, as are entree or snack items under $1 (notice how many fast-food places have a $0.99 "value menu"). Dropping your price to a popular price point might mean a lower margin, but more than enough increase in sales to offset it.<br /><span style="font-weight:bold;">Fair pricing -</span> Sometimes it simply doesn't matter what the value of the product is, even if you don't have any direct competition. There is simply a limit to what consumers perceive as "fair". If it's obvious that your product only cost $20 to manufacture, even if it delivered $10,000 in value, you'd have a hard time charging two or three thousand dollars for it -- people would just feel like they were being gouged. A little market testing will help you determine the maximum price consumers will perceive as fair.<br /><br /><br /><span style="font-weight:bold;">HOW TO COMBINE ALL THESE CALCULATIONS TO COME UP WITH A PRICE.</span><br /><br />Your price must be enough higher than costs to cover reasonable variations in sales volume. If your sales forecast is inaccurate, how far off can you be and still be profitable? Ideally, you want to be able to be off by a factor of two or more (your sales are half of your forecast) and still be profitable.<br /> <br />You have to make a living. Have you figured salary for yourself in your costs? If not, your profit has to be enough for you to live on and still have money to reinvest in the company.<br /> <br />Your price should almost never be lower than your costs or higher than what most consumers consider "fair". This may seem obvious, but many entrepreneurs seem to miss this simple concept, either by miscalculating costs or by inadequate market research to determine fair pricing. Simply put, if people won't readily pay enough more than your cost to make you a fair profit, you need to reconsider your business model entirely. How can you cut your costs substantially? Or change your product positioning to justify higher pricing?<br />Pricing is an important factor in determining the success of the company, you’re certainly going to make a profit on your products and services are taken the right step in pricing decision. Always remember something is ultimately worth only when someone is willing to pay for it.<div class="blogger-post-footer">“The level of your success is not measure by the fatness of your bank account, but rather it is measured by the level of your knowledge”. Oluwabamidele</div>Prince Oluwabamidele http://www.blogger.com/profile/11493338625119821611noreply@blogger.com0tag:blogger.com,1999:blog-2071650916271931293.post-50236408569103072872009-12-25T22:04:00.000-08:002009-12-25T22:09:49.350-08:00Pricing Strategies in a Recession Period - Your Best Recession Strategy? Think Twice Before Price CutsSales and profits are plummeting and customers are demanding better deals. What can you do to silence customer complaints, cover fixed costs, and buy time until the economy rebounds? Often, companies will cut prices. But is this knee-jerk reaction the best strategy for pricing your products in a downturn? Definitely no it may affect profitability when the economy rebounds, signal to your customers that you're easy prey for additional discounts, and cloud your brand's hard-earned image. Learn how to craft your pricing strategies to strengthen your business now and to help prime your business for later growth.<br /> <br />Before you think about adjusting prices, think again, a knee-jerk reaction to the recession is never good for business in the long run, and could even erode your brand image. Instead, make your pricing decisions based on clear strategic goals.<br />When times are good, pricing mistakes can be easily forgiven. But when the economy sours, a misguided pricing strategy can shrink profitability, warp customer relationships, and destroy a brand.<br /><br />When sales and profits are plummeting and customers are demanding better deals, the instinctive response is to cut prices. This silences customer complaints, helps cover fixed costs, and buys time until the economy rebounds. A price cut can also boost sales quickly, especially when there is no money for advertising or other promotions.<br />But such a knee-jerk reaction may not be the best strategy; Price cuts now may affect your company's profitability when the upturn occurs. It may signal to customers that you're an easy prey for additional discounting. And it may cloud your brand's hard-won image.<br /><br />Pricing decisions should not be viewed as Band-Aid solutions for bleeding income statements, they should be part of a long-term strategy for fiscal fitness. When economic storm clouds gather, trim your production levels, postpone expansion plans that aren't absolutely vital to your future growth, and slash nonessential costs wherever you can. This prepares you to pursue low-value business opportunities that help you maintain your cash flow without drastically reducing your production capacity.<br /><br />Crafting the right pricing strategies will not only strengthen your business now, it will also prime it for growth later. To bolster sales while avoiding a price cut's dampening effect on long-term profitability, keep the following advice in mind:<br /><br /><span style="font-weight:bold;">Consider the impact</span><br />Profitability is not the only prism through which you should view pricing. Other important perspectives include:<br />•Volume. Too many firms fail to account for the effects of price on volume and of volume on costs. In a recession, trying to recover these costs through a price increase can be fatal.<br />•Impact on customer relationships. "Sucker pricing" This creates ill will and tarnishes your brand.<br />•Impact on the industry. Price cuts not backed by cost reductions often lead to competitive counterattacks, which erode profitability.<br /><br /><span style="font-weight:bold;">Adjust your sales goals</span> <br />"Don't fight today's sales wars with yesterday's pricing strategies," says Mitchell. Sales goals set when checkbooks were open may no longer be suitable for a recession. Executives experience what Holden calls the "coffin corner of costing" when, for the purposes of making the numbers, they overemphasize capacity utilization and become willing to cut the price of high-value products. The wireless industry, for example, generated strong demand with its low pricing but then was unable to recover its costs of capital.<br /><br />Instead of sales goals, set dollar contribution goals for products, market segments, and individual customers. To do this you may have to invest in financial systems that can track process costs as well as direct costs. Moreover, setting profitability goals may mean abandoning market-share goals. After all, a large market share doesn't necessarily mean increased profitability. But switching to profitability benchmarks can help you pursue other low-price business.<br /><br />It may also make sense to change the basis for your pricing. Most expert believe that pricing based on value the economic or psychological benefits delivered by your product or service is much more effective than competitor, cost, or customer-driven pricing strategies. Remember, too, that the basis for customer value can shift when the economic climate changes. When times are good, customers often place a premium on your maintaining production capacity to ensure timely delivery of their orders; otherwise, their sales suffer. But in a recession, logistical services may be more valuable.<br /><br /><span style="font-weight:bold;">Understand your competitive advantage </span><br />In a recession, pricing should be shaped by industry position and long-term strategy. If your competitive advantage derives from a low-cost structure, cost cutting can pump up your market share, positioning your firm for a payoff when the economy improves. But a common mistake, says Holden, "is to use price as a competitive advantage for high-value products by giving away services or discounting to your best customers. You erode the base of profitable customers and reduce the potential for profitability when the recession ends."<br /><br /><span style="font-weight:bold;">Leverage your segmentation strategy </span><br />Especially if you have high fixed costs, use pricing to generate incremental revenue from your segmented customer base. Strive for "first-class," "business-class," and "economy" pricing, the way the airlines do. First-class customers receive extra value with minimal discounting; economy customers get minimum value. Such segmentation based on price sensitivity creates sales opportunities that can offset losses in other areas, especially since there is often little difference in production costs among the offerings. <br /><br />Offerings can be segmented not only by value added but also by time (for example, peak-load purchasing), location, or purchase quantity. "The more you can slice and dice your prices and offerings without affecting your brand, the more you can sustain profitability," Dynamic pricing represents an extension of such a segmented pricing strategy; here, prices shift instantaneously in response to changes in supply and demand. Although the practice doesn't suit every company, early testers of dynamic pricing software have been pleasantly surprised to discover how much more they can charge without affecting sales volume. The consulting firm Accenture reports that a price increase of just 5% can improve operating profits by 55% if sales volume remains constant.<br /><br /><span style="font-weight:bold;">Pamper loyal customers </span><br />Losing a customer now represents a double whammy: It drains customer equity and raises the cost of acquiring a replacement. Keep your best customers happy by bolstering loyalty programs or providing additional services. Consider offering product training or other classes for your B2B customers—not only will it augment the value you offer customers, it will also make it more difficult for those customers to switch to another provider.<br /><br /><span style="font-weight:bold;">Plug revenue leaks</span> <br />Companies can run aground on pricing gaffes once covered by the high tide of a good economy. A common oversight is not recovering all the costs involved in services, delivery, or other processes, says Mitchell. Set minimum order quantities so that processing costs won't eat all the profits. Strengthen your collection efforts to shrink the time between orders and receipt of payment. Without undermining customer value, establish a price menu for "free" services such as delivery or favorable payment terms. When sold separately, such offerings increase revenue opportunities. They also provide a benchmark value for customers who formerly discounted them because they were free.<br /><br />In a recession, revenue leaks also occur because sales forces become less resistant to customer pressures. They knock down the price until the sale is won, despite the impact on profitability. Ideally, prices should be negotiated based on business rules volume, delivery, financing and not according to the negotiating skills of purchasing agents. They should also be based on the value to the customer. But sales forces often oppose value pricing because it usually means higher prices and a greater willingness to walk away from price-sensitive deals. To encourage the desired behavior, compensate your sales force based on its contribution to profitability and/or customer equity, not just on sales volume.<br /><br /><span style="font-weight:bold;">Shift the battleground</span> <br />When you negotiate with customers, include other factors besides the payment amount—for example, payment terms or ongoing training in the conversation. Some additional suggestions:<br />•Change the volume requirement to raise revenue and lower unit costs.<br />•Bundle products that increase customer value.<br />•In exchange for a discount, ask for a multiyear contract to smooth out your revenue and production variability.<br /><br /><span style="font-weight:bold;">Protect your brands</span> <br />Brands become more valuable during a recession period because they offer defensible margins. Sales of cosmetics often rise during a recession, The reason: They represent affordable luxuries or offer a psychological boost. So don't cut prices on your premium brands during a recession; they can be sold without discounts through word-of-mouth or channel promotions that increase visibility and appeal.<div class="blogger-post-footer">“The level of your success is not measure by the fatness of your bank account, but rather it is measured by the level of your knowledge”. Oluwabamidele</div>Prince Oluwabamidele http://www.blogger.com/profile/11493338625119821611noreply@blogger.com0tag:blogger.com,1999:blog-2071650916271931293.post-84226724438258656692009-12-09T03:34:00.000-08:002009-12-09T03:38:42.097-08:00Getting The Most Out Of Your PriceWhen you are setting up a business for the first time, it can be quite difficult to know what price to set. You need to think about what your customers are willing to pay what the competition is charging and your costs.<br /><br />As a rule of thumb, it is best to aim high as you can, as you should always lower your price rather than increase it. If your price is low, you may attract a lot of customers but you may lose them if you need to increase the price. You may also be losing money because your price does not cover your costs. Customers may think that if your product is cheap, it can't be good. Customers would be happy to pay for quality - value for money is often the best option.<br /><br />When comparing your product to competitive products, you do not necessarily have to follow their pricing. Ask yourself if your product or service compares favourably and whether you can justify a higher price.<br />When considering your costs, it would be helpful if you did a forecast. This will allow you to be more informed and realistic about the price you charge. Bear in mind that you will need to charge a fair and competitive price with a reasonable profit. Your gross profit will need to cover all overheads and expenses. You take your money (your drawings) from what is left, that is your net profit.<br /> <br /><span style="font-weight:bold;">Costing Formulae </span><br />There are three main costing formulae you can use to work out a cost for your service or cost for your product.<br /><br /><span style="font-weight:bold;">1 Daily/Hourly Rate</span> <br />If you are providing a service, for example consultancy, you may find it useful to cost your service based on time calculation. You do this by first adding the number of days you will not be providing a service in the year. This will include weekends off, holidays, bank holidays, administration (about a day a week) and contingency days for any emergencies. Subtract this figure from the number of days in the year and this will give you your potential earning days. Then work out how many hours each day you will work and this will give you your total potential hours for the year.<br />To calculate your daily/hourly rate the formula is:<br />Business Overheads (fixed costs pa) + PSB (Personal Survival Budget - money taken out business to live on) divided by Number of days/hours available to sell = Cost per day/hour.<br /><br /><span style="font-weight:bold;">2 Cost of Product </span><br />The formula below applies if you are making something that you are going to sell.<br />Business Overheads + PSB divided by Production (the total number of items you produce) plus the Variable Cost per item (the variable costs per item will be know when you start making them) = Total Cost per item.<br /><br /><span style="font-weight:bold;">3 Mark up and margin</span><br />You business can only exist if you make a profit. The profit can either be as a percentage of the cost price or the selling price. If the profit is based on the cost price, it is known as Mark Up and can be expressed as follows:<br />Selling Price - Cost Price<br />--------------------------------------- x 100<br />Cost Price <br />If based on the selling price it is known as Margin and can be expressed as follow:<br />Selling Price - Cost Price<br />--------------------------------------- x 100 <br />Selling Price<br />When pricing your product, make sure that the selling price provides an adequate margin to produce a profit.<br />There is no definitive method of setting a price. Your aim should be to set your prices initially at the level, which gives you your highest profits possible. Easier said than done!<br /><br /><span style="font-weight:bold;">Tips To Know When Setting Your Prices</span><br /><br />Determining prices must be based on a broad, thoughtful basis. It requires a basic understanding of both your financial and business goals. Below are few principles to consider when you decide what prices to put on your product or service.<br /><br /><span style="font-weight:bold;">Keep your prices realistic</span>. A realistic price is the price you set after taking into consideration various factors: the direction of your business, your cost structure and expenses, your resources and financial goals. Avoid setting your prices based on “what everybody is charging.” What is right for your competitors may not be profitable for your business. After all, their goals, strategies and financials may be different from yours. Research your competition and see what they are charging, but do not copy their pricing structure just to charge what everybody else is charging. Set your prices based on your own situation.<br /><br /><span style="font-weight:bold;">Cover all your costs</span>. The price of your item should cover the costs associated with it, its contribution to the overhead, and profit. A successful pricing strategy is one that results in the most dollars after all your costs are met. Be careful in setting your prices too low: while it may attract a large sales volume, you may not be making enough revenue to cover the costs of selling the merchandise. If you set your prices too high, your sales volume may be so low you can't cover operating expenses.<br /><br /><span style="font-weight:bold;">Check your prices against inflation</span>. Your prices must keep up with inflation. Inflation increases your cost of doing business, with the prices of your materials, overhead and other costs increasing. If you maintain your prices despite rising inflation, you will erode your profit margin. Allow your business to increase your prices at least once a year, but give your customers sufficient warning about the price increase. Once you’ve established your policies, constantly monitor your prices and operating costs to insure profit.<br /><br /><span style="font-weight:bold;">Include in your pricing the value of your time</span>. Avoid committing the mistake of not including a salary for yourself, particularly if you are operating a service business. Your time is valuable, and you need to compute it in your pricing structure.<br /><br /><span style="font-weight:bold;">Customers are not always looking for the lowest price.</span> Price is not always the topmost concern of customers. There are many customers who do not mind paying higher prices, particularly if they know that they are purchasing exclusive merchandise, or your business is located in a convenient or high-end location. Many customers are willing to pay premium prices for quality service: speedy delivery; helpful and friendly customer relations; excellent product knowledge, or satisfaction in handling complaints.<br /><br /><span style="font-weight:bold;">Price low, but smart</span>. A common pricing strategy for small business. particularly new entrants into the market is to price low just to get the work. By pricing low, the aim is to penetrate the market and get as much repeat business.<br /><br />However, be aware that pricing low can have adverse repercussions on your business. First, a low price may signal a low quality product and service. Be careful in setting prices too low. Second, it may be difficult to raise prices later on once customers are accustomed to your low prices. Third, your start-up business is yet to develop economies of scale that makes it hard to compete on price.<br /><br /><span style="font-weight:bold;">Use discounts with care.</span> Offering discounts is a good strategy for encouraging repeat/bulk orders, bundling sales, and early payment of customers. Discounts also allow you to more quickly sell products with vanishing opportunity -- e.g. products with sell-by dates, seasonal and quick obsolescence like fashion and technology. You can also stimulate demand for your products during the times when your product/service is less popular. Discounts are also used to clear out merchandise that has become outdated.<div class="blogger-post-footer">“The level of your success is not measure by the fatness of your bank account, but rather it is measured by the level of your knowledge”. Oluwabamidele</div>Prince Oluwabamidele http://www.blogger.com/profile/11493338625119821611noreply@blogger.com0tag:blogger.com,1999:blog-2071650916271931293.post-17097770797861868842009-12-01T18:41:00.000-08:002009-12-01T18:43:37.324-08:00Specifications of ServiceAny service can be clearly, completely, consistently and concisely specified by means of the following 12 standard attributes which conform to the MECE principle (Mutually Exclusive, Collectively Exhaustive)<br />1.Service Consumer Benefits<br />2.Service-specific Functional Parameter(s)<br />3.Service Delivery Point<br />4.Service Consumer Count<br />5.Service Readiness Times<br />6.Service Support Times<br />7.Service Support Language(s)<br />8.Service Fulfillment Target<br />9.Maximum Impairment Duration per Incident<br />10.Service Delivering Duration<br />11.Service Delivery Unit<br />12.Service Delivering Price<br /><br /><span style="font-weight:bold;">The meaning and content of these attributes are</span>:<br />•Service Consumer Benefits describe the (set of) benefits which are callable, receivable and effectively utilizable for any authorized service consumer and which are provided to him as soon as he requests the offered service. The description of these benefits must be phrased in the terms and wording of the intended service consumers.<br />•Service-specific Functional Parameters specify the functional parameters which are essential and unique to the respective service and which describe the most important dimension of the services cape, the service output or outcome, e.g. maximum e-mailbox capacity per registered and authorized e-mail service consumer.<br />•Service Delivery Point describes the physical location and/or logical interface where the benefits of the service are made accessible, callable, receivable and utilzable to the authorized service consumers. At this point and/or interface, the preparedness for service delivery can be assessed as well as the effective delivery of the service itself can be monitored and controlled.<br />•Service Consumer Count specifies the number of intended, identified, named, registered and authorized service consumers which shall be and/or are allowed and enabled to call and utilize the defined service for executing and/or supporting their business tasks or private activities.<br />•Service Readiness Times specify the distinct agreed times of day when<br /><br />1)The described service consumer benefits are<br />I)Accessible and callable for the authorized service consumers at the defined service delivery point<br />ii)Receivable and utilizable for the authorized service consumers at the respective agreed service level<br />2)All service-relevant processes and resources are operative and effective<br />3)All service-relevant technical systems are up and running and attended by the operating team<br />4)The specified service benefits are comprehensively delivered to any authorized requesting service consumer without any delay or friction.<br />The time data are specified in 24 h format per local working day and local time, referring to the location of the intended service consumers.<br />•Service Support Times specify the determined and agreed times of day when the usage and consumption of commissioned services is supported by the service desk team for all identified, registered and authorized service consumers within the service customer's organizational unit or area. The service desk is/shall be the so called the Single Point of Contact (SPoC) for any service consumer inquiry regarding the commissioned, requested and/or delivered services, particularly in the event of service denial, i.e. an incident. During the defined service support times, the service desk can be reached by phone, e-mail, web-based entries and/or fax, respectively. The time data are specified in 24 h format per local working day and local time, referring to the location of the intended service consumers.<br />•Service Support Languages specifies the national languages which are spoken by the service desk team(s) to the service consumers calling them.<br />•Service Fulfillment Target specifies the service provider's promise of effective and seamless delivery of the defined benefits to any authorized service consumer requesting the service within the defined service times. It is expressed as the promised minimum ratio of the counts of successful individual service deliveries related to the counts of requested service deliveries. The effective service fulfillment ratio can be measured and calculated per single service consumer or per consumer group and may be referred to different time periods (workday, calenderweek, work month, etc.)<br />•Maximum Impairment Duration per Incident specifies the allowable maximum elapsing time [hh:mm] between<br />i)The first occurrence of a service impairment, i.e. service quality degradation or service delivery disruption, whilst the service consumer consumes and utilizes the requested service,<br />ii)The full resumption and complete execution of the service delivery to the content of the affected service consumer.<br />•Service Delivering Duration specifies the promised and agreed maximum period of time for effectively delivering all specified service consumer benefits to the requesting service consumer at the currently chosen service delivery point.<br />•Service Delivery Unit specifies the basic portion for delivering the defined service consumer benefits. The service delivery unit is the reference and mapping object for all cost for service generation and delivery as well as for charging and billing the consumed service volume to the service customer who has commissioned the service delivery.<br />•Service Delivering Price specifies the amount of money the service customer has to pay for the distinct service volumes his authorized service consumers have consumed. Normally, the service delivering price comprises two portions<br />a)A fixed basic price portion for basic efforts and resources which provide accessibility and usability of the service delivery functions, i.e. service access price<br />b)A price portion covering the service consumption based on<br />i)Fixed flat rate price per authorized service consumer and delivery period without regard on the consumed service volumes,<br />ii)Staged prices depending on consumed service volumes,<br />iii)Fixed price per particularly consumed service delivering unit.<div class="blogger-post-footer">“The level of your success is not measure by the fatness of your bank account, but rather it is measured by the level of your knowledge”. Oluwabamidele</div>Prince Oluwabamidele http://www.blogger.com/profile/11493338625119821611noreply@blogger.com0tag:blogger.com,1999:blog-2071650916271931293.post-24062475286737427502009-11-24T00:33:00.001-08:002009-11-24T00:39:57.029-08:00Service Marketing<span style="font-weight:bold;">Service Marketing</span> is the marketing of intangible products, such as hairdressing, cleaning, insurance and travel.<br />Marketing a service-base business is different from marketing a goods-base business.<br />There are several major differences, including:<br />1.The buyer purchases are intangible<br />2.The service may be based on the reputation of a single person<br />3.It's more difficult to compare the quality of similar services<br />4.The buyer cannot return the service<br /><br /><span style="font-weight:bold;">Service <br />What is a Service</span>? <br />•A service is the action of doing something for someone or something. It is largely intangible (i.e. not material). A product is tangible (i.e. material) since you can touch it and own it. A service tends to be an experience that is consumed at the point where it is purchased, and cannot be owned since is quickly perishes. <br /><br />•The term Service is used in so many other industry buzwords, namely Web Services, Service Oriented Architecture (SOA), Enterprise Service Bus (ESB) and Application Service Provider (ASP). It's an extremely overloaded term. However, Services marketing is marketing based on relationship and value. It may be used to market a service or a product. It's a strange almost mythical combination of competing requirements, which is it is both isolated and interoperable.<br /><br /><span style="font-weight:bold;">Characteristics of a Service</span><br />There are five characteristics to a service which are considered below:<br />•Lack of ownership.<br />You cannot own and store a service like you can a product. Services are used or hired for a period of time. For example when buying a ticket to the UK the service lasts maybe 9 hours each way , but consumers want and expect excellent service for that time. Because you can measure the duration of the service consumers become more demanding of it.<br /><span style="font-weight:bold;">•Intangibility</span><br />You cannot hold or touch a service unlike a product. In saying that although services are intangible the experience consumers obtain from the service has an impact on how they will perceive it. What do consumers perceive from customer service? The location and the inner presentation of where they are purchasing the service?<br /><span style="font-weight:bold;">•Inseparability</span><br />Services cannot be separated from the service providers. A product when produced can be taken away from the producer. However a service is produced at or near the point of purchase. Take visiting a restaurant, you order your meal, the waiting and delivery of the meal, the service provided by the waiter/ress is all apart of the service production process and is inseparable, the staff in a restaurant are as apart of the process as well as the quality of food provided.<br /><span style="font-weight:bold;">•Perishibility</span><br />Services last a specific time and cannot be stored like a product for later use. If travelling by train, coach or air the service will only last the duration of the journey. The service is developed and used almost simultaneously. Again because of this time constraint consumers demand more.<br /><span style="font-weight:bold;">•Heterogeneity</span><br />It is very difficult to make each service experience identical. If travelling by plane the service quality may differ from the first time you travelled by that airline to the second, because the airhostess is more or less experienced.. Generally systems and procedures are put into place to make sure the service provided is consistent all the time, training in service organisations is essential for this, however in saying this there will always be subtle differences.<div class="blogger-post-footer">“The level of your success is not measure by the fatness of your bank account, but rather it is measured by the level of your knowledge”. Oluwabamidele</div>Prince Oluwabamidele http://www.blogger.com/profile/11493338625119821611noreply@blogger.com0tag:blogger.com,1999:blog-2071650916271931293.post-57830014100893718902009-11-11T14:28:00.000-08:002009-11-11T14:32:29.640-08:00How Effective and Efficient is your Pricing StrategiesFirst will shall be taken a look at the meaning of Pricing and Pricing Strategies this will gives us a good and clearer meaning of the topic.<br /><span style="font-weight:bold;">What is pricing?</span> Pricing is a method adopted by a firm to set its selling price. It usually depends on the firm's average costs, and on thecustomer's perceived value of the product in comparison to his or her perceived value of the competing products. <br /><br /><span style="font-weight:bold;">What is pricing Strategies?</span> Price planning that takes into view factors such as a firm's overall marketing objectives, consumer demand, product attributes, competitors’ pricing, and market and economic trends.<br />The pricing strategy of your business can ultimately determine your fate. As a business owner you can ensure profitability and longevity by paying close attention to your pricing strategy.<br />Commonly, for many businesses, the pricing strategy has been to be the lowest price provider in the market. This approach comes from taking a superficial view of competitors and assuming one can win business by having the lowest price.<br /><br />Below are some pricing strategies to consider.<br /><span style="font-weight:bold;">Competitive pricing:</span> Use competitors' retail (or wholesale) prices as a benchmark for your own prices. Price slightly below, above or the same as your competitors, depending on your positioning strategies. Note you must collect competitor pricing information by observation rather than by asking them. Otherwise it could be seen as collusion<br /><span style="font-weight:bold;">•Cost plus mark-up:</span> This is the opposite of competitive pricing. Instead of looking at the market, look at your own cost structure. Decide the profit you want to make and add it to your costs to determine selling price. While using this method will assure a certain per-unit margin, it may also result in prices that are out-of-line with customer expectations, hurting total profit.<br /><span style="font-weight:bold;">•Loss Leader:</span> A loss leader is an item you sell at or below cost in order to attract more customers, who will also buy high-profit items. This is a good short-term promotion technique if you have customers that purchase several items at one time.<br /><span style="font-weight:bold;">•Close out:</span> Keep this pricing technique in mind when you have excess inventory. Sell the inventory at a steep discount to avoid storing or discarding it. Your goal should be to minimize loss, rather than making a profit.<br /><span style="font-weight:bold;">•Membership or trade discounting:</span> This is one method of segmenting customers. Attract business from profitable customer segments by giving them special prices. This could be in the form of lower price on certain items, a blanket discount, or free product rewards.<br /><span style="font-weight:bold;">•Bundling and quantity discounts:</span> Other ways to reward people for larger purchases are through quantity discounts or bundling. Set the per-unit price lower when the customer purchases a quantity of five instead of one, for example. Alternately, charge less when the customer purchases a bundle or several related items at one time. Bundle overstocks with popular items to avoid a closeout. Or, bundle established items with a new product to help build awareness.<br /><span style="font-weight:bold;">•Versioning:</span> Versioning is popular with services or technical products, where you sell the same general product in two or three configurations. A trial or very basic version may be offered at low or no cost.<br /><br /><span style="font-weight:bold;">Avoiding the Lowest Pricing Strategy</span><br />Having the lowest price isn't a strong position for business. Larger competitors with deep pockets and the ability to have lower operating costs will destroy any small business trying to compete on price alone. Avoiding the low pricing strategy starts with looking at the demand in the market by examining three factors:<br /><span style="font-weight:bold;">1. Competitive Analysis:</span> Don't just look at your competitor's pricing. Look at the whole package they offer. Are they serving price-conscious consumers or the affluent group? What are the value-added services if any?<br /><span style="font-weight:bold;">2. Ceiling Price:</span> The ceiling price is the highest price the market will bear. Survey experts and customers to determine pricing limits. The highest price in the market may not be the ceiling price.<br /><span style="font-weight:bold;">3. Price Elasticity:</span> If the demand for your product or service is less elastic, you can then have a higher ceiling on prices. Low elastic demand depends on limited competitors, buyer's perception of quality, and consumers not habituated to looking for the lowest price in your industry.<br /><br /> The low price strategy is best avoided by small business but there are conditions such as a price war that can drag a company into the lowest price battle.<br /><br /><span style="font-weight:bold;">Evading a Price War</span><br />A price war can wreck havoc in any industry and leave many businesses, out of business. Care should be taken to avoid a Price war. <br />Take these tips to evade a deadly price war:<br />•Enhance Exclusivity: Products or services that are exclusive to your business provide protection from falling prices.<br />•Drop High Maintenance Goods: There may be products or services in your business that have high customer service and maintenance costs. Drop the unprofitable lines and find out what customers don't want.<br /><br />•Value-added: Find value your business can add to stand out in the marketplace. Be the most unique business in the category.<br />•Branding: Develop your brand name in the market. Brand name businesses can always stand strong in a price war.<br /><br />Carefully, consider your price decisions. Your business depends on it.<div class="blogger-post-footer">“The level of your success is not measure by the fatness of your bank account, but rather it is measured by the level of your knowledge”. Oluwabamidele</div>Prince Oluwabamidele http://www.blogger.com/profile/11493338625119821611noreply@blogger.com0tag:blogger.com,1999:blog-2071650916271931293.post-18404108751352333642009-11-10T17:34:00.000-08:002009-11-10T17:37:44.936-08:00Benchmarking<span style="font-weight:bold;">What is Benchmarking?</span><br />•Benchmarking is the process of comparing the business processes and performance metrics including cost, cycle time, productivity, or quality to another that is widely considered to be an industry standard benchmark or best practice. Essentially, benchmarking provides a snapshot of the performance of your business and helps you understand where you are in relation to a particular standard. The result is often a business case and "Burning Platform" for making changes in order to make improvements.<br />•Benchmarking can be simply defined as a continuous process to find and implement best practices that will lead to superior performance. As the definition implies, benchmarking is a process that will make a company s operations lean, and improve quality and productivity<br />In the quest for increased competitiveness, companies often ask themselves the question, "How are we doing?" Asking this question leads logically to the next question, "Compared to what?" To fully answer this second question involves an examination of a company's own operations, and subsequently comparing the operations with those of other organisations identified to be leaders in the field. Such comparisons are at the heart of benchmarking.<br /><br />There are three major reasons for an organisation to embark upon benchmarking. These are:<br />•Benchmarking provides an objective evaluation of a company's business processes against similar processes in other organisations<br />•Benchmarking serves as a vehicle to source for improvement ideas from other organisations<br />•Benchmarking broadens an organisation's experience base by providing insights into systems and methods that work and those that don't. It therefore supports the notion of a learning organisation.<br /><br />The benchmarking process can be applied to all facets of a company's business, be it in products, services or business processes. However, the focus of most benchmarking projects is on business processes because the effective management of these processes, including quality, speed, and service, is of vital importance to achieve superior performance and he more competitive.<br />There is no single benchmarking process that has been universally adopted. The wide appeal and acceptance of benchmarking has led to various benchmarking methodologies emerging. The first book on benchmarking, written by Kaiser Associates, offered a 7-step approach. Robert Camp (who wrote one of the earliest books on benchmarking in 1989) developed a 12-stage approach to benchmarking.<br />The 12 stage methodology consisted of 1. Select subject ahead 2. Define the process 3. Identify potential partners 4. Identify data sources 5. Collect data and select partners 6. Determine the gap 7. Establish process differences 8. Target future performance 9. Communicate 10. Adjust goal 11. Implement 12. Review/recalibrate<br /> <br /><span style="font-weight:bold;">Types of Benchmarking</span><br />Depending on the objectives and scope of benchmarking, different types of benchmarking processes can be distinguished depending on what is compared and to whom it is being compared.<br /><br />Let take a good look at this.<br /><span style="font-weight:bold;">Benchmarking of What?</span><br />•Performance benchmarking is a brief evaluation process that compares company performance measures against a standard or target that has been established, or performance data of other organisations.<br />•Process benchmarking analyses and compares the methods and practices of a participating company's processes in order that another company can learn from the best and improve their own processes. In effect, it involves the identification of best practices that lie behind superior performance.<br />•Strategic benchmarking is an in-depth analysis aimed at identifying fundamental areas for improvement, i.e. a company's strengths and weak points. Information concerning other company's strategic choices is collected in order to improve a company's own strategic planning and positioning.<br />Benchmarking against Whom?<br />•Internal benchmarking is the comparison between a company's different departments, units or subsidiaries, including those based in different countries.<br />•Competitive benchmarking entails the direct comparison of a company's own performance against its competitors. This is easier in some respects because many external factors that affect performance are similar between the benchmarked companies, but it may be more difficult because of the competitive relationship between the companies, which can make data collection difficult.<br />•Functional benchmarking involves the comparison of processes against non-competitor companies within the same industry or service area that share common technological or market characteristics. Compared to competitive benchmarking, it is easier to find benchmarking partners, since the relationship between companies is not one of direct competition.<br /><br />Generic benchmarking focuses on the comparison of a company's own processes against best processes, irrespective of industry or service sector. It studies innovative methods or technologies with the aim of identifying technologies that will lead to breakthroughs. This is particularly relevant for environmental benchmarking because best environmental practices are rarely industry-specific.<br /><br /><span style="font-weight:bold;">Benefits from Benchmarking</span><br />•Improving communication<br />•Professionalizing the organization / processes, or for<br />•Budgetary reasons<br />•In outsourcing projects<br /><br /><span style="font-weight:bold;">Cost of Benchmarking</span><br />There are costs to benchmarking, although many companies find that it pays for itself. The three main types of costs are:<br />•Visit costs - This includes hotel rooms, travel costs, meals, a token gift, and lost labour time.<br />•Time costs - Members of the benchmarking team will be investing time in researching problems, finding exceptional companies to study, visits, and implementation. This will take them away from their regular tasks for part of each day so additional staff might be required.<br />•Benchmarking database costs - Organizations that institutionalize benchmarking into their daily procedures find it is useful to create and maintain a database of best practices and the companies associated with each best practice<br /><br /><span style="font-weight:bold;">Limitation of Benchmarking</span><br />•Benchmarking is a tough process that needs a lot of commitment to succeed.<br />•Time-consuming and expensive.<br />•More than once benchmarking projects end with the 'they are different from us' syndrome or competitive sensitivity prevents the free flow of information that is necessary.<br />•Comparing performances and processes with 'best in class' is important and should ideally be done on a continuous basis (the competition is improving its processes also...).<br />•Is the success of the target company really attributable to the practice that is benchmarked? Are the companies comparable in strategy, size, model, culture?<br />•What are the downsides of adopting a practice?<div class="blogger-post-footer">“The level of your success is not measure by the fatness of your bank account, but rather it is measured by the level of your knowledge”. Oluwabamidele</div>Prince Oluwabamidele http://www.blogger.com/profile/11493338625119821611noreply@blogger.com0tag:blogger.com,1999:blog-2071650916271931293.post-12881722210526977402009-11-04T13:51:00.000-08:002009-11-04T13:58:54.030-08:00Porter’s Five Forces AnalysisPorter's five forces analysis is a framework for the industry analysis and business strategy development developed by Michael E. Porter of Harvard Business School in 1979. It uses concepts developed in Industrial Organization (IO) economics to derive five forces which determine the competitive intensity and therefore attractiveness of a market. Attractiveness in this context refers to the overall industry profitability. An "unattractive" industry is one where the combination of forces acts to drive down overall profitability. A very unattractive industry would be one approaching "pure competition".<br />Porter referred to these forces as the micro environment, to contrast it with the more general term macro environment. They consist of those forces close to a company that affect its ability to serve its customers and make a profit. A change in any of the forces normally requires a company to re-assess the marketplace. The overall industry attractiveness does not imply that every firm in the industry will return the same profitability. Firms are able to apply their core competences, business model or network to achieve a profit above the industry average. A clear example of this is the airline industry. As an industry, profitability is low and yet individual companies, by applying unique business models have been able to make a return in excess of the industry average.<br /><br /><span style="font-weight:bold;">Main Aspects of Porter’s Five Forces Analysis</span><br />The original competitive forces model, as proposed by Porter, identified five forces which would impact on an organization’s behaviour in a competitive market. These include the following:<br />•The rivalry between existing sellers in the market.<br />•The power exerted by the customers in the market.<br />•The impact of the suppliers on the sellers.<br />•The potential threat of new sellers entering the market.<br />•The threat of substitute products becoming available in the market.<br />Understanding the nature of each of these forces gives organizations the necessary insights to enable them to formulate the appropriate strategies to be successful in their market.<br /><br /><span style="font-weight:bold;">Force 1: The Degree of Rivalry</span><br />The intensity of rivalry, which is the most obvious of the five forces in an industry, helps determine the extent to which the value created by an industry will be dissipated through head-to-head competition. The most valuable contribution of Porter's “five forces” framework in this issue may be its suggestion that rivalry, while important, is only one of several forces that determine industry attractiveness.<br />•This force is located at the centre of the diagram;<br />•Is most likely to be high in those industries where there is a threat of substitute products; and existing power of suppliers and buyers in the market.<br /><br /><span style="font-weight:bold;">Force 2: The Threat of Entry </span><br />Both potential and existing competitors influence average industry profitability. The threat of new entrants is usually based on the market entry barriers. They can take diverse forms and are used to prevent an influx of firms into an industry whenever profits, adjusted for the cost of capital, rise above zero. In contrast, entry barriers exist whenever it is difficult or not economically feasible for an outsider to replicate the incumbents’ position (Porter, 1980b; Sanderson, 1998) The most common forms of entry barriers, except intrinsic physical or legal obstacles, are as follows:<br />•Economies of scale: for example, benefits associated with bulk purchasing;<br />•Cost of entry: for example, investment into technology;<br />•Distribution channels: for example, ease of access for competitors;<br />•Cost advantages not related to the size of the company: for example, contacts and expertise;<br />•Government legislations: for example, introduction of new laws might weaken company’s competitive position;<br />•Differentiation: for example, certain brand that cannot be copied (The Champagne)<br /><br /><span style="font-weight:bold;">Force 3: The Threat of Substitutes</span> <br />The threat that substitute products pose to an industry's profitability depends on the relative price-to-performance ratios of the different types of products or services to which customers can turn to satisfy the same basic need. The threat of substitution is also affected by switching costs – that is, the costs in areas such as retraining, retooling and redesigning that are incurred when a customer switches to a different type of product or service. It also involves:<br />•Product-for-product substitution (email for mail, fax); is based on the substitution of need;<br />•Generic substitution (Video suppliers compete with travel companies);<br />•Substitution that relates to something that people can do without (cigarettes, alcohol).<br /><br /><span style="font-weight:bold;">Force 4: Buyer Power </span><br />Buyer power is one of the two horizontal forces that influence the appropriation of the value created by an industry (refer to the diagram). The most important determinants of buyer power are the size and the concentration of customers. Other factors are the extent to which the buyers are informed and the concentration or differentiation of the competitors. Kippenberger (1998) states that it is often useful to distinguish potential buyer power from the buyer's willingness or incentive to use that power, willingness that derives mainly from the “risk of failure” associated with a product's use.<br />•This force is relatively high where there a few, large players in the market, as it is the case with retailers an grocery stores;<br />•Present where there is a large number of undifferentiated, small suppliers, such as small farming businesses supplying large grocery companies;<br />•Low cost of switching between suppliers, such as from one fleet supplier of trucks to another.<br /><br /><span style="font-weight:bold;">Force 5: Supplier Power</span> <br />Supplier power is a mirror image of the buyer power. As a result, the analysis of supplier power typically focuses first on the relative size and concentration of suppliers relative to industry participants and second on the degree of differentiation in the inputs supplied. The ability to charge customers different prices in line with differences in the value created for each of those buyers usually indicates that the market is characterized by high supplier power and at the same time by low buyer power (Porter, 1998). Bargaining power of suppliers exists in the following situations:<br />•Where the switching costs are high (switching from one Internet provider to another);<br />•High power of brands (McDonalds, British Airways, Tesco);<br />•Possibility of forward integration of suppliers (Brewers buying bars);<br />•Fragmentation of customers (not in clusters) with a limited bargaining power (Gas/Petrol stations in remote places).<br />The nature of competition in an industry is strongly affected by suggested five forces. The stronger the power of buyers and suppliers, and the stronger the threats of entry and substitution, the more intense competition is likely to be within the industry. However, these five factors are not the only ones that determine how firms in an industry will compete – the structure of the industry itself may play an important role. Indeed, the whole five-forces framework is based on an economic theory know as the “Structure-Conduct-Performance” (SCP) model: the structure of an industry determines organizations’ competitive behaviour (conduct), which in turn determines their profitability (performance). In concentrated industries, according to this model, organizations would be expected to compete less fiercely, and make higher profits, than in fragmented ones. However, as Haberberg and Rieple (2001) state, the histories and cultures of the firms in the industry also play a very important role in shaping competitive behaviour, and the predictions of the SCP model need to be modified accordingly.<br /><br /><span style="font-weight:bold;">Strengths of the Five Competitive Forces Model Benefits</span><br />•The model is a strong tool for competitive analysis at industry level. Compare: PEST Analysis<br />•It provides useful input for performing a SWOT Analysis.<br /><br /><span style="font-weight:bold;">Limitation of Porter’s Five Forces Model</span><br />•Care should be taken when using this model for the following: do not underestimate or underemphasize the importance of the (existing) strengths of the organization (Inside-out strategy). <br />•The model was designed for analyzing individual business strategies. It does not cope with synergies and interdependencies within the portfolio of large corporations. <br />•From a more theoretical perspective, the model does not address the possibility that an industry could be attractive because certain companies are in it.<br />•Some people claim that environments which are characterized by rapid, systemic and radical change require more flexible, dynamic or emergent approaches to strategy formulation. Sometimes it may be possible to create completely new markets instead of selecting from existing ones.<br /><br />Porter's Six Forces model and its relationship to the standard Five Forces model <br />Porter’s Five Forces model actually has an extension referred to as Porter’s Six Forces model. It is considerably less popular than the Five Forces model as its acceptance has been less positive than the Five Forces model. The Six Forces model though is very similar to the Five Forces model with the only difference being the addition of the sixth force in the framework. This sixth force in the model is termed as the relative power of other stakeholders, and can refer to a number of other groups or entities, depending on the factor which has the greatest influence including:<br /><br /><span style="font-weight:bold;">• Complementors</span> – One school of thought looks at the sixth force to be complementors, which are businesses offering complementary products to the sector in focus and being analysed (Grove 1996). The author states that these complementary businesses, as a sixth factor, affect the industry as changes in these businesses (such as new techniques, approaches or technologies) can impact on the dynamics between the industry and the complementors.<br /><span style="font-weight:bold;">• The government</span> – The sixth force in the framework can also be considered to be the government, and is included in the framework if it has potential to impact on all the other five forces (Gordon, 1997). Thus, the government can have direct impact in the industry as the sixth force, but can also have indirect impact or influence by affecting the other five forces, whether favourably or unfavourably.<br /><span style="font-weight:bold;">• The public </span>– Yet other viewpoints look at the public as the sixth force in the model, particularly if the public has a strong influence in the dynamics of the sector resulting in changes to the other forces or in the sector as a whole.<br /><span style="font-weight:bold;">• Shareholders</span> – This group can also be considered potentially as the sixth force. This is more important in recent years where shareholder activity has increased significantly in the boardroom, and management of firms has been scrutinised much more and even given ‘threats’ if certain actions favoured by the shareholders were not pursued.<br /><span style="font-weight:bold;">• Employees</span> – Employees could also be considered as the sixth force if they wielded extraordinarily strong influence on the firm in a particular sector. The status of employees seems to follow similar rules in certain sectors, and thus could be considered a strong influence in these sectors. For example, in the automobile sector in the US, a large part of the work force are unionised, and thus could be considered the sixth force instead of the government or complementors.<br />While a sixth force has been added to Porter’s original Five Forces model, the acceptance of this framework has been somewhat limited. This could be for two reasons. First, is that there is no definite and specific sixth force in all sectors, as it is different for each sector. Second, while a sixth force could be defined for all sectors, the influence of this factor can also be captured in the other five forces and thus the necessity of having it in the framework is less compelling.<div class="blogger-post-footer">“The level of your success is not measure by the fatness of your bank account, but rather it is measured by the level of your knowledge”. Oluwabamidele</div>Prince Oluwabamidele http://www.blogger.com/profile/11493338625119821611noreply@blogger.com0tag:blogger.com,1999:blog-2071650916271931293.post-81103634833768650602009-11-04T13:48:00.000-08:002009-11-04T13:49:38.801-08:00Ecological Model of Competition<span style="font-weight:bold;">The ecological model of competition</span> is a reassessment of the nature of competition in the economy. Traditional economics models the economy on the principles of physics (force, equilibrium, inertia, momentum, and linear relationships). This can be seen in the economics lexicon: terms like labour force, market equilibrium, capital flows, and price elasticity. This is probably due to historical coincidence. Classical Newtonian physics was the state of the art in science when Adam Smith was formulating the first principles of economics in the 1700s.<br />According to the ecological model, it is more appropriate to model the economy on biology (growth, change, death, evolution, survival of the fittest, complex inter-relationships, and non-linear relationships). Businesses operate in a complex environment with interlinked sets of determinants. Companies co-evolve: they influence, and are influenced by, competitors, customers, governments, investors, suppliers, unions, distributors, banks, and others. We should look at this business environment as a business ecosystem that both sustains, and threatens the firm. A company that is not well matched to its environment might not survive. Companies that are able to develop a successful business model and turn a core competency into a sustainable competitive advantage will thrive and grow. Very successful firms may come to dominate their industry (referred to as category killers).<div class="blogger-post-footer">“The level of your success is not measure by the fatness of your bank account, but rather it is measured by the level of your knowledge”. Oluwabamidele</div>Prince Oluwabamidele http://www.blogger.com/profile/11493338625119821611noreply@blogger.com0tag:blogger.com,1999:blog-2071650916271931293.post-90065404597498052912009-10-26T14:44:00.000-07:002009-10-26T14:49:34.159-07:00SWOT Analysis<span style="font-weight:bold;">Definition</span><br />SWOT is an abbreviation for Strengths, Weaknesses, Opportunities and Threats<br />An assessment of Strengths, Weaknesses, Opportunities, and Threats. SWOT analysis is used within organizations in the early stages of strategic and marketing planning. It is also used in problem solving, decision making, or for making staff aware of the need for change. It can be used at a personal level when examining your career path or determining possible career development<br />SWOT analysis is an important tool for auditing the overall strategic position of a business and its environment.<br />Once key strategic issues have been identified, they feed into business objectives, particularly marketing objectives. SWOT analysis can be used in conjunction with other tools for audit and analysis, such as PEST analysis and Porter's Five-Forces analysis. It is also a very popular tool with business and marketing students because it is quick and easy to learn<br /><span style="font-weight:bold;"> <br />The Key Distinction - Internal and External Issues</span><br />Strengths and weaknesses are Internal factors. For example, strength could be your specialist marketing expertise. A weakness could be the lack of a new product.<br />Opportunities and threats are External factors. For example, an opportunity could be a developing distribution channel such as the Internet, or changing consumer lifestyles that potentially increase demand for a company's products. A threat could be a new competitor in an important existing market or a technological change that makes existing products potentially obsolete.<br />It is worth pointing out that SWOT analysis can be very subjective - two people rarely come-up with the same version of a SWOT analysis even when given the same information about the same business and its environment. Accordingly, SWOT analysis is best used as a guide and not a prescription. Adding and weighting criteria to each factor increases the validity of the analysis.<br /><br /><span style="font-weight:bold;">Where is S.W.O.T. being applied? </span><br />S.W.O.T. Analysis as it may sometimes being called can be performed in a variety of application or situation. It can be used as a situation analysis as an input into a strategic planning process at corporate of company level. It can also apply to evaluate the situation in terms of its capabilities. We use S.W.O.T. as a situation analysis tool. <br /><br /><span style="font-weight:bold;">When do we Perform a S.W.O.T. Analysis?</span><br />In common practice, S.W.O.T. Analysis is performed during the Strategic Planning or Business budget session normally done at the end of a financial year. But to perform a S.W.O.T. should not be limited to a yearly affair. You may perform a S.W.O.T. Analysis whenever it is needed to help you to identify causes of a non-conformance and you needed a new solution or strategy. <br /><br /><span style="font-weight:bold;">Who would Perform a S.W.O.T. Analysis?</span><br />In most cases, leaders of an organization perform a S.W.O.T. Analysis. However, it should not be limited to this group of people. In fact, anyone who has an interest and trained can perform a S.W.O.T. Analysis for the situation they are in. I have many situations where heads of a department perform a S.W.O.T. Analysis for their own operation issues because they want to develop solutions based on facts. <br /><br /><span style="font-weight:bold;">Why do you need to Perform a S.W.O.T. Analysis?</span><br /> As it can be seen by now, data gathering is an essential part of S.W.O.T. Analysis. Hence, the information collected is likely to be more factual. Any solution derived from S.W.O.T. will be more realistic and reliable. <br /><br /><span style="font-weight:bold;">How to Perform a S.W.O.T. Analysis? </span><br />As data collection is one of the key activities in S.W.O.T. analysis, it should allow enough time to bring back the data. 1-3 month before a S.W.O.T. Analysis session is conducted. Once the data is collected, it should be grouped into the four factors. This can be done individually or in a team. <br />In summary, with some basic understanding of S.W.O.T. Analysis, the solution derived from it can be value add to the organization.<br /><br /><span style="font-weight:bold;">How SWOT Analysis is used to formulate Strategies </span><br />This is perhaps the most powerful usage of SWOT Analysis in the Strategic Planning Process. I am going to show you how to used the four factors of SWOT to develop Strategies <br />By now, you would have collected several data pertaining to the Strengths, Weaknesses, Opportunities and Threats. Then you will use them to formulate strategy. Not sure how to do it? Don't worry, I take you through the steps. <br /><br /><span style="font-weight:bold;">Step 1 – Evaluate the Surrounding </span><br />Let's take a moment to think about both of us as the coach for two teams of football teams. <br />Before the game starts, you and I have certain strategies that we want the team to follow. As the game progresses, there is sign of difference between the two teams in terms of the game as well as the condition of the team members. <br /><br /><span style="font-weight:bold;">Step 2 – Identify the Strengths, Weaknesses, Opportunities and Threats <br />Now,</span> it is time to evaluate the teams in the four factors of SWOT. Let’s take the following examples as the result of the evaluation:- <br />Strengths - Your team full of fighting spirit <br />Weaknesses - One of your team members is hurt <br />Opportunities - Your opposition team seems to loose stamina <br />Threats - Your opposition team is full of energy <br />Note: Some of these factors seem to be conflicting each other. For the purpose of this step, this conflict is ignored.<br /><br /><span style="font-weight:bold;">Step 3 - Pair the SWOT factors to formulate Strategies </span><br />Now, you would start to formulate strategies in the four categories. Namely:- <br /><br />• SO Strategies (Strengths and Opportunities Strategy) <br /><br />• ST Strategies (Strengths and Threats Strategy) <br /><br />• WO Strategies (Weaknesses and Opportunities Strategy) <br /><br />• WT Strategies (Weaknesses and Threats Strategy) <br /><br />In this case, your strength is "your team is full of fighting spirit " and paired with your opportunities is " Opposite team is losing stamina" . With this scenario, what would you do? Perhaps you formulate a strategy to " ATTACK ". There it goes, you just formulate a attacking strategy. <br />Then you do the same procedure for SW Strategies, WO strategies and WT strategies. <br /><br /><span style="font-weight:bold;">Step 4 – Evaluate the Strategic Options</span> <br />At the end of this paring of SWOT factors, you would have end up several strategic options. Do a quick evaluation of each of these strategies to the extent of meeting the company objectives. <br /><br />Step 5 – Selecting Strategic Options <br />At this step, you would have a long list of strategic options. Too many strategies to implement may not be practical. Therefore, you need to shorten the list to perhaps maximum three strategies. <br />After you have completed all the 5 steps to use SWOT Analysis to Formulate Strategies, you have a list of strategies for you to implement to your business.<br /><br /><span style="font-weight:bold;">Pros and Cons of using SWOT in Strategic Planning </span><br />You may have gained some basic understanding of SWOT Analysis. You like to start using it for your work or your personal objectives. Whichever way you do it, it will bring about a your desired outcome because the data you collected for the Four factors of S.W.O.T. is objective and relevant. <br />If you have put the SWOT Analysis into real life practice, you could have faced with some difficulties in using it. But don't worry too much, as more practice would gain better experience with SWOT Analysis. <br />In this chapter, I will point out some of the Pros and Cons of using SWOT Analysis in Strategic Planning so you are aware of it. The sample list below should help you to reinforce your understanding of the SWOT Analysis. <br /><br /><span style="font-weight:bold;">PROS </span><br />1) Factual data are available to understand external factors as well as internal capabilities <br />2) Get a chance to evaluate the external opportunities and threats <br />3) A factual evaluation of own strengths and Weaknesses as compared with competitors <br />4) Open up a new dimension of competitive position <br /><br /><span style="font-weight:bold;">CONS</span> <br />1) Time consuming <br />2) Data collected may not be current (member may take past single even to make conclusion) <br />3) Differences in opinion due to difference understanding of the SWOT process <br />4) Form own opinion of an event instead of base on factual information<div class="blogger-post-footer">“The level of your success is not measure by the fatness of your bank account, but rather it is measured by the level of your knowledge”. Oluwabamidele</div>Prince Oluwabamidele http://www.blogger.com/profile/11493338625119821611noreply@blogger.com0tag:blogger.com,1999:blog-2071650916271931293.post-59494339609315654502009-10-22T00:48:00.000-07:002009-10-22T00:53:42.109-07:00Environmental Scanning<span style="font-weight:bold;">Environmental Scanning<br />Definition<br /></span><br />Careful monitoring of a firm's internal and external environments for detecting early signs of opportunities and threats that may influence its current and future plans. <br /><br /><span style="font-weight:bold;">Objectives of an Environmental Scanning System</span><br />•Detecting scientific, technical, economic, social, and political trends and events important to the institution,<br />•Defining the potential threats, opportunities, or changes for the institution implied by those trends and events,<br />•Promoting a future orientation in the thinking of management and staff, and<br />•Alerting management and staff to trends that are converging, diverging, speeding up, slowing down, or interacting.<br />Fahey and Naravanan (1986) suggest that an effective environmental scanning program should enable decision makers to understand current and potential changes taking place in their institutions' external environments. Scanning provides strategic intelligence useful in determining organizational strategies. The consequences of this activity include fostering an understanding of the effects of change on organizations, aiding in forecasting, and bringing expectations of change to bear on decision making.<br /><span style="font-weight:bold;"><br />Experimental Research Designs</span><br />In an attempt to control for extraneous factors, several experimental research designs have been developed, including:<br />•Classical pretest-post test - The total population of participants is randomly divided into two samples; the control sample, and the experimental sample. Only the experimental sample is exposed to the manipulated variable. The researcher compares the pretest results with the post test results for both samples. Any divergence between the two samples is assumed to be a result of the experiment.<br />•Solomon four group design - The population is randomly divided into four samples. Two of the groups are experimental samples. Two groups experience no experimental manipulation of variables. Two groups receive a pretest and a post test. Two groups receive only a post test. This is an improvement over the classical design because it controls for the effect of the pretest.<br />•Factorial design - this is similar to a classical design except additional samples are used. Each group is exposed to a different experimental manipulation<br /><br /><span style="font-weight:bold;">Advantages and Disadvantages of Experimental Research</span><br /><span style="font-weight:bold;">Advantages</span><br />*Gain insight into methods of instruction<br />*Intuitive practice shaped by research<br />*Teachers have bias but can be reflective<br />*Researcher can have control over variables<br />*Humans perform experiments anyway<br />*Can be combined with other research methods for rigor <br />*Use to determine what is best for population<br />*Provides for greater transferability than anecdotal research<br /><br /><span style="font-weight:bold;">Disadvantages</span><br />*Subject to human error<br />*Personal bias of researcher may intrude<br />*Sample may not be representative<br />*Can produce artificial results<br />*Results may only apply to one situation and may be difficult to replicate<br />*Groups may not be comparable<br />*Human response can be difficult to measure<br />*Political pressure may skew results<div class="blogger-post-footer">“The level of your success is not measure by the fatness of your bank account, but rather it is measured by the level of your knowledge”. Oluwabamidele</div>Prince Oluwabamidele http://www.blogger.com/profile/11493338625119821611noreply@blogger.com0tag:blogger.com,1999:blog-2071650916271931293.post-72859642195337924742009-10-22T00:40:00.000-07:002009-10-22T00:46:09.965-07:00Observational Techniques<span style="font-weight:bold;">What is Observational Techniques?</span><br />•Observational Techniques (or field research) is a social research technique that involves the direct observation of phenomena in their natural setting.<br />•Observational Techniques, a form of naturalistic inquiry, allow investigation of phenomena in their naturally occurring settings. <br />Participant observation is where the researcher joins the population or its organisation or community setting to record behaviours, interactions or events that occur. He or she engages in the activities that s/he is studying, but the first priority is the observation. Participation is a way to get close to the action and to get a feel for what things mean to the actors. As a participant, the evaluator is in a position to gain additional insights through experiencing the phenomena for themselves. Participant observation can be used as a long or short term technique. The evaluator/researcher has to stay long enough however to immerse him /herself in the local environment and culture and to earn acceptance and trust from the regular actors. <br />Observation consists of observing behaviour and interactions as they occur, but seen through the eyes of the researcher. There is no attempt to participate as a member of the group or setting, although usually the evaluator has to negotiate access to the setting and the terms of research activity. The intention is to ‘melt into the background’ so that an outsider presence has no direct effect on the phenomena under study. He or she tries to observe and understand the situation ‘from the inside’. <br />Observational techniques share similarities with the ethnographic approach that anthropologists use in studying a culture although typically they spend a long time in the field. Aspects of the ethnographic approach are sometimes incorporated into observational methods, as for example where interest is not just in behaviours and interactions but also in features and artefacts of the physical, social and cultural setting. These are taken to embed the norms, values, procedures and rituals of the organisation and reflect the ‘taken for granted’ background of the setting which influences behaviours understandings, beliefs and attitudes of the different actors. <br />Another form of naturalistic inquiry that complements observational methods is conversation and discourse analysis. This qualitative method studies naturally occurring talk and conversation in institutional and non-institutional settings, and offers insights into systems of social meaning and the methods used for producing orderly social interaction. It can be a useful technique for evaluating the conversational interaction between public service agents and clients in service delivery settings. <br /><span style="font-weight:bold;"><br />Main Steps in Observational Techniques</span><br /><span style="font-weight:bold;">Observational methods generally involve the following steps.</span> <br /><span style="font-weight:bold;">Step 1. Choice of situations for observation</span>: The settings for observation are defined in advance in relation to the interests of the evaluation commissioners and other key stakeholders. They consist of settings of interaction or of negotiation between public actors and the beneficiaries of the evaluated policy. The researcher negotiates access to the sites of observation with the relevant parties (informally, in the case of participant observation). <br /><br /><span style="font-weight:bold;">Step 2. Observation: </span>The observer observes the course of interaction, taking care to disturb the behaviour of the actors as little as possible. This work consists of note-taking and audio-visual recordings (as discretely as possible). The observer can take notes away from research subjects or immediately after the visit.<br /><br />This step cannot be limited to simple observation but must be complemented by organisational or institutional analysis so as to identify the ways in which social, cultural and physical features of the setting impinge on relations between the actors. The observer must record as much information as possible and capture an insider view of the setting. <br /><br /><span style="font-weight:bold;">Step 3. Analysing the material: </span> One approach to processing the material gathered is to analyse the events observed in terms of characteristic sequences. Each recording is ‘cut up’ just as one would edit a film into sequences. <br />The observer identifies the ‘evaluative assertions’, that is to say, the sentences which convey an explicit or implicit value judgement. Typical sequences and their analysis are concentrated on these assertions, and reveal the way in which the policy is judged in the field. Used in this way, the tool can shed important new light on the validity and effectiveness of the policy.<br /><br /><span style="font-weight:bold;">Step 4. Analysis of typical sequences with the actors. </span> The typical sequences and assertions are rewritten or modified to make them anonymous. They are then given to representatives of the people observed, for the purpose of collecting their comments and reactions. This step serves to verify that no bias has been created by taking the sequences out of their context. It gives, for each sequence, keys for interpretation which are recognised and validated by the ‘community’ under study. <br />Comments about the above section – only one method is described, analysis of sequences (or conversations?). More common, general observation technique is to write notes and code them afterwards, an ethnographic method and with this it is not usually returned to subjects to verify. <br /><br /><span style="font-weight:bold;">Types of Observation Technique</span><br />The most frequently used types of observational techniques are:<br /><span style="font-weight:bold;">•Personal observation</span><br />1.Observing products in use to detect usage patterns and problems<br />2.Observing license plates in store parking lots<br />3.Determining the socio-economic status of shoppers<br />4.Determining the level of package scrutiny<br />5.Determining the time it takes to make a purchase decision<br /><span style="font-weight:bold;">•Mechanical observation</span><br />1.Eye-tracking analysis while subjects watch advertisements<br />(a)Oculometers - what the subject is looking at<br />(b)Pupilometers - how interested is the viewer<br />(2)Electronic checkout scanners - records purchase behavior<br />(3)On-site cameras in stores<br />(4)Nielsen box for tracking television station watching<br />(5)Voice pitch meters - measures emotional reactions<br />(6)Psychogalvanometer - measures galvanic skin response<br /><span style="font-weight:bold;">•Audits</span><br />i)Retail audits to determine the quality of service in stores<br />ii)Inventory audits to determine product acceptance<br />iii)Shelf space audits<br /><span style="font-weight:bold;">•Trace Analysis</span><br />i)Credit card records<br />ii)Computer cookie records<br />iii)Garbology - looking for traces of purchase patterns in garbage<br />iv)Detecting store traffic patterns by observing the wear in the floor (long term) or the dirt on the floor (short term)<br />v)Exposure to advertisements<br /><span style="font-weight:bold;">•Content analysis</span><br />i)Observe the content of magazines, television broadcasts, radio broadcasts, or newspapers, either articles, programs, or advertisements<br /><br /><span style="font-weight:bold;">Strengths and Limitations of Observational Techniques</span><br />Observation is a generic method that involves the collection, interpretation and comparison of data. It shares these characteristics with the case study method. It is therefore particularly well suited to the analysis of the effects of an intervention that is innovative or unfamiliar, and especially the clarification of confounding factors that influence the apparent success or failure of the interventions evaluated.<br />Observational techniques serve to reveal the discrepancy between the way in which public interventions are understood high up at decision-making level, and the way in which it is understood in the field; it highlights the interpretation made of it by individuals in an operational situation. <br />The observation is generally limited to a small number of settings. Generalisation is therefore possible only if the intervention is sufficiently homogeneous across sites. <br />It is based on spontaneous or naturalistic data, gathered by an independent and experienced observer. The reliability of the observation depends to a large extent on the professional know-how of the observer-analyst. It is however possible to introduce a structured observational template that can be used by less experienced researchers, when gathering data across a large number of settings. <br />Despite its advantages, observation requires meticulous preparation to enable the observer to fit into the observed context without disturbing anyone [what sort of preparation?], as well as considerable time for data collection. making it an expensive method.<br />The technique allows data to be gathered in difficult situations where other survey techniques cannot be used. <br />A major strength of using observational techniques, especially those based on Grounded Theory, is that they can capture unexpected data which other methods can miss. The researcher does not define categories of data before going out into the field but is open to “what’s there” – the theory emerges from the data on the ground rather than pre-defined theory influencing what data is collected.<br />The extent to which the observer can be present without disturbing or influencing research subjects is never nil; it is usually recommended that observers maintain self-awareness about how they impact the environment they are researching and to take account of it in their data collection. In participant observation the researcher aims to become part of a community or environment rather than maintaining a detached status.<div class="blogger-post-footer">“The level of your success is not measure by the fatness of your bank account, but rather it is measured by the level of your knowledge”. Oluwabamidele</div>Prince Oluwabamidele http://www.blogger.com/profile/11493338625119821611noreply@blogger.com0tag:blogger.com,1999:blog-2071650916271931293.post-39976127892756885052009-10-20T17:44:00.000-07:002009-10-20T17:50:55.594-07:00Sampling<span style="font-weight:bold;">Sampling Ratio</span><br />This is the proportion of elements in the population that are selected (one name for every two respondent in the class). <br />Sampling ratio= Sample size/pop size.<br /><br /><span style="font-weight:bold;">Sampling Interval</span><br />This is the standard distance between elements selected in the sample population size/sample size<br /><br /><span style="font-weight:bold;">Sampling Methods</span><br /><br />Sampling is a very important part of the Market Research process. If you have surveyed using an appropriate sampling technique, you can be confident that your results will be generalised to the population in question. If the sample were biased in any way, for example, if the selection technique gave older people more of a chance of selection than younger people, it would be inadvisable to make generalisations from the findings.<br /><br />There are essentiality two types of sampling: probability and non-probability sampling.<br /><br />• Probability Sampling Methods<br />Probability or random sampling gives all members of the population a known chance of being selected for inclusion in the sample and this does not depend upon previous events in the selection process. In other words, the selection of individuals does not affect the chance of anyone else in the population being selected.<br /><br />Many statistical techniques assume that a sample was selected on a random basis. There are four basic types of random sampling techniques:<br /><br /><span style="font-weight:bold;">1) Simple Random Sampling</span><br />This is the ideal choice as it is a ‘perfect’ random method. Using this method, individuals are randomly selected from a list of the population and every single individual has an equal chance of selection.<br /><br />This method is ideal, but if it cannot be adopted, one of the following alternatives may be chosen if any shortfall in accuracy.<br /><br /><span style="font-weight:bold;">2) Systematic Sampling</span><br />Systematic sampling is a frequently used variant of simple random sampling. When performing systematic sampling, every element from the list is selected (this is referred to as the sample interval) from a randomly selected starting point. For example, if we have a listed population of 6000 members and wish to draw a sample of 2000, we would select every 30th (6000 divided by 200) person from the list. In practice, we would randomly select a number between 1 and 30 to act as our starting point.<br /><br />The one potential problem with this method of sampling concerns the arrangement of elements in the list.? If the list is arranged in any kind of order e.g. if every 30th house is smaller than the others from which the sample is being recruited, there is a possibility that the sample produced could be seriously biased.<br /><br /><span style="font-weight:bold;">3) Stratified Sampling</span><br />Stratified sampling is a variant on simple random and systematic methods and is used when there are a number of distinct subgroups, within each of which it is required that there is full representation. A stratified sample is constructed by classifying the population in sub-populations (or strata), base on some well-known characteristics of the population, such as age, gender or socio-economic status. The selection of elements is then made separately from within each strata, usually by random or systematic sampling methods.<br />Stratified sampling methods also come in two types – proportionate and disproportionate.<br />In proportionate sampling, the strata sample sizes are made proportional to the strata population sizes. For example if the first strata is made up of males, then as there are around 50% of males in the UK population, the male strata will need to represent around 50% of the total sample.<br /><br />In disproportionate methods, the strata are not sampled according to the population sizes, but higher proportions are selected from some groups and not others. This technique is typically used in a number of distinct situations:<br /><br />The costs of collecting data may differ from subgroup to subgroup.<br />We might require more cases in some groups if estimations of populations values are likely to be harder to make i.e. the larger the sample size (up to certain limits), the more accurate any estimations are likely to be.<br />We expect different response rates from different groups of people. Therefore, the less co-operative groups might be ‘over-sampled’ to compensate.<br /><br /><span style="font-weight:bold;">4) Cluster or Multi-stage Sampling</span><br />Cluster sampling is a frequently-used, and usually more practical, random sampling method. It is particularly useful in situations for which no list of the elements within a population is available and therefore cannot be selected directly. As this form of sampling is conducted by randomly selecting subgroups of the population, possibly in several stages, it should produce results equivalent to a simple random sample.<br />The sample is generally done by first sampling at the higher level(s) e.g. randomly sampled countries, then sampling from subsequent levels in turn e.g. within the selected countries sample counties, then within these postcodes, the within these households, until the final stage is reached, at which point the sampling is done in a simple random manner e.g. sampling people within the selected households. The ‘levels’ in question are defined by subgroups into which it is appropriate to subdivide your population.<br /><br /><span style="font-weight:bold;">Cluster samples are generally used if:</span><br /><br />- No list of the population exists.<br />- Well-defined clusters, which will often be geographic areas exist.<br />- A reasonable estimate of the number of elements in each level of clustering can be made.<br />- Often the total sample size must be fairly large to enable cluster sampling to be used effectively.<br /><br /><span style="font-weight:bold;">•Non-probability Sampling Methods</span><br />Non-probability sampling procedures are much less desirable, as they will almost certainly contain sampling biases. Unfortunately, in some circumstances such methods are unavoidable.<br /><br />In a Market Research context, the most frequently-adopted form of non-probability sampling is known as quota sampling.? In some ways this is similar to cluster sampling in that it requires the definition of key subgroups. The main difference lies in the fact that quotas (i.e. the amount of people to be surveyed) within subgroups are set beforehand (e.g. 25% 16-24 yr olds, 30% 25-34 yr olds, 20% 35-55 yr olds, and 25% 56+ yr olds) usually proportions are set to match known population distributions. Interviewers then select respondents according to these criteria rather than at random. The subjective nature of this selection means that only about a proportion of the population has a chance of being selected in a typical quota sampling strategy.<br /><br />If you are forced into using a non-random method, you must be extremely careful when drawing conclusions. You should always be honest about the sampling technique used and that a non-random approach will probably mean that biases are present within the data. In order to convert the sample to be representative of the true population, you may want to use weighting techniques.<br /><br />The importance of sampling should not be underestimated, as it determines to whom the results of your research will be applicable. It is important, therefore to give full consideration to the sampling strategy to be used and to select the most appropriate. Your most important consideration should be whether you could adopt a simple random sample.? If not, could one of the other random methods be used? Only when you have no choice should a non-random method be used.<br /><br />All too often, researchers succumb to the temptation of generalising their results to a much broader range of people than those from whom the data was originally gathered. This is poor practice and you should always aim to adopt an appropriate sampling technique. The key is not to guess, but take some advice?<br /><br /><span style="font-weight:bold;">General Advantages</span><br />•Typicality of subjects is aimed for<br />•Permits exploration<br /><span style="font-weight:bold;">- General Disadvantage</span><br />•Unrepresentative<br /><br /><span style="font-weight:bold;">Calculating a Sample Size</span><br />A frequently asked question is “How many people should I sample?” It is an extremely good question, although unfortunately there is no single answer! In general, the larger the sample size, the more closely your sample data will match that from the population. However in practice, you need to work out how many responses will give you sufficient precision at an affordable cost. <br />Calculation of an appropriate sample size depends upon a number of factors unique to each survey and it is down to you to make the decision regarding these factors. The three most important are:<br /><br />- How accurate you wish to be<br />- How confident you are in the results<br />- What budget you have available<br /><br />The temptation is to say all should be as high as possible. The problem is that an increase in either accuracy or confidence (or both) will always require a larger sample and higher budget. Therefore a compromise must be reached and you must work out the degree of inaccuracy and confidence you are prepared to accept.<br /><br />There are two types of figures that you may wish to estimate in your Market Research project: values such as mean income, mean height etc. and proportions (the percentage of people who intend to vote for party X). There are slightly different sample size calculations for each:<br /><br /><span style="font-weight:bold;">For a mean</span><br />The required formula is: s = (z / e)2<br /><br /><span style="font-weight:bold;">Where:</span><br />s = the sample size<br />z = a number relating to the degree of confidence you wish to have in the result. 95% confidence* is most frequently used and accepted. The value of ‘z’ should be 2.58 for 99% confidence, 1.96 for 95% confidence, 1.64 for 90% confidence and 1.28 for 80% confidence.<br />e = the error you are prepared to accept, measured as a proportion of the standard deviation (accuracy)<br /><br />For example, imagine we are estimating mean income, and wish to know what sample size to aim for in order that we can be 95% confident in the result. Assuming that we are prepared to accept an error of 10% of the population standard deviation (previous research might have shown the standard deviation of income to be 8000 and we might be prepared to accept an error of 800 (10%)), we would do the following calculation:<br /><br />s = (1.96 / 0.1)2<br /><br />Therefore s = 384.16<br /><br />In other words, 385 people would need to be sampled to meet our criterion.<br /><br />*Because we interviewed a sample and not the whole population (if we had done this we could be 100% confident in our results), we have to be prepared to be less confident and because we based our sample size calculation on the 95% confidence level, we can be confident that amongst the whole population there is a 95% chance that the mean is inside our acceptable error limit. There is of course a 5% chance that the measure is outside this limit. If we wanted to be more confident, we would base our sample size calculation on a 99% confidence level and if we were prepared to accept a lower level of confidence, we would base our calculation on the 90% confidence level.`<br /><br /><span style="font-weight:bold;">For a Proportion</span><br />Although we are doing the same thing here, the formula is different:<br /><br />s = z2(p(1-p))<br />???????? e2<br /><br />Where:<br />s = the sample size<br />z = the number relating to the degree of confidence you wish to have in the result<br />p = an estimate of the proportion of people falling into the group in which you are interested in the population<br />e = the proportion of error we are prepared to accept<br /><br />As an example, imagine we are attempting to assess the percentage of voters who will vote for candidate X. If we assume that we wish to be 99% confident of the result i.e. z = 2.85 and that we will allow for errors in the region of +/-3% i.e. e = 0.03. But in terms of an estimate of the proportion of the population who would vote for the candidate (p), if a previous survey had been carried out, we could use the percentage from that survey as an estimate. However, if this were the first survey, we would assume that 50% (i.e. p = 0.05) of people would vote for candidate X and 50% would not. Choosing 50% will provide the most conservative estimate of sample size. If the true percentage were 10%, we will still have an accurate estimate; we will simply have sampled more people than was absolutely necessary. The reverse situation, not having enough data to make reliable estimates, is much less desirable.<br /><br />In the example:<br /><br />s = 2.582(0.5*0.5)<br />???????? 0.032<br /><br />Therefore s = 1,849<br /><br />This rather large sample was necessary because we wanted to be 99% sure of the result and desired and desired a very narrow (+/-3%) margin of error. It does, however reveal why many political polls tend to interview between 1,000 and 2,000 people.<div class="blogger-post-footer">“The level of your success is not measure by the fatness of your bank account, but rather it is measured by the level of your knowledge”. Oluwabamidele</div>Prince Oluwabamidele http://www.blogger.com/profile/11493338625119821611noreply@blogger.com0tag:blogger.com,1999:blog-2071650916271931293.post-23302826386147865152009-10-20T17:42:00.000-07:002009-10-20T17:43:50.406-07:00Non- Sampling Error<span style="font-weight:bold;">What is Non- Sampling Error? <br />Definition <br /></span><br />Any error affecting a survey or census estimate apart from sampling error <br />Occurs in complete censuses as well as in sample surveys <br /><span style="font-weight:bold;">Types of Non- Sampling Error </span><br />•Non-Response Error<br />•Response Error<br />•Processing Error<br />•Coverage Error<div class="blogger-post-footer">“The level of your success is not measure by the fatness of your bank account, but rather it is measured by the level of your knowledge”. Oluwabamidele</div>Prince Oluwabamidele http://www.blogger.com/profile/11493338625119821611noreply@blogger.com0tag:blogger.com,1999:blog-2071650916271931293.post-30167979944985681502009-10-20T03:56:00.000-07:002009-10-20T04:06:59.972-07:00Standard Error (SE)Definition <br />A measure of the variability of an estimate due to sampling<br />Depends on variability in the population and sample size <br />Foundational measure<br /><br /><span style="font-weight:bold;">Margin of Error (MOE) <br />Definition <br /></span><br />A measure of the precision of an estimate at a given level of confidence (90%, 95%, 99%) <br />Confidence level of a MOE <br />MOEs at the 90% confidence level for all published ACS estimates <br />Margin of Error (MOE) <br /><br /><span style="font-weight:bold;">Confidence Interval <br />Definition </span><br /><br />A range that is expected to contain the population value of the characteristic with a known probability. <br />Formula <br /> <br />Where<br />LCL is the lower bound at the desired confidence level<br />UCL is the upper bound at the desired confidence level<br /> is the ACS estimate and <br /> is the margin of error at the desired confidence level <br />Confidence Interval computation <br /><br /><br /><span style="font-weight:bold;">Coefficient of Variation (CV) <br />Definition</span> <br />The relative amount of sampling error associated with a sample estimate <br />Sampling Error is related to Sample Size. <br />.The larger the sample size, the smaller the uncertainty or sampling error<br />•Combining ACS data from multiple years increases sample size and reduces sampling error<br />•All sample surveys have sampling error – including decennial census long-form data<br /><br /><span style="font-weight:bold;">How to Use Measures Associated With Sampling Error<br />How are Measures of Sampling Error Used?</span> <br />•To indicate the statistical reliability and usability of estimates<br />•To make comparisons between estimates<br />•To conduct tests of statistical significance<br />•To help users draw appropriate conclusions about data<br /><span style="font-weight:bold;"><br />Test of Statistical Significance <br />Definition </span> <br /><br /><br />A test to determine if it is unlikely that something has occurred by chance <br />A “statistically significant difference” means there is statistical evidence that there is a difference<div class="blogger-post-footer">“The level of your success is not measure by the fatness of your bank account, but rather it is measured by the level of your knowledge”. Oluwabamidele</div>Prince Oluwabamidele http://www.blogger.com/profile/11493338625119821611noreply@blogger.com0